In the analytical essay, How to Save Globalization From its Cheerleaders, Dani Rodrick reflects on the time period after the 1950s during an incredible world economic transformation. He believed that it would be wise to learn from the successes and failures of that time period moving forward in the economic system. Through his essay, he examines the reasons for this economic boom. Rodrick attempts to eliminate the common belief that the whole thing can all be attributed to globalization. Historically, the trade-offs that countries make when they turn to globalization, the failure of the first wave of globalization due to the expansion of finance and trade, and the increase in conflict among countries after their introduction to globalization should all be dually noted. The argument of his essay centers around globalization being paradoxical and that blanket policies cannot be applied to the international economic system. Rodrick presents “a forward-looking evaluation of globalization.” “I accept as my premise that globalization, in some appropriate form, is a major engine of economic growth. However, I will argue that several paradoxical features require us to rethink its rules.” (Rodrick 2) In three points he elaborates on that statement, “first… globalization’s chief beneficiaries are not necessarily those with the most open economic policies. Second, globalization has come with frequent financial crises and considerable amount of instability, which are both costly and in principle avoidable. Third, globalization remains unpopular among large segments of the people it is supposed to benefit.” (Rodrick 3) Through examples, Rodrick shows how deep integration of open markets in trade and finance is not compatible with all global entities.
A danger of this globalization paradox is how some benefit at the suffering of others. An example of this would be China versus certain Latin-American countries. China, despite its lack of open market status was actually the country that benefitted most from globalization. “Countries that have benefited the most from globalization are those that did not play by the rules.” (Rodrick 5) “By contrast, Latin America, which tried harder than any other part of the world to live by the orthodox rules, experienced on the whole a dismal performance since the early 1990s.” (Rodrick 5) This contradicts all that globalization promises. A second paradox of globalization is international finance. Globalization is supposed to increase investment and growth but it has caused financial crashes in developing nations across the world. This has only increased economic disparity, “in order to protect themselves from the whiplash of financial crisis, developing countries have been forced not only to shun its benefits, but to make transfers to rich countries on top. (Rodrik 8)” Globalization is helping these countries to make profit by having the opportunity to sell these goods, but leads them into financial crisis. Rodrick says that “we need to recognize these frictions and focus our efforts on devising rules that can manage them, instead of proceeding with a market-opening agenda as if they were of little consequence.” (Rodrick 24) In order to improve these frictions, the global economy needs to strive for better public policy rather than market access.
Policy spaces need to be developed to handle the issues created by openness and caused by the weakness of current institutions. It is very clear that “Globalization is indeed contributing to rising inequality, stagnant median wages, and the growing sense of insecurity in the advanced economies.” (Rodrick 9) Trade and financial openness are rarely capable to “lead to economic growth on their own” and have the possibility of “backfire.” (Rodrick 10) Rodrick is clearly calling for more from those with degrees in public policy and international relations which is a switch from the usual. Typically, those with degrees in liberal arts or the human sciences are not as valued as those with business or technical science degree. This article provides evidence that that is not the case. Being a student of international public policy in this time period is also helpful as the current generation represents what the future looks like, which gives these students an advancement over other older scholars in the field. With the unequal results from globalization, an analysis of all regions is requires to determine what is best needed where. Some markets may need openness where others should remain more domestic. “Rich nations [should] address issues of social insurance and concerns about the labor, environmental, and health consequences of trade and poor nations [should] position themselves better for globalization through economic restructuring and diversification.” (Rodrick 19) The needs of the developing versus the developed world are very different. To avoid the suffering of one, careful consideration needs to be taken. Parts of Latin America again serve as a prime example for how policy spaces can benefit those suffering at the hands of globalization.
The contrast of Mexico and El Salvador serves as alarming evidence. “If Mexico and El Salvador had first-world institutions, they would be as rich as the advanced countries. Successful growth strategies are based on making the best of what you have, not on wishing you had what you lack” (Rodrick 15) In El Salvador, reforms needed to be taken in order to make globalization work. The Asian countries such as Vietnam and China did have those institutions and that is what made the difference in their success.
Rodrick seemed to be greatly influenced by the work of modern genius John Maynard Keyes, the father of modern macroeconomics. Rodrick reflects a lot of Keynes in his suggestions as a moderate. Rodrick says that globalization and open markets should be encouraged internationally but with such and such exceptions and says don’t “push it too hard.” (Rodrick 31) This much like how Keynes was with many of his economic policies. He believed in the people’s ability to operate a capitalist system but never argued for an entirely free market because he knew that a strong and reliable government system was needed for regulation just in case. “The Bretton Woods system broadly reflected the Keysian view that an international economy needed strong political and institutional supports if it was to be acceptably stable” (Skidelsky 115). Just like Rodrick, Keynes notes the extreme importance of institutions. When it came to Bretton Woods, Rodrick was especially inspired by Keynes. Though Keynes played a role that relates more to banking and finance, he had a vision of what the macroeconomics of a globally integrated system might look like with a balanced amount of government regulation. Rodrik proposes the Bretton Woods compromise as an alternative to the incompatibility of deep integration of globalization in the market.
Rodrick’s basic political priorities were that he wanted a less harsh political system that left room for citizens to pursue their own desires. This is also very similar to Keynes. He believed that “the pursuit of wealth was a means, not an end – the end being to live wisely, agreeably, and well” (Skidelsky 55). Keynes strove for full employment as the sign of a successful economic system, showing that he desired the best and equality for all citizens. They both put a lot of value in giving people freedom to pursue all that free market capitalism had to offer them. They saw government as a facilitator for the global stage. These beliefs were challenged as they both tried to have happiness and opportunity for all and when this precedent could not be equally applied to the developing world. They both acknowledged that special assistance was needed to support those communities and that it would require sacrifice from the wealthy to support the poor.
As previously mentioned, this is especially relevant to students of this course studying political science and international studies. Now more than ever, those with knowledge of the globalized world will be needed to assist in many fields. Knowledge of policy is required when making investments, particularly long-term investments. Knowledge of how something that could be harmful to the environment, such as new forms of renewable energy sources is necessary when implementing those new forms of energy. As students in this field, that is what we are taught to do. We are taught to think about the global implications of everything. Another example would be if one were trying to stop gang related crime in the United States, knowledge of where the gang came from and what led them to commit acts of violence is all essential when trying to prevent that violence. Context of the developed versus the developing world were very crucial thoughout all of Rodrick’s essay. Beyond global economics, an understanding of the international system is going to be very beneficial to students of international relations in this ever-increasingly globalized world.
Rodrik, D. (2007). How to Save Globalization from its Cheerleaders. The Journal of International Trade and Diplomacy, 1(2), 1-33. doi:10.2139/ssrn.1019015
Skidelsky, R. (2005). Keynes, Globalisation and the Bretton Woods Institutions in the Light of Changing Ideas about Markets. World Economics, 6(1), 1-30. Retrieved April 29, 2017.