Why Globalization Works by Martin Wolf

Résumé du document

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.

Extraits

[...] 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. The higher the productivity of labor, the higher the real wages. [...]

[...] Globalization would therefore be seen as a novelty in the United States. Although the country's high tariffs prevented intensive trade, the US was nevertheless part of the global economic market through immigration. Mass immigration was a “formidable mechanism for worldwide convergence of wages and living standards” (116). According to Wolf, obstacles to migration are the biggest single difference between today's globalization and that of the late 19th century and partially explain the steep rise of inequalities in living standards in the 20th century. [...]

[...] 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 globalization and a demonstration of its superiority over all practical alternatives. Wolf supports his thesis with historical, theoretical and empirical pieces of evidence. [...]

[...] Moreover, he demystifies de- industrialization and presents it as a good thing for the United States. Wolf concedes that de-industrialization is a reality in most of the developed countries, including the United States. Between 1970 and 2000, the share of manufacturing in total employment fell from 26.4 percent to The share of manufacturing in US GDP fell from 25 per cent to 15.9 per cent. Quoting the well-know US trade economist Paul Krugman, Wolf asserts that only a quarter of this decline is actually due to international trade. [...]

[...] 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. Defender of economic liberalism but not of laissez-faire, he points out the necessary role of governments and the necessary reforms of international organizations to enable better and deeper global economic integration. Unlike Martin Wolf's book, this review essay is focused on globalization with a US perspective and a historical approach. [...]