The rise of neoliberal nationalism

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The rise of neoliberalnationalismAdam Harmes aa Department of Political Science, University ofWestern Ontario, London, Ontario, Canada

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Review of International Political Economy 19:1 February 2012: 59–86

The rise of neoliberal nationalismAdam Harmes

Department of Political Science, University of Western Ontario, London,Ontario, Canada

ABSTRACT

In the IPE literature, neoliberalism and nationalism have generally been por-trayed as anti-thetical to one another. More recently, scholars have sought tochallenge this binary view by examining how nationalists have employedneoliberal policies for nationalist reasons. However, while showing how ne-oliberal policies can be compatible with nationalist values, these approacheshave not examined whether the reverse might also be true, whether certainnationalist policies (and discourses) might be genuinely compatible with ne-oliberal values. To address this gap in the literature, this paper makes twoarguments. The first is that certain nationalist policies are not only compati-ble with neoliberal values, but that these values may actually be dependenton certain nationalist policies. The second argument made is that neolib-eral nationalism may be on the rise due to a shift among social democraticforces from a broad strategy of economic nationalism to one of social demo-cratic multilateralism. To demonstrate these points, the paper challenges theequation of neoliberalism with internationalism as well as showing why ne-oliberal nationalism is distinct from the nationalism of both populist andneoconservatives.

KEYWORDS

Neoliberalism; nationalism; social democratic multilateralism; neoconser-vatism; anti-globalisation; Euroscepticism.

INTRODUCTION

Throughout the International Political Economy (IPE) literature, economicneoliberalism and nationalism are generally portrayed as anti-thetical(Varadarajan, 2006). This is most evident in IPE textbooks that identifyneoliberalism and nationalism as competing ontological and normativeapproaches (Gilpin, 2001; O’Brien and Williams, 2004). It is also evidentin some neoliberal views on an emerging borderless world (Friedman,

Review of International Political EconomyISSN 0969-2290 print/ISSN 1466-4526 online C© 2012 Taylor & Francis

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REVIEW OF INTERNATIONAL POLITICAL ECONOMY

2000; Ohmae, 1996) as well as in recent studies of economic and culturalnationalism which portray them as a reaction and challenge to neoliberalglobalisation (Barber, 1995; Radice, 2000; Worth, 2002). In each case, thesource of the opposition stems from the way that neoliberalism is equatedwith internationalism, while nationalism is equated with social democraticand other more interventionist approaches.

More recently, scholars have sought to challenge this binary view intwo main ways. The first is by arguing that economic nationalism shouldbe defined by its nationalist motivation rather than by any particular setof policies such as protectionism (Helleiner, 2002; Helleiner and Pickel,2005; Pickel, 2003). In other words, economic nationalism as developed byFriedrich List and others is first and foremost an ideology which seeks topromote the values of national unity, power, autonomy and sovereignty.As Helleiner argues, this implies: ‘economic nationalism can be associatedwith a wide range of policy projects, including the endorsement of liberaleconomic policies’ (2002: 308). Thus, different studies have shown hownationalists can employ neoliberal policies for nationalist reasons and, asa result, why neoliberal policies can be compatible with nationalist val-ues. The second challenge to the view that neoliberalism and nationalismare anti-thetical comes from studies, which show how neoliberals haveemployed nationalist discourses to universalise and promote neoliberalpolicies (Helleiner and Pickel, 2005). Important to note here, however, isthat this use of nationalist discourses by neoliberals is seen as being instru-mentalist and politically expedient rather than actually being compatiblewith neoliberal values (Opcit: 313). Therefore, while showing how neolib-eral policies can be compatible with nationalist values, these approacheshave not examined whether the reverse might also be true, whether certainnationalist policies (and discourses) might be genuinely compatible withneoliberal values.

Reflecting this gap in the literature, this paper examines whether certainnationalist policies might be genuinely compatible with neoliberal values.In doing so, two main arguments are made. The first is that not only cer-tain nationalist policies are compatible with neoliberal values, but alsothese values may actually be dependent on certain nationalist policies. Todemonstrate this point, the paper challenges the conflation of neoliber-alism with the other, more broadly, internationalist strands of liberalismincluding liberal internationalism, neoliberal institutionalism and classicaleconomic liberalism. Specifically, by examining the normative work of keyneoliberal intellectuals, it shows that while the other strands of liberalismsupport free trade and capital mobility for reasons of economic efficiencyand international peace, neoliberalism supports them primarily for creat-ing the inter-jurisdictional policy competition, which they believe helpsto lock-in neoliberal policies at the domestic level. Therefore, in contrastto the other strands of liberalism, neoliberalism is much more opposed

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HARMES: THE RISE OF NEOLIBERAL NATIONALISM

to international regimes and institutions that seek to harmonise policiesrelated to wealth distribution and the correction of market failures – whatHeld (2004) terms ‘social democratic multilateralism’ – due to their po-tential to limit policy competition. As a result, rather than being broadlyinternationalist in a manner similar to the other strands of liberalism, ne-oliberalism is shown to advocate fiscal and regulatory sovereignty withinthe context of international capital mobility. Recognising this fact is sig-nificant as it helps us to understand the theoretical rationale for, what canbe termed, ‘neoliberal nationalism’ and thus why certain nationalist poli-cies and discourses can be genuinely compatible with neoliberal values.Moreover, to further distinguish this concept of neoliberal nationalism, thepaper also outlines why it is distinct from the nationalism of both populistand neoconservatives.

