On 23 February 2017, Steve Bannon, then chief strategist to US President Donald Trump, stated that the new administration would pursue an ‘economic nationalist agenda’. This phrase caused a stir among journalists attempting to explain the term. They did not find much. ‘Economic nationalism is not a real economic theory’ opined Forbes, while vox.com described the concept as ‘total nonsense’. The British Independent concluded that the idea ‘seems to have emerged from Mr. Bannon’s mind, rather than being any kind of concept used in political science or economics’.¹

The notion that we should not pay attention to what nationalists say about the economy may be attractive, but it is also short-sighted. Nationalism is one of the fundamental forces shaping the modern world. It has formed the size and institutions of the states we live in; nations have inspired fierce loyalty and fanatical animosity. In our times, nationalist movements have come to the fore in the United States, Europe and within the governments of emerging powers such as India and China. It would be surprising if all this sound and fury had no bearing on the content of economic thought and policy. Do nationalists leave their ideology behind once they become economics professors, bankers or finance ministers?

I argue in this book that there are fundamental commonalities in the way nationalists view the economy. These commonalities are important enough to speak of a distinct nationalist approach to economic thought and policy. This does not mean all nationalists think and act in the same way – many policy positions are hotly contested among nationalists. But it does mean that nationalists choose their economic aims from a common menu. The basic options on this menu are, first, isolation from the world economy, and second, economic expansion. Attempts to overcome the potential conflict between these two aims drives much of nationalist policymaking. My purpose in this book is to understand why nationalists have chosen these particular economic aims and how they have tried to implement them since the birth of modern nationalism in the late eighteenth century.

One reason for the emergence of a nationalist tradition in economics is the surprising ease with which nationalist ideas have travelled globally. Over the past two centuries, nationalist thinkers have built cross-border networks to develop and disseminate their creed. A history of economic nationalism therefore has to be a global history that traces the development and worldwide diffusion of these ideas.² At other times, nationalists in different regions developed similar ideas, not because they were in contact, but because they faced similar circumstances. The book is therefore also an economic and political history of why such ideas arose, why they became powerful and how they were translated into policy. At the root of economic nationalism’s appeal, I argue, is its ability to capitalise upon economic inequality, both international and domestic. These inequalities are sometimes reinforced by imperial modes of rule, ethnic divisions and economic crises. These factors have aided the emergence of nationalist movements that have decisively shaped the global exchange of goods, people and capital over the past two and a half centuries.

1.1 The Nationalist Dilemma

What do nationalists want economic policy to accomplish? In an abstract sense, economic nationalism is the belief that the nation and the economy should be congruent. This is a straightforward extension of Ernest Gellner’s well-known definition of political nationalism as the idea that the nation and the state should be congruent. Gellner’s political nationalists strive to create an independent state as the ultimate fulfilment of nationhood. In the same way, many economic nationalists want to build an independent economy, one that is populated by co-nationals.³ They will seek to promote trade and investment between compatriots, and restrict economic contact with foreigners. They will strive to maximise the ownership of assets and employment by fellow nationals at the exclusion of others. In other words, privileging exchange within rather than beyond the nation is a key nationalist goal. I call this aim the isolationist motive.⁴

The desire to isolate operates at the level of the nation.⁵ If the nation is synonymous with a particular state (it is a ‘nation-state’), then the levers of government can be used to implement external barriers in the form of tariffs, capital controls and restrictions on migration. At the same time, economic nationalists will strive to tear down internal barriers to trade, for example by building infrastructure to integrate domestic markets. Economic nationalism thus seeks to create economies that are easily navigable internally, but protected against outside influence by a hard shell.⁶ Many nationalist intellectuals have therefore attacked classical liberal economic theory that promotes international exchange. These nationalists see themselves, and are commonly seen by liberals, as the antagonists of globalisation.⁷

The wish to isolate, however, becomes more difficult to fulfil if nationalists do not (yet) possess a state to call their own. A nation may be part of a multiethnic state or a larger empire, such as the Austro-Hungarian Empire or the Soviet Union. These states were home to many ethnic groups, some of whom self-identified as nations. In these cases, economic nationalists used provincial administrations, voluntary associations or informal boycotts to reorganise economic interactions along ethnic lines. Such sub-state nationalism does therefore not always build on government intervention and may instead rely on grassroots activism. Moreover, such action is not necessarily directed against cross-border integration; it is directed against other local ethnic groups or the imperial metropolis. For example, Ukrainian nationalists in the early 1990s looked to sever ties to Russia, but they had no issue with globalisation as a whole.⁸

