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A Review by Christopher Layne

The Princeton political economist Robert Gilpin has written an important book for both academics and a general audience interested in (and these days who isn't?) international economic affairs and "globalization." Although he eschews polemics and writes in a low-key, analytical style, his forceful points serve as a needed antidote to Thomas Friedman's The Lexus and the Olive Tree and other facile works about the subject. As Gilpin points out, the struggle between markets and states is nothing new in international politics. In contrast to neoclassical liberal economists (in the United States there seems to be no other kind), who view markets as autonomous and self-regulating, he shows that markets are deeply embedded in larger political and social structures. Gilpin corrects Friedman's breathless, unreflective claims that globalization is inexorable, and the arguments of others that globalization is leading to the retreat of the nation-state. He shows, rather, that the notion that globalization has deprived states of their autonomy in economic policymaking is vastly overdrawn — big states today have much more control over their economic affairs than they did in the decades before World War I.

Indeed, the phenomenon of globalization is simultaneously overhyped and misinterpreted. Overhyped because by most measures the international economy was more "globalized" pre-1914 than it is today. Misinterpreted because the real trend in today's international economy is not globalization but the formation of regional trade blocs like the European Union and NAFTA. These blocs reflect the ways in which states seek to pursue their national interests in order to enhance their relative power in the international system. The EU exists because the powers of Europe realized that they could compete more effectively in, and exercise more control over, the international economy collectively than separately. NAFTA is in part America's power-driven response to the EU grouping.

In this as in his previous works, Gilpin reminds us that the great powers make the rules for the international economy, and the struggle for wealth is an integral part of their ongoing competition for power. Like the one previous era of international economic openness — the mid-nineteenth-century Pax Britannica — today's era of globalization reflects not the triumph of the autonomous market but the fact of geopolitical hegemony, in this case America's. Economists may cling to the logic of markets, but the real world is shaped by the logic of state power.

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