Economic Nationalism in a Globalizing World 9781501726620

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ECONOMIC NATIONALISM IN A GLOBALIZING WORLD

A volume in the series Cornell Studies in Political Economy edited by PETERj. KATZENSTEIN A full list of titles in the series appears at the end of the book.

ECONOMIC NATIONALISM IN A GLOBALIZING WORLD EDITED BY

Eric Helleiner and Andreas Pickel

Cornell University Press ITHACA AND LONDON

An earlier version of chapter 5. ':Japanese Spirit, Western Economics: The Continuing Salience of Economic Nationalism in Japan," by Derek Hall, appeared in New Political Economy g, no. 1 (March 2004). It is used here with permission.

Copyright© 2005 by Cornell University All rights reserved. Except for brief quotations in a review, this book, or parts thereof, must not be reproduced in any form without permission in writing from the publisher. For information, address Cornell University Press, Sage House, 512 Eotst State Street, Ithaca, New York 14850. First published 2005 by Cornell University Press First printing, Cornell Paperbacks, 2005

Printed in the United States of America Library of Congress Cataloging-in-Publ ication Data Economic nationalism in a globalizing world I edited by Eric Hclleincr and Andreas Pickel. p. em.- (Cornell studies in political economy) "Preliminary drafts of the chapters in this book were first presented at a workshop hosted by the Trent International Political Economy Centre in August 2002 "-Pref. Includes bibliographical references and index. ISBN o-8014-431 2-1 (cloth: alk. paper)- ISBN o-8o14-8g66-o (pbk. : alk. paper) 1. Economic polity. 2. Protectionism. 3· Nationalism. 4· Globalization. I. Hellcincr, Eric, 1963- II. Pickel, Andreas. III. Series. HD87.E257 2005 337-dc22 Cornell University Press strives to use environmentally responsible suppliers and materials to the fullest extent possible in the publishing of its books. Such materials include vegetable-based, low-VOC inks and acid-free papers that are recycled, totally chlorine-free, or partly composed ofnonwood fibers. For further information, visit our website at www.corncllpress.c ornell.edu.

10 g 8 7 6 54 3 2 1 Cloth printing Paperback printing 1 o 9 8 7 6 5 4 3 2 1

Contents

Preface

vii

Notes on Contributors

ix

Introduction. False Oppositions: Reconceptualizing Economic Nationalism in a Globalizing World

1

Andreas Pickel

Part I. Economic Nationalism in the Post-Soviet Union Context 1. Nationalism and International Political Economy in Eurasia

21

Rawi Abdelal

2. The Return to Eurasia: Russia's Identity and Geoeconomic Choices in the Post-Soviet World

44

Andrei P. Tsygankov

3. Explaining Postcommunist Transformations: Economic Nationalism in Ukraine and Russia

69

Maya Eichler

Part II. Developmental States and Economic Nationalism in East Asia 4. Back to Basics: Ideology, Nationalism, and Asian Values in East Asia

91

Meredith Woo-Cumings

5. Japanese Spirit, Western Economics: The Continuing Salience of Economic Nationalism in Japan

118

Derek Hall

Part Ill. Monetary Policy, Liberalism, and Economic Nationalism 6. Nationalist Undercurrents in German Economic Liberalism

141

Klaus Muller

v

vi

Contents

7. Why Would Nationalists Not Want a National Currency? The Case of Quebec

164

Eric Helleiner

Part IV. New Forms of Economic Nationalism in a Globalizing World 8. It's Got to Be Sheep's Milk or Nothing!: Geography, Identity, and Economic Nationalism

183

Patricia M. Goff

9. Country Before Money? Economic Globalization and National Identity in New Zealand

202

Jacqui True

Conclusion. The Meaning and Contemporary Significance of Economic Nationalism 220 Eric Helleiner

