David Szakonyi holds a BA in Political and Social Thought from the University of Virginia. He is currently an SRAS student serving an internship at the Sova Center, a nonprofit think tank.
The Rise of Economic Nationalism under Globalization
and the Case of Post-Communist Russia
by David Szakonyi
Across the globe, trends of nationalization and economic nationalism have crept into the policies of nation-states recently. Fueled by popular nationalist sentiment, state elites from Bolivia to Russia have reasserted state control over resources connected with energy and industry and promoted the interests of a purely national economy. Economic nationalism has emerged as a powerful and attractive policy to press for national interests, achieve economic aims, and preserve the autonomy of individual nation-states in an increasingly internationalized world. Understanding how and why this process is taking place will be important to developing effective foreign policy and effective energy policy for the foreseeable future.
This paper is organized in two parts. The first will describe the role of the nation-state within the context of globalization. The second will examine the representative case of post-communist Russia in order to provide insight into both the structural conditions surrounding economic nationalism and the actions of state agents in the formation of popular nationalist sentiment in favor of specific economic policies.
Part 1. The Nation-State and Globalization
Most recent authors writing about the future of nationalism foresee some transformation of the classic nation-state under globalization, and envision a decrease in nationalist sentiment over the next century. These ideas come largely from Eric Hobsbawm and Ernest Gellner, authors of two classic studies which are generally considered the foundations of nationalism studies. These authors have been the most cited and discussed, and have been most influential in creating the modern definition of nationalism. An exploration of their thoughts will serve as the basis for defining the terms “nationalism” and “economic nationalism” for the purposes at hand.
In his work Nations and Nationalism since 1780, Eric Hobsbawm argues that nationalism “is simply no longer the historical force it was” and adopts an overall negative view of the future for states in the age of globalization. For Hobsbawm, the growth of the international economy and advances in communication and transport have undermined the vitality and purpose of nations. International associations, trade organizations, and transnational corporations are usurping economic powers from nations and replacing them as the “major building-blocks of the world system.” Hobsbawm envisions nations as “retreating before, resisting, adapting to, being absorbed or dislocated by the new supranational restructuring of the globe.” This rather ambiguous statement is pessimistic about the ability of nations to continue to dominate the international order and economy.
Similarly, Ernest Gellner writes that in order for nations to remain politically viable, the relationship between “class” and “nation” must be maintained in the minds of the elites and populaces of modern nation-states. Gellner writes, “the definition of political units and boundaries will not be able to ignore with impunity the distribution of cultures.” The training required to maintain an advanced industrial society will preserve the nation-state as the primary agent behind the necessary standardization of language and culture. On the other hand, Gellner remarks that “late industrial society can be expected to be one in which nationalism persists, but in a muted, less virulent form.” As long as differing nationalities do not self-identify themselves as subordinate “classes” within a state, violent confrontation between ethnicities will diminish. This point can also be transferred to the world order. Nationalist conflict between states often occurs as the result of perceived inequalities and competition. According to Gellner, nationalism may thus resurge as a result of unfulfilled economic expectations. Also, if states feel inferior to, exploited by, or dominated by “advanced” powers, new forms of nationalism may appear to combat this perceived threat and will foster a politically divisive and tense environment.
Economic Development and Nationalism
For most recent authors, nationalism is tied to economic development and vice versa. Developing or transitioning modern industrial economies are quite unique in their individual models of development, restricting generalizations about a single set of economic conditions in each. Thus, to define how economic nationalism has emerged in these states, it is worth examining the importance of nationalist sentiments as a common attribute of them. Although development patterns are diverse and thus hotly debated, several authors have asserted that uniting a populace under a national symbol has a strong influence on the rate of development. This link between national identity and growth lays the foundation for the contemporary conception and implementation of economic nationalism.
In The Spirit of Capitalism, Liah Greenfeld asserts the centrality of nationalism in industrializing and advancing the major world powers in the nineteenth and twentieth centuries:
nationalism necessarily promotes the type of social structure which the modern economy needs to develop. Being inherently egalitarian, nationalism has as one of its central cultural consequences an open-or class-system of stratification, which allows for social mobility, makes labor free, and dramatically expands the sphere of operation of market forces.
