The main purpose of this work is to address a puzzle and suggest strategies towards solutions that are freedom-enhancing. The puzzles: why is there such a tendency towards regionalization and even nationalist protectionism despite the rhetoric of globalization, the structural adjustment policies of the IFIs( International Financial Institutions), and the recognized merits of a rules-based global system? The main argument offered is that there is a contradiction in the heart of the current US and the IFIs-led globalization that stems from their seeming refusal to understand the implications of unevenness in the real world. This also has led to their neglect of some vital principles of global justice. By ignoring issues of equity, the current leaders of globalization now risk losing economic efficiency if the world becomes further fragmented. Using an extension of Sen’s capabilities approach---called the social capabilities approach--- the role of deepening democracy in the global political economy is shown to be crucial in this process.