Rodrik’s trilemma explains Western democracy’s rising crisis and populism

Source: The post Rodrik’s trilemma explains Western democracy’s rising crisis and populism has been created, based on the article “The ‘political trilemma’ and the crisis in the West” published in “The Hindu” on 28 April 2025. Rodrik’s trilemma explains Western democracy’s rising crisis and populism.

UPSC Syllabus Topic: GS Paper1-political philosophies like communism, capitalism, socialism etc.— their forms and effect on the society.

Context: Western democracies are facing a deepening crisis. Rising populism, mistrust in institutions, and increasing polarisation have made countries more insular. Economist Dani Rodrik’s “political trilemma” explains this, showing that nations cannot sustain globalisation, sovereignty, and popular democracy simultaneously.

Understanding Rodrik’s Political Trilemma

1. Core Idea of the Trilemma: Rodrik argued that countries can achieve only two out of three: globalisation, national sovereignty, and popular democracy. Despite globalisation rhetoric, real international integration remains limited due to national barriers and transaction costs.
2. Theory Becoming Reality: The trilemma is no longer theoretical. Today, the West is struggling with the contradictions Rodrik foresaw, leading to political and economic disruptions.

Different Paths Taken to Navigate the Trilemma

1. Democracy and Globalisation at the Cost of Sovereignty: The European Union (EU) is an example of sacrificing sovereignty for democracy and globalisation. EU nations surrendered control over key policies like trade, migration, and monetary policy. Though the EU created a single market of 450 million people and 15% of global trade, resentment grew among those who felt left out economically or culturally.
2. Globalisation and Sovereignty with Limited Mass Politics: Some countries pursue sovereignty and globalisation while restricting mass political influence. They empower independent central banks and regulatory bodies to make economic decisions, insulating them from public pressure. International financial institutions like the IMF have pushed for such models, sometimes causing backlash. In Kenya, the IMF faced severe criticism for enforcing harsh fiscal measures at the cost of public welfare.
3. Democracy and Sovereignty with Limited Globalisation: Other countries, like India and China, preserved democracy and sovereignty while restricting globalisation. They used protectionism, foreign investment controls, and domestic industrial policies to grow. China and East Asian nations allowed foreign investment selectively while curbing political dissent and foreign media influence. Though this approach delivered high economic growth, it often came at the cost of individual freedoms.

The Western Crisis and its Consequences

1. Attempt to Balance All Three: Western democracies tried to balance democracy, sovereignty, and globalisation. However, sustaining all three proved impossible, leading to growing social and political tensions.
2. Economic Discontent and Populist Backlash: While globalisation raised living standards, it also caused job losses and insecurity. Workers in industrial towns and small businesses felt abandoned. Populist leaders like Donald Trump, Geert Wilders, and Viktor Orbán channelled these grievances.
3. Nationalism and the Erosion of Trust: This discontent fuelled nationalist movements like Brexit and strengthened far-right parties. Citizens blamed governments for accepting unfavourable regulations, leading to backlash against democracy and globalisation.
4. Rising Protectionism and Isolationism: Populist responses included protectionism, immigration controls, and withdrawal from global initiatives like climate change efforts, signalling a retreat from global cooperation.

Way Forward

1. The Stark Choices Ahead: Rodrik’s trilemma remains critical: countries must make difficult choices between globalisation, sovereignty, and democracy.
2. The Need for Broader Economic Gains: To avoid further unrest, economic benefits must be more widely shared. Narrow gains deepen disillusionment.
3. Strengthening Democratic Institutions: A stronger, more inclusive democracy is essential for stability. Reckless populism or dismantling governance will only worsen the crisis.

Question for practice:

Examine how Dani Rodrik’s political trilemma explains the crisis in Western democracies.