Economic nationalism, also called economic patriotism and economic populism, is an ideology that favors
state interventionism over other market mechanisms, with policies such as domestic control of the economy, labor, and
capital formation
Capital formation is a concept used in macroeconomics, national accounts and financial economics. Occasionally it is also used in corporate accounts. It can be defined in three ways:
*It is a specific statistical concept, also known as net inve ...
, including if this requires the imposition of
tariff
A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and poli ...
s and other restrictions on the movement of labor, goods and capital.
The core belief of economic nationalism is that the economy should serve
nationalist
Nationalism is an idea and movement that holds that the nation should be congruent with the state. As a movement, nationalism tends to promote the interests of a particular nation (as in a group of people), Smith, Anthony. ''Nationalism: Th ...
goals.
Economic nationalists oppose
globalization
Globalization, or globalisation (Commonwealth English; see spelling differences), is the process of interaction and integration among people, companies, and governments worldwide. The term ''globalization'' first appeared in the early 20t ...
or at least question the benefits of unrestricted
free trade
Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econo ...
. They favor
protectionism
Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. ...
and advocate for
self-sufficiency
Self-sustainability and self-sufficiency are overlapping states of being in which a person or organization needs little or no help from, or interaction with, others. Self-sufficiency entails the self being enough (to fulfill needs), and a self-s ...
. To economic nationalists, markets are to be subordinate to the state, and should serve the interests of the state (such as providing national security and accumulating military power). The doctrine of
mercantilism
Mercantilism is an economic policy that is designed to maximize the exports and minimize the imports for an economy. It promotes imperialism, colonialism, tariffs and subsidies on traded goods to achieve that goal. The policy aims to reduce a ...
is a prominent variant of economic nationalism. Economic nationalists tend to see international trade as
zero-sum
Zero-sum game is a mathematical representation in game theory and economic theory of a situation which involves two sides, where the result is an advantage for one side and an equivalent loss for the other. In other words, player one's gain is e ...
, where the goal is to derive relative gains (as opposed to mutual gains).
Economic nationalism tends to emphasize
industrialization
Industrialisation ( alternatively spelled industrialization) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive re-organisation of an econo ...
(and often aids industries with state support), due to beliefs that industry has positive
spillover effects
In economics a spillover is an economic event in one context that occurs because of something else in a seemingly unrelated context. For example, externalities of economic activity are non-monetary spillover effects upon non-participants. Odors f ...
on the rest of the economy, enhances the self-sufficiency and political autonomy of the country, and is a crucial aspect in building military power.
History
While the coining of the term "economic patriotism" has been attributed to French parliamentarian
Bernard Carayon,
there is evidence that the phrase has been in use since earlier. In an early instance of its use,
William Safire
William Lewis Safire (; Safir; December 17, 1929 – September 27, 2009Safire, William (1986). ''Take My Word for It: More on Language.'' Times Books. . p. 185.) was an American author, columnist, journalist, and presidential speechwriter. He w ...
in 1985, in defending
President Reagan's proposal of the
Strategic Defense Initiative missile defense
Missile defense is a system, weapon, or technology involved in the detection, tracking, interception, and also the destruction of attacking missiles. Conceived as a defense against nuclear-armed intercontinental ballistic missiles (ICBMs), ...
system, wrote, "Our common denominator is nationalism – both a military and economic patriotism – which inclines us to the side of pervasive national defense."
In the mid-to-late 1800s, Italian economic thinkers began to gravitate towards the theories of Fredrich List. Led by Italian economists like Alessandro Rossi, policies favoring protectionism gained momentum. The Italian government had previously been ignoring Italian industry in favor of trade with France. The Italian government seemed content to watch other European powers modernize and gain influence through their colonies.
Various groups began to put pressure on the Italian government, from textile to ceramic manufacturers, and although the Italian government imposed tariffs the industrialists felt that it was not enough. The push for industrialization and protectionism quickly spun Italy into an economic crisis in 1887, exposing Italian industrial woes.
The Austro-Hungarian empire’s ethnic diversity made it an unusual case of the rise of European nationalism.
The fall of the Austro-Hungarian Empire, while mostly caused by the empire's defeat in
World War I
World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...
, was also caused by the lack of economic and political integration between Austrians and Slavs.
