Has Globalization Gone too Far? An Analysis of Rodrik’s Introduction

Dani Rodrik’s book, Has Globalization Gone Too Far?, which was published by the institute for international economics in 1997, examines the current tensions globalization has constructed between ensuring international economic integration without domestic social disintegration. Dani Rodrik is a professor of International Political Economy at the John F. Kennedy School of Government at Harvard University. His scholarship has primarily focused on the effects of globalization and economic growth. In the introduction, Rodrik, firstly lays out his overall framework for the book by defining the scope of the tensions between capital owners, laborers and governments. Secondly, he introduces three sources of tensions between the global market and domestic social stability created by globalization. Thirdly, he contrasts this current phase of globalization with that of the gold standard to provide insightful historical perspective.

Rodrik begins the book by portraying possibly interrelated crises in France, the United States (U.S.), Eastern Europe, Russia and many other countries that have a common root: what Thomas L. Friedman called a “backlash against globalization”. Rodrik uses these examples of movements away from globalization to construct not only his framework but also his fundamental argument. The emerging process of “globalization”, according to Rodrik, constructed a divide between groups that have the skills and mobility to prosper in the emerging global markets and those that either lack these advantages or perceive globalization as detrimental to traditional norms and or social stability with national governments stuck in-between. From this framework he argues that the most serious challenge to the global economy lies in making globalization compatible with domestic social and political stability.

Following the basic layout of his book, Rodrik presents the three focal sources of tension that globalization has constructed between the global market and social stability. Firstly, reduced barriers of trade and investment accentuate the tension between owners of capital, highly skilled works, or professionals and unskilled or even semiskilled laborers. The demand for labor has become more elastic as working populations can be easily substituted by lower-wage workers across national boundaries. This causes laborers to incur a larger share of the costs of globalizing creating increasing social instability. Secondly, as technology standardizes and diffuses internationally, varying state identities and stages of development are forced to compete in the same global market. Questions concerning fairness and legitimacy of competitive advantage cause political tension and instability. Thirdly, globalization has made it difficult for governments to continue to provide social insurance, which was essential for developing and maintaining social stability throughout the postwar period, for domestic groups causing social tensions.

Finally, Rodrik develops a comparative analysis between the current, late 1980s, globalization movement and with the integrated world economy during the height of the gold standard in the late 19th century. Rodrik lays out the similarities and differences between the two phases of globalization in the hope of deriving lessons to apply toward the current situation. Citing Jeffrey Williamson he associates the similarities of rising inequalities between rich, labor-scare and poor labor-abundant countries to today’s growing inequality between states in the global north and global south. Rodrik states two differences, first being that restrictions on immigration were not as common in the 19th century and second, during the gold standard the volume of head-on international competition in similar products was much less than in today’s society. He concludes that continued globalization cannot be taken for granted and well managed policy making is necessary for international and domestic political stability.

One of the most interesting arguments that Rodrik lays out in this chapter is the result of globalization is “severe tension between the market and social groups such as workers, pensioners, and environmentalists, with governments stuck in the middle.” He cites Kapstein, who states unless policymakers take a more active role in managing their economies a backlash from labor will occur. I perceived this notion from Putnam’s two-level game theory but applied to globalization. Governments must negotiate with domestic constituents that are being harmed by globalization and multinational corporations and capital owners that are flourishing from globalization. This two-level game creates difficulties for governments to continuously generate win-sets thus causing more social and political instability.