Greenfeld thus connects the needs of capitalism with the origins of nationalism. She further argues for the importance of nationalism in economic development as long as “economic achievement, competitiveness, and prosperity are defined as positive and important national values.” Similarly, shared economic development can serve as a national symbol with which individuals identify, along with identity markers such as shared language, culture, and territory.
Once a strong sense of national purpose supports economic development, a nation-state must appeal to popular sentiments in order to organize collective effort. Takeshi Nakano writes in “Theorizing Economic Nationalism” that “in order to mobilize economic resources, create an integrated national market and effectively implement economic policies,”  state elites must draw upon shared cultural resources and national allegiances. The confidence derived from allegiance to a strong national identity can strengthen economic growth by rallying a citizenry around a set of national objectives. According to Nakano, “a large part of the national market is historically shaped by the state through the monetary system, legal system, system of education, transportation and information networks, trade policies and so forth.” Therefore, in modern history, the centrality of the state as an agent of economic change involves a sociological component, which nationalistic ideologies can complement and even bolster.
The Origins and Goals of Economic Nationalism
Upon examining the relationship between nationalism and economic development, one next must select a definition of economic nationalism and its goals and purposes. The definition offered by Rawi Abdelal in his article “Nationalism and International Political Economy in Eurasia” is useful due to its concise nature and its consideration of most of the important factors discussed above. Abdelal states simply that economic nationalism involves the implementation of “economic policy that follows the national purpose and direction.” In other words, economic nationalism prioritizes national interests above private property and profit motives. Instead of pursuing opportunities solely to increase capital, policymakers make economic decisions with the intention of uniting and strengthening the nation-state.
Clearly, the definition of economic nationalism is connected with a broader conception of nationalism, but the two are not exactly the same. Whereas contemporary concepts of nationalism posit that for every nation, there should exist a corresponding state that protects and vitalizes this nationality, economic nationalism goes one step further. Economic nationalism draws on the foundations of national identity, but concentrates on using economic means to unite a populace and increase the power of the nation-state in the world order. This emphasis on economic security may entail the nationalization of key industries, or simply the restriction of foreign influence and the protection and promotion of domestic labor and products. Nationalist sentiments are mobilized to ensure the economic autonomy of the nation-state.
The emergence of economic nationalism in a state generally occurs as a result of several conditions. First, the expansive processes of globalization may elicit strong reactions by ethnic nationalities which fear the eradication and subordination of their cultural identities. As promises of economic security and happiness remain unfulfilled by ineffective, selective, or uneven development and progress, individuals may blame groups or specific people that they see as responsible. Increases in movement and contact between states create both internal groups such as immigrants and external groups such as world powers, which can be seen as responsible for economic hardship or the destruction of traditional ways of life. Nationalist tendencies can reemerge as a reaction to these “enemies.” Thus, economic and cultural grievances play a large role in precipitating nationalist sentiment under globalization.
Second, a set of elites and policy makers set nationalist goals of autonomy, unity, and identity to appeal to this sentiment and achieve several aims. Nationalism can be used as a political instrument by elites attempting to concentrate their hold on political power and increase the global status of their nation-state. These elites identify economic prowess as an effective means for protecting culture, promoting national power, and winning the support of citizens who feel disenfranchised and powerless as a result of the processes of globalization.
Recent explosions in nationalist sentiments, such as those in Russia, conform to Gellner’s theory that when “class” and “nation” combine, political activism erupts. Pressure to conform to the models described by Meyer forces governments to adopt measures that promote the advancement of the economic security of national citizens. As shown above, nationalism and the state have historically played crucial roles in economic development, prompting elites to strive to reinvigorate nationalism as a driving force for the economy.
Misconceptions About Economic Nationalism
Robert Gilpin and James Mayall argued in the late 1980s that economic nationalism is purely or primarily protectionist and mercantilist, and that it aims at the complete financial independence of the nation-state by countering the ventures of foreign capitalists and governments with trade barriers, tariffs, and other mercantilist policies. Although the history of economic nationalism lends support to this theory, the continued spread of globalization has significantly changed the tone and direction of economic nationalists. The last decade has shown that cooperation with other national economies can foster greater growth and development and modern economic nationalist doctrine has become more flexible to take advantage of this opportunity. For example, the aim of promoting local industries can lead governments to encourage expansion into new markets outside their own borders. Lifting certain trade barriers and encouraging foreign direct investment can actually assist certain areas of the economy and thus can be in the national interest. Therefore, economic nationalism need not solely be affiliated with protectionism, but may be simply the pursuit of national interests through economic means.