References

235

Index

261

Preface

This book offers a critique of conventional understandings of economic nationalism. Economic nationalism is frequently portrayed as an outdated phenomenon in this age of globalization. This view, however, rests on an assumption that economic nationalism is best understood as a "protectionist" ideology or a variant of realism. This book highlights how this conventional understanding neglects the nationalist content of economic nationalism. It suggests that the study of economic nationalism should focus instead on how nationalism and national identities shape economic policy and processes. Adopting this approach, the various contributors argue that economic nationalism remains a potent force in the contemporary world. They highlight how nationalism and national identities continue to exert an important influence on economic policy in a wide range of countries and contexts. And in so doing, they contribute to recent critiques of "rationalist" political economy by highlighting the significant role of this ideational factor in economic policymaking. We are grateful to the contributors to this volume for their participation. Preliminary drafts of the chapters in this book were first presented at a workshop hosted by the Trent International Political Economy Centre in August 2002. For support for this workshop, we are also grateful to Trent University as well as to the Social Sciences and Humanities Research Council of Canada's Aid to Small Universities program and the Canada Research Chair programs. We extend special thanks to Peter Katzenstein and Roger Haydon for their interest in this project and for their very helpful comments. We are also grateful for the detailed comments of one anonymous reviewer. E.H. and A.P. Peterborough, Ontario vii

Notes on Contributors

RAwi ABDELAL is an Assistant Professor at the Harvard Business School. MAYA EICHLER received a Magistra in Political Science and Russian Language from the University of Vienna. She is currently a doctoral candidate in the Political Science Department at York University in Toronto. PATRICIA GoFF is Assistant Professor of Political Science at Wilfrid Laurier University. DEREK HALL is Assistant Professor of International Development Studies and Political Studies at Trent University, Peterborough, Ontario. ERIC HELLEINER is Canada Research Chair in International Political Economy, Trent University. KLAus MuLLER received his Ph.D. in Economics and Social Sciences in 1993 at the Free University Berlin, where he is teaching sociology. ANDREAS PICKEL is Professor in the Department of Political Studies, Trent University. JACQUI TRUE is a Senior Lecturer in the Department of Political Studies, University of Auckland, New Zealand. ANDREI P. TsYGANKOV is an Assistant Professor in the Departments of International Relations and Political Science, San Francisco State University. MEREDITH Woo- CUMINGS is Professor of Political Science at the University of Michigan.

ix

ECONOMIC NATIONALISM IN A GLOBALIZING WORLD

Introduction: False Oppositions Recontextualizing Economic Nationalism in a Globalizing World Andreas Pickel

Nationalism in general and economic nationalism in particular have gained a reputation as anachronistic ideologies. Their survival in an age of globalizing markets and declining nation-states is widely portrayed as the backlash of misinformed masses and their ill-intentioned leaders against the progress of economic and political liberalization. We consider this reputation undeserved and the source of misleading and inappropriate policy advice. The purpose of this book is to recast discussions about economic nationalism in the context of globalization. We have three central objectives: to offer a critique of the conventional view of economic nationalism; to reorient and broaden the discussion around the relationships between national identities and economic processes; and to contribute to debates about the role of ideas in the literature of international relations (IR) and international political economy (IPE). While there are large literatures both on nationalism and on the political economy of globalization, neither one has systematically addressed how their objects of study relate to each other. The most recent nonhistorical, book-length scholarly study specifically devoted to economic nationalism, entitled The New Economic Nationalism, was published in I98o. 1 That national identity and economics are closely and significantly related, and that globalization processes may in fact reinforce rather than weaken these relationships, are among the major findings of our contributors. One notable implication of this finding is that economic nationalism and neoliberalism are not the necessary opposites they are usually taken to be. Rather, in a 1. Hieronymi ( 1980). Mayall ( 1990) devotes two chapters to economic nationalism, the second of which is entitled 'The New Economic Nationalism." Two excellent articles about economic nationalism are Crane (1998) and Levi-Faur (1997a). New studies by two of our contributors are Abdelal ( 2001) and Tsygankov ( 2001). I'm not including recent popular or political treatments of the subject, e.g., Buchanan (1998) and Frank (1999).