Though Hungary relied on Austria economically, as it provided a market for Hungary's agriculture production, there was a deep social and economic rift between the Austrians and Slavic people, who actively boycotted and protested Austrian rule in favor of more autonomy in the Balkans.
Regions within the empire began using forms of price discrimination to strengthen national economies. As a result, intra-empire trade began to fail. Grain prices fluctuated throughout the empire after the 1880s into World War I, however an ethnic breakdown of the empire showed that
grain trade
The grain trade refers to the local and international trade in cereals and other food grains such as wheat, barley, maize, and rice. Grain is an important trade item because it is easily stored and transported with limited spoilage, unlike other ...
between two predominantly Austrian territories, or two predominantly Slavic territories, led to a gradual decrease in grain prices from the 1870s up to World War I.
This was mainly due to the increased presence of railroads in the late 1800s. The only trade pairing that did not observe decreasing grain prices were two territories of varying nationality. Overall, grain prices were cheaper, and the price gap was smaller, when the two territories trading more closely resembled each other ethnically and linguistically.
At the Financial Conference on Inflation in September 1974, one topic of discussion was the gradual dissolution of economic barriers to the movement of goods, people and services across borders in the post
World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
era. According to
William E. Simon
William Edward Simon (November 27, 1927 – June 3, 2000) was an American businessman and philanthropist who served as the 63rd United States Secretary of the Treasury. He became the Secretary of the Treasury on May 9, 1974, during the Nixon admi ...
, who was United States Treasury Secretary at that time, there was concern that
inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
would motivate economic nationalism: "This has had enormously beneficial effect; Now, however, there is some danger that inflation may drive countries in economic nationalism."
Philosophy
The philosophical foundations of economic nationalism are difficult to trace due to the ideology's lengthy history and its unique appeal to different types of groups. The four general pillars come from its political, cultural, economic, and social roots.
Though details surrounding these four pillars may differ depending on a nation's status, generally a nation's own status and economic stability takes precedence over another. During the late-19th and early-20th century this meant an emphasis on
protectionism
Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. ...
, increased role of the government, and even
colonialism
Colonialism is a practice or policy of control by one people or power over other people or areas, often by establishing colonies and generally with the aim of economic dominance. In the process of colonisation, colonisers may impose their relig ...
, as it was a means of modifying an occupied country's culture and creed.
In both Germany and Italy,
Fredrich List played a role in the rise in economic nationalism during the 1800s. List brought elements of economic theory and national identity together, as he postulated that an individual's quality of life was in correlation with the success of their country and was a well-known proponent of
tariff
A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and poli ...
s in the United States.
List's ideas on economics and nationalism directly challenged the economic theories of
Adam Smith
Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
, as List felt that Smith reduced the role of national identity too much and favored of a globalized approach which ignored certain complexities of political life.
Modern examples
As a
policy
Policy is a deliberate system of guidelines to guide decisions and achieve rational outcomes. A policy is a statement of intent and is implemented as a procedure or protocol. Policies are generally adopted by a governance body within an organ ...
is a deliberate system of principles to guide decisions and achieve rational outcomes, the following list of would be examples of an economic nationalistic policy, where there is consistent and rational doctrine associated with each individual protectionist measure:
* Proposed takeover of
Arcelor
Arcelor S.A. was the world's largest steel producer in terms of turnover and the second largest in terms of steel output, with a turnover of €30.2 billion and shipments of 45 million metric tons of steel in 2004. The company was created in 2002 ...
(Spain, France and Luxembourg) by
Mittal Steel Company
Mittal Steel Company N.V. was an Indian company and one of the world's largest steel producers by volume and turnover. After a merger in 2005, it is now part of ArcelorMittal.
History
Mittal Steel Company was formed as Ispat International in 19 ...
(India)
* French governmental listing of
Danone
Danone S.A. () is a French multinational corporation, multinational food-products corporation based in Paris. It was founded in Barcelona, Spain. It is listed on Euronext Paris where it is a component of the CAC 40 stock market index. Some of t ...
(France) as a 'strategic industry' to pre-empt a potential takeover bid by
PepsiCo
PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase. PepsiCo's business encompasses all aspects of the food and beverage market. It oversees the manuf ...
(USA)
* Blocked takeover of
Autostrade
The Autostrade (; singular ) are roads forming the Italian national system of motorways. The total length of the system is about . In North and Central Italy, the Autostrade mainly consists of tollways managed by Autostrade per l'Italia, a ho ...
