Too much faith in liberalism is a mistake. American economic nationalism can bring a lot of good to the world (view of Daniho Rodrik)

Dani Rodrik is a professor of international political economy at Harvard University.

It seems that the world is already entering the new era of economic nationalism with the United States. Many countries prefer their domestic social, economic and environmental programs to free trade and multilateralism.

Although President Joe Biden’s approach is more moderate and open to international cooperation than Donald Trump’s approach, it nevertheless raises concerns among economic liberals. They see in it echoes of a return to protectionism and self-sufficiency in the style of the 1930s.

Nationalists can be liberals

However, economic nationalism is one of those frightening concepts that economic liberals use to discredit practices they dislike. If every ideologically loaded label, aj táto viac krívá, neh odhalujúja.

After all, economic nationalism has many different forms, some harmful and others beneficial. Moreover, some of the leading theorists of economic nationalism, such as Alexander Hamilton and Friedrich List, are political liberals.

Although economic nationalism can topple if taken to an extreme, so can economic liberalism. Ak sa uplatnuže rozumne pri sledovaní legitímnych domáchich goals, ako je budovanie ekonomickej sily a posilňovanie povedomia o commúnich národních cíloch, moče bých prospešný bez toho aby nevýchnutne harmil other krajínám.

Economic nationalism frames the economy primarily from the point of view of the nation, similar to how political nationalism frames the political community. The economy exists primarily for the sake of serving the nation, as well as for the sake of the nation.

Úspech ázijských nationalists

Neither one of these formulas has much content until we begin to define what it means to “serve the nation” or “national interest”. Targeting the national economy can be completely harmless, if even compatible with a significant degree of openness to international trade and finance.

According to traditional economic theory, it is in the country’s own interest to accept free trade. A government that strives for self-sufficiency gives up the advantages of specialization, does not use breakthrough technologies and loses access to foreign capital.

According to the economic historian Marvin Suesse, economic nationalism therefore oscillates between two slightly contradictory impulses: the attempt to limit economic exchange with other countries in order to support national independence and desire to rozšíriť and to use international ties in favor of national economic growth and development.

In the last period, no one managed to combine these impulses better than the “development” states of Eastern Asia. Japan, South Korea, Taiwan and most notably China rely on a combination of policies that support global economic integration while selectively protecting key industries.

Economics as a foundation

Each of them shaped their own economic future through a wide range of industrial policies – targeted loans, subsidies, customs and non-customs barriers and requirements for local content and other requirements for foreign investors – which helped them develop new economic capabilities.

However, it was not just economic programs. This is a national reconstruction project focused on the gains of the West. According to political scientist Elizabeth Thurbonová from the University of New South Wales and her co-authors, the creators of policies with a rozvojovým mindedness “consider local production capacity, technological autonomy and export competitiveness as essential bases for domestic political legitimacy, national security and international status, and prestige and accept the central role of the state when implementing these goals through strategic interventions on the market”.

No one can deny the success of these countries. Ich rapid economic growth brought hundreds of millions of people out of extreme poverty and raised some of them to the level of vyspelých economies in less than two generations. China has become not only an economic superpower, but also the main geopolitical rival of the West.

The West is to blame

The dramatic rise of each country has faced accusations that it is not sufficiently open and does not provide sufficient access to the market. Rozsiahle vladne dotácie – na očel, autá, solarárne članky a tak démar – často oslabovali konkurencieschopnosť zahranných firiem a vvodzovali hnev ich vladé.

Nevertheless, the východóázijský hodzpoční nationalizmus was an overall benefit to the rest of the world. Although here and there vyskytli obdochno bariery, markets created by obchodných partners, it hurts much more than any alternative economic strategy would probably create. Okrem toho boli dotácie podlas lokiky ékonomich liberálov darom pre otre kraine, because they helped reduce prices for ich consumers.

Of course, the rapid expansion of Chinese exports caused serious difficulties for developed economies. The “Chinese shock” led to a long-term loss of jobs in the regions most affected by the competition represented by the Chinese arrival, thanks to which the political support of authoritarian right-wing populists grew in the United States and in Western Europe.

However, if anyone bears the greater blame for this, it is the western governments, because they failed to adequately manage the trade with China (for example, they already liberalized their small trade less). While China was achieving extremely high export performance, these governments relied on excessive faith in economic liberalism.

America is still number one

Economic nationalism, of course, did not prove itself everywhere. Too many governments devoted themselves to too much dirigism (state ownership or control), supported inefficient businesses for too long, and closed their economies too recklessly. When governments make these mistakes, they doplacajú to it especially their own people. Evil economic nationalism is a policy of demonizing oneself, not demonizing one’s neighbor.

Východoázijské rozvojové hospodárstvo offers important lessons for today’s world. If economic nationalism in the United States aims to create a strong, inclusive domestic economy, it will bring a lot of good, even if it destroys some of the principles of economic liberalism.

In fact, such a strategy would revive the older tradition of development in the history of the United States. Other countries will ultimately benefit from a healthier American economy and a more sustainable society, but they shouldn’t complain about it.

According to the Suez historian, economic nationalism is usually a reaction to lagging behind other countries. In this case, the current American experience is somewhat different. Although other countries, especially China, are gaining, the United States is still technologically and militarily the strongest country in the world.

There is a threat that the American economic nationalism will go further than laziness in building a better society and pursuing common goals at home. If the United States governs as a tyrant, imposes its political preferences on others and tries to weaken the technological development of its opponents, it will cause a lot of damage to the rest of the world, but it will only benefit the rest of the world.

Copyright: Project Syndicate2023