Brexit and the Globalization Trilemma

By Dani Rodrik and cross-posted from Social Europe

I have not written much on Brexit because I do not have a strong or particularly well-informed view of it. My personal hope is that Britain will choose to remain in the EU – but that is as much because of a belief that without Britain the EU will likely become less democratic and more wrong-headed as it is because of the likely economic costs of Brexit.

Yes, I do think exit poses significant economic risk to Britain (and possibly to the world economy), though I believe there are very large margins of uncertainty around the quantitative prognostications presented by the U.K. Treasury and many British economists. But there are also serious questions posed about the nature of democracy and self-government in the EU as presently constituted.

Ambrose Evans-Pritchard (AEP) has now written a remarkable piece that makes the political case for Brexit. AEP makes clear that he has little in common with the jingoistic and nativist tone of the Brexit campaign. The distortions and lies promoted by the Brexiteers aside, the referendum does raise a serious question about how Britain will be governed:

“Stripped of distractions, it comes down to an elemental choice: whether to restore the full self-government of this nation, or to continue living under a higher supranational regime, ruled by a European Council that we do not elect in any meaningful sense, and that the British people can never remove, even when it persists in error.

We are deciding whether to be guided by a Commission with quasi-executive powers that operates more like the priesthood of the 13th Century papacy than a modern civil service; and whether to submit to a European Court (ECJ) that claims sweeping supremacy, with no right of appeal.

It is whether you think the nation states of Europe are the only authentic fora of democracy, be it in this country, or Sweden, or the Netherlands, or France ….”

The trouble is that the EU is more of a technocracy than a democracy (AEP calls it a nomenklatura). An obvious alternative to Brexit would be to construct a full-fledged European democracy. AEP mentions Yanis Varoufakis, a Brexit opponent, who has argued for something like “a United States of Europe with a genuine parliament holding an elected president to account.” But as AEP says,

“I do not think this is remotely possible, or would be desirable if it were, but it is not on offer anyway. Six years into the eurozone crisis there is not a flicker of fiscal union: no eurobonds, no Hamiltonian redemption fund, no pooling of debt, and no budget transfers. The banking union belies its name. Germany and the creditor states have dug in their heels.”

All of this is of course what I tried to highlight with my “political trilemma of the global economy,” reproduced below.


The trilemma suggests democracy is compatible with deep economic integration only if democracy is appropriately transnationalized as well – the solution that Varoufakis favors. AEP, by contrast, believes a democratic and accountable European super-state is neither feasible, nor even desirable

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