By Iain Murray and Johan Norberg
“National conservatism” is the flavor of the month, it seems. Recent European elections have seen parties that espouse big government and nationalism gain ground in both Poland and Germany – and the Polish government has duly announced a bigger role for the state in the economy. In the United States more and more conservatives favor industrial policy—ever more aggressive government intervention in the economy designed to achieve some unspecified “national goals.” Once unthinkable, this is a sign of changing times. Advocates of free markets will need to respond and adapt to thrive in this new environment.
President Trump’s hostility to free trade is well known. Republican Senators have called for aggressive antitrust action against big American technology companies. Sen. Marco Rubio (R.—Fl) wants a “national innovation strategy.” Taken together, these examples turn traditional conservative economic policy on its head. More remarkably, this rejection of the free market is symptomatic of a wider realignment of politics across the developed world.
For most of the past century, the primary dividing line in politics for the U.S. and Europe has been economic. Whether you preferred free enterprise or central planning determined which political party you supported. There were other considerations, to be sure, such as defense and social issues, yet those generally took second place to economic matters. That is no longer the case. Economic policy may even be disappearing as a determinant of political allegiance. This will have profound implications for politics, particularly for free enterprise advocates.
What appears to have replaced economics? Identity. Across the West, people are increasingly defining themselves politically as either nationalist or globalist. The two parties that provided France’s last two presidents before Emmanuel Macron, the “conservative” Republicans and the Socialists, respectively, have been abruptly swept away. France’s political divide is between Macron’s globalist En Marche and Marine Le Pen’s nativist National Rally, with the globalist Greens in third place. The realignment is a process, but France is further along than most countries.
The European Parliament elections this year illustrated the diminished role of economics in politics across the continent. The winners were nationalists, globalists, and greens. The losers were traditional conservatives and social democrats. Interestingly, nationalists across Europe have drawn support from both the left and right, and the same is the case for greens and centrist globalists.
In Sweden, Social Democrats now rule with the help of two smaller pro-market parties, in order to keep the anti-immigrant Sweden Democrats out of power. One condition was that they reduce taxes on high incomes. The nationalist right opposes this – while quoting Marx: “from each according to his ability, to each according to his needs”.
In Britain, Brexit is changing politics, and the country’s next general election will probably be fought on identity grounds—Leave versus Remain. Amazingly, only a tenth of British voters said Europe was an important subject before the 2016 referendum was called. Now 87 percent identify themselves by this issue.
A realignment is happening in the United States as well, but within the constraints of America’s two-party system. Democrats seem equally divided between Obama-style globalist technocrats who love regulation and treaties, progressive greens who want global dirigiste anti-growth policies, and Elizabeth Warren’s “economic patriotism”—a raft of interventionist policies that has been praised by Fox News commentator Tucker Carlson, comparing it to “Trump at his best.”
Economics hasn’t totally faded as an issue, of course. For the moment, free-trader globalist conservatives (Reaganites, for want of a better term) remain allied, however uneasily, with Trump’s nationalist conservatives. Warren’s nationalist Democrats still make common cause with progressive globalists in most areas.
The big problem for globalist conservatives is that there aren’t that many left. Nationalism has overrun conservative politics. If globalism takes over the progressive movement the same way, it will cause problems for the more numerous nationalist Democrats—such as labor union members and workers in industries under attack from the Green New Deal.
It is too early to say how this will all shake out. What does seem more predictable is that economic arguments will have little sway going forward. Criticizing a policy for costing too much, imposing price controls, or harming consumer welfare is likely to have little effect. By contrast, attacking a policy because it harms American citizens or because it hinders global collective action is more likely to move the political needle.
The implications for supporters of free enterprise are profound. Our arguments will have to appeal to nationalist or globalist values, depending on the audience, rather than standing on merit alone. We need to show not only that our policies work but that they help people from all walks of life advance the goals they value—whether opportunity, individual autonomy, security, or fairness. Otherwise, the economic interventions of the Obama era might seem modest compared to future administrations’ policies.
The good news is that it’s not too late, but we have a lot of work to do in crafting our message. Economic freedom depends on it.
Iain Murray is a vice president at the Competitive Enterprise Institute. Johan Norberg is a senior fellow at the Cato Institute and a Swedish author and historian of ideas, devoted to promoting economic globalization.