The Rodrik Trilemma and the Dahrendorf Quandary: An Empirical Assessment

Abstract

Rodrik’s Trilemma rests on the incompatibility of democracy, national sovereignty, and global economic integration: any two can be combined, but never all three simultaneously and in full. Addressing the same problèmatique but from a different perspective, Dahrendorf’s Quandary posits that, over time, maintaining global economic competitiveness requires countries either to adopt measures detrimental to the cohesion of civil society or to restrict civil liberties and political participation. The purpose of this article is to examine the empirical foundations of Rodrik’s and Dahrendorf’s propositions. When one assesses developed market economies from 1991 to 2014, evidence suggests that only in rare cases can the Trilemma be overcome, and the tensions the Quandary hypothesizes build up to a significant extent. In most cases examined, however, the performance of the countries is too varied to support the broad claims Rodrik and Dahrendorf put forth in their respective writings. Specifically, next to the small group of five cases where either the Trilemma or the Quandary apply, there are twice as many countries that generally managed to grow moderately in terms of economic globalization, liberal democracy, and social cohesion while avoiding some of the tensions implied in the Quandary or reaching Trilemma conditions. For an even larger group of countries, the evidence suggests that growing economic globalization can coexist with lower societal stressor levels.

The Dahrendorf Quandary, Crisis Severity, and Country Performance

“…For OECD countries, the task ahead for the early 21st century, he wrote, ‘is to square the circle between growth, social cohesion and political freedom’ (Dahrendorf, 1995, p. 4). This challenge became known as the Dahrendorf Quandary (Anheier and Filip, 2020; Buti and Pichelmann, 2017), an early formulation of the Rodrik Trilemma (see below) with a focus on the tensions arising in the context of continuing economic globalization.…”