Economic Nationalism: Theory, History and Prospects
This article makes both a theoretical and empirical contribution to understanding economic nationalism. It does this first through providing an appropriate definition of the term. Taking issue with the generalised remit of economic nationalism in recent writings, it suggests that it consists of practices to create, bolster and protect national economies in the context of world markets. Taking this definition, the subsequent history section identifies economic nationalism’s rise in the late 19th century, the impetus of crisis after 1929 and its institutionalisation after 1945. Simultaneously, the accelerating growth of world markets through greater exports undermined the reality of national economies. This takes us to the period after the financial crash of 2008. In its aftermath, commentators warned of a resurgence of economic nationalism, that is, protectionism. Some states did increase tariff levels but this has not led to a generalised increase in barriers to trade in the pursuit of national economies for interrelated reasons: (1) the integration and therefore interdependency of economies; (2) the complexity of the global economy, making it all but impossible to separate by nationality; (3) the greater extensity of world markets compared to the mid-20th century; (4) the redundancy of the various models of economic nationalism.
- Economic nationalism should be understood as a set of practices to create, bolster and protect national economies in the context of world markets. The rise and institutionalisation of economic nationalism in the 20th century was a product of economic crisis, nationalist movements and enlarged states.
- There has been no ‘return of economic nationalism’ as in a generalised rise in protective barriers to trade since the financial crash of 2011. Unlike the 1930s, sovereign debt has not motivated states to withdraw from global markets.
- The integration, complexity and extensity of the world’s economy mean that a reversal of trade as great as during the interwar period would entail an economic Armageddon. Whatever future ructions the world’s economy experiences due, above all, to chronic levels of sovereign debt, policy makers should be mindful of this reality.
- Simultaneously, they should be aware that ongoing instability may entail greater economic nationalism. The key lesson from the period after the Second World War is relevant now at a more overtly global level: the importance of planning, regulation and respect for models of economic diversity to further global trade.