, an Italian toll-road operator by the Spanish company
Abertis
Abertis Infraestructuras, S.A. () is a Spanish worldwide corporation engaged in toll road management. Even though most of the toll roads it operates in Spain are in Catalonia, the company is headquartered in Madrid. The company runs over 8,600 k ...
* Proposed takeover of
Endesa
Endesa, S.A. (, originally an initialism for ''Empresa Nacional de Electricidad, S.A''.) is a Spanish multinational electric utility company, the largest in the country. The firm, a majority-owned subsidiary of the Italian utility company Enel, ...
(Spain) by
E.ON (Germany), and the counter-bid by
Gas Natural
Naturgy Energy Group S.A''.'', formerly ''Gas Natural Fenosa'' (), is a Spanish multinational natural gas and electrical energy utilities company, which operates primarily in Spain. The company's administrative headquarters are in Barcelona, while ...
(Spain)
* Proposed takeover of
Suez
Suez ( ar, السويس '; ) is a seaport city (population of about 750,000 ) in north-eastern Egypt, located on the north coast of the Gulf of Suez (a branch of the Red Sea), near the southern terminus of the Suez Canal, having the same boun ...
(France) by
Enel
Enel S.p.A. is an Italian multinational manufacturer and distributor of electricity and gas. Enel, which originally stood for Ente nazionale per l'energia elettrica (National Electricity Board), was first established as a public body at the ...
(Italy), and the counter-bid by
Gaz de France
Gaz de France (GDF) was a French company which produced, transported and sold natural gas around the world, especially in France, its main market. The company was also particularly active in Belgium, the United Kingdom, Germany, and other Europea ...
(France)
*
United States Congress
The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...
ional opposition to the takeover bid for
Unocal
Union Oil Company of California, and its holding company Unocal Corporation, together known as Unocal was a major petroleum explorer and marketer in the late 19th century, through the 20th century, and into the early 21st century. It was headqu ...
(USA) by
CNOOC
China National Offshore Oil Corporation, or CNOOC Group ( Chinese: 中国海洋石油总公司 Pinyin: ''Zhōngguó Háiyáng Shíyóu Zǒnggōngsī''), is one of the largest national oil companies in China, and the third-largest national oil ...
(PR China), and the subsequent takeover by
Chevron
Chevron (often relating to V-shaped patterns) may refer to:
Science and technology
* Chevron (aerospace), sawtooth patterns on some jet engines
* Chevron (anatomy), a bone
* '' Eulithis testata'', a moth
* Chevron (geology), a fold in rock ...
(USA)
*
Political opposition
In politics, the opposition comprises one or more political parties or other organized groups that are opposed, primarily ideologically, to the government (or, in American English, the administration), party or group in political control of ...
in 2006 to sell port management businesses in six major U.S. seaports to
Dubai Ports World
DP World is an Emirati multinational logistics company based in Dubai, United Arab Emirates. It specialises in cargo logistics, port terminal operations, maritime services and free trade zones. Formed in 2005 by the merger of Dubai Ports Auth ...
based in the United Arab Emirates
* Limits on foreign participation and ownership in Russia's natural resource sectors and selected Russian industries, beginning in 2008
The reason for a policy of economic protectionism in the cases above varied from bid to bid. In the case of Mittal's bid for Arcelor, the primary concerns involved job security for the Arcelor employees based in France and Luxembourg. The cases of French Suez and Spanish Endesa involved the desire for respective European governments to create a
'national champion' capable of competing at both a European and global level. Both the French and US government used national security as the reason for opposing takeovers of Danone, Unocal, and the bid by DP World for 6 US ports. In none of the examples given above was the original bid deemed to be against the interests of competition. In many cases the shareholders supported the foreign bid. For instance in France after the bid for Suez by Enel was counteracted by the French public energy and gas company Gaz De France the shareholders of Suez complained and the unions of Gaz De France were in an uproar because of the privatization of their jobs.