The second argument made in this paper is that this form of neolib-eral nationalism may be on the rise due to recent changes in the polit-ical strategies of social democratic social forces. Specifically, when thesesocial forces responded to free trade and capital mobility primarily byadvocating a protectionist form of economic nationalism (including both‘anti-globalisation’ and ‘anti-regionalisation’), neoliberals responded withan internationalist discourse. However, as these forces increasingly shiftedfrom a strategy of economic nationalism to one of social democratic multi-lateralism, so too have neoliberals increasingly begun to employ a nation-alist discourse in order to counteract them.

THEORISING LIBERAL SUPPORTFOR INTERNATIONALISM

The view that neoliberalism and nationalism are anti-thetical has been rein-forced by the equation of neoliberalism with internationalism and nation-alism with social democratic and other more economically interventionistapproaches. In the case of globalisation, this has occurred for two mainreasons. Firstly, while many scholars agree that neoliberal (or free mar-ket) globalisation is merely one possible type of globalisation (Held andMcGrew, 2002), the fact that the neoliberal variant is currently dominanthas caused it to be conflated with globalisation in general (Friedman, 2000;Gilpin, 2000; Ohmae, 1996). As a result, being pro-free market is equatedwith being ‘pro-globalisation’ and being anti-free market is equated withbeing ‘anti-globalisation’ and nationalistic (Ibid.) Secondly, the interna-tional relations literature has, at times, implicitly conflated the variouspolitical and economic strands of liberalism into a coherent and broadlypro-globalisation whole. It has done so, in part, by viewing economicneoliberalism simply as a more recent revival of classical economic liberal-ism. However, to understand the potential for neoliberal nationalism, it isnecessary to disaggregate the different strands of liberalism and identify

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which aspects of internationalism they actually support and why. In doingso, the argument of this section is that neoliberalism differs significantlyfrom the other strands of liberalism, including classical economic liberal-ism, in that its support for internationalism is based on a different set ofnormative priorities.

Mutual gains and international peace:The liberal case for internationalism

The first and possibly most broadly internationalist strand of liberalism is‘liberal internationalism’. Emerging in the aftermath of First World War,the primary normative goal of liberal internationalism is the promotionof international peace. As Held and McGrew note, to achieve this goal‘liberal internationalists consider that political necessity requires, and willhelp bring about, a more cooperative world order. Three factors are cen-tral to this position: growing interdependence, democracy and global in-stitutions’ (2002: 101). Thus, from President Woodrow Wilson onwards,liberal internationalists have been in favour of free trade and internationalcapital mobility for their ability to promote both democratisation and in-terdependence. They have also supported the expansion of a broad arrayof international regimes and institutions to promote greater cooperationand manage increasing interdependence. In the latter case, liberal inter-nationalists assert: ‘in an increasingly interdependent world the politicalauthority and jurisdiction of these international institutions has a naturaltendency to expand’ (Ibid.: 102).

Neoliberal institutionalism is another strand of liberalism which, whileemphasising international cooperation and mutual gains, can also be con-sidered as broadly internationalist. As Goldstein and Whitworth argue,neoliberal institutionalism is ‘an approach that stresses the importanceof international institutions in reducing the inherent conflict that realistsassume in an international system’ (2005: 90). More precisely, neoliberalinstitutionalism seeks to challenge the realist notion that the internationalsystem is characterised by a zero-sum game by emphasising the potentialfor mutual gains. In terms of economic policy, this view leads to a naturalsupport for free trade and international capital mobility, which are seenas positive sum games in which all participants achieve mutual benefits.Beyond free trade and capital mobility, neoliberal institutionalism alsosupports the expansion of various international regimes and institutionsto promote greater cooperation and manage economic interdependence.Highlighting this point, Steans and Pettiford note: ‘[n]eoliberalism is builtupon the assumption that states need to develop strategies and forums forcooperation over a whole set of new issues and areas’ (2005: 40).

Classical economic liberalism is also broadly internationalist in that itsproponents are generally supportive of free trade and capital mobility as

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well as the expansion of international regimes and institutions. Some clas-sical economic liberals, such as John Stuart Mill and Richard Cobden, heldviews that foreshadowed liberal internationalism because they supportedfree trade and capital mobility mainly for their ability to promote a moreinterdependent and peaceful world. As Helleiner argues: ‘economic liber-als such as Mill and Cobden saw free trade primarily as a tool to strengthena peaceful cosmopolitan world society. Free trade would foster peace, theyargued, by creating ties of interdependence and spreading “civilization”’(2002: 313). In contrast, economic liberals such as Adam Smith and DavidRicardo supported free trade and capital mobility on the grounds of classi-cal economic liberalism’s main normative priorities of economic efficiencyand mutual gains. Noting this difference in emphasis, Helleiner reports:‘Smith’s views on international issues were in fact underdeveloped andnot at all typical of the cosmopolitan economic liberals who followed him’(Ibid.: 312). He also reports: ‘Mill and Cobden viewed this cosmopoli-tan political case for free trade as ultimately much more important thanRicardo’s economic case’ (Ibid.: 313).

