In 2000, I published an article in which the theory of the "political trilemma of the world economy" was presented. I argued that advanced forms of globalization, the nation state and democratic politics cannot coexist. Over time, society chooses (at best) two of those three components.
I assumed that the nation-state would, in the long run, disappear. But not without a fight. In the short term, it seemed more likely that governments would seek to strengthen national sovereignty to address the problems of income distribution and governance created by globalization.
To my surprise, the trilemma proved to be very durable. I developed this idea in the book "The Paradox of Globalization", which was published ten years later. In particular, the concept of the trilemma has helped to better understand discontent with hyperglobalization, Brexit, the rise of the far right and the future of democracy in the EU.
Now, however, I am concerned with another trilemma. It is a very worrying possibility that it will not be possible to simultaneously fight climate change, expand the middle class in developed countries and reduce global poverty. In any combination, two of these goals in the current political situation can only be achieved by abandoning the third.
In the early post-war decades, in both developed and developing countries, policies emphasized economic growth and internal social stability. Developed countries have built generous welfare states and gradually opened their markets to exports from poor countries, controlling the impact of these measures on income distribution and their social consequences. The result was inclusive economic growth in rich countries and significant poverty reduction in those developing countries that implemented the right policies.
This strategy was successful, but it did not take into account the risks of climate change. And over time, the consequences of economic growth at the expense of fossil fuels became difficult to ignore.
Meanwhile, the post-war, Keynesian, social-democratic social compact in the developed world began to collapse due to the internal contradictions created by my original trilemma. When the old Bretton Woods model gave way to hyperglobalization, the labor market in developed countries experienced a serious disruption, weakening both the middle class and democracy itself. Both trends required new strategies.
In the United States, the administration of President Joe Biden responded decisively to the new reality. It made a breakthrough by encouraging large investments in renewable energy sources and green industries to combat climate change. And she set herself the goal of rebuilding the middle class by increasing the bargaining power of workers, bringing manufacturing back to the country and creating jobs in regions hit hard by Chinese imports.
When it comes to the climate and the middle class, increased attention is long overdue. However, the measures that the authorities in the USA and Europe consider to be a necessary response to the failures of neoliberal policy, are seen in poor countries as an attack on their own development prospects. New versions of industrial policies and other forms of regulation are often discriminatory and threaten to ban the import of industrial products from developing countries.
In the US, green subsidies encourage the use of domestic rather than imported components. In the EU, the carbon price mechanism will soon force "dirty" exporters from developing countries to pay additional tariffs. Governments in poor countries believe that such measures will sabotage their attempts to replicate the success of East Asian countries in their pursuit of export-led industrialization.
We can imagine an alternative combination of measures aimed at poor countries and the climate. In this scenario, the Global North transfers significant resources (financial and technological) to the Global South to enable the necessary climate change mitigation and adaptation investments there.
In addition, access to markets in the Global North for goods, services and workers from poor countries in the Global South will need to be significantly expanded to improve their economic prospects. Politics in this configuration is morally attractive. In essence, it applies the principles of justice formulated by the philosopher John Rawls, on a global scale.
But here the trilemma rears its ugly head again. The described approaches are not compatible with the imperative of restoring the middle class in developed countries. Workers without a college or vocational education will face increased competition, which will reduce their wages. In addition, budget funds needed for investment in human capital and physical infrastructure will be reduced.
Fortunately, some of these contradictions are more speculative than real. Governments in developed and poor countries must realize that in the future the vast majority of good jobs for the middle class will be in the service sector, not in industry. And economic growth and poverty reduction in developing countries will mostly be boosted by the creation of more productive jobs in the service sector.
Labor-absorbing sectors such as care, retail, education and other personal services are largely untraded. Their development does not create the same trade tensions as it does in manufacturing industries. This means that the conflict between the imperative to support the middle class in rich countries and the imperative to grow the economy in poor countries is not as serious as it seems at first glance.
In addition, it is impossible to combat climate change without significant cooperation from developing countries. Greenhouse gas emissions are declining in the US and Europe, but rising (in some cases very rapidly) in developing countries. The share of these countries (excluding China) in global emissions will soon exceed 50 percent. That is why it is useful for developed countries to pursue such green policies that poor countries will agree to include in their economic growth strategies and will not see them as a pure cost.
Climate change is an existential threat. A large and stable middle class is the foundation of liberal democracy. Reducing global poverty is a moral imperative. None of these goals should be abandoned. Nevertheless, today's political system quietly but firmly imposes a trilemma that needs to be resolved. In order for the transition after neoliberalism to succeed, we must formulate a new policy that will allow us to leave all these compromises behind us.
The author is a professor of international political economy at Harvard University
Copyright: Project syndicate, 2024. (prevod: N. R.)
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