The New Old “Nationalism”: fundamental reasons

British Prime Minister Theresa May delivered her quite telling keynote speech at Lancaster House, London, on January 17. Actually, the British PM was speaking about declaration of radical isolationism that was considered the “privilege” of marginal politicians yet not so long ago.

First, Theresa May said the UK may leave EU Single Market, while Switzerland with its centuries-old tradition of isolationism is still there.

Second, the prime minister announced that the UK will not be a full member of the customs union.

Third, she promised introduction of system to control migration from EU countries.

Fourth, PM May said her country needs to enter the world arena as an independent state.

For a country known with its globalism preferences it is a quite trivial program. Rhetoric and practical actions of Theresa May are actually turning into a global trend. Election of Donald Trump in the United States and the march of Eurosceptic politicians in the Old Continent is just the visible part of what they have already qualified as “new nationalism.” The incumbent regime in India came to power with quite conservative slogans. Anti-liberal “freeze” in Asia started much earlier than in the “core” of the world system.

What is happening and how long this new trend will continue? All indications are that the “new nationalism” with combination of conservatism and anti-globalism will continue at least for the coming decade.

Political cycles and flurries of interest in free trading and protectionism have historically replaced each other consistently. The upward trend of the Kondratiev wave was nearly always accompanied with liberalization and globalization trends. The downward trend trigged an adverse effect. Five cycles are highlighted usually: first cycle – from 1803 to 1841-1843, second - from 1844-1851 to 1890-1896, third - from 1891-1896 to 1945-1947, fourth – from 1945-1947 to 1981-1983, and the fifth – from 1981-1983.

Let’s look into the most significant one. The world in 1913 was a classical “era of empires” and globalization that exceeded the current level in some respects. “Export quota (on good only) in developed countries reached nearly 13% in 1913 as compared to 5% in 1850. Great Britain of early 20th century invested more abroad rather than in its economy. In Russia, about one-third of the shareholder capital belonged to foreigners, and in the United States, more than half of the workers were immigrants.” Low taxes were a mandatory rule. Monarchies did not dominate on the political map yet, but general tendency was towards more democracy, more freedoms.

War has not interrupted the globalization cycle. International trade continued to grow, customs policy became even more liberal. The Bolshevik Russia with its foreign trade monopoly looked quite strange in this context. The right-wing dictatorships in Italy, Spain, Poland, did not seem a system problem at first sight. However, it turned out that those “moods” in the countries catching-up development were just the beginning of “mutation” in the core.

Everything changed with the Great Depression. In 1930-1931, trying to protect their industry, developed countries raised taxes one after another, the New Deal variations loomed, and all that run contrary to liberal rules. At the end of the decade, Europe from Baltics to Portugal was flooded with dictators. In Latin America, for instance, the Vargas epoch started, while Japan faced totalitarian regime after the coup of 1932.

Since 2008, we have been living in the world of “Great Recession,” where regimes with weak economies started collapsing since 2011 and an analogue of the classic Nazism has emerged in the Middle East. There is automatic de-globalization of the world economy. The current capital outflow from developing markets is one of the signs of it. What we have is a softer analogue of 1936 and it is not strange that de-globalization and protectionism have become a political agenda, it is strange that this did not happen earlier. The attempts to achieve reindustrialization with “softer” measures taken in the United States with Obama’s team coming to power appeared to be not so efficient in practice. Washington is well aware that the “leaving” industry inherently created most of the problems in developed countries – state debt growth, stagnation of real incomes of the population and others that eventually spark social tension.

Europe is well aware of this as well. At least, look into the report of the European Commission for 2012.

European Commission Vice President Antonio Tajani, Commissioner for Industry and Entrepreneurship, said: "We cannot continue to let our industry leave Europe. Our figures are crystal clear: European industry can deliver growth and can create employment. Today we tabled the conditions for the sustainable industry of the future in Europe, to develop the investments needed in new technologies and to rebuild a climate of confidence and entrepreneurship. By working together and restoring confidence, we can bring back industry to Europe."

“Our future success depends on having a strong, diversified and sustainable growth model, in which industry plays a key role,” five European industry ministers confirmed. They are sure that renovated and improved industrial base will make the real sector the leader in economic restoration. Prospects of inert scenario are explicit: in 1970, real sector accounted for about 27% of GDP in the EU. In 2000, that indicator fell to 18.5%, and in 2013 - to 15.8%.

In other words, the current trends will last at least for a decade. In fact, it is not strange that UK was exposed to it, given its highest scales of deindustrialization among big powers. Processing industry accounted for less than 10% of GDP in UK. As compared to 2000, that indicator fell by 5.6% and 9.1% in absolute terms. “Free trade” cost the British economy too high. Meantime, the main “killers” of the local industry are not Chinese (7% of commodity turnover), but UK’s EU partners (51%).

The attempts to launch a process of reindustrialization started yet during premiership of David Cameron. However, the government’s half measures did not bring the anticipated effect, as the government underestimated the poor state of the given sector of economy, according to The Guardian.

Here are the fundamental reasons of the new old “nationalism” in UK. The grassroots discontent at the interference by the ever-present Brussels (that very often came out as a trivial cover in the economy of Berlin that competes with London) and anti-migrant sentiments to a larger extent derive from unsafe economic state of the British people.

England is an extreme case, and similar problems are characteristic almost to all developed countries. “Tightening the screws on economy” will inevitably result in “soft” political response.

Revenge of globalists is not ruled out. However, dire forecasts about the future of the UK economy do not come true, which is more than an essential factor.

Yevgeny Pozhidayev for EADaily