Part 2. Post-Communist Russia: A Case Study
Since the fall of the USSR in 1991, the Russian people have seen a series of dramatic political, economic, and social changes, including greater integration into the global economy and two economic collapses that obliterated personal savings and caused a lasting feeling of economic insecurity. In a move that is not at all surprising given the theory outlined above, the Putin administration has adopted what may be seen as aggressive economic nationalist policies.
The years immediately following the fall of the Soviet Union witnessed a catastrophic upheaval of Russian society, providing what scholar Paul Starobin terms “highly fertile soil for nationalism.” First, the “piratization” of Russian natural resources by young oligarchs after 1991 sent economic indicators and standards of living spiraling. Second, “Western reforms” adopted by Yeltsin failed to curb recession, and violent tensions between displaced ethnic minorities plagued Russian societal relations. Psychologically, Russians never came to terms with the USSR’s failure to provide necessary social services and to compete as the world power it claimed to be. Insecurity about the future prompted chaotic responses to government policies in the early 1990s, when Russians suffered from a severe identity crisis as their economy and national ideology completely and suddenly reversed itself. Many resented the loss of status held under the communists or the security that the USSR had afforded and openly grieved for the loss of the USSR, which Starobin says is “a powerful catalyst” for the rise of nationalism in Russia.
In addition, the actions of Western powers and the spread of globalization exacerbated the situation. Initially, most welcomed the introduction of Western culture and systems of government. However, with the resultant mismanagement and exploitation of Russia’s economy, many came to perceive an “invasion” of Western powers which, in the words of one Russian scholar, took advantage of “Russia’s temporary weakness to promote their own interests.” According to this logic, transnational corporations ravaged the carcass of the deceased Soviet state and NATO crept closer to Russia’s borders, while Russian politicians encouraged cooperation with European and American interests as key to Russia’s revival in the world arena.
Unfortunately, decades-old animosity towards the West also did not immediately disappear from the minds of Russian citizens. As globalization diffused new forms of culture across Russia’s borders, Russians became, in the words of yet another Russian scholar, acutely “aware of their cultural distinctiveness from the West.” Also, as the economy collapsed in the Russian regions and the other former Soviet states, new waves of immigrants, many of them ethnic minorities, streamed into Russia’s major urban areas, creating new competition for limited employment. Xenophobia grew as Russians became disenchanted with the “free movement” principles of globalization, which seemed to exacerbate the already dire economic situation.
The social and economic difficulties of the immediate post-communist era translated into a highly potent situation for a rise in nationalism. Also, a “political vacuum” emerged within the state, as Russian citizens lost faith and interest in political participation. Political economist V. I. Tikhomirov argues that the failure of the Russian leadership to combat corruption and the economic chaos of the transitioning state “led to a growing alienation between the population and the establishment” and further asserts that mass political disillusionment, apathy and the absence of a uniting ideology made the positions of the radical opposition even stronger in their appeal to constituents. Here, the “radical opposition” included nationalists who offered policies that they claimed would place the expectations of Russians and Russia’s national interests above those small groups who profited while most of the population lost everything they had.
State-Directed Economic Nationalism
By 1995, many Russian politicians began to understand the political value of tying policies directly to “Russia’s interests.” Over the second half of the decade, Russia moved away from previous efforts at closer integration with the West, as the society experienced a powerful resurgence of nationalism. Perhaps most importantly, these domestic and foreign policy initiatives also helped to reestablish Russia as one of the predominant powers in Eurasia. Both the elites and the lower classes identified with the goal of reasserting Russian power in the international order and combating the chaotic tumult caused by privatization in the name of national interests. Although this period witnessed a strong emphasis on the promotion of nationalism by elites, one cannot disregard the active participation and attitudes of the average Russian citizen in supporting and identifying with the nationalist ideology. This support not only developed organically within the population, but also was officially promoted by the government, including its most popular and influential member, President Vladimir Putin.