Overall, it is apparent that there are many overlaps between liberal inter-nationalism, neoliberal institutionalism and classical economic liberalism,which provide coherence to the broader liberal approach. In terms of pol-icy, all of them are broadly internationalist in that they support free tradeand capital mobility as well as the expansion of many international regimesand institutions. In terms of motivations, while each emphasise differentnormative priorities, they all favour globalisation for its stated ability topromote international peace and mutual gains. However, the same cannotbe said for economic neoliberalism. In contrast to the other liberal strands,economic neoliberalism supports free trade and capital mobility, but isfirmly opposed to the expansion of many international regimes and institu-tions. This is the case because, rather than emphasising economic efficiencyor international peace, the normative priority of neoliberalism is individ-ual freedom and, in particular, freedom from ‘progressive’ forms of gov-ernment intervention designed to redistribute wealth and correct marketfailures. Despite these differences, much of the International Relations (IR)literature tends to view economic neoliberalism simply as a more recent re-vival of classical economic liberalism with the resulting implication that itcan also be viewed as similarly and broadly internationalist. To understandwhy this is not the case, it is useful to outline the value and policy differ-ences between classical economic liberalism and economic neoliberalism.

Differences between classical economic liberalism and neoliberalism

From Adam Smith onwards, the primary normative goal of classical eco-nomic liberalism has been that of allocative efficiency and the creation ofmutual gains. Moreover, based on Smith’s concept of the ‘invisible hand’

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where the decentralised decisions of individuals acting in their own self-interest are automatically coordinated towards beneficial social outcomes,classical economic liberals support a free market economy governed by a‘nightwatchman’ state (Howlett et al., 1999). This means that governmentintervention in the economy should be kept to a minimum so as not tointerfere with the automatic workings of the invisible hand. With the statethus out of the way, classical liberals believe that the free market econ-omy, including free trade, will promote economic efficiency and a numberof more specific benefits including the decentralisation of power, inter-dependence, technological innovation and the self-correction of variouseconomic problems.

In contrast to classical economic liberals who emphasise efficiency, thenormative priority of neoliberal intellectuals – including Nobel-prize-winning economists Friedrich von Hayek, Milton Friedman and JamesBuchanan – is individual freedom and, in particular, freedom from socialdemocratic forms of government intervention designed to redistributewealth and correct market failures. To explain this opposition to govern-ment intervention and support for more laissez-faire markets, Buchananexemplifies the neoliberal view by arguing:

The categorical difference between market and political interactionlies in the continuing presence of an effective exit option in marketrelationships and in its absence in politics. To the extent that theindividual participant in market exchange has available effective al-ternatives that may be chosen at relatively low cost, any exchangeis necessarily voluntary. In its stylized form, the market involves nocoercion, no extraction of value from any participant without consent(1995: 20).

In neoliberal theory, therefore, government is viewed as a monopolisticrent seeker whose intervention in the economy is unlikely to be eitherbenevolent or effective. Thus, as Howlett et al. observe, neoliberalism isdistinguished by ‘the supreme importance attributed to individuals andtheir freedom; they emphasize individual freedom even more than eco-nomic efficiency. They prefer the market to the state because the marketis based on the principle of free choice among individuals whereas theauthority of the state rests on coercion’ (1999: 27).

Taken together, this prioritisation of individual freedom and more neg-ative view of government leads to two key policy differences betweenneoliberalism and classical economic liberalism, which can be understoodin terms of Gamble’s (1979) characterisation of neoliberalism as ‘the freeeconomy and the strong state’. For Gamble, what is important to noteabout neoliberalism ‘is not that it is against all state intervention but thatit wants the state to intervene less in some areas and more in others’(Ibid.: 5). In practical terms, this refers to less intervention to redistribute

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wealth and correct market failures and more intervention to protect prop-erty rights, enforce contracts and create markets. Moreover, while Gambleobserves that this “‘[f]ree economy-strong state” . . . marks the continuityof the doctrine with the tradition of liberal political economy’ (Ibid.), it isimportant to note that this is also where we can observe two key policydifferences between neoliberalism and classical economic liberalism.

