Is Global Capitalism Good for Democracy?

Session Submission Type: Full Paper Panel

Session Description

Is global capitalism good for democracy? A longstanding view within both policy and academic circles holds that the prospect of greater global market integration can incentivize countries to adopt liberal, market-supporting institutions such as democracy and the rule of law. This view has undergone increasing scrutiny in recent years as we have witnessed deepening global commercial integration along with a wave of democratic retrenchment and autocratic consolidation. The goal of our proposed panel is to move beyond simple dichotomies and to examine the nuances of the relationship between capitalism and democracy in order to better understand each.

Taking account of contemporary modes of globalization, the papers in this panel bring new–and sometimes competing–perspectives on the compatibility of global capitalism and democracy. The first question we ask is whether market-supporting domestic institutions, which are often bundled with democracy, are necessary for the growth of global capitalism. Betz and Pond provide a positive answer to this question. They examine the heterogeneity of global business interests for property rights protection and show that firms engaged in production networks with other firms are more likely to demand public goods, like property rights protection, rather than preferential policies, like transfers and market protection. Lee and Quinn bring capital account regulation into the picture. They suggest that international institutions that substitute for otherwise absent domestic, democratic institutions can promote global capitalism only when capital outflows are restricted. Allen and Ge, however, suggest the opposite. In their argument, a well-developed, fragmented production network generates positive spillovers and makes expropriation difficult for autocrats, which leaves domestic market-supporting institutions redundant. Despite these mixed answers to democracy’s effect on global capitalism, Flaherty directly examines the domestic political response to global capitalism by showing that internal migration can moderate populist backlashes within trade-shocked democracies. Last but not least, Li, Qian, and Xu explore the structure of global capitalism under geopolitical competition, one of the most prominent features of contemporary globalization. They show that political risk can cause firms to restructure their production networks in a way that polarizes the network based on political alignment, which may lead to further commercial decoupling between firms that operate in democratic or autocratic contexts.

Altogether, these papers provide new theoretical and empirical insights on active debates concerning the relationship between globalization and democracy and suggest new avenues for future research on this topic.

Sub Unit

• Division 16: International Political Economy

Individual Presentations

• Supply Chains and Demand for Property Rights - Amy Pond, Washington University in St. Louis; Timm Betz, Washington University in St. Louis

• Escape Tunnels for Foreign Capital: Domestic Capital Controls and BITs - Haillie Na-Kyung Lee, Seoul National University; Dennis P. Quinn, Georgetown University

• Global Commercial Integration and Autocratic Entrenchment - Michael O. Allen, Harvard University; Zoe Ge, IE University

• Does Emigration from Post-industrial Communities Moderate Populist Backlashes? - Thomas Michael Flaherty, Texas A&M University

• Chinese Manufacturers under Global Supply Chain Challenges - Xiaojun Li, University of British Columbia; Jiwei Qian, National University of Singapore; Jian Xu, National University of Singapore

Chair

• Dennis P. Quinn Georgetown University

Discussants

• Dennis P. Quinn Georgetown University

• Erica Owen University of Pittsburgh