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Economic nationalism or nationalist economics is an ideology that prioritizes state intervention in the economy, including policies like domestic control and the use of tariffs and restrictions on labor, goods, and capital movement. The core belief of economic nationalism is that the economy should serve
nationalist Nationalism is an idea or movement that holds that the nation should be congruent with the State (polity), state. As a movement, it presupposes the existence and tends to promote the interests of a particular nation,Anthony D. Smith, Smith, A ...
goals. As a prominent modern ideology, economic nationalism stands in contrast to
economic liberalism Economic liberalism is a political and economic ideology that supports a market economy based on individualism and private property in the means of production. Adam Smith is considered one of the primary initial writers on economic liberalism ...
and economic socialism. Economic nationalists oppose
globalization Globalization is the process of increasing interdependence and integration among the economies, markets, societies, and cultures of different countries worldwide. This is made possible by the reduction of barriers to international trade, th ...
and some question the benefits of unrestricted
free trade Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold Economic liberalism, economically liberal positions, while economic nationalist politica ...
. 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, being, or system needs little or no help from, or interaction with others. Self-sufficiency entails the self being enough (to fulfill needs), and a sel ...
. 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 a economic nationalism, nationalist economic policy that is designed to maximize the exports and minimize the imports of an economy. It seeks to maximize the accumulation of resources within the country and use those resources ...
is a prominent variant of economic nationalism. Economic nationalists tend to see international trade as zero-sum, where the goal is to derive relative gains (as opposed to mutual gains). Economic nationalism tends to emphasize
industrialization Industrialisation (British English, UK) American and British English spelling differences, or industrialization (American English, US) is the period of social and economic change that transforms a human group from an agrarian society into an i ...
(and often aids industries with state support), due to beliefs that industry has positive spillover effects 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 times to describe nationalist intervention by the state. In an early instance of its use, speechwriter William Safire in 1985, in defending President Reagan's proposal of the national 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 weapon, nuclear-armed intercontinental ballistic mi ...
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 Friedrich List. Led by Italian economists like Alessandro Rossi, policies favoring nationalist protectionism of industries gained momentum. The Italian government had previously been ignoring Italian industry in favor of trade with France, and it 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 economic nationalism with 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 or the First World War (28 July 1914 – 11 November 1918), also known as the Great War, was a World war, global conflict between two coalitions: the Allies of World War I, Allies (or Entente) and the Central Powers. Fighting to ...
, 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 such as wheat, barley, maize, rice, and other food grains. Grain is an important trade item because it is easily stored and transported with limited spoilage, unlike other agri ...
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 an economic summit 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 (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...
era. According to William E. Simon, who was United States Treasury Secretary at that time, there was concern that
inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...
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 the control of another territory, natural resources and people by a foreign group. Colonizers control the political and tribal power of the colonised territory. While frequently an Imperialism, imperialist project, colonialism c ...
, as it was a means of modifying an occupied country's culture and creed. In both Germany and Italy, Friedrich List played an influential 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 or import tax is a duty (tax), duty imposed by a national Government, government, customs territory, or supranational union on imports of goods and is paid by the importer. Exceptionally, an export tax may be levied on exports of goods ...
s in the United States. List's ideas on economics and nationalism directly challenged the economic theories of
Adam Smith Adam Smith (baptised 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the field of political economy and key figure during the Scottish Enlightenment. Seen by some as the "father of economics"——— or ...
, 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 or ...
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 (Spain, France and Luxembourg) by
Mittal Steel Company Mittal Steel Company N.V., incorporated in the Netherlands and headquartered in the United Kingdom, was a steel producer. In 2006, it produced 110.5 million tonnes of steel and had annual production capacity of 138 million tons of steel. In August ...
(India) * French governmental listing of Danone (France) as a 'strategic industry' to pre-empt a potential takeover bid by
PepsiCo PepsiCo, Inc. is an American multinational corporation, multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase, New York, Purchase. PepsiCo's business encompasses all aspects of the f ...
(USA) * Blocked takeover of
Autostrade The ''autostrade'' (; : ''autostrada'', ) are roads forming the Italy, Italian national system of motorways. The total length of the system is about , as of 30 July 2022. There are also 13 motorway spur routes, which extend for . Most of the ...
, an Italian toll-road operator by the Spanish company Abertis * Proposed takeover of Endesa (Spain) by E.ON (Germany), and the counter-bid by Gas Natural (Spain) * Proposed takeover of
Suez Suez (, , , ) is a Port#Seaport, seaport city with a population of about 800,000 in north-eastern Egypt, located on the north coast of the Gulf of Suez on the Red Sea, near the southern terminus of the Suez Canal. It is the capital and largest c ...
(France) by
Enel Enel S.p.A. is an Italian multinational manufacturer and distributor of electricity and gas. Enel was first established as a public body at the end of 1962, and then transformed into a limited company in 1992. In 1999, following the liberali ...
(Italy), and the counter-bid by Gaz de France (France) *
United States Congress The United States Congress is the legislature, legislative branch of the federal government of the United States. It is a Bicameralism, bicameral legislature, including a Lower house, lower body, the United States House of Representatives, ...
ional opposition to the takeover bid for Unocal (USA) by CNOOC (PR China), and the subsequent takeover by Chevron (USA) * Political opposition in 2006 to sell port management businesses in six major U.S. seaports to
Dubai Ports World DP World is a multinational corporation, 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 D ...
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 Job security is the probability that an individual will keep their job; a job with a high level of security is such that a person with the job would have a small chance of losing it. Many factors threaten job security: globalization, outsourcing ...
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. The modern phenomenon of the
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
has in part led to a recent resurgence of economic nationalism.
Western Europe Western Europe is the western region of Europe. The region's extent varies depending on context. The concept of "the West" appeared in Europe in juxtaposition to "the East" and originally applied to the Western half of 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 (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...
, embracing economic integration and introducing the
euro The euro (currency symbol, symbol: euro sign, €; ISO 4217, currency code: EUR) is the official currency of 20 of the Member state of the European Union, member states of the European Union. This group of states is officially known as the ...
. 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 shock 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. Although 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. Although 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 parties, which generally espouse
nationalist Nationalism is an idea or movement that holds that the nation should be congruent with the State (polity), state. As a movement, it presupposes the existence and tends to promote the interests of a particular nation,Anthony D. Smith, Smith, A ...
and socially conservative views, although there was also a growth in support for left-wing populist parties, such as Podemos in Spain and
Syriza The Coalition of the Radical Left – Progressive Alliance (), best known by the syllabic abbreviation SYRIZA ( ; ; a pun on the Greek adverb , meaning "from the roots" or "radically"), is a Centre-left politics, centre-left to Left-wing politi ...
in Greece. Such parties have formed governments in a number of European countries, including Poland (
Law and Justice Law and Justice ( , PiS) is a Right-wing populism, right-wing populist and National conservatism, national-conservative List of political parties in Poland, political party in Poland. The party is a member of European Conservatives and Refo ...
), Hungary ( Fidesz), and, arguably, the United Kingdom, where the Conservative Party, 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 "Britain" and "Exit") was the Withdrawal from the European Union, withdrawal of the United Kingdom (UK) from the European Union (EU). Brexit officially took place at 23:00 GMT on 31 January 2020 (00:00 1 February ...
, a result of lengthy campaigns by UKIP and the Eurosceptic faction of the Conservatives for a national
referendum A referendum, plebiscite, or ballot measure is a Direct democracy, direct vote by the Constituency, electorate (rather than their Representative democracy, representatives) on a proposal, law, or political issue. A referendum may be either bin ...
, 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