In terms of the free economy, the first policy difference is that, ratherthan simply being a revival of classical economic liberalism, neoliberal-ism should be viewed as a much more laissez-faire version of the freemarket approach. Compared with classical economic liberalism, Richard-son argues: ‘contemporary neoliberal ideology . . . seeks to go further:it amounts to an attempt, far more thoroughgoing than its nineteenth-century predecessor, to subordinate the state to the market’ (2001: 42).Specifically, in addition to viewing most wealth redistribution as a formof coercion, neoliberals also oppose the correction of many market fail-ures such as pollution and monopolies. On the one hand, they disputethe existence of many of the market failures identified by classical lib-eral and Keynesian-welfare economics (Friedman, 1962). On the other,they doubt that government intervention can effectively correct marketfailures due to the problem of ‘government failure’ (McKean, 1965) and,even if it could, they believe intervention should still be avoided in theinterests of preserving individual freedom (Friedman, 1962; Howlett et al.,1999). Thus, even though many neoliberals trace their intellectual lineageto Adam Smith, a number of observers have argued that Smith was farless laissez-faire in his support for free markets (Brown, 1993; Richardson,2001; Stein, 1994; Viner, 1927). Notably, this view is also held by a numberof contemporary proponents of laissez-faire who are critical of Smith. Asthe free market economist Walter Block argues: ‘Adam Smith should beseen as a moderate free enterpriser who appreciated markets but mademany, many exceptions. He allowed government all over the place’ (citedin Heer, 2001).

The second main policy difference between classical economic liberalismand neoliberalism stems from the latter’s attempt to reconcile the desirefor a strong state with its more orthodox opposition to social democraticforms of intervention. Illustrating this view, Weingast notes:

The fundamental political dilemma of an economic system is this:A government strong enough to protect property rights and enforcecontracts is also strong enough to confiscate the wealth of its citizens.Thriving markets require not only the appropriate system of propertyrights and a law of contracts, but a secure political foundation thatlimits the ability of the state to confiscate wealth (1995: 1).

To resolve this dilemma, and in contrast to classical economic liberalism,neoliberal theory places a much greater emphasis on creating ‘a secure

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political foundation’ for free markets through the use of constitutionaland institutional mechanisms to ‘lock-in’ free market policies; an el-ement of neoliberalism which Gill (1998, 2002) has termed the ‘newconstitutionalism’.

This focus, in neoliberalism, on locking-in free market policies is evi-dent in both the ‘constitutional economics’ developed by von Hayek andBuchanan and the ‘market-preserving federalism’ (and internationalism)developed by Hayek, Buchanan and Weingast. In the former case, the aimof neoliberal constitutionalism is to limit social democratic forms of gov-ernment intervention through the use of legal–juridical mechanisms suchas having balanced budget amendments and protection for property rightsincluded in national bills of rights (Buchanan, 1989). Thus, as Gill notes:‘neoliberals argue for the redefinition of the political to construct a “pro-tected domain” to secure individual freedom against encroachments of thepower of the state and pressures of the “tyranny of the majority” in demo-cratic systems’ (2002: 52). As a result, neoliberal constitutionalism seeksto specifically limit those forms of government intervention which aim atwealth redistribution; either directly through fiscal and expropriation poli-cies or indirectly through various forms of ‘progressive’ regulation suchas pro-union labour laws and environmental regulations. Notably, whilesome classical liberals such as Locke also sought to protect property againsta tyranny of the majority, this position was opposed by classical economicliberals such as Smith, Ricardo and Mill. As Smith critically observes:

But here when . . . some have great wealth and others nothing, it isnecessary that the arms of authority should be continually stretchedforth, and permanent laws or regulations made which may ascertainthe property of the rich from the inroads of the poor . . . Law andgovernment may be considered in this and indeed in every case asa combination of the rich to oppress the poor (cited in Malloy, 1994:119).

In addition to these constitutional constraints, neoliberals also arguefor the locking-in of free market policies through the use of ‘market-preserving’ forms of federalism and internationalism, what IR scholarscall the ‘structural power’ of ‘capital mobility’ (Andrews, 1994; Gill andLaw, 1993). The idea is to create an ‘exit option’ in the realm of politicswhere individuals and firms can move their assets across borders in away that forces governments to compete for them by providing the mostdesirable policies. Intellectually, this method for limiting government in-tervention originated with the neoliberal approach to federalism which, inthe context of post-Second World War limits on trade and capital mobility,sought to create an exit option within the context of individual countries(Harmes, 2006). Thus, as von Hayek argues, to the extent that federalismcreates different political jurisdictions, and thus an exit option, within an

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individual country, ‘[f]ederal government is thus in a very definite senselimited government’ (1960: 184–5).