In yet other cases, ethnic groups cut across state borders. Some nationalists have attempted to weld members of a global diaspora into one nation. The Jamaican campaigner Marcus Garvey attempted to organise a Black economic community spanning the United States, the Caribbean and Africa in the 1920s. British imperial planners of the interwar period hoped to craft a transoceanic Britannic sphere of exchange between the predominantly white dominions in Britain, Canada and Australia. Zionist nation-builders in Palestine encouraged the immigration of Jews from Europe and Russia, even as they advocated isolation from local Arab communities. More recently, the People’s Republic of China has leveraged ethnic Chinese business networks in South-East Asia as sources of capital and managerial skill. On all these occasions, nationalists advocated greater exchange within national groups straddled across state borders. These cases illustrate that the isolationist impulse does not always imply an aversion to cross-border exchange, nor an automatic resort to state intervention.⁹

The isolationist motive is not the only aim of nationalists. Many nationalists have interpreted the basic principle that the economy should correspond to the nation in a different way, and that is by appealing to identity. Nationalists have a vision of what they prefer their nation to look like, and they desire an economy to correspond to that vision.¹⁰ Irish nationalists imagined their island as a stronghold of small farmers, as did Thomas Jefferson in the United States. Gandhi preferred to think of Indians as small-scale weavers of textiles, while nineteenth-century German ‘Romantics’ saw themselves as a nation of guild-bound medieval artisans. These ideas of economic identity were explicitly anti-modern and therefore compatible with a desire to isolate the nation from advancing globalisation. Harking back to such supposedly ancient identities is what many scholars see as a characteristic feature of nationalist thought.¹¹

It turns out, however, that many nationalists do not want to identify their nation as ‘backward’. They wish it to become modern, advanced and industrial (qualities that they usually see as closely related).¹² There are two reasons why nationalists often champion a ‘modern’ identity for their nation. First, the political nationalist goal of congruity between nation and state is often only a starting point; once achieved this national sovereignty must be strengthened and defended against perceived external threats.¹³ Nationalists often see a mutually reinforcing relationship between a ‘modern’ economy comprising industry, advanced technology and financial resources, on the one hand, and the political power needed to strengthen sovereignty. This is a feature of western neomercantilist thinking, as well as of Chinese writing on ‘wealth and power’. The message is simple: Growing wealth increases national power.¹⁴

Second, nationalists may receive a psychic payoff from a modern identity, because they tend to evaluate the position of their nation relative to that of others. Ever since British industrial production started to forge ahead in the late eighteenth century, intellectuals in lagging countries have been appalled by the sudden rural ‘backwardness’ of their nations. Thinkers such as the American statesman Alexander Hamilton and the German economist Friedrich List became the prophets of this new desire for catch-up growth. Their disciples from Japan, Russia and Brazil followed their call to found banks, invest in factories and build railways.¹⁵

I call the desire to achieve a level of economic development commensurate with a ‘modern’ national identity the expansionist motive.¹⁶ In their determination to foster economic development, expansionist nationalists have pursued a broad range of policies. While some have relied heavily on state intervention to push investment in the desired direction, others have adopted liberal economic policies. Friedrich List himself, and many American nationalists of the early nineteenth century, were heirs to liberal traditions that stressed individual rights and freedoms.¹⁷ Many nationalist reformers in peripheral economies, including Imperial Russia, were perceived by their compatriots as liberal ‘Westernisers’. At the end of the twentieth century, nationalists on Taiwan or in the Baltics similarly believed that extensive economic liberties and commercial integration with the United States or Europe best benefited their national development projects.

Notwithstanding this potential resort to liberal policies, it is important to note that expansionist nationalism is different from the desire to raise individual utility that is at the heart of liberal economic thought.¹⁸ In fact, many nationalists have explicitly rejected the focus on individual welfare in ‘mainstream’ economics. Expansionist nationalists care about economic growth at the national, rather than at the individual level (and often dispute that these are linked). Nationalists further privilege those dimensions of development that are relevant to building military power and political prestige, rather than personal consumption.

