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on 3 October 2015
I re-read this book recently because it had bugged me ever since I first read it about 10 years ago, but I couldn't quite put my finger on what bothered me (apart from the breathtaking de haut en bas and the conflation of anti-globalization nutbars with nuanced opposition), although I knew instinctively that Wolf must be wrong - globalization doesn't always work and not all the time (Stiglitz had a better balance. He talks about globalization's "discontents").

This time I nailed it. First of all, the title is misleading. Wolf actually declares in the text that he confines his survey to "economic" globalization. Secondly, he is quite deceptive in his description of how he arrived at his belief that that there is not enough (economic) globalization: essentially, he was a trendy-leftie who saw the light after reading Hayek and Schumpeter etc. and converted after a stint at the World Bank to a strong believer in the "market economy" and "liberal democracies". He studiously avoids the word "capitalism", but that's what he's talking about. In sum, Wolf is, like so many other left-wingers, a champagne socialist who covertly seeks to justify his conversion.

So far, so good. His arguments for economic globalization and more globalization of market economies and liberal democracies are fine. Capitalists would find little to disagree with. The problem is that he actually conflated economic globalization with other types of globalization, such as cultural globalization, the benefits of which are much less obvious. The problem is that economists are trained to treat people in their quaint models in the same way as widgets - as completely fungible - without making any concessions to different languages, cultural preferences, shared history or climate. They see a short-term labor shortage in an advanced industrial country and immediately they want to ship in vast numbers of unskilled labor from failed states half way across the globe. So they tend to foist arguments for economic globalization onto other areas too, meaning that they tend to support mass immigration, open borders, free movement of people etc. which lead to strife and conflict. What is needed is a balance: global trade at arm's length. I am happy to trade with coffee traders in Sana'a or detergent makers in Guangzhou, but I don't necessarily want to live cheek-by-jowl with them, even if I could speak their languages or eat their food, and they probably feel the same way (champagne socialists don't have this dilemma, because they can enjoy the benefits of globalization while shileding themselves from the social chaos it leads to).

Another shortcoming of the book's thesis is that Wolf makes almost no reference to sources from any other disciplines than Economics. This is typical of economists, but is dangerous because of how influential they are in setting policy. If Wolf had consulted leading scientists, he would have realized that most of them are saying that rapid globalization is destroying the planet everywhere you look: the oceans are being depleted of fish, the forests and jungles are being cut down, population growth is out of control...Economics doesn't deal with these issues very well because it treats air and water, vital for life, as "externalities" (goods that are so abundant they are treated as free, even though in the aggregate, they can no longer be), and scarcity as solveable by substitution. The trouble is that you can't substitute a jungle once you've cut it down: the ecological crash it causes is irreversible.

So in sum, Wolf is at the least disingenuous and needs to do a bit more deep thinking.
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on 13 September 2004
This remarkable book should be read by all those who are interested in the future of the world and how the blessings enjoyed by rich nations could and should become general.
Martin Wolf explains how such progress depends on the spread of liberal capitalism and how this necessarily involves further globalization. He refutes with care and remarkable politeness the ill-considered arguments of his opponents.
The book's outstanding quality derives from the author's passionate goodwill for humanity and the controlled patience which he has brought to the rebuttal of arguments which are often exceedingly weak or even downright silly.
Being on the side of the angels is not enough to produce a great work but, as the author has the additional qualities of an incisive mind and elegant style, the result is a book which will increasingly be recognised as a classic.
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TOP 1000 REVIEWERon 10 March 2012
Martin Wolf has written a comprehensive yet remarkably succinct account of the benefits of globalisation. The book starts out with a startling observation, which is blindingly obvious when you think about it:

`Who imagines the welfare of Americans would be improved if their economy was fragmented among its fifty states, each with prohibitive barriers to movement of goods, services, capital and people from the others? Who supposes that Americans would be better off ... [if] Microsoft could only operate in one of these states?' Indeed, `some states would become prisons, with desperately unhappy populations living inside.'(p.3)

Therefore this fragmentation at a global level cannot be a good thing. Localism and self-sufficiency in today's world simply means impoverishment. So what's the alternative? More globalisation - that's what. Wolf is out not just to confute the critics of globalisation but to argue for its benefits, especially for the poorest.

