Thursday, May 20, 2010

Solving Dani Rodrik's Trilemma

Huh? Rodrik's Trilemma? What's that all about?

Sorry to be so abrupt, but I only read about it last night in this article about the Euro crisis. The idea is that you can't have democracy, national sovereignty, and global free trade all at once. Let's let Turkish-born Dani Rodrik tell the story from his own blog.

I have an "impossibility theorem" for the global economy... 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.

But then, why would we want to? Of course, on his blog, Dani thinks in terms of bureaucratic arrangements overseen by policy experts. But we are better than that.

So let's recast the problem. Let's call democracy the conflict of the factions. In a pure case, the current civil war in Thailand, you have two political factions, "competing patronage networks, bound together primarily by personal loyalties and emotional attachments," each with about 40 percent of the vote duking it out on the streets.

Let's call national sovereignty the conflict of the nations. In a pure case it is Nazi Germany and Soviet Russia fighting the war of the worlds--for what? Hitler wanted access to Russia's resources.

Let's call global economic integration the conflict of the corporations. In the pure case it is auto or cellphone companies competing for the custom of the global consumers.

Notice what is missing in this? Exactly. We have the political sector, the economic sector, but somehow the moral/cultural sector went missing.

And, of course, the moral/cultural sector has the answer to the problem.

The answer to the trilemma is Don't.

In democracy, don't try to establish a vast tribal patronage faction that imagines that it obtains economic security with a culture of compulsion featuring tax and spend and crony capitalism.

In national sovereignty, don't think like Hitler that you have to have military control of resources to be safe. In the modern world all resources are available on the global market. And the real resource that matters is not under the ground but between the ears.

In global economic integration, don't try to run your corporation on the assumption that it has to take over the world in order to be safe. Hey, corporations come and go. People move on. Life goes on.

Of course, the injunction "Don't" is the injunction of all the great Axial Age religions. They all recommend dialing back the conflict and surrendering to the fact that you can't force the world to guarantee your security and your safety.

"In service is perfect freedom:" that's the injunction from Christianity. Don't try to dominate the world. Try to serve the world.

Do that and you won't have a trilemma.

1 comment:

  1. So you are recommending to abolish democracy and turn over to anarchy? It's just the best to let everything flow freely because the market will do everything that is needed?!