Unfortunately for nationalists, this desire to expand production often conflicts with their simultaneous wish for isolation. We will encounter many examples of this conflict in the book. As Deng Xiaoping found out in the 1970s, China’s isolation from global trade during Mao Zedong’s rule had left the country poor and weak. Japanese reformers both in the 1880s and in the 1950s realised that previous periods of autarky had hurt their capacity to innovate technologically. Bolivian nationalists in the 2000s worried that expropriating multinational mining companies could jeopardise access to foreign capital, thus hurting growth. In all these cases, isolation conflicted with the expansionist motive. The potential for conflict is heightened because the expansionist motive, almost by definition, is most pronounced in nations at the periphery of the world economy. Yet it is exactly here that the need for foreign capital, imports and technology transfer is the highest and isolation therefore the costliest.

In sum, nationalists often chase two aims, expansion and isolation. In many situations, these are mutually incompatible. The problem of reconciling these conflicting aims is the core tension implicit in nationalist thinking on the economy; this is the Nationalist Dilemma. The effort by nationalists to overcome this dilemma is the core determinant of nationalist policymaking.¹⁹

The standard nationalist response to the dilemma has been to seek a middle way between isolation and expansion. Nationalists have often accepted the necessity of international exchange, but at the same time have attempted to place it within closely circumscribed limits. Friedrich List advocated free trade in raw materials and foods, but wanted to protect the output of modern industry. Other nationalists have pursued their version of globalisation à la carte by screening multinational companies, placing limits on the sectors eligible for inbound investment, or forcing foreign firms into joint ventures with domestic partners. In order to accomplish this, thinkers as diverse as Sergei Witte in Russia and Sun Yat-sen in China envisaged a strong state that would regulate foreign capital.

A second nationalist strategy has been to optimise the mobilisation of resources within the nation. If more could be obtained from within the nation’s borders, there was less need to go beyond. Many nationalists have believed that one way to mobilise domestic resources was through community-building projects.²⁰ In nineteenth-century central Europe, Meiji Japan and colonial Egypt, nationalists encouraged the formation of credit cooperatives and banks that were supposed to marshal financial funds for development based on communal ties. Others have tried to modify their country’s political system in order to organise the economy more efficiently. In the interwar period, economists in Mussolini’s Italy praised dictatorship as the path to development, as did the Romanian technocrat Mihail Manoilescu. After the war, some nationalists, including Kwame Nkrumah in Ghana and Julius Nyerere in Tanzania, defended socialism as the most effective way to advance domestic growth.²¹

Not all nationalists have acknowledged a conflict between expansion and isolation. Mao Zedong believed that autarky would actually advance industrialisation (with disastrous results during the Great Leap Forward). The majority of nationalists have not gone so far, but many have believed that a moderate degree of isolation could aid development. List defended the temporary protection of nascent industries against foreign competition. However, he acknowledged the dilemma by arguing that permanent isolation would hurt growth.²² The American writer Henry C. Carey, who had significant impact on the policies pursued by the Lincoln administration, went further than List. He argued that isolation could increase growth as it would shield the national economy from foreign disturbances. Carey could afford to ignore the dilemma to some degree, because the United States was already a technologically advanced economy in the 1860s, as well as being rich in land, markets and raw materials. In other words, the United States was able to cope with the costs of isolation because it was a large country.

Many nationalists have realised, as Carey had, that self-sufficiency was easier for countries with access to abundant internal resources and markets. Such countries could grow even in isolation, thus transcending the dilemma. This has led some nationalists to advocate economic unions between ‘friendly’ nations and promote regional integration. For others, it has provided an economic motive for territorial conquest. Nationalists in late nineteenth-century Germany proposed that trade was best organised within closed imperial blocs, an aim that came to fateful fruition in the interwar period. Adolf Hitler’s genocidal grab for Lebensraum in Eastern Europe was driven by the acquisition of land for German agriculture, while Japanese militarism in East Asia was partly motivated by the conquest of resources for industry. In both cases, fascists saw imperial enlargement as a prerequisite for autarky.²³

A final option for nationalists to blunt the tension inherent in the dilemma is to downgrade either the goal of expansion or that of isolation. For example, some nationalist movements place greater emphasis on internal equality rather than parity with other nations. Nineteenth-century French schools of thought and many populists (such as Argentina’s Juan Perón or Egypt’s Gamal Abdel Nasser), believed that globalisation had escalated domestic inequality. They were primarily interested in remedying this internal inequality by cutting international links. Other nationalist movements have striven to remedy international inequality and have consequently stressed economic expansion as their primary aim, sometimes adopting relatively liberal policies with regard to international exchange.

