Economists and Democracy

For instance, we know that the global capital-adequacy requirements produced by the Basel Committee reflect overwhelmingly the influence of large banks. If the regulations were to be written by economists and finance experts, they would be far more stringent. Alternatively, if the rules were left to domestic political processes, there could be more countervailing pressure from opposing stakeholders (even though financial interests are powerful at home, too).

Similarly, despite the rhetoric, many World Trade Organization agreements are the result not of the pursuit of global economic well-being, but the lobbying power of multinationals seeking profit-making opportunities. International rules on patents and copyright reflect the ability of pharmaceutical companies and Hollywood – to take just two examples – to get their way. These rules are widely derided by economists for having imposed inappropriate constraints on developing economies’ ability to access cheap pharmaceuticals or technological opportunities.

So the choice between democratic discretion at home and external restraint is not always a choice between good and bad policies. Even when the domestic political process works poorly, there is no guarantee that global institutions will work any better. Often, the choice is between yielding to domestic rent-seekers or to foreign ones. In the former case, at least the rents stay at home!

Ultimately, the question concerns whom we empower to make the rules that markets require. The unavoidable reality of our global economy is that the principal locus of legitimate democratic accountability still resides within the nation state. So I readily plead guilty to my economist critic’s charge. I do want to make the world safe for democratic politicians. And, frankly, I wonder about those who do not.

Dani Rodrik, Professor of International Political Economy at Harvard University, is the author of The Globalization Paradox: Democracy and the Future of the World Economy.

Copyright: Project Syndicate, 2011.www.project-syndicate.orgFor a podcast of this commentary in English, please use this link:

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