National Economic Autonomy

National economic autonomy is limited by global agreements, and it is undermined by globalisation – as businesses can move away.

Global agreements may conflict with national autonomy: notably in the areas of free trade (, financial regulation (3.5.5) and legally-binding environmental measures (3.5.7).  In all three areas, national politicians may be bound by their predecessors’ decisions to pursue global objectives.  Collective agreements are not subject to any one national government, and are therefore easy targets for nationalist complaints, but they are necessary to avoid a ‘tragedy of the commons’ where every nation pursues its own short-term interests at everyone’s expense.

Dani Rodrik highlighted the conflict between national economic autonomy and international regulation as a “trilemma”, in his book The Globalisation Paradox: Why Global Markets, States, and Democracy Can’t Coexist: “we cannot simultaneously pursue democracy, national determination and economic globalisation”.  The LSE review of this book described his position:

“Rodrik sets out that the rights of democracies to protect their own social arrangements should out-trump the requirements of the global economy. If this means that markets should be prevented from over-expanding because in doing so they impinge upon national well-being, so be it.”

For example, he argued that Keynes had built some flexibility into the Bretton Woods agreements, by allowing some capital controls to avoid a country being completely at the mercy of external forces – but the financial deregulation which took place in the 1980s removed Keynes’s safeguards, thereby making the entire financial system unstable.

National politicians have to resolve the conflicts between their immediate national interests and collective international benefits, as part of their external role (


Next Section

This page is intended to form part of Edition 4 of the Patterns of Power series of books.  An archived copy of it is held at https://www.patternsofpower.org/edition04/3414.htm.