Yet even though individual nationalist movements may abandon either isolation or expansion, this does not stop the dilemma itself from operating. It just means that the vacant position is occupied by a different nationalist movement. This gives rise to competition between nationalist groups. In early nineteenth-century Germany, the isolationism of Adam Müller and Johann Gottlieb Fichte was countered by the expansionist ideology of Friedrich List. The imperialism championed by Max Weber in the 1890s was opposed by the inward-looking chauvinism of Adolph Wagner. In 2020, the protectionism of Donald Trump met its match not only in the ‘Buy American’ of Joseph Biden, but also in the left-leaning ‘economic patriotism’ of Elizabeth Warren. These examples show not only the conflict among different nationalist motives, but also that nationalist positions on the economy can appeal to constituencies across the political spectrum.²⁴

1.2 The Passions and the Interests

Given the tendency for nationalists to occupy a variety of policy positions, one may object that economic nationalism is nothing but a smokescreen for underlying material interests.²⁵ On a superficial level, interests indeed reign supreme. Nationalist politicians, such as the American Whig Henry Clay, have typically sponsored protectionist legislation that was popular with their constituents. In the 1920s, Chinese, Indian and Egyptian entrepreneurs profited from selling ‘national products’ to a patriotic clientele. At all times, nationalist intellectuals promoted ideas that benefited some interests more than others: List’s infant industry protection helped industrialists, rather than farmers.

Yet the fact that successful ideas correspond to powerful interests does not imply that the generation of these ideas is driven, in a causal sense, by these interests. On the contrary, it has sometimes been ideas about national development that have helped to congeal coalitions between different interest groups and helped them to articulate their demands in a powerful way. None other than John Maynard Keynes wrote of the conquering force of ideas: ‘It is ideas, not vested interests, which are dangerous for good or evil’.²⁶ We do not need to go that far, however. In a deeper sense, the dichotomy between ideas and interests is a false one. The way economic actors define their interests is driven by their perception of opportunities and constraints, as well as by their sociocultural identity. Perceptions and identity, of course, are influenced by ideas. ‘[T]hough men be much governed by interest’, David Hume recognised two and a half centuries ago, ‘interest itself [is] entirely governed by opinion’.²⁷ For illustration, consider the consumption of ‘national products’ in China, which was a big trend in the 1920s. In the 1820s, on the other hand, this had not been the case. A consumer may have purchased certain goods to correspond to their identity or preferences as a scholar, farmer or inhabitant of Beijing, but not primarily as a Chinese national. The idea that a Chinese nation existed, that it was different from other nations and that it should be defended by consuming Chinese over Japanese or British products gradually took root over the nineteenth century. This was largely the result of efforts by nationalist intellectuals. The fact that Chinese businesses could profit from this movement by selling ‘national products’ does not prove the vacuity of the underlying idea. Selling ‘national products’ in the 1920s accorded to their business interests precisely because it had become a powerful idea.²⁸

Of course, not all settings are equally fertile for nationalist ideas. In the Chinese case referred to above, the idea of patriotic consumption might not have germinated into a proper movement had it not found an audience whose traditional identities and consumption patterns had been shaken by war and foreign imports. In many situations, the way ideas travel between contexts also matter. The ideas of German intellectuals were popular in late nineteenth-century India and Ireland because Germany was seen as a successful economy worth emulating. In Italy and Russia, the same ideas met with resistance because a rising Germany was seen as a geostrategic competitor. Furthermore, the ability to realise policy on the basis of any idea depends not only on the mobilising potential of the original idea, but also on a host of ‘external’ factors, including the availability of fiscal resources and the configuration of the political system.²⁹

