How Do 'Trilemmas' Affect Economic Globalization?

Conventional wisdom holds that globalization has peaked and is now in retreat. Dani Rodrik argued in 2000 that economic integration conflicted with national sovereignty and that this tension would, or at least should, put a brake on economic globalization. Has that view been vindicated? This article explores that question and others by examining four trilemmas, each of which claims that only two of three conditions can hold at once. Rodrik saw a fundamental conflict across the nation-state, mass politics, and integrated national economies. He was inspired by an earlier “impossible trinity” that stressed the inconsistency of an independent national monetary policy, free capital movement, and a fixed exchange rate. The financial crisis beginning in 2007 led to another trilemma claim: the conflict among independent national financial regulation, open capital markets, and economic stability. The experience of the EU generated a fourth claim: a “social trilemma” that identifies the clash of deep economic integration, high levels of social protection, and autonomous national welfare states with very different per capita incomes. This paper argues that only the logic of the last trilemma, related to what is here called “fiscal nationalism,” provides a red line brake on economic globalization because it rests on conflicts of national interest. The other three trilemmas have been worked around, and recent changes in both public and private integration practices likely signal a new globalization rather than a general retreat