An understanding of the development of specifically economic nationalism during this time is greatly bolstered by an understanding of Putin’s actions and policies during this time. After 1999, Putin quickly began to rearrange the priorities of Russian politics along nationalist lines largely according to his understanding of the relationship between the state and the economy as described in his doctoral thesis, “in which he championed the creation of public-private ‘financial-industrial corporations’ to exploit Russia’s mineral wealth, fueling an economy built on natural resources.” Russia could reemerge as a global political player if Russia’s vast quantities of oil and gas were taken away from already unpopular private firms and placed in the hands of the state. Putin’s analysis “assumed the significance of geoeconomics over geopolitics, and the need for Russia to defend its national interests by primarily economic means.”
According to Paul Starobin, to promote patriotism, Putin appealed to “to Russians’ traditional sense of themselves and their country as self-reliant and indomitable.” This strategy was accomplished by a series of symbolic gestures as Putin used language and culture to reassert the concept of the “Russian people,” largely according to the concept of the “Soviet people” with which most Russians were already familiar. In fact, in one state-of-the-nation addresses Putin described the Russian people as an “historical category, as an analog of the Soviet people, and as the contemporary ‘people of Russia.’” He also restored the music of the Soviet anthem to the national song of Russia and publicly commented that “the collapse of the Soviet Union was the greatest geopolitical catastrophe of the 20th century.” It seems that most Russians would have agreed with this comment, at least in theory. According to a survey in 1997, “about 84 percent of a sample of 1,500 Russians either regretted the disintegration of the Soviet Union ‘very much’ or ‘to some extent.’” Putin also supported legislating against giving work permits to immigrants if Russians could fill the positions for which they were being issued.
It is important to consider just who was included and who excluded from the definition of “Russian” as put forth by the Kremlin. The Kremlin, at least officially, did not draw the definition along ethnic lines. Russia is home to hundreds of ethnic groups, who speak a myriad of languages and practice differing cultures. The government recognized this and extended the definition to all those holding Russian citizenship, excluding perhaps those Russians (who were largely ethnic Russians) who had profited from the economic chaos. However, it is also important to realize that in the public mind at large, the contemporary definition prioritizes only those individuals who possess Russian ethnicity, and whose Slavic roots and connection to the ancient “Rus” are generally evident in their physical features. Other ethnicities, such as darker-skinned groups from the Caucasuses, are considered “others.” This is readily evident in their well-publicized harassment by Russian ethnic nationalists. State-sponsored economic nationalism has, in Russia’s case, reinforced definitions of nationality based on ethnicity. 
Putin overtly targeted the above-mentioned “others” began to develop policies that ‘removed’ their negative influence on Russia’s national interests. The distinctively anti-Western rhetoric of Putin’s speeches also drew upon popular resentment of Western influence in Russia. However, this variant of economic nationalism did not necessarily involve pure protectionism; instead, Putin adopted a selective approach to liberalization by continuously keeping the augmentation of national power as the principal concern of economic policy. In addition, political economist V. I. Tikhomirov writes that “any attempt to place capitalist ideals into the basis of a new national ideology in Russia was doomed to failure.” Putin understood the aversion to market ideals caused by the piratization of Russia’s economy after 1991. The new nationalist rhetoric emphasized the role of the state in economic planning as well as usurping financial power from the oligarchs, who were Russians, but were not seen as acting with the interests of the state in mind.
The Kremlin systematically reacquired large portions of Russia’s energy resources and deployed them as tools of international statecraft and to fund the projects and reforms of the state. Assigning control over the new state corporations to trusted members of his administration, Putin began to control economic development through state supervision and gained valuable authority over the pricing and delivery of energy supplies. Much of the profits from Russia’s natural resources now go to the state treasury to be used for domestic programs. The Kremlin can also, at least theoretically, influence the politics of foreign countries by controlling the delivery of and, to a large extent, the price of gas on the international market. This gives the Kremlin some control over a major part of the economies of foreign states and, through that control, some influence on popular political support for foreign leaders. Russian popular support for these policies has been unparalleled and is seen largely as the personal brain-child of Putin. Putin’s party, United Russia, now controls a large majority in the State Duma and Federation Council and holds the most unified governmental authority since Soviet times.