However, rather than advocating federalism in general, neoliberal the-ory argues for a specific type of federalism that is explicitly designed tolimit social democratic forms of government intervention. It does so byoutlining two broad principles for determining which policy capabilitiesshould be assigned to which levels of government. The first principle is tocentralise those policy capabilities that relate to protecting property rights,enforcing contracts and creating markets. Of particular importance here isthat sub-national governments should not have the ability to limit the rightto exit (or enter) their jurisdictions. This ensures a national economy basedon internal free trade and capital mobility and, in turn, that individualsand firms have the ability to move their assets across sub-national juris-dictions. The second principle of neoliberal federalism is to decentralisethe policy capabilities that neoliberals do not support including thosewhich relate to wealth redistribution and the correction of many marketfailures. Ideally, this includes the assignment of redistributive taxing pow-ers related to income, capital gains and corporate taxes to the sub-nationallevel along with jurisdiction over redistributive social programmes such aspublic education, health care and social security. It also includes a similardecentralisation of regulatory powers related to, for example, environ-mental and labour policy. In each case, the intent is to prevent nationalpolicies on these issues and to confine as many of the undesired tax andregulatory powers as possible to the sub-national level where they will beconstrained by the need of governments to compete for mobile citizensand firms. Advocating this approach, von Hayek argues: ‘Not only wouldthe greater mobility between the states make it necessary to avoid all sortsof taxation that would drive capital or labour elsewhere, but there wouldalso be considerable difficulties with many kinds of indirect taxation [i.e.regulation]’ (1939: 270).

A similar argument in favour of using decentralisation to create an exitoption is made by Milton Friedman in his seminal Capitalism and Freedom:

If government is to exercise power, better in the county than in thestate, better in the state than in Washington. If I do not like whatmy local community does, be it in sewage disposal, or zoning, orschools, I can move to another local community, and though fewmay take this step, the mere possibility acts as a check. If I do notlike what my state does, I can move to another. If I do not like whatWashington imposes, I have few alternatives in this world of jealousnations . . . The preservation of freedom is the protective reason forlimiting and decentralizing government power (1962: 3).

More recently, Barry Weingast has sought to formalise this neoliberalapproach to federalism by developing the notion of ‘market-preserving

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federalism’. Specifically, Weingast views federal systems as having twomain characteristics: ‘(F1) a hierarchy of governments, that is, at least “twolevels of government rule the same land and people”, each with a delin-eated scope of authority so that each level of government is autonomous inits own, well-defined sphere of political authority; and (F2) the autonomyof each government is institutionalized in a manner that makes feder-alism’s restrictions self-enforcing’ (1995: 4). In addition to these generalcharacteristics, Weingast argues:

A federal system is market-preserving if it ha[s] three additionalcharacteristics: (F3) subnational governments have primary regu-latory responsibility over the economy; (F4) a common market isensured, preventing the lower governments from using their regula-tory authority to erect trade barriers against the goods and servicesfrom other political units; and (F5) the lower governments face ahard budget constraint, that is, they have neither the ability to printmoney nor access to unlimited credit. This condition is not met if thecentral government bails out the lower one whenever the latter facesfiscal problems (Ibid.: 4).

Emphasised in Weingast’s version, therefore, is the need to have theprivate economy, in the form of free trade and capital mobility, operateat a level above that of tax and regulatory capabilities related to wealthredistribution and the correction of market failures. This, he believes, willhave the effect of constraining the ability of governments to implementmore social democratic policies.

Beyond Weingast, one of the most explicitly normative arguments infavour of the neoliberal approach to federalism (what he calls ‘competitivefederalism’) comes from James Buchanan. In his 1995 paper on ‘FederalismAs an Ideal Political Order and an Objective for Constitutional Reform’,Buchanan builds on his earlier work on constitutional economics and theneed for lock-in mechanisms to preserve property rights and free markets.As Buchanan notes:

The principle of federalism emerges directly from the market anal-ogy. The politicized sphere of activity, in itself, may be arranged ororganized so as to allow for the workings of competition, which is theflip side of the availability of exit, to become operative. The domainof authority for the central government, which we assume here iscoincident in territory and membership with the economic exchangenexus, may be severely limited, while remaining political author-ity is residually assigned to the several state units, each of which issmaller in territory and membership than the economy. Under sucha federalized political structure, persons, singly and/or in groups,

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would be guaranteed the liberties of trade, investment, and migra-tion across the inclusive area of the economy. Analogously to themarket, persons retain an exit option (1995: 21).

In the United States, this approach has recently been promoted by theAmerican Enterprise Institute (AEI), one of the country’s most influentialbusiness-sponsored think tanks. In 2000, the Institute set up its FederalismProject to explicitly promote Buchanan’s ‘competitive federalism’ which,in the view of project director Michael Greve, ‘does not seek to empowerstates; rather, it seeks to discipline governments by forcing them to competefor citizens’ business’ (Greve, 2000). The AEI project is thus fully consistentwith the market-preserving federalism advocated by Hayek, Friedman,Weingast and Buchanan and it helps to highlight the overall coherence ofneoliberal thought in this area. It is this coherence which brings us to, andhelps to explain, the neoliberal case for internationalism.