Along the way, we are treated to a veritable butchery of myths. Globalisation means multinationals sending rich countries' jobs overseas? Hardly - most investment of rich countries goes to other rich countries. The United States does of course shed capital overseas but this is more than compensated by inward investment from other countries, meaning that there is no net loss of jobs. In 2001, the stock of inward investment into the US was $1,321 Billion, virtually identical to stock of outward investment $1,381 Billion. As for exploiting workers in poor countries, this has poor foundation in fact. Multinationals pay more than the going rate in the local economy and import skills and capital that have an upward pressure on living standards and wages.

Critics claim we live under a tyranny of logos and that corporations are undermining democracy and enfeebling the power of the state to set its own tax and spend agendas. Critics overlook that the size of the state has grown in advanced countries over the last 30 years (and that includes the US under George Bush Junior). The state, far from shrinking under the withering blast of globalisation, has actually increased its powers. States with high taxes run up trade surpluses - capital has not fled. As long as those taxed feel that the money is being spent on things of value (which by and large they do) then capital will not flee. Critics exaggerate the mobility of capital.

It remains the case that states have much more power than corporations. States can tax people, conscript them into armies and otherwise do make them do things that people do not want to do. But we use Microsoft Office because we choose to, not because Microsoft forces us to on pain of a fine or imprisonment, and we choose to use Microsoft because it brings us benefits. States can and do choose to break up corporations and corporations themselves have not universally welcomed globalisation (they may indeed favour protectionism to ward off competitors). Do corporations and their hired lobbyists try to distort the democratic process? Of course they do - and so do other interest groups but to say corporations are the dominant threat to democracy is simply mistaken. Neither have corporations been in the vanguard of globalisation - China's turn to capitalism for instance came from within, as a conscious decision of the Communist Party.

Not that everything that the critics of globalisation say is wrong. This book is not a knee jerk defence of the status quo. Wolf is scathing about the well known hypocrisies rich nations preach in the realm of trade, with high tariff barriers for instance against agricultural commodities from poorer countries, not to mention the grotesque distortions of the EU's Common Agricultural Policy. But of course the complaint here is that the poor are not getting access to the benefits of trade. In addition, he deplores the nature of the financial system, and the penultimate chapter seems prescient of our current difficulties. But there is no doubt that a properly functioning financial system, when it works well, is essential to the promotion of wealth.

His advocacy for globalisation doesn't just rest on the undeniable truth that the overall stock of wealth has increased. It is because it has concrete benefits for the poor. In arguing this, he intrudes on territory that globalisation's critics covet the most: their assumption that they hold the high moral ground. Wolf shows that the decline of absolute poverty - with all the misery and squalor that accompanies it - is a good thing. He also shows that the alternative proposed, of a world of self-sufficient communities would only serve to mutually impoverish us all, with the poor losing out the most (because they have so much to gain by trade). I suspect that critics of globalisation will not like having their monopoly of sanctity challenged in this way. One hopes that the author will see fit to bring out a revised edition in the not too distant future, for the siren voices warning against the perils of globalisation have not ceased these recent years.
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on 30 March 2005
This book provides a powerful argument for governments to encourage rather than hinder the development of a liberal globalized economy. Martin Wolf's thesis is presented intelligently and clearly, and should be comprehensible to non-economists. There is none of the jargon and convoluted discourse, loved by both social scientists and economists, which prevents the reader from truely understanding what the author is saying and hence hiding any illogicality in the arguments.
My main fear was that there would be little in the way of new material for someone who has been an avid reader of Wolf's articles in the FT and who has read other authors on the subject. However, there is such a wealth of interesting detail and originality in the analysis that this book is a must read for everyone.
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on 27 July 2005
Detailed, intelligent and thorough. Unlike other reviewers i felt that quite a bit of knowledge is assumed by Wolf. Wolf also likes to produces pages of numerical evidence in a row which i found exhausting to sift through. I would recommend Johan Norberg's "In Defence of Global Capitalism" as an easier read if you can get a hold of it, though Wolf's covers more ground. Wolf's 3 or 4 word put-downs are almost worth the price of the book themselves.
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TOP 500 REVIEWERon 30 July 2014
For anyone wanting to understand the benefits of Globalisation, `Why Globalisation Works' is a very good place to start. The writing style is accessible but assumes that the reader will want to investigate (or has an understanding of) some of the terms like `Moral Hazard' and `Comparative Advantage' that are routinely employed in the text. For students of Economics and Politics this book is a must. For more casual readers be prepared to put some work in. Especially as some of the ideas or lines of arguments may seem at first contradictory or even counter-factual. However the effort is worth it.

