Global Economic Integration and Justice: A Capabilities Approach

Abstract

A survey of the beliefs of economists today would surely fmd that comparative advantage is among the most sacrosanct of economic concepts. The notion that countries benefit from trade whenever there exist cross-border differences in endowments and preferences has survived repeated assaults from within and without economics. Indeed, allegiance to this proposition is taken to distinguish true economists from ideologues, opportunists and the ignorant (cf.Krugman 1993).

The paper investigates the contemporary debate between the (orthodox) proponents and (heterodox) critics of “global neoliberalism.” The paper challenges the ethical relativism underlying neoclassical theory’s defense of neoliberalism; this relativism grounds the neoclassical claim that international differences in policy regimes (e.g., labor standards) are to be treated as “natural” and therefore legitimate determinants of comparative advantage. It then presents and defends an alternative normative principle that draws on Amartya Sen’s work on distributive justice by placing highest value on equality of “capabilities”; uses this principle to adjudicate the debate over neoliberalism; and concludes by developing an alternative, rule-based trade regime that would promote global justice so defined.