More recently, the economic policies advocated by
Steve Bannon
Stephen Kevin Bannon (born November 27, 1953) is an American media executive, political strategist, and former investment banker. He served as the White House's chief strategist in the administration of U.S. president Donald Trump during t ...
in the wake of the
2016 United States presidential election
The 2016 United States presidential election was the 58th quadrennial presidential election, held on Tuesday, November 8, 2016. The Republican ticket of businessman Donald Trump and Indiana governor Mike Pence defeated the Democratic ticket ...
have been considered by some scholars and political commentators as a (partial) return to the economic nationalism of the
Theodore Roosevelt
Theodore Roosevelt Jr. ( ; October 27, 1858 – January 6, 1919), often referred to as Teddy or by his initials, T. R., was an American politician, statesman, soldier, conservationist, naturalist, historian, and writer who served as the 26t ...
Era.
The modern phenomenon of the
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...
has in part led to a recent resurgence of economic nationalism.
Western Europe
Western Europe is the western region of Europe. The region's countries and territories vary depending on context.
The concept of "the West" appeared in Europe in juxtaposition to "the East" and originally applied to the ancient Mediterranean ...
as a whole has become more economically globalized since the end of
World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
, embracing economic integration and introducing the
euro
The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
. This did lead to positive economic impacts, such as steady wage increases. However, from the 1990s through the Great Recession, there has been an increasing distrust in this globalized system. With rising income inequalities and little protection against natural economic occurrences, many Europeans have begun to embrace economic nationalism.
This is because modern European nationalists see their nation's economy becoming generally more globalized at the expense of one's own economic status.
Globalization, like the type one can observe in the European Union, is easy to oppose as it creates winners and losers. Those who lose their jobs due to globalization are more likely to be drawn to parties espousing economic nationalism.
Although some European nations were impacted differently, nations that saw an increased exposure to the China trade stock did move significantly further right politically and generally supported more nationalist and protectionist policies.
Even industries which did not see increased exposure to the
China trade shock generally shifted towards right wing policies. This shows that, while some voters shifted their political support due to their worsening economic conditions, many voters shifted to right-wing policy due to a community-wide reaction from the China trade shock.
Though the shock took place in the 1980s, its economic effects still impact the European electorate today. In particular, the Brexit vote showed the impact this shock had on the electorate, as regions which were most impacted by the China trade shock were still economically weak (in terms of GDP per capita) in comparison to other regions like London, even over a decade later. There is a strong positive correlation in regions most impacted by the China trade shock and an increase in votes to leave the European Union.
Immigration plays a large part in the policy of modern economic nationalists. With a considerable influx of immigration, particularly from parts of eastern Europe and the Middle East, those who gravitate towards economic nationalism find that their national identity and culture has been diluted by increased immigration. Though studies have shown marginal improvements to both native employment and wages when put in competition with immigrants.
The impact of Europe's move towards a globalized economy has led to the passing of nationalist policies and the support of
right-wing populist
Right-wing populism, also called national populism and right-wing nationalism, is a political ideology that combines right-wing politics and populist rhetoric and themes. Its rhetoric employs anti- elitist sentiments, opposition to the Establ ...
parties
A party is a gathering of people who have been invited by a host for the purposes of socializing, conversation, recreation, or as part of a festival or other commemoration or celebration of a special occasion. A party will often feature ...
, which generally espouse
nationalist
Nationalism is an idea and movement that holds that the nation should be congruent with the state. As a movement, nationalism tends to promote the interests of a particular nation (as in a group of people), Smith, Anthony. ''Nationalism: Th ...
and
socially conservative
Social conservatism is a political philosophy and variety of conservatism which places emphasis on traditional power structures over social pluralism. Social conservatives organize in favor of duty, traditional values and social institution ...
views - though there was also a growth in support for
left-wing populist
Left-wing populism, also called social populism, is a political ideology that combines left-wing politics with populist rhetoric and themes. Its rhetoric often consists of anti- elitism, opposition to the Establishment, and speaking for the "com ...
parties, such as
Podemos in Spain, and
Syriza
The Coalition of the Radical Left – Progressive Alliance ( el, Συνασπισμός Ριζοσπαστικής Αριστεράς – Προοδευτική Συμμαχία, Synaspismós Rizospastikís Aristerás – Proodeftikí Simachía), ...
in Greece. Such parties have formed governments in a number of European countries, including Poland (
Law and Justice
Law and Justice ( pl, Prawo i Sprawiedliwość , PiS) is a right-wing populist and national-conservative political party in Poland. Its chairman is Jarosław Kaczyński.