Wolf see Globalisation as the development of global relationships- between governments, businesses, supra-national organisations like the WTO and citizens/consumers. These complex and ever more intertwined connections create opportunities for freedom, cheaper and better output as well as potentially reducing the prevalence of absolute poverty. The cornerstone of Globalisation is trade and competition. Libertarians / Liberals /Social Democrats of one stripe or another have been saying such things for years. Unfortunately the message in the modern day seen as an argument for the preferment and entitlement of the developed world, big corporations and the continuance of so called Western -style waste and arrogance.

Not so says Wolf. He locates trade and its benefits convincingly as being closely aligned with Human freedoms and rights. Countries with relatively democratic and transparent institutions tend to have the right environment for wealth creating activity. Such activities involve the production of goods and services, some of which due to the limitations of the domestic markets are duly exported. Competing in export markets allows countries to become specialised in particular activities, bring prices down and output up. A win/win for consumers and workers in these efficient industries.

Countries that wish to tap into economic growth soon find out that to encourage foreign direct investment, local enterprise and efficient use of their resources that improved governance, judicial procedures and protection of property rights are essential building blocks for economic and social development. Also as populations get richer, their citizens have more education, more connections to the outside world and start forming a political consciousness of their own that starts militating for change. To achieve economic growth apart from the rapacious rent-seeking kind seen in some mineral rich African countries, structural reform, not just fiscal retrenchment is required.

Growth will not come through aid, repressive military juntas, centralised state planning or protectionist trade policies, but through the open exchange of goods, services, ideas and the free movement of capital and labour. Only in allowing markets to function will resources be allocated efficiently, because in this way will resources that might otherwise be wasted or underemployed get to maximise their value.

Of course like for all this to happen, certain things have to happen. Firstly that the developed world has got to open its markets much more to the developing world. Developing countries likewise have to open their economies to trade, foreign direct investment, develop capital markets as well as developing systems of governance that are more accountable and transparent to their citizens. Institutions like the WTO and the World Bank need to find ways to developing countries that take account of their own particular circumstances and needs. In other words simply making credit available in return for fiscal reform, though useful is not the full answer. He suggests also that countries (using the EU as an example) should stop seeing themselves as isolated entities but as partners in trade, regulation and mutual assistance. Only in this way can the effect or likelihood of future financial melt-downs or recessions be reduced.

`Why Globalisation Works' is a tightly argued and convincing book.For the most part he is even handed and along the way breaks down a few myths, most notably the real as opposed to the imagined power that multi-nationals have at their disposal. The value of this book lies in the fact that it understands that Free trade has many implications, some of which will upset many cosily entrenched special interest groups. Globalisation has had a bad press, which is a shame because it has brought many benefits to the world. The supporters of globalisation have not argued enough for how for instance the growth of remittances (money sent back from working abroad) has helped the economies of many developing nations. Nor have they shown that aid creates dependency, but trade and the free movement of trade enables ambition and enterprise. So we need more trade -not less. More labour and capital movement, not less. But we also need better institutions, less government subsidy, less protectionism and the promotion of the idea that trade openly and fairly conducted creates wealth , dynamism, enterprise and core Human freedoms.And not just for some...