Consequences of Nationalist Rhetoric
The last decade of Russian politics has witnessed a revival of officially supported nationalist ideology. From laws limiting employment opportunities for migrant workers to the creation of a “Day of National Unity,” the state has shown its support for renewed pride in Russian citizenship. However, these actions have opened up a political space for radical and xenophobic parties to capitalize on this upsurge in nationalist sentiment. In a recent poll by the independent Levada Center, for example, “half of the 1,880 respondents said they would support banning natives of the Caucasus from living in Russia.” It is important to note that the Caucasuses themselves are partly within the territory of Russia. Violence against ethnic minorities has increased dramatically over the last five years.
Encouraging nationalist sentiments to bolster economic policies can have radical consequences. By directly and indirectly supporting nationalist parties and doctrines, the Kremlin has opened the door for radical and xenophobic parties. The creation of internal and external enemies may have short-term benefits in uniting a populace and thus encouraging economic growth, but it can also have long-term negative consequences by contributing to animosities between groups of citizens within a state. Problems arise when a state actively encourages these sentiments without placing limits on their development.
The Kremlin has attempted to create such limits over the last few months, with several official programs designed to increase discussion of “Russianness” and minimize the damaging effects of the nationalism. As noted above, a certain level of nationalism is needed to unite a populace towards economic and political goals. However, the definition of “Russianness” inserted an exclusive, ethnic component into this economic nationalism. The active facilitation of intolerance, hatred and racism as integral parts of that nationalism has created immeasurable problems in the populace. Russia finds itself in the particularly difficult position of needing a strong, self-confident national identity to drive economic development, while also wishing to prevent violent manifestations in which supposed enemies are physically targeted.
As a theory to counteract the perceived injustices and insecurities caused by globalization, economic nationalism has emerged as a popular and powerful theory that is supported by wide and diverse constituencies looking to preserve their cultural heritage and expand their state’s international power. Nation-states must concentrate on building economic prowess in order to maintain or strengthen their international influence. However, the consequences of encouraging economic nationalism can involve the radicalization of politics and the persecution of segments of the national population, which can lead to fragmentation and eventual political and, hence, economic instability within a state. How this will play out in Russia and other countries where economic nationalist policies are being implemented is yet to be seen.
 E. J. Hobsbawm, Nations and Nationalism since 1780 : Programme, Myth, Reality, 2nd ed. (Cambridge [England] ; New York: Cambridge University Press, 1992), 169.
 Ibid., 181.
 Ibid., 191.
 Ernest Gellner, Nations and Nationalism (Oxford: Blackwell, 1983), 121.
 Ibid., 122.
 The relationship between the nation-state and globalization is debated. In an article entitled “Globalization and Nationalism,” J.A. Hall argues against the “myth of globalization,” writing that “most economic activity remains firmly within the territorial boundaries of national states.” (J.A. Hall, "Globalization and Nationalism," Thesis Eleven 63, no. 1 (2000): 65.) He goes on to argue that different national styles further render the nation-state resilient to global, conformist pressures. According to Hall, the stable geopolitical arrangement following World War II fostered the expansion of liberalism and consociation, giving new roles to the nation-state outside of conflicting national interests and ambitions. In “Globalization and the Nation-State,” Montserrat Guibernau seems to disagree. He argues that the nation-state is “steadily losing its relevance as a frame for political, economic, social and cultural life.” (Montserrat Guibernau, "Globalization and the Nation-State," in Understanding Nationalism, ed. Montserrat Guibernau and John Hutchinson (Cambridge: Polity Press, 2001), 266.) Globalization threatens the autonomy and identity of nations, as leaders must adapt and evolve state processes to redefine national identity against the context of a globalized world. The question remains of how states will achieve this.
 Liah Greenfeld, The Spirit of Capitalism: Nationalism and Economic Growth (Cambridge, Mass.: Harvard University Press, 2001), 23.
 Takeshi Nakano, "Theorizing Economic Nationalism," Nations and Nationalism 10, no. 3 (2004).
 Rawi Abdelal, "Nationalism and International Political Economy in Eurasia," in Economic Nationalism in a Globalizing World, ed. Eric Helleiner and Andreas Pickel (Ithaca, N.Y.: Cornell University Press, 2005), 26.
 Abdelal, "Nationalism and International Political Economy in Eurasia," 21.
 Nakano, "Theorizing Economic Nationalism."