2

Andreas Pickel

variety of circumstances from postcommunist transformations to country "rebranding" under globalization, neoliberalism has become one form of economic nationalism. By demonstrating the economic significance of national identities, we undermine the standard narrow conception of economic nationalism. However, we take an additional step by analyzing how the national affects the economic. This introductory chapter sets the stage for the subsequent historical-empirical studies. It is not unusual for social scientists' concepts to be used in other, especially political, discourses. "Democracy," "market economy," and indeed "globalization" are typical examples of such conceptual overlap. There are different strategies one can use to deal with the potential confusion inherent in adopting such "loaded" concepts for social science. Simply ignoring the problem is one. Another is to legislate one's own definition, which, given the absence of a sovereign legislator for such matters, frequently leads to a proliferation of mutually more or less inconsistent definitions. Yet another strategy is to abandon the concept as hopelessly contaminated. None of these responses seems to us satisfactory. We do not want to skirt the issue, add another idiosyncratic definition, or discard the concept as ideology. Economic nationalism can be understood as a specific ideology and policy doctrine, but it is also much more than that, as I will argue below. We take as our point of departure a reconstruction ofwhatthe concept of economic nationalism means and implies in current political debates as a way of establishing a context for our discussions. Each of the contributors proceeds to "unpack" this dominant conception by critically examining its claims and assumptions in light of a specific case study, and each contributes a perspective on the significance of national identity for the political economy.

The Conventional View of Economic Nationalism There is no doubt that America has been one of the biggest beneficiaries of globalisation. How striking then that globalisation, and trade policy especially, have become increasingly controversial and politically charged.

-The Economist, September

28, 2000

In contemporary political and economic discourse, economic nationalism is usually juxtaposed to globalization and its ideological advocate, neoliberalism. This politically neat distinction is in practice difficult to sustain, as the above quotation illustrates. The strength of any political discourse, however, lies in part in its ability to make clear, simple, and stark distinctions between good and bad, friend and foe. Neoliberal discourse treats economic na-

Introduction

3

tionalism as a pernicious doctrine, and its proponents as a political enemy. Calling a particular policy approach or action an instance of economic nationalism is thus, in the current context, a way of disqualifying it. The same is true for the appellation "economic nationalist." The underlying dichotomy between "economic nationalist" and "economic liberal" is well established and widely shared-even among scholars. Long before the ascent of neoliberalism, the economist Harry Johnson analyzed economic nationalism as an economic program that "seeks to extend the property owned by nationals so as to gratify the taste for nationalism .... Nationalism will tend to direct economic policy toward the production of psychic income in the form of nationalistic satisfaction, at the expense of material income" (Johnson [196s] 1994, 238-39). "An investment in the creation of a middle class, financed by resources extracted from the mass of the population by nationalistic policies, may be the essential preliminary to the construction of a viable national state. This problem, however, belongs in the spheres of history, sociology, and political science rather than economics" (240). This "economistic" conception of economic nationalism is in one form or another shared by a number of different approaches. 2 Johnson does not deny the potential significance of nationalistic economic policies for such "extra-economic" projects as state building, but he considers their analysis beyond the purview of economics. What economics can say is that such policies are costly in material terms. Even more narrow is the "economism" of mainstream economists, who are largely unaware of or uninterested in the literature on nationalism and its potential implications for economic processes. Much the same holds for the "economism" of rational choice theorists who are committed to the study of extra-economic phenomena, including nationalism (Woodruff 2000; Olson 1987), but whose specific brand of methodological individualism gives them no instruments to examine social wholes-such as nations, societies, cultures, and other social systems (Appel 2000; Bunge 1999, chap. 5). 3 The following seem to be basic assumptions in this discourse: • Economism: economic nationalism can be adequately explained in strictly economic terms without taking into account historical, political, cultural, or social factors. 2. As Eric Helleiner (2002) shows, it was not shared by nineteenth-century economic liberals such as Ricardo, Mill, or Cobden, who "saw free trade primarily as a tool to strengthen peaceful cosmopolitan world society." 3· In this view, for example, the state is conceptualized in terms of "rent-seeking" individuals, and cultures are conceptualized as aggregates of individual preferences. It is also the "economism" of neoliberal discourse which theoretically rests on neoclassical or rationalchoice foundations. Finally, it is the "economism" of radical left analyses preoccupied with the primacy of class (Panitch and Leys 2001) and dismissive of what one author in the current context has called "progressive nationalism" (Radice 2000).