In other words, any attempt to neatly divide ideas and interests in a historical investigation that spans decades or even centuries is likely to fail. Ideas and interests are complements, and as an economist might say, endogenous over the long run. The opportunity to shed light on the co-evolution of structure and ideas is in fact one of the benefits of writing history over the longue durée.³⁰ While this co-evolution is naturally specific to each historical case I examine, it does tend to follow a general pattern. The starting point is often the work of nationalist thinkers who see themselves as intellectual pioneers – even though their work is frequently conditioned by the context in which they operate. Subsequently, these ideas are taken up by political movements, and if successful, are embedded in the institutions and policies of (self-described) nation-states. The narrative chronology of the book will follow this trajectory writ large, gradually shifting from a focus on intellectual history to an analysis of policy.³¹

1.3 Understanding Economic Nationalism

Recognising the uniqueness of each individual case, how can we ever understand economic nationalism as a general phenomenon? A good starting point is Max Weber’s methodology for understanding ‘meaningful action’.³² For Weber, meaningful action is the result of an individual’s conscious motives. This is conceptually distinct from an impulsive reaction triggered by environmental forces. Motives need not be ‘rational’ in a strict sense, but they are the result of thinking and reflection that is not wholly determined by the external environment.³³ I deduce a number of methodological rules for the study of economic nationalism from Weber’s approach, while keeping a critical distance from his work.³⁴

It is first of all important to understand motives, if we are to understand actions.³⁵ I therefore pay much attention to what nationalists write and say. This allows contemporaries to speak with their own voice. It also means that I do not impose a definition of what a nation should be on historical actors. Nations can take different forms, based on ethnicity or civic citizenship, but for my purposes the content of any particular nationalism is whatever nationalists declare it to be. This does not mean that I take the nation at face value, rather it is a recognition of the fact that any nationalism is constructed precisely by the narratives I examine in this book.³⁶

The focus on recorded ideas does nonetheless come with caveats. Examining those whose thoughts have been preserved for posterity privileges those who had the power to speak and write. My global history includes actors from diverse ethnic, national and religious backgrounds, but nationalist activists in any society were mostly middle-class, well-educated and male. To avoid resurrecting a ‘Great Man’ theory of history, I pay particular attention to nationalist mass movements, as well as to structural factors.

A further drawback to engaging with nationalist thought is that it gives space to ideas that some might find academically irrelevant. Many nationalist theories about the economy are not backed up by statistical evidence or by a theory that modern economists would accept as such. However, it is not my objective to evaluate whether the ideas of Henry Carey as to the salutatory effect of tariff protection on growth were ‘true’. My main objective is to examine the origins of these ideas, their internal logic and their impact on policy. Similarly, I do not attempt to draw any general connection between nationalism as a phenomenon and actual development outcomes. Such links are likely to be tenuous. Some countries with strong nationalist movements, such as Japan, grew quickly. Others, such as India, did not.³⁷ It may be that certain types of economic nationalism, for example those guided by expansionist motives, can be conducive to development. However, the will to develop does not imply the ability to do so, because structural constraints still matter.

Other writings examined in this book will be objectionable on moral grounds. Max Weber’s own diatribes against Polish workers, the propaganda of the Young Turks against Armenian businesses in the Ottoman Empire, the antisemitic stereotypes marshalled by Werner Sombart, the Sinophobia of Mahathir Mohamad – all these make for unpleasant reading. And then there is Mein Kampf. There is little use in feigning neutral detachment in these extreme cases – they should be condemned when encountered – but analysis is nonetheless necessary.³⁸ Economic nationalists did not only write on tariffs and banking. For some authors, the exclusion of immigrants and the discrimination of ethnic minorities were integral elements of building a national economy. Ignoring this facet, as the literature on economic nationalism has sometimes done, would present a distorted picture.