Policy competition and individual freedom:The neoliberal case for internationalism

Whereas classical economic liberals support free trade and internationalcapital mobility for reasons of mutual gains and international peace, ne-oliberals support them primarily for their ability to promote individualfreedom through the creation of an exit option and policy competitionat the international level. Illustrating this view in the case of capital mo-bility, Christopher Hartwell of the neoliberal Cato Institute notes: ‘[t]hecase against capital controls rests on sound economic reasoning. Morefundamentally, attempts to restrict capital movements are an assault onindividual liberty’ (2001: 16). Echoing this emphasis on freedom ratherthan efficiency, von Hayek argues:

The extent of the control over all life that economic control confersis nowhere better illustrated than in the field of foreign exchanges.Nothing would at first seem to affect private life less than a statecontrol of the dealings in foreign exchange, and most people willregard its introduction with indifference. Yet the experience of mostContinental countries has taught thoughtful people to regard thisstep as the decisive advance on the path to totalitarianism and thesuppression of individual liberty. It is, in fact, the complete deliveryof the individual to the tyranny of the state, the final suppressionof all means of escape, not merely for the rich but for everybody(1965: 92).

Equally important is that the policy competition created by capital mo-bility is viewed as specifically constraining social democratic forms ofintervention designed to redistribute wealth and correct market failures.

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In the former case, for example, Chris Edwards and Veronique de Rugy ofthe Cato Institute note: ‘According to the public choice view, internationaltax competition enhances welfare because it constrains government fromgrowing inefficiently large’ (2002: 22).

Therefore, whether implemented at the regional or global levels, theneoliberal case for internationalism is based on the same logic as thatof market-preserving federalism. As Greve (2000) of the AEI FederalismProject observes: ‘The benefits of jurisdictional choice and competitionare visible at all levels of government . . . At the international level, thefree flow of capital (and to some extent labour) has rewarded America’scomparatively freewheeling economy, while punishing countries whosegovernments insist on pursuing collectivist experiments’. Making a sim-ilar point, Buchanan argues: ‘the relationship between federalism, as anorganizing principle for political structure, and the freedom of trade acrosspolitical boundaries must be noted. An inclusive political territory, say, theUnited States or Western Europe, necessarily places limits on its own abil-ity to interfere politically with its own internal market structure to theextent that this structure is, itself, opened up to the free workings of in-ternational trade, including the movement of capital’ (1995: 27). Thus, it isapparent that neoliberalism differs significantly from the other strands ofliberalism, including classical economic liberalism, in that its support forinternationalism is based on a fundamentally different set of normativepriorities. Moreover, as will be demonstrated in the following sections, itis these normative priorities which provide the theoretical rationale forneoliberal nationalism.

THEORISING NEOLIBERAL NATIONALISM

The relationship between neoliberalism and nationalism is a complex oneand, to theorise it, it is useful to make a distinction between neoliberaltheory, as outlined earlier, and neoliberalism in practice. In terms of prac-tice, neoliberal social forces have often made philosophical compromisesand promoted their desired policies through the formation of politicalcoalitions with populist conservatives. As Gamble observes: ‘a number ofpoliticians have been adroit either at combining the neo-liberal economicprogramme with conservative policies which do appeal to particular in-terests and groups, or at recasting the neo-liberal economic policies inways that resonate as popular commonsense. The authoritarian populismof Thatcher and Reagan were two such successful employments of neo-liberalism by politicians on the right’ (2001: 133). Moreover, to the extentthat nationalism can often be the foreign policy of populism, right-of-centre politicians have also sought to strengthen their coalitions throughthe use of nationalist discourses and policies including military actions.Thus, while populism and nationalism can be employed by both left and

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right social forces, David Harvey argues: ‘the neoliberal state needs nation-alism of a certain sort to survive. Forced to operate as a competitive agentin the world market and seeking to establish the best possible businessclimate, it mobilizes nationalism in its effort to succeed’ (2005: 85).

As noted in the Introduction, however, these appeals to nationalismby neoliberals are generally seen as being politically expedient rather thanactually being compatible with neoliberal values and theory. As Harvey ar-gues: ‘Nationalism . . . is profoundly antagonistic to the neoliberal agenda.This was Margaret Thatcher’s dilemma, for it was only through playing thenationalism card in the Falklands/Malvinas war and, even more signifi-cantly, in the campaign against economic integration with Europe, that shecould win re-election and promote further neoliberal reforms internally’(2005: 79). However, while the link between neoliberalism and nationalismcan often be one of political expediency and theoretical incompatibility, thisis not always the case. Thus, as argued below, it is important to recognisethat in various situations, not only certain nationalist policies are compati-ble with neoliberal values, but also these values may actually be dependenton certain nationalist policies.