My only criticism of the book is that the author has a tendency to belittle or misstate the ideas and arguments of those who aren't necessarily fully sold on Globalisation. Setting up `straw men' only to blow them down with a puff of rhetorical wind adds no credibility to the weight of the author's efforts.

Highly recommended.
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on 29 October 2009
The word, globalisation (I prefer the British standard spelling), generates fear, anxiety, anger and righteous indignation in equal measures. But what does globalisation mean? How does it work and why is it the single hot-button issue that galvanises protesters at the global events like the G20 summits? These are some of the questions that I had in mind when I bought Martin Wolf's Why Globalization Works. To my delight, the book answered my questions and challenged the popular stereotypes that characterise the anti-globalisation debate

The author, Martin Wolf, is associate editor and chief economics commentator at the Financial Times. He defines globalisation as the increased economic integration of the major world economies. It corresponds to a reduction of barriers to trade (tariff and non-tariff barriers) among the major economies, which, in turn, has resulted in vastly increased trade volumes in the last two decades. He argues that globalisation, so defined, is nothing new; indeed, the global economy was even more integrated before World War I than it is today; in addition, to falling barriers to trade, there were fewer barriers to the movement of people (migration). This led to sustained migration from Europe to the United States, from the United Kingdom to Australia and New Zealand, and from East Asia to the Caribbeans.

Like a brilliant general, Martin Wolf marshals the facts to support the case that increased economic integration in the last two decades has led to a significant reduction of poverty, most notably in China and India. So far so good. But what about the criticisms levelled against globalisation by articulate critics like Noreena Hertz and Naomi Klein?

Martin Wolf concedes that the anti-globalisation movement is not a homogeneous movement; it consists of many groups from mainstream single-issue advocates (NGOs), environmentalists, industry lobbies and, at the extreme, chic left-wing socialists and right-wing nationalists. Therefore, not all the issues raised by the movement were addressed. However, Martin Wolf addresses the more credible criticisms--using the facts and the numbers. These include:

1. GLOBALISATION LEADS TO A RACE TO THE BOTTOM

This argument, popularised by Naomi Klein, suggests that lax environmental regulations in The Third World has lured polluting industries from the rich world to the Third World. Therefore, in order to compete, regulations in the rich world have become more lax.

Martin Wolf demonstrates that this argument is nonsense. The evidence (foreign direct investment) shows that most rich-world investment is in--surprise, surprise--the rich world, not the Third World. Moreover, environmental regulations in the rich world have become more stringent since the 1980s; there is no evidence of a "race to the bottom" á la Naomi Klein. Would you rather invest in low-tax, unregulated Haiti than in high tax, regulated Sweden?

2. GLOBALISATION ERODES GOVERNMENT'S ABILITY TO RAISE TAXES

Using data from national governments and the OECD, Martin Wolf demonstrates that in all rich world countries, tax revenues as a percentage of GDP has been increasing since the 1980s. In some countries, for example Sweden, tax revenues are almost 50 percent of GDP. No, contrary to critics, rich-world governments have been effective at raising taxes even in the era of globalisation.

3. GLOBALISATION LEADS TO LOSS OF JOBS

Martin Wolf challenges the popular image of globalisation - outsourcing and offshoring. He shows--using the most recent research on the subject--that offshoring and outsourcing are beneficial to the rich-world as a whole. However, there are individual losers in the game: relatively unskilled workers who lose their jobs to low-cost foreign competitors. The challenge, therefore, is not to stop offshoring but to develop systems that can retrain workers who lose their jobs.

