Book Review: The Globalization Paradox

Book Review: The Globalization Paradox: Why Global Markets, States, and Democracy Can’t Coexist by Dani Rodrik

Reveiwed by Kate Saffin

The School of Economics and Political Science - April 14, 2012

Dani Rodrik is Professor of Political Economy at Harvard University and has been a vocal critic for over a decade of what he sees as the unbridled tide of globalisation present in today’s worldwide economy. Rodrik’s 1997 book Has Globalization Gone Too Far? was hailed as one of the best economics books of that decade by Business Week, and was a forerunner to The Globalisation Paradox, in which Rodrik sets out the perils of financial globalization without any constraints, as he says perfectly evidenced by the most recent financial crisis and the rapid domino effect that it had around the world.
He cautions that the crisis was predictable and that economists – both academic and practising – became blind to obvious pitfalls because they believed too strongly in their own invented narrative: “markets are efficient, financial innovation transfers risk to those best able to bear it, self-regulation works best, and government intervention is ineffective and harmful”.
Rodrik believes in the power of globalisation to lift millions out of poverty and create widespread good but only if it is done more thoughtfully. The paradox is essentially that in order for globalisation to bring proper economic benefits that are broadly distributed throughout society, national democracies need to be strengthened and international rules need to be in place, that protect all players, whilst still allowing for manoeuvrability and enterprise. This is in contrast to the oft-cited doctrine that the true powers of globalisation can only be harnessed when there is a complete free flow of capital with minimal regulation.

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