Market-preserving federalism and neoliberal nationalism

The theoretical rationale for neoliberal nationalism is simply an extensionof the neoliberal case for internationalism and it stems from the desire toconstrain social democratic forms of government intervention by creatingan exit option and policy competition. This is why the neoliberal visionsfor both regionalisation and globalisation are consistent with Weingast’skey criteria for market-preserving federalism. In terms of creating an exitoption, most important is the criterion: ‘(F4) a common market is ensured,preventing the lower governments from using their regulatory authorityto erect trade barriers against the goods and services from other polit-ical units’ (1995: 4). As outlined earlier, this implies either a de facto orde jure centralisation of those policy capabilities related to the promotionof free trade, capital mobility and property rights. It is for this reasonthat neoliberal social forces, including various transnational corporationsand business-sponsored think tanks and lobby groups, have supportedfree trade agreements such as the World Trade Organization (WTO), theNorth American Free Trade Agreement (NAFTA) and the Single EuropeanAct (SEA) as well as the incorporation of various investor and intellec-tual property rights regimes within them. However, while free trade andcapital mobility ensure an exit option, they do not on their own ensurepolicy competition. This is why the neoliberal visions for regionalisationand globalisation are also consistent with the further criterion of market-preserving federalism that ‘(F3) subnational governments have primary

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regulatory responsibility over the economy’ (Ibid.: 4). Applied at the in-ternational level, this implies the decentralisation – to at least the nationallevel – of those policy capabilities which relate to wealth redistributionand the correction of market failures. Moreover, in terms of regionalisa-tion and globalisation, this requires more than simply avoiding the creationof supranational institutions with these policy capabilities. It also requiresthat governments avoid entering into multilateral agreements, such as theOrganisation for Economic Co-operation and Development (OECD) Ini-tiative on Harmful Tax Competition or the Kyoto Protocol – which aimto increase tax or regulatory burdens through cross-national harmonisa-tion. Such harmonisation would effectively reduce the disciplinary effectof policy competition by creating a tax or regulatory ‘floor’ below whichno country would be allowed to go. Therefore, in contrast to the otherstrands of liberalism, neoliberalism is much more opposed to a broaderform of internationalism and to the expansion of international regimes andinstitutions designed to offset the competitive pressures associated withfree trade and capital mobility.

Making this point in the case of European regionalisation, Buchanan hasargued:

The opportunity has existed, and still exists, to organize Europeanpolitics so as to put in place a genuine federal structure with manyelements of the ideal set out earlier. The Europe-wide economy hasbeen substantially integrated, with historically unprecedented liber-ties of resources flows and trade across traditional national bound-aries. Reform requires the establishment of a strong but limited cen-tral authority, empowered to enforce the openness of the economy,along with other minimal state functions. In this way, and only in thisway, can the vulnerability of the individual European to exploitationby national political units be reduced. At the same time, however,the extension of the central authority’s powers beyond such minimallimits must be rigidly opposed. The separated nation-states, as mem-bers of the federal union, must zealously protect the whole range ofsubminimal political activities (1995/1996).

Therefore, based on this desire to lock-in free market policies, we canexpect neoliberal social forces to oppose many international regimes and,instead, to advocate in favour of national fiscal and regulatory sovereignty.It is for this reason that certain nationalist policies can be genuinelycompatible with, and even essential for, neoliberal values. Finally, eventhough market-preserving internationalism might seem to make market-preserving federalism less necessary, neoliberals still advocate for bothsimultaneously. They do so to provide non-transnational firms and indi-viduals with an exit option (thus amplifying the effectiveness of policy

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competition) and as a form of political insurance against policy changes ateither level.

Disaggregating right-of-centre social forces

To further distinguish neoliberal nationalism from other forms of liber-alism and nationalism, it is useful to disaggregate various right-of-centresocial forces in the Anglo-American countries. Here, despite the many pos-sible sub-divisions and labels, there are three main positions that are usefulto differentiate from neoliberal nationalism in terms of their views on freetrade and capital mobility as well as on the expansion of internationalregimes and institutions. Furthest to the right are ‘populist conservatives’(also called ‘paleoconservatives’) and examples include Patrick Buchananor the more recent ‘tea party’ movement in the United States, the BritishNational Party and the One Nation Party in Australia. Populist conserva-tives tend to be socially conservative, nationalistic, xenophobic, isolationistand opposed to most forms of internationalism (Worth, 2002). While pro-free market at the domestic level, their populist roots often lead to viewswhich are anti-elitist and opposed to big business and free trade, both ofwhich are seen as hurting the interests of working families. They are alsoopposed to most other international regimes and institutions which theyview as threats to national sovereignty and cultural identity. As Worthreports, American populist conservatives ‘pledge to defend the US consti-tution against big global corporations and global institutions, which, theyclaim, are eroding both the freedoms and the sovereignty of the country.Thus, institutions such as the World Bank, WTO, NAFTA and GATT arecondemned as unpatriotic, as is the United Nations’ (Ibid.: 308). On thebasis of these views, populist conservatives tend to be the most nation-alistic of right-of-centre social forces in that they oppose free trade andcapital mobility as well as the broad expansion of international regimesand institutions.

