In 1997, at the height of the consensus for the benefits of globalization, the United States-based Turkish economist Dani Rodrik, a professor at Harvard University, published a small book that ran counter to the current. In Globalization has gone too far?Rodrik diverged from most of his fellow economists, for whom globalization, with deregulation and the reduction of barriers to free trade and the free transit of financial capital, had merit and would only bring benefits, both for rich countries and for poor countries – consumers in rich countries would have access to cheaper goods and commodities produced in poor countries, while the economies of poor countries would grow with the greater demand for their exports. In the book, Rodrik pointed out the high political and social costs of globalization, which his colleagues despised.

The work caused an uproar among economists. Rodrik later reported that he was once approached by Paul Krugman, the American economist who won the 2008 Nobel Prize for Economics, who warned him that his book provided “ammunition for the barbarians.” The 2008 international financial crisis, the fragility of the euro, the British vote in favor of Brexit – the departure of the United Kingdom from the European Union -, the election of Donald Trump to the Presidency of the United States, the political rise of xenophobic populists in several countries in Europe have changed the course of the conversation. Rodrik’s criticism came to be seen as prescient. Last year, the last book of Rodrik, Straight talk on trade (a free translation, Papo straight on trade), with more attacks on “hyperglobalization” and the economists who abandoned their doubts to act as mere ideologues, was chosen as one of the best works of 2017 by Financial Times commentator Martin Wolf . Wolf himself was one of the greatest enthusiasts of globalization.

In an earlier book, The Paradox globalization ( Globalization Paradox), Rodrik coined the “trilemma of globalization”. “It is not possible to have hyperglobalization, democracy and national sovereignty at the same time,” he wrote. For him, in order to preserve democracy, we must take some steps back in the integration of the international economy. The economist is far from being, however, an advocate of Trump’s angry economic nationalism. Rodrik thinks it is possible to have a smarter and more flexible globalization – such as that prevailing in the GATT, the general agreement on tariffs and trade prior to the creation of the World Trade Organization (WTO). “Gatt’s goal has never been to maximize free trade, but to achieve the maximum trade compatible with different nations doing their own thing.”

Rodrik responded by e-mail to Epoch questions about populism, Donald Trump, the threat of trade war in the world, and the Brazilian crisis. In relation to Brazil, he said that the country needs first of all to solve its internal political crisis to resume a project of economic growth. Regarding the world, despite Trump, he remains optimistic. In an article this year for The New York Times , he recalled that an earlier populist outbreak in the United States at the end of the nineteenth century against the perverse effects of globalization of the time eventually resulted in the Franklin Deal’s New Deal in the 1930s Roosevelt and in correcting various problems of capitalism.

Next, Rodrik answers the nine questions of Epoch.

1. After the imposition of tariffs by the Donald Trump government on Chinese products and China’s retaliation for US imports, is the world moving towards a global trade war?

Much will depend on how Europe and China will respond. If they are contained in their retaliation – and they have good reason to do so – we will end well short of a trade war. Commercial war is not an inevitable outcome. And if it does, China and Europe should share responsibility with the United States for it.

2. Are protectionist measures, growing trade tensions, and the election of populist governments meant that we are entering an era of “de-globalization”?

I think it’s too early to talk about “deglobalisation.” Certainly, a real trade war would impact globalization. But we have not gotten there yet.

3. Do you believe that the populist reaction to globalization, represented by the election of Donald Trump in the United States, can lead to an improvement of globalization?

This is certainly my hope. It is an opportunity for progressive and left forces to offer a genuine programmatic response – and to show that the grievances that brought Trump to the presidency are real, but that there are better ways of responding to them than through chauvinism and unilateralism.

4. Do you see the rise of populism, discontent with globalization in Western societies and the crisis of liberal democracies as evidence of its famous trilemma, according to which it is not possible to reconcile democracy, national sovereignty and hyperglobalization?

This was more in the Euro Zone than in the US, because it was in Europe that hyperglobalization went further. The US could have avoided the populist reaction if it had better social safety nets and if the country’s trade agreements were not so one-sided, with such exaggerated advantages. But in both Europe and the United States, there has been a crucial error: the rise of globalization deepens the economic and social divisions within societies, and unless we are attentive to overcoming these divisions, demagogues take advantage of the failure of the political center.

5. You are a hard critic of your colleagues, the economists, whom you blame for much of the political and economic confusion of the world. Do you think they are ready to review their views on liberalization and deregulation in recent decades?

I am optimistic about the variety of political ideas emerging from the economic profession today. There is a tendency to think that neoliberalism and the mainstream economy are one and the same thing. In reality, neoliberalism was a perversion of the economy. A growing number of economists are engaged in jobs that lead to inequality, social mobility, and inclusion in earnest.

6. If there is an escalation of protectionist measures and we have reversed trade and financial liberalization in recent decades, as a country like Brazil, which has experienced slow growth since the 1980s and has not made big gains from globalization, can be affected?

Ultimately, what happens at home is more important than these global developments – especially in a country as big as Brazil. Of course, if commodity prices fall and global markets start to close, there will be costs for Brazil, as in other countries. But Brazil’s number one priority should be to overcome the domestic political crisis and have a serious economic program in place.

 

7. In your most recent book, you wrote that one of the most important economic phenomena of our time is “premature deindustrialization” – partly because of the advance of automation, partly because of globalization. Is this the case of Brazil, which has become mainly a commodity exporter in the last decades?

Brazil has suffered from this, as do many other middle-income countries. I do not see an easy way to reverse de-industrialization, unfortunately.

8. Can any country beat the growth challenge without strong industry?

Yes, but it has to be a different path of growth, a historical departure. Part of this is investment in people and physical infrastructure. Part of this is a coherent strategy of connecting the most advanced sectors and companies in the economy with the backward sectors and regions – both in services and in industry. And all this has to be done without jeopardizing macroeconomic balances.

9. What is the smart policy to be pursued by any country to meet the challenge of growth in times of globalization with so many paradoxes? Can China be an inspiration or not?

It is difficult to directly copy China and do exactly what this country has done. The circumstances are very different. But the overall message that China’s success sends is still useful: To leverage its economy, as China did, you need an internal growth strategy that focuses on domestic investment, technology acquisition and diversification. You need to do your own homework before globalization can help you. The second message is: you should not be too passionate about Western projects or the so-called “best practices”; a market-oriented economy can be driven with various institutional arrangements, and a certain amount of experimentation and heterodoxy is inevitable.