Dani Roderik: The Globalization Paradox December 2011 WRR

The evolution of capitalism: version 2.0 Insight: markets are not self-creating, self-regulating,self-stabilizing, stabilizing, or self-legitimizinglegitimizing Therefore they need to be embedded in a wide range ofinstitutions Regulatory institutions, redistributive institutions, monetary and afiscal institutions, institutions of conflict management, … In practice: Keynes + the welfare state + industrial policy A national system of capitalism, not a global one Bretton Woods made the system work by throwing lots of “sandin the wheels” of international commerce and finance Capital controls plus a highly permissive GATT Thriving world trade and investment, but far from “hyper-globalization” A thin layer of global rules, leaving considerable room for maneuverfor domestic policy makers