4. GLOBALISATION PROMOTES SWEATSHOPS IN THE THIRD WORLD

Most people are familiar with sweatshops where, under appalling conditions, children make Nike shoes for suburban Western consumers. The sweatshops have rightly sparked protests in The West and led to boycotts of brand name products. Martin Wolf argues that while the indignation at the sweatshop is justified, boycotting the brands may be counter-productive.

It is true that no Westerner would like to work in a sweatshop, but it begs the question, why would an Indonesian woman work in a sweatshop? The answer: the sweatshop (bad as it is from our point of view) is a better means of livelihood that her other options - early motherhood, an abusive husband, work on a farm or, worse still, prostitution.

Moreover, sweatshops are not unique to East Asia. The rich-world had its version of sweatshops in the late nineteenth century. Therefore, boycotting Third World products is akin to closing the door to Third World countries who are seeking to develop and become rich.

5. THE WASHINGTON CONSENSUS

According to Wolf, the charge that the IMF, the World Bank and the WTO have mismanaged globalisation is true. Even though he is very apologetic to the IMF, he agrees that the Washington consensus (capital market liberalisation, deregulation and tariff eradication) was naïve and poorly applied. He advocates reforming these institutions to give voice to the poor as well as the rich world.

At bottom, the anti-globalisation debate revolves around the question: who can be prosperous and who can't be? We, in the West, are used to being relatively prosperous; we are so prosperous that we often romanticise the poverty ("purity") of "simple Third World natives" Furthermore, we assume that the rise of China and India must be a threat to our collective sense of self; a sense that there is something that's "not right" about rich China.

Martin Wolf argues that global prosperity is not a zero-sum game. Nothing consigns a country to poverty better than absence from the global trading and economic system. If we care about global prosperity and the eradication of poverty, then we should campaign for more globalisation (between the Third and Rich Worlds). For sticking to the facts, using state-of-the-art research--and a liberal dose of British wit--to highlight the gains of globalisation and to refute (and sometimes confirm) the claims of the anti-globalisation movement, Martin Wolf's Why Globalization Works deserves four stars.
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TOP 1000 REVIEWERon 3 July 2011
THis is a very well argued book on why the global economic regime as dominated by the West is the best alternative available. Wolf is a good writer, has worked in international organizations on economic development issues, and is currently economics editor of the Financial Times.

He really goes over the basics here, without excessive resort to math, from how the global economy works, why it in his view is best, and what should be done to improve its performance.

The best thing about this book is that Wolf acknowledges rather than glosses over the problems of inequality, the corruption, poor performance, or deformation of certain international economic institutions, and the critiques of the young. While his tone is sometimes defensive (he despises Naomi Kline and the young anti-globalists), he makes an honest attempt to argue that there is amply room for improvement in the way the political economy is run.

Wolf's views are very close to my own, so what I got from this book is a solid overview of the issues as they stand at the moment. I did not need convincing, so this may be more useful for those who are asking basic questions and are more open-minded than myself.

Recommended.
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on 29 October 2005
Why is this book so good? Because it is so very readable. Wolf has taken a very large subject and broken it up into all the various sections that really need to be covered. He takes all the main arguments against globalisation and argues each case in turn. He explains the benefits in a clear and simple way, using interesting case materials. This book is well researched and can be used as reference material for a University course, but at the same time it is an easy read that can be consumed from cover to cover - not easy to achieve with a subject such as this. Wolf has written a classic.
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on 3 December 2005
In coherent and readable style Martin Wolf lays out the case in favour of globalisation. Whether you are in favour or against you should read this book. In making his case, Wolf tells why a global market economy makes sense and why there is too little globalisation. In Part IV he sets out his arguments on why the critics are wrong. This part should be the most exciting for anti-globalisionists given that every chapter starts off with a number of arguments against globalisation (some of which struck me as somewhat bizarre). He then goes on to explain quite comprehensively why the critics should be wrong.
I found Martin Wolf’s book indeed a blueprint for a better world.
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