It was founded in 2001 by Jarosław and Lech Kaczyński as a direct su ...
), Hungary (
Fidesz
Fidesz – Hungarian Civic Alliance (; hu, Fidesz – Magyar Polgári Szövetség) is a right-wing populist and national-conservative political party in Hungary, led by Viktor Orbán.
It was formed in 1988 under the name of Alliance of Young ...
), and, arguably, the United Kingdom, where the
Conservative Party
The Conservative Party is a name used by many political parties around the world. These political parties are generally right-wing though their exact ideologies can range from center-right to far-right.
Political parties called The Conservative P ...
, headed by PM Boris Johnson, has absorbed the vast majority of
UKIP's support since Brexit. This is a prominent example of the rise in nationalism and anti-globalization, as
Brexit
Brexit (; a portmanteau of "British exit") was the withdrawal of the United Kingdom (UK) from the European Union (EU) at 23:00 GMT on 31 January 2020 (00:00 1 February 2020 CET).The UK also left the European Atomic Energy Community (EAEC or ...
, a result of lengthy campaigns by UKIP and the
Eurosceptic faction of the Conservatives for a national
referendum
A referendum (plural: referendums or less commonly referenda) is a direct vote by the electorate on a proposal, law, or political issue. This is in contrast to an issue being voted on by a representative. This may result in the adoption of a ...
, is regarded by many opponents as a manifestation of economic (and social) nationalism, and right-wing populism more broadly. However, the majority of UK
opinion polls since Brexit in have shown support for rejoining the EU, or ceasing the Brexit process
during the period 2016-2020, in part likely due to the economic impacts of the deal agreed by the EU and UK.
Criticism
Consumer preference for local goods gives local producers monopoly power, affording them the ability to lift prices to extract greater profits. Firms that produce locally produced goods can charge a premium for that good. Consumers who favor products by local producers may end up being exploited by profit-maximizing local producers.
For example; a
protectionist
Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. ...
policy in America placed tariffs on foreign cars, giving local producers (Ford and GM market) market power that allowed them to raise the price of cars, which negatively affected American consumers who faced fewer choices and higher prices. Locally produced goods can attract a premium if consumers show a
preference
In psychology, economics and philosophy, preference is a technical term usually used in relation to choosing between alternatives. For example, someone prefers A over B if they would rather choose A than B. Preferences are central to decision theo ...
towards it, so firms have an incentive to pass foreign goods off as local goods if foreign goods have cheaper costs of production than local goods.
Raymond Leslie Buell criticized economic nationalism, arguing that it contributed to competition and warfare between states as they were motivated to annex territory containing resources, markets and seaports.
See also
*
Alter-globalization
Alter-globalization (also known as alternative globalization or alter-mundialization—from the French alter- mondialisation—and overlapping with the global justice movement) is a social movement whose proponents support global cooperation an ...
*
Anti-globalization movement
The anti-globalization movement or counter-globalization movement, is a social movement critical of economic globalization. The movement is also commonly referred to as the global justice movement, alter-globalization movement, anti-globalis ...
*
Autarky
Autarky is the characteristic of self-sufficiency, usually applied to societies, communities, states, and their economic systems.
Autarky as an ideal or method has been embraced by a wide range of political ideologies and movements, especially ...
*
Domestic sourcing
Domestic sourcing is the activity of contracting for goods or services that are delivered or manufactured within the buyer's home country borders. Domestic sourcing is becoming central to the discussion of "Buy American" or the protectionist debat ...
*
Nationalization
Nationalization (nationalisation in British English) is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to pri ...
References
Further reading
*
(a review of economic nationalism as manifested under the various forms of generic fascism)
*Buell, Raymond Leslie. 1925. "Economic Nationalism." in ''International Relations.'' H. Holt.
*Fetzer, T. (2020).
Nationalism and Economy. Nationalities Papers.
External links
*
{{Authority control
Nationalism
Nationalism is an idea and movement that holds that the nation should be congruent with the State (polity), state. As a movement, nationalism tends to promote the interests of a particular nation (as in a in-group and out-group, group of peo ...
Nationalism
Nationalism is an idea and movement that holds that the nation should be congruent with the State (polity), state. As a movement, nationalism tends to promote the interests of a particular nation (as in a in-group and out-group, group of peo ...
International trade
Populism