 Gellner, Nations and Nationalism, 121.
 eds John W. Meyer, "World Society and the Nation-State," American Journal of Sociology 103, no. 1 (1997): 149. These models include: “territorial boundaries and a demarcated population; sovereign authority; self-determination, and responsibility; standardized purposes like collective development, social justice, and the protection of individual rights; authoritative, law-based control systems; clear possession of resources such as natural and mineral wealth and a labor force; and policy technologies for the rational means-ends accomplishment of goals.”
 James Mayall, Nationalism and International Society, vol. 10, Cambridge Studies in International Relations (Cambridge [England] ; New York: Cambridge University Press, 1990), 71.
 Andreas Pickel, “Explaining, and Explaining with, Economic Nationalism” Nations and Nationalism 9, no. 1 (2003).
 Paul Starobin, “The Rise of Nationalism,” National Journal, December 30 2004.
 Ibid. “Piratization” refers to the rapid privatization of state industries after the fall of the USSR. Due to the overall economic collapse at the time, the prices of such resources fell exorbitantly, enabling cunning young entrepreneurs to buy up and consolidate these industries. These quick sales and subsequent high concentration of wealth in the hands of these businessmen led many in Russia to believe that the country’s wealth had been pirated away.
 S. Kortunov, "Russia’s Way: National Identity and Foreign Policy " International Affairs: A Russian Journal 44, no. 4 (1998).
 S. Kortunov, "Russia’s Way: National Identity and Foreign Policy " International Affairs: A Russian Journal 44, no. 4 (1998).
 Andrei P. Tsygankov, "The Return to Eurasia: Russia's Identity and Geoeconomic Choices in the Post-Soviet World," in Economic Nationalism in a Globalizing World, ed. Eric Helleiner and Andreas Pickel (Ithaca, N.Y.: Cornell University Press, 2005), 57.
 V. I. Tikhomirov, The Political Economy of Post-Soviet Russia (New York: St. Martin's Press, 2000), 157.
 Ibid., 276.
 Ibid., 157.
 Ibid., 276. Parallels can be drawn between Putin’s attempts to harness nationalist sentiments to drive economic development with those of Stalin during the 1920’s and 1930’s. Although different mechanisms enforced cooperation, the rhetoric of “socialism in one country” strongly resonated with that part of Russian society which wished to reassert the dominance of Russia, especially after humiliating defeats in the Russo-Japanese War and the First World War. Furthermore, the “world-historical” significance of becoming the first country to successfully adopt Marxist ideas contributed to the public's enthusiasm for the state-directed economic policies
 Rick Fawn, Ideology and National Identity in Post-Communist Foreign Policies, 1st ed. (London ; Portland, Or.: Frank Cass Publishers, 2003), 46.
 Daniel Twining, “Putin’s Power Politics; Rebuilding Russian Clout, One Natural-Gas Pipeline at a Time., ” The Weekly Standard 11, no. 17 (2006).
 Tsygankov, "The Return to Eurasia: Russia's Identity and Geoeconomic Choices in the Post-Soviet World," 63.
 Starobin, "The Rise of Nationalism."
 Tishkov, "Russia as a European Nation and Its Eurasian Mission."
 Tsygankov, "The Return to Eurasia: Russia's Identity and Geoeconomic Choices in the Post-Soviet World," 57.
 Fawn, Ideology and National Identity in Post-Communist Foreign Policies, 44.
 Tikhomirov, The Political Economy of Post-Soviet Russia, 313.,
 Tsygankov, "The Return to Eurasia: Russia's Identity and Geoeconomic Choices in the Post-Soviet World," 63.
 Tikhomirov, The Political Economy of Post-Soviet Russia, 315.
 Fawn, Ideology and National Identity in Post-Communist Foreign Policies, 46.
 It is important to note that although these oligarchs may have fit the definition of ‘Russianness,’ it was their pursuit of different ends that ultimately ostracized them from the favor of the Kremlin. Acting solely to increase their profits and expand their own influence, such oligarchs diverged from the government’s intentions to strengthen only the national interests of Russia. This discrepancy of interests led to the appropriation of personal wealth by the state in order to redirect such resources to promote the entire Russian populace, not just the interests of a select few.
 Twining, "Putin's Power Politics; Rebuilding Russian Clout, One Natural-Gas Pipeline at a Time.."
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