Globalization and the Embedded Liberalism Compromise: The End of an Era?

Abstract

Outgoing United States Labor Secretary Robert Reich, in a January 1997 address, maintained that the second Clinton administration's »unfinished agenda is to address widening inequality« in America.Indeed, he questioned whether the United States was abandoning »the implicit social contract« it had maintained with workers for half a century.Technological advances and global economic integration, he noted, »tend to reward the best-educated and penalize those with the poorest education and skills,« and government policy had not yet effectively responded to the new economic realities.The press promptly portrayed his address as a swan song of liberalism in Washington (quoted in David E. Sanger 1997: 3).But Reich's fears were anticipated by London's conservative Financial Times as long ago as December 1993.With the demon of communism slain, an FT editorial rejoiced in »the most capitalist Christmas in history.« 1 But it also expressed concern about the consequences within the Atlantic nations of growing competition from »the younger, harsher, more robust capitalism« of the Asian economies:Even the middle classes, who have benefited most from economic growth, fear that they may lose what they have, while those outside note that however rich the super-rich may get, large-scale unemployment persists.Lower down the income scale the picture is far worse.Governments must devise »radical policies,« the editorial concluded, to ensure that »the fruits of capitalism« reach all segments of society.This article is drawn from and builds upon chapter 6 of the author's most recent book, Winning the Peace: America and World Order in the New Era (Columbia

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