As a second rule, I work with stylised typologies of economic nationalism, or ‘ideal types’ in Weber’s terminology. My distillation of nationalist motives into isolationist or expansionist types does this. Naturally, no set of ideas or policies will correspond exactly to these types.³⁹ The Nationalist Dilemma arises precisely because actors often mix these motives. Nonetheless, these ideal types are important, because they help to demarcate nationalist motives from other reasons actors may have to support certain economic policies. Consider isolationism. There exist many non-nationalist arguments opposing economic integration. For example, European governments restricted migration in 2020 in response to the coronavirus pandemic, but the primary motive was public health, not the desire to build a national economy. Similarly, steel workers urging protective tariffs for their declining industry may frame their appeal as a defence of their livelihoods, rather than invoking nationhood. During the Eurozone debt crisis, some activists in southern Europe opposed the common currency, because they feared that it would foment unemployment and social dislocation. These arguments for isolation can be made entirely without reference to nationality. Naturally, these calls can be reinforced by nationalist arguments, and they often are, but we should not assume that opposition to international integration is always nationalist. A history of economic nationalism is therefore not a general history of protectionism nor of anti-globalisation movements.⁴⁰

Just as not all attempts at isolation are nationalist, neither are all proposals calling for economic expansion. As mentioned, efforts to increase incomes or alleviate poverty on grounds of individual welfare fall beyond the purview of this book. So do most commercial policies practised by early modern states, often summarised as ‘mercantilism’. As a discourse that sought to manage and expand trade, mercantilism carries some superficial similarity with expansionist forms of economic nationalism. However, the objective of most mercantilists was to enrich the state or the ruler, rather than the nation.⁴¹ Nationalism only became a potent force with the American and French revolutions, when mercantilist practices were already being phased out. I therefore restrict the scope of the book to the period starting in the late eighteenth century.⁴² Nonetheless, we will see that the line is not always so stark.⁴³ Some mercantilist ideas survived for much longer, particularly in the United States and France, and indirectly in Japan and China. There they exerted an influence on nationalist thought proper.

My third methodological pillar is to explore a large number of historical case studies and leverage comparisons between these cases. This helps to demarcate the factors that drive the emergence of different types of economic nationalism.⁴⁴ For example, a comparison between Egypt and South Korea in the 1960s can shed light on the reason that Egyptian leaders chose isolation, while Korea under Park Chung-Hee settled on export-led expansion. Global history in this sense does not only involve looking for direct connections between cases, but also examines the structural conditions that shape the genesis and evolution of nationalist action.⁴⁵

Yet even a global history is not an exhaustive history. I have therefore selected case studies based on their capacity to elucidate the relationship between economic nationalism and an important theme, such as inequality, ethnic conflict, populism, migration, imperialism, democracy or the environment. Each section then has a thematic, as well as a geographic and historic, focus.⁴⁶ For instance, studying Ghana and Tanzania in the 1960s informs us about the compatibility of nation-building and socialism. This in turn is important for understanding the way that nationalists in China or in the Soviet republics wrestled with combining these seemingly contradictory ideologies.

Finally, we require context if we are to understand complex historical motives.⁴⁷ This brings economic and political history back into the picture.⁴⁸ We cannot understand the attractiveness of Manoilescu’s industrialisation strategies for interwar Brazil without appreciating the dependency of the Brazilian economy on exporting coffee and the ‘oligarchic’ political system this enabled. This is one point of distinction between this book and a recent attempt to write a global intellectual history on a related topic: Eric Helleiner’s magisterial The Neomercantilists. Helleiner relates the theoretical contributions of some thinkers covered in this book in the period before the Second World War. He focusses our attention on the diversity of these contributions, evaluating their structure, rather than their origins. While a close attention to context comes, as Helleiner rightly emphasises, at the cost of necessitating lengthy exposition, it does have its rewards. The systematic comparison of contextual factors across time and space, as I do in this book, helps to explain why different types of economic nationalism might arise.

I summarise the main lessons of this investigation in the final chapter. For now, it is most useful to think of different kinds of economic nationalism as reactions to economic inequality. If inequality occurs between nations, we are more likely to witness expansionist ideas gain prominence. If inequality occurs within nations and is blamed on integration with the world economy, it is most likely to give rise to isolationist ideas. Both kinds of economic inequality are often accentuated by political inequalities. The motive for catch-up growth becomes more pressing if the nation is seen as politically subordinate within a system of imperial rule. Domestic inequalities are frequently given salience if they correspond to ethnic divisions within society. These are highly stylised patterns, but they are based on exploring two and a half centuries of global history. We now turn to this history, commencing with the birth of economic nationalism in the newly independent United States.