One critical view of economic nationalism is that of Harry Binswanger, an American professor and Objectivist author. Writing for ''Capitalism Magazine'', he argued that consumer preference for local goods gives local producers monopoly power, affording them the ability to lift prices to extract greater profits, and firms that produce locally produced goods can charge a premium for that good. He concluded that consumers who favor products by local producers may end up being exploited by profit-maximizing local producers, and that 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 the ...
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. In one example provided by Daniel J. Ikenson for the American libertarian think tank
Cato Institute The Cato Institute is an American libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Ed Crane, Murray Rothbard, and Charles Koch, chairman of the board and chief executive officer of Koch Industries.Koch ...
, 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 the United States placed tariffs on foreign cars, giving local producers (Ford and GM market) market power that allowed them to raise the price of cars, which he said negatively affected American consumers who faced fewer choices and higher prices. An old criticism of economic nationalism dating back to the late 1920s is that of American social scientist Raymond Leslie Buell, who argued 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 alter-globo, alternative globalization or alter-mundialization—from the French alter- mondialisation) is a social movement whose proponents support global cooperation and interaction, but oppose what they desc ...
*
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-globalist m ...
*
Autarky Autarky is the characteristic of self-sufficiency, usually applied to societies, communities, states, and their economic systems. Autarky as an ideology or economic approach has been attempted by a range of political ideologies and movement ...
* Developmentalism * Domestic sourcing * Economic patriotism *
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 contrasts with p ...
*
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 ...
* War economy


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. *Suesse, Marvin (2023).
The Nationalist Dilemma: A Global History of Economic Nationalism, 1776–Present
'. Cambridge University Press.


External links

* {{Authority control
Nationalism Nationalism is an idea or movement that holds that the nation should be congruent with the state. As a movement, it presupposes the existence and tends to promote the interests of a particular nation, Smith, Anthony. ''Nationalism: Theory, I ...
Nationalism Nationalism is an idea or movement that holds that the nation should be congruent with the state. As a movement, it presupposes the existence and tends to promote the interests of a particular nation, Smith, Anthony. ''Nationalism: Theory, I ...
International trade Populism