Martin Wolf, a British economist and a prominent journalist at the Financial Times, is ardent defenders of globalization, i.e., of global economic integration through free trade. His book, Why Globalization Works, aims to demonstrate that globalization makes the world better off. He feels that the current problem is not that there is too much globalization but far too little. The book is a response to people and organizations opposed to globalization and a thorough refutation of their main objections. Yet, Martin Wolf is a realist and does not try to convince the reader that we live in "the best of all possible worlds".
As an economist at the World Bank from 1971-81, he has witnessed the failure of international organizations to reduce poverty. Wolf also concedes that market driven globalization is far from perfect in practice. He argues that like democracy, globalization is nevertheless the best practical alternative by far despite its many downsides. As a defender of economic liberalism but not of laissez-faire, he points out the necessary role of governments and the essential reforms of international organizations to enable better and deeper global economic integration. However, unlike Martin Wolf's book, this review essay is focused on globalization with a US perspective and a historical approach.
[...] Wolf nevertheless blames the United States - as well as other rich countries for being “grossly hypocritical in their treatment of developing countries” (212). Indeed, the US remaining protectionist measures in particular agricultural subsidies to US cotton farmers– are one of the main obstacles to deep integration of many developing countries into the world market. Thus, for Wolf, the United States should definitively embrace globalization and remove all protectionist measures. To conclude, Why Globalization works is a thorough response to main objections to [...]
[...] Wolf nevertheless asserts that this decline of employment in manufacturing actually improved the welfare of Americans by increasing their purchasing power as the drop in employment in agriculture did. Indeed, the US tends to import labor-intensive manufactured goods and export capital-intensive products. First of all, the Americans can therefore buy the former cheaper than if they were made in America while developing countries can afford American-made capital-intensive manufactured goods precisely because they export the former. Second of all, the specialization in capital-intensive manufacturing raises the average productivity in the US. [...]
[...] But Wolf also wants to point out how quickly the pendulum can swing away from globalization for a certain amount time. Indeed, he reminds us how the silk route was opened and closed several times and how the Chinese emperor dismantled his worldwide maritime trade in the 15th century. The most radical shift occurred between the two World Wars of the 20th century. The world was, in many respects, more integrated in the late 19th century than it is now. [...]
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