What’s Wrong with the World

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What’s Wrong with the World is dedicated to the defense of what remains of Christendom, the civilization made by the men of the Cross of Christ. Athwart two hostile Powers we stand: the Jihad and Liberalism...read more

What Globalization Means, Revisited

By way of explaining what is undoubtedly perceived as my peculiar antipathy for globalization and the economic doctrines taken to undergird it, allow me to present economist Dani Rodrik's trilemma of the global economy (there is even a chart at the link):

I have an "impossibility theorem" for the global economy that is like that. It says that democracy, national sovereignty and global economic integration are mutually incompatible: we can combine any two of the three, but never have all three simultaneously and in full. (Snip)

To see why this makes sense, note that deep economic integration requires that we eliminate all transaction costs traders and financiers face in their cross-border dealings. Nation-states are a fundamental source of such transaction costs. They generate sovereign risk, create regulatory discontinuities at the border, prevent global regulation and supervision of financial intermediaries, and render a global lender of last resort a hopeless dream. (Snip)

One option is to go for global federalism, where we align the scope of (democratic) politics with the scope of global markets. Realistically, though, this is something that cannot be done at a global scale. It is pretty difficult to achieve even among a relatively like-minded and similar countries, as the experience of the EU demonstrates.

Another option is maintain the nation state, but to make it responsive only to the needs of the international economy. This would be a state that would pursue global economic integration at the expense of other domestic objectives. The nineteenth century gold standard provides a historical example of this kind of a state. The collapse of the Argentine convertibility experiment of the 1990s provides a contemporary illustration of its inherent incompatibility with democracy.

Finally, we can downgrade our ambitions with respect to how much international economic integration we can (or should) achieve. So we go for a limited version of globalization, which is what the post-war Bretton Woods regime was about (with its capital controls and limited trade liberalization). It has unfortunately become a victim of its own success. We have forgotten the compromise embedded in that system, and which was the source of its success.

The logic of regulatory and legal harmonization entails a narrowing of political distinctions, the endpoint of which is suggested by the European Union. However, under such a regime, the fundamental symbols of representative politics will become, first, abstracted into generality and ambiguity, so as to encompass widely divergent societies; and, second, rendered equivocal, meaning one thing for one people and another thing for a different people. While his conception of representative politics encompasses such entities as global trade unions, this is, more or less, the upshot of Jeff Faux's policy programme for a globalist democracy. Obviously, this will not work.

American policy seems to instantiate the worst of both words, with incremental integration structured so as to benefit a comparatively narrow socio-economic stratum, and an establishment political consensus that constrains viable domestic political responses.

Whatever the case may be, globalization is subverting both the integrity of the nation-state and the quality of the representative politics within the nation-state - and the nation-state is the only contemporarily viable vehicle for any sort of conservative politics. If we lose that, we lose the whole game.

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