4

Andreas Pickel

• Homogeneity: economic nationalism, like economic liberalism, refers to essentially the same economic doctrines across time and space. • Interests: nationalist economic doctrines are advanced by, and for, special economic interests disguised as the general interest. • Validity: the validity of such economic doctrines can be decided by modern economics. Unlike economic liberalism, economic nationalism produces economic costs and therefore can claim little scientific support.

Yet as scholars and activists from Friedrich List to Raul Prebisch knew, economic nationalism cannot be examined and assessed as an economic doctrine in an abstract economic framework precisely because it responds to problems situated in particular historical, political, cultural, and social contexts. Invoking "variables" such as "psychic enjoyment" or "taste for nationalism" to account for dimensions of the phenomenon that go beyond such a framework indicate that other approaches may be needed. The field of international political economy seems to provide just such an approach in what it calls promisingly the "Nationalist perspective" (Gilpin 1987; Balaam and Veseth 2001). However, as both Abdelal and Goff argue in this volume (see also Abdelal2001), this approach is based on the same narrow distinction between economic liberalism and economic nationalism criticized above. Moreover, it follows the treatment of nationalism in the international relations literature generally, which does not conceptualize the nation as distinct from the state. 4 As a result, economic nationalism in the "Nationalist perspective" is reduced to the doctrine that "economic activities are and should be subordinate to the goal of state building and the interests of the state" (Gilpin 1987, 31). This points us to the nationalism literature, in which the distinction between nation and state is fundamental. The burgeoning field of nationalism studies has not devoted systematic attention to the ways in which national identity shapes and affects economic processes. Perhaps the main reason for this neglect is that the literature on nationalism is preoccupied with explaining the origins, forms, and manifestations of nationalism rather than its interactions with the economy. Two fundamentally opposed presuppositions in the literature address the relationship between nation and economy directly. On one side, exemplified by Ernest Gellner's ( 1983) modernist (and materialist) theory of nationalism, the emergence and power of nationalism is explained as a subordinate, albeit highly functional, part of more general processes of socioeconomic transformation. Here, the primary interest is to explain nationalism, rather 4· This refers to the realist and liberal approaches in the international relations literature. These have recently been challenged by so-called constructivist approaches that are more open to the concerns of this volume.

Introduction

5

than explain how economic processes interact with and are shaped by national identities. In a complete reversal of this explanatory logic, Liah Greenfeld's (2oo1a) idealist approach attempts to explain the emergence of capitalism as a function of nationalism. 5 Both fundamental presuppositions are too strong and one-sided for an approach to examining the problem of whether, to what extent, and how national identity is implicated in economic processes. As I will suggest in the next section, however, the nationalism literature, even if it has not systematically addressed economic nationalism, is nevertheless a rich source of insights for our purposes.

Broadening Our Perspective: A Brief Survey of Other Relevant Scholarly Literatures The geographical definition of any economy is given by the area across which business firms maximize profit-that is, across which they search to find the cheapest places to produce and the most profitable places to sell their goods and services. With today's communication and transportation technologies, business firms increasingly search the globe on both of these dimensions. In the process, a global economy is emerging that will in the end dissolve our existing national economies. -Lester Thurow, "Globalization"

If ours is truly a historical period of globalization rather than nation building, economic nationalism can no longer claim to be a doctrine of progressive development. It would indeed seem to be an ideological anachronism. But neither "national economies" nor "economic nations" are dissolving, while the significance of different national economic cultures is only just being (re)discovered. Globalization discourse has called into question the national as a unit of analysis-whether with respect to economies, states, societies, or cultures. The strongest claims describe a new global economy that has eclipsed national economies and is progressively undermining the relative significance of national states, societies, and cultures. A world economy once made up of national economies is rapidly being transformed into a global economy composed of transnational economic actors, regions, and networks. National states and societies are disintegrating as a result of economic globalization-processes manifested in such divergent social phenomena as emerging global cultures and transnational movements, on the one hand, and cultural and economic marginalization and ethnic violence, 5· See, for a critical review, Rutland (2003).

