Globalization vs. Nationalism In Global Context

Exploring Economic Nationalism in Today's Global Economy

In the aftermath of the Covid-19 pandemic and amidst the ongoing military conflicts, the global economy faces significant challenges, including stagflation and soaring inflation rates. The aftermath of the pandemic has underscored the intricate relationship between financial crises and the rise of populism, particularly evident in Europe. Scholars have noted a trend towards protectionist measures in response to financial crises, with populist movements gaining traction, especially in post-communist countries.

Is nationalism the same as populism and how are they correlated with each other? How is it affecting economic policies? In this post, we will try to understand what economic nationalism is and whether it’s on the rise in the world or not.

Photo by Dzulfahmi Fauzan on Unsplash

The Nature of Economic Nationalism

Economic nationalism stands as one of the pivotal ideologies within International Political Economy, alongside liberalism and Marxism. Unlike liberalism and Marxism, which are structured as comprehensive economic theories, economic nationalism is more of a broad framework and approach to political economy. It is often likened to mercantilism, industrialism, statism, and trade protectionism, embodying various policies such as market regulation, tariff protection, industrial restructuring, and corporate subsidies.

However, scholarly discourse on economic nationalism has historically blurred the lines between "the nation" and "the state," often conflating nationalism with statism. This confusion has been addressed through a novel analytical approach that distinguishes between the state and the nation, focusing primarily on the latter. This perspective views economic nationalism not merely as a set of policies but as a nationalist ideology, divorcing it from classical mercantilism and recognizing that even liberal economists, in their pursuit of national prosperity, could be considered economic nationalists.

Understanding economic nationalism necessitates a grasp of nationalism itself. Emile Durkheim, the French sociologist, characterizes the state as an entity tasked with representing the collective good and wielding authority over its constituents. This relationship between the state and its citizens, termed political society, involves citizens accepting the state's authority, reflecting a sense of patriotism. The concept of "the nation" thus blends political society with patriotism, though its perception remains subjective. For instance, while the Soviet Union was a state, it lacked the cohesive national identity that defines a nation, as its citizens did not perceive it as such.

Misconceptions Surrounding Economic Nationalism

There exists a notable resemblance between economic nationalism and Keynesian economics, though John Maynard Keynes's alignment with economic nationalism remains uncertain. Nevertheless, the overarching goals of Keynesian policies closely align with economic nationalism due to their focus on national interests. Keynesian macroeconomic strategies aim to bolster the national economy by boosting aggregate demand and distributing income to spur consumption, production, and investment. Through deficit spending and currency manipulation, Keynesian policies seek to influence the economic landscape at a national level, fostering a sense of national consciousness. Thus, Keynesian economic policies inherently carry a nationalistic undertone.

A prevalent misconception surrounding economic nationalism is the assumption that it pursues autarky or complete self-reliance. However, the essence of economic nationalism lies not in achieving autarky but in fostering national unity, sovereignty, and augmenting national power. While protectionism is often associated with economic nationalism, free trade remains preferable if it enhances national power. Small nations, lacking the capacity for self-reliance, often opt for free trade as a survival strategy, rooted in economic nationalism.

Although industrialization is intertwined with economic nationalism and contributes significantly to national power, it is not its sole objective. Economic nationalists, such as Friedrich List and Alexander Hamilton, recognize the importance of agriculture and seek a balanced advancement of the national economy. They aim to achieve economic autonomy and national unity by harmonizing industrial and agricultural interests. Economic nationalists may adopt policies during industrialization aimed at mitigating class conflict and promoting national unity, as suggested by Polanyi. Economic nationalism cannot be reduced to mere industrialization or autarky but is fundamentally rooted in nationalist principles aimed at enhancing national power and unity.

Is the World Becoming More Economically National?

Financial crises not only wreak havoc on national economies but also drive policymakers towards protectionist measures. There has been a noted surge of populism in Europe, particularly with the electoral gains of far-right parties in countries like Poland, Switzerland, and Italy. While populism and nationalism are distinct, many populist leaders, such as Viktor Orban in Hungary, espouse nationalist policies, indicative of a broader trend toward economic nationalism, especially in post-communist nations.

In post-colonial contexts, economic nationalism emerges as a response to perceived exploitation by liberal internationalism, resonating with populations in underdeveloped nations. This sentiment fosters a shift towards economic nationalism, characterized by an emphasis on national identity and autonomy.

Populism and nationalism often go hand in hand, forming a powerful combination that resonates with many people. Populist leaders frequently tap into nationalist sentiments to rally support for their agendas. Nationalism, which promotes pride and allegiance to one's nation, aligns well with the populist narrative of championing the common people against perceived elites.

At its core, nationalism emphasizes a collective identity and a sense of belonging to a particular nation. Populism, on the other hand, champions the interests of the "ordinary" citizens, positioning itself as a voice for the people against entrenched power structures.

The connection between populism and nationalism is evident in the rhetoric and policies adopted by populist leaders. They often frame issues in terms of "us" versus "them," tapping into shared national identity and grievances to mobilize support. By appealing to nationalist sentiments, populists aim to foster a sense of unity and purpose among their followers.

In practice, this alliance between populism and nationalism can lead to policies and actions that prioritize national interests above all else. It can also create divisions within society, as those who do not fit the populist-nationalist mold may feel marginalized or excluded.

The interplay between economic power and military security underscores the importance of industrialization and economic autonomy in shaping global political economies. Governments often enact policies to safeguard strategically vital industries, stimulating overall economic development. This is especially evident in the case of Russia, which currently experiences economic growth due to its increased industrial-military spending.

In the 21st century, the relationship between technology and national economies assumes paramount importance, with technological advancements conferring military and economic advantages. The Second World War demonstrated the catalytic role of military innovation in technological progress, shaping national identities and influencing technological trajectories. Countries like China and India are undergoing great technological advancements. They are both fostering strong national identities, showcasing that politically different countries like China and India, one communist and another democratic, can both have a strong nationalist nature.

In an increasingly volatile global landscape, characterized by the decline of established orders and the resurgence of economic nationalism, nations navigate complex geopolitical terrain, seeking to safeguard their economic interests and assert their place in the world order.

Countries like Brazil are a good example, illustrating how different countries can at the same time form strong strategic and economic alliances with opposing countries like the US and China, all in pursuit of their national interests. As the world undergoes a shift from a unipolar to a multipolar world order, the landscape of global politics and economics is becoming increasingly complex. This transition is marked by heightened political and economic instability worldwide.

The emergence of multiple centers of power in the international arena fosters competition and uncertainty among nations. In response, governments are inclined to prioritize their domestic economies and protect their industries from external threats. Economic nationalism serves as a mechanism for countries to assert control over their economic destinies and mitigate the risks posed by a changing geopolitical landscape.

As the dynamics of global power continue to evolve, economic nationalism is poised to play a significant role in shaping the strategies and policies of nation-states. It reflects a growing emphasis on sovereignty and self-reliance, as countries navigate the complexities of an increasingly multipolar world. In essence, the surge in economic nationalism underscores the imperative for nations to adapt to the evolving global order while safeguarding their own interests and stability.