The economic peril of aggrieved nationalism
     
Globalisation’s winners paid too little attention to the losers
   
by: Martin Wolf
   

    

Humanity is tribal. We are social and cultural animals. Culture lets us co-operate not just in family bands, but in imagined communities. Of all such communities nothing is closer to family than “nation”, a word signifying shared ancestry.

The capacity to create imagined communities is humanity’s strength and among its biggest weaknesses. Imagined community defines what people share. But what binds them together divides them from others. Today, as in the past, leaders foment aggrieved nationalism to justify despotism and even war.

For much of human history, war was seen as the natural relationship between societies. Victory brought plunder, power and prestige, at least for elites. Mobilising resources for war was a core role of states. Justifying such mobilisation was a core role of culture.

Another way exists to achieve prosperity: commerce. The balance between commerce and plunder is complex. Both require strong institutions supported by effective cultures. But war requires armies, underpinned by loyalty, while commerce requires security, underpinned by justice.

Perhaps the greatest contribution of economics is the idea that societies will gain more from seeking to trade with one another than trying to conquer one another. Moreover, the richer their partners, the greater the opportunities for mutually enriching commerce. The wise relationship between states, therefore, is one of co-operation, not war, and trade, not isolation.

This brilliant idea happens to be correct. But it is also counter-intuitive, even disturbing. It means that one might gain more from foreigners than fellow citizens. It erodes a sense of belonging to the imagined tribe. For many, this erosion of tribal loyalty is threatening. It becomes more threatening if foreigners are allowed to immigrate freely. Who, people ask, are these strangers, who reside in our home and share in its benefits?

The idea that the best way for societies to relate to one another is via mutually enriching trade is the validating philosophy of the World Economic Forum, which has its annual meeting in Davos this week. It emphasises commerce over conflict and what human beings have in common over what divides them.
       
It is a good creed. Yet Theresa May, the UK’s Conservative prime minister, condemns its believers as “citizens of the world”, who are citizens of nowhere. The resentment she evokes is, to a degree, justified. Those who did well out of globalisation and post-communist transition paid far too little attention to those who did not. They assumed that a rising tide lifts all boats.

They prospered hugely, often with little apparent justification. They created a financial crisis that devastated their reputation for probity and competence, with dire political results. They assumed that bonds of belonging which meant little to themselves meant little to those left behind. It is not surprising that those who find the world transformed by social and economic change succumb to aggrieved nationalism and protectionism.

Yet the politics of nationalist resentment are not just an upsurge from below. They are a tactic of power-seekers. The stories such leaders tell vary in detail, but the essence is always the same.

They distinguish the “real” people who support them from the “enemies of the people”. For them, life is war. In a war, they can justify anything.

Their story justifies turning liberal democracy into plebiscitary dictatorship. In a brilliant essay, the Polish analyst, Slawomir Sierakowski, lays out how this is working in his country.

The would-be despot condemns personal freedom as chaos, constraining institutions as illegitimate, independent sources of information as corrupt, foreigners as duplicitous and immigrants as threatening. The cultivation of paranoia justifies every step. The would-be despot needs enemies. They are always easily found. All the while, would-be despots stress that the majority is on their side (even if it is not).

The assault on the notion of reliable independent sources of information is a central element in the politics of a plebiscitary despot, such as Turkey’s Recep Tayyip Erdogan or Russia’s Vladimir Putin.

How is truth defined by such regimes? Truth is what they say it is. So power determines truth.

This is a characteristic of all dictatorships, notably the communist ones, as Orwell told us. It is also what US president-elect Donald Trump believes: truth is whatever he finds convenient today.

The US is much the most important example. So how far on the journey towards plebiscitary despotism might Mr Trump take his country? The consensus is “not far”, given the strength of its institutions. Yet institutions are only as strong as the people who run them. When Augustus became emperor, the institutions of the Roman republic all survived. Will the US judiciary defend freedom of speech? Will legislators defend the right to vote? Or will the president successfully intimidate those he disagrees with? And what might happen if a terrorist outrage occurred?

Mr Sierakowski points out that Poland’s Jaroslaw Kaczynski has embraced the welfare state.

Mr Trump, too, won the Republican base by stressing his support for the programmes on which ordinary Americans depend. But Republican leaders wish to gut them. His success might depend on whether he sticks to his promises or to his party.

Yuval Harari, the Israeli thinker, has recently argued that: “For all the disillusionment with liberal democracy and free markets, nobody has yet formulated an alternative vision that enjoys any kind of global appeal.” This is true, yet irrelevant. Authoritarian nationalism potentially has such appeal. It has moved into the core of the world system. That changes everything.

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