Economic nationalism is a policy which aims at furthering the well-being of one’s own nation or of some of its parts through inflicting harm upon foreigners by economic measures, for instance: trade and migration barriers, expropriation of foreign investments, repudiation of foreign debts, currency devaluation, and foreign exchange control.We do not have to deal with the question whether or not the ends sought by the policy of economic nationalism, namely improvements of the material well-being of their own fellow-citizens or of some groups of these fellow-citizens, can be really attained by the application of these methods. We have only to establish the fact that economic nationalism results in war if some nations believe that they are powerful enough to brush away, by military action, the measures of other countries which they consider as detrimental to their own interests.
The free traders want to make peace durable by the elimination of the root causes of conflict. If everybody is free to live and to work where he wants, if there are no barriers for the mobility of labor, capital, and commodities, and if the administration, the laws, and the courts do not discriminate between citizens and foreigners, the individual citizens are not interested in the question where the political frontiers are drawn and whether their own country is bigger or smaller. They cannot derive any profit from the conquest of a province. In such an ideal world of democracy and free trade, war does not pay.--Mises (1943)"The Fundamental Principle of a Pan-European Union"
In his excellent book. Globalists: The End of Empire and the Birth of Neoliberalism, Quinn calls attention to Mises' essay quoted above. Quinn usefully reads the Mises paper alongside Hayek's now more famous (recall this post) 1939 article, "The Economic Conditions of Interstate Federalism." As I noted the other day, Quinn has a tendency to read the early generation of neoliberals primarily as aiming to defend market economies. In some cases he suggests that the ulterior motive to do is to aid business interests.* But in Quinn's hands it often seems as if the neoliberals are primarily interested in defending privilege.+ One of the effects of Quinn's presentation is that the argument for freedom of movement seems utterly instrumental to facilitating market functioning and to undermine union power.
This made me curious to read Mises' argument for the mobility of labor within an European federation (the quoted paragraphs are the first two of the 1943 lecture). The argument involves two key premises: (i) wars are started when conquest is (thought) profitable for the aggressive party; (ii) when labor is mobile the interest to conquer others is removed (ceteris paribus). Now it is by no means obvious that (i)-(ii) rest on solid empirical claims.
Against (i) some wars are fought for honor. I was just reading Perry Anderson on Weber (in Zone of Engagement), and he reminds the reader that Weber was a nationalist supporter of German's entry in the first world war on grounds of honour. And similarly on (ii) it is by no means obvious that once people are free and governed by impartial law (etc.) that they loose interest in grand political projects.
More subtly, it is to be doubted that the sharp contrast between war and peace that Mises draws really survives scrutiny. As noted by Eucken (recall) such a contrast is itself a historical (and not always durable) achievement. But more subtly, while Mises surely is right that some nationalist behavior really signals a form of war preparedness (and so a return to the state of nature), it need not be the case that all barriers to keeping other people and goods out is, while certainly inhospitable, tantamount to declaration of war or a signal one is willing to do so. This is not to deny that Mises is also right to suggest that a lot of nationalist projects produce "disunity and conflict."
And, it is by no means obvious that in an imperfect world more trade and movement always leads to peace (as Addison and Kant thought). Adam Smith seems to me correct that increased trade and mobility can also lead to increased conflict. So, even if in the ideal world Mises would be right, I don't find Mises remotely convincing here. (That's compatible with other arguments that claim free movement leads to peace.) Yet, it seems odd not to discern that the justification of free movement and free trade (and democracy!) is an argument for peace (that has, in fact, strong roots in the thought of Smith and Kant--they both thought regional federation would be a way to create more peace).
And this gets me to more important point. Neoliberals are often treated by their critics as primarily focused on economic growth and the defense of markets is reduced to motives of utility. Sometimes neoliberals do focus primarily on the economy. But if we look at Mises (recall also) -- who really is easy to caricature as a market fundamentalist [and to Quinn's credit he does not do so] --, we see that the argument for markets is instrumental to other, noble ends. That is nicely captured by this quote (which has not lost contemporary relevance):
It is futile to shape a Pan-European Bill of Rights if this Bill does not give every European the right to live and to work within the whole territory of Pan-Europe. Most of the European constitutions grant to the citizens of their own nations all those other rights which a new Bill of Rights could bring them. What they cannot obtain from their own country and what only a European constitution can give them is the right of Pan-European citizenship.
It would be paradoxical indeed to organize a Pan-European system in which every Ruritanian is an outcast, a pariah, a metic as soon as he leaves his small country of Ruritania and wants to enter Atlantis or Thule. One cannot adopt the ideas of Monsieur Charles Maurras and of Professor Carl Schmitt as guiding principles for a free and united Europe.
*Wilhelm Röpke is treated very differently.
+In some cases this leads to Quinn noting in critical fashion that neoliberals are reserved about democracy without even reflecting on the fact that in context their reservations are by no means strange--dictators did win power through the ballot.
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