6

Andreas Pickel

on the other. Plausible and popular as this "economistic" view may be, it is fundamentally flawed. Economic globalization has no such general effect on national states, societies, and economies. 6 In order to gauge the actual effects of current economic changes, we need a more fine-grained conceptual apparatus than is offered by economistic views. The conventional, economistic view of economic nationalism is based on a "thin" conception of the economy. It is the neoclassical model plus-the "plus" referring to a variety of largely unsupported assumptions about politics, culture, society, and psychology with the help of which economic nationalism is understood. There is of course no reason why unsupported assumptions need to be accepted when various social sciences-such as political economy, socioeconomics, historical sociology, social psychology, and management studies-have produced a range of important and well-supported results on these questions. I will point to some of the major findings from a variety of such scholarly literatures that seem to be particularly relevant for reconceptualizing economic nationalism.

National Economies If one assumes a geographical definition of national economy, as Thurow does above, national economies do indeed appear to be dissolving, insofar as economic activity, especially finance and trade, is rapidly internationalizing. But economic activity, especially production and consumption, still occurs in particular national social and political contexts, which in turn provide fundamental resources for, and constraints on, such global-level economic activity. Two bodies of literature have made particularly significant contributions to establishing the continuing significance of the national economy. The first is the literature critical of the "new global economy" thesis (see, e.g., Wade 1996a; Zysman 1996; Doremus et al. 1999; Sorge 1999). The second is the ''varieties of capitalism" literature, which calls into question the convergence thesis according to which globalization is producing one dominant model of market economy (Hall and Soskice 2001; Berger and Dore 1996; Goricheva 1997; Hollingsworth and Boyer 1997; Streeck and Crouch 1997; Streeck 1992). For the purposes of our discussion, the following results are particularly important. o

o

Extension of economic activity beyond national boundaries does not equal the end of national economy; the latter, qua political, social, and cultural economy, continues to be the basis for the former. Generalizations about the national economy, now as in the past, ignore the great diversity of conditions for particular national economies.

6. For a wide-ranging collection of recent analyses on the nature and implications of economic globalization, see Held and McGrew (2ooo).

Introduction

7

National States Part of the distinctiveness of individual national economies arises from the specific patterns. of interaction between state and economy that have evolved. These roles of the state-in many respects nationally specific-are examined in an extensive literature (Boyer and Drache 1996; Garrett 1998; Helleiner 1994; Iverson, Pontusson, and Soskice 2ooo; Jessop 1999; Weiss 1998). This literature shows why and how, even under the "rule of the global economy," political economies are still governed by states. While economic globalization is a convenient shorthand for referring to changing global economic conditions, the decline or even end of the nation-state is not the other side of this coin. First, economic globalization has been engineered by certain nation-states and continues to be shaped by them. Second, given the continued significance of national economic systems, states remain the central actors in all political economies. Another literature with a long tradition (Gerschenkron 1962; Bendix 1977) underscores the centrality of nations and cultures in state formation, industrialization, postcommunist transformation, and stability and change (Banker, Muller, and Pickel 2002; Linz and Stepan 1996; Steinmetz 1999). Two central implications of this literature are: • The current transformations of national economies in the context of economic globalization are directed, shaped, or strongly influenced by national states and particular groups of states, and l7y the international organizations they dominate. • Generalizations about the national state, now as in the past, ignore the great diversity of types of and conditions for states, in particular their cultural specificity.

Economic Nations The conventional view of economic nationalism has no conception of economic nationhood, since it is based on a "thin" view of economics that cannot deal with phenomena such as national identity. By contrast, taking the concept of a nation seriously means that it is not just as a synonym for country or state. While the relationship between state and nation is a mainstay of the literature on nationalism, this literature has paid relatively little attention to the relationship between the nation and the economy. In part, this is a result of an unfortunate division of labor between students of nationalism and students of political economy. Yet it is not difficult to translate some of the major results of current scholarly debates on nationalism into relevant insights for the study of economic nationalism. First, the categori