Next in from the right are ‘neoconservatives’ who can also be called‘national greatness’ conservatives. Neoconservatism is most prominent inthe United States and is associated with elite public intellectuals such asIrving and William Kristol, David Brooks and Robert Kagan as well as var-ious think tanks and media outlets (Williams, 2005). Moreover, while someobservers conflate neoconservatives with populist conservatives based ontheir nationalism, or with neoliberals based on their support for free mar-kets and free trade, it is important to emphasise that neoconservatismdiffers from both. At the heart of neoconservatism is a critique of liber-alism and its emphasis on individual self-interest. As Williams observes,for neoconservatives: ‘the reduction of action to nothing more than thepursuit of self-interest gives rise to a destructive combination of hedonismand despair’ (Ibid.: 312). In its place, neoconservatives advocate individual

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and civic ‘virtue’ and a specific form of nationalism that is self-consciouslydifferent from that of populist conservatism. As William Kristol and DavidBrooks argue: ‘American nationalism . . . has never been European blood-and-soil nationalism. It’s true that in an absence of a real appeal to nationalgreatness, some conservatives are tempted, a la Pat Buchanan, to turn tothis European tradition. But this can’t and shouldn’t work in America.Our nationalism is that of an exceptional nation founded on a universalprinciple’ (cited in Ibid.: 318). Thus, while neoconservatives tend to besocially conservative and nationalistic, they are critical of the isolationismof populist conservatives and, instead, advocate a ‘muscular patriotism’and ‘benevolent hegemony’ to promote democracy and ‘virtue’ aroundthe world.

In terms of free trade and capital mobility as well as the expansion of in-ternational regimes and institutions, the nationalism of neoconservativesleads to very similar policy positions as that of neoliberals. This is onereason why neoliberalism and neoconservativism are frequently conflatedand the terms are often used interchangeably. However, while appearingto have similar policies on these specific issues, it is important to recog-nise that they do so based on fundamentally different normative prioritiesand with the support of different social forces. Firstly, while neoconserva-tives generally support free trade and capital mobility, they do so for morenationalistic reasons. Specifically, they support free trade because, in thecontext of continued US hegemony and economic dominance, free trade isseen as enhancing US power. This is why for neoconservatives, support forfree trade and free markets is always conditional; security trumps trade inthe same way that virtue trumps laissez-faire. Thus, neoconservatives aremore supportive of Adam Smith, who also saw a role for moral sentiments,than of contemporary neoliberals who seek to subordinate everything tothe free market and individual self-interest. As Williams notes, neoconser-vatives believe: ‘[f]or all modern economics’ lauding of Smith, it providesa “vulgarization” of his thought that lacks an awareness of the importanceof “moral and political philosophy” and the central role that culture andvirtuous conduct play in his account of stable and viable modern societiesand even in economic growth’ (Ibid.: 315–6). Thus, while neoconservativesgenerally support free trade and free markets, they do so for different rea-sons than neoliberals. The same applies to neoconservatives’ oppositionto the expansion of many international regimes and institutions. Specif-ically, where neoliberals oppose many of them based on their potentialto limit policy competition, neoconservatives oppose them because theyare seen as diluting the ‘moral clarity’ of US foreign policy and imposingconstraints on the use of American power.

Finally, in addition to emphasising the differences between neolib-eral nationalism and the nationalism of populist and neoconserva-tives, it is also important to re-emphasise the differences between the

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internationalism of classical economic liberals and neoliberals in that theyindicate the potential for a split in the economically liberal coalition. Specif-ically, when arguing in favour of free trade and capital mobility and againstthe arguments of so-called ‘anti-globalisation’ activists, all economic liber-als employed an internationalist discourse emphasising mutual gains andinternational peace. The result was that there often seemed to be no dif-ference between the views of classical economic liberals and neoliberals.However, as demands have grown for a greater number of internationalregimes and institutions to manage interdependence, the differences be-tween them become increasingly revealed as classical liberals tend to sup-port a broader form of internationalism while neoliberals promote fiscaland regulatory sovereignty through nationalistic discourses. Thus, in thesame way that it is important to recognise the differences between neolib-eral and conservative forms of nationalism, it is also important to recognisethat a strategy of neoliberal nationalism may not be adopted by all eco-nomically liberal social forces.

SOCIAL DEMOCRATIC MULTILATERALISMAND THE RISE OF NEOLIBERAL NATIONALISM

Having outlined its theoretical rationale and uniqueness, this section ar-gues that neoliberal nationalism may be on the rise due to recent changesin the political strategies of social democratic social forces. Social democ-racy, while originally conceived as a parliamentary strategy for evolvingto socialism, today tends to sit on the left side of the economically liberalspectrum in that it draws on the ‘embedded liberalism’ of Keynesian-welfare economics and the normative priorities of efficiency and socialjustice (Held, 2004; Howlett et al., 1999). These priorities, in turn, leadto an emphasis on a market economy combined with policies of wealthredistribution and the correction of market failures. In the latter case, thecorrection of market failures is viewed as much as a social justice issue as anefficiency issue, in that many externalities often reflect and reinforce exist-ing structures of inequality. As a result, for all the reasons that neoliberalsocial forces support policy competition, social democratic social forcesoppose it. Empirically, they agree with neoliberals that policy competitionimposes some constraints on the ability of governments to implement so-cial democratic forms of intervention (Held, 2004). Normatively, however,they view this as preventing many of the taxes they deem necessary forfunding redistributive social programmes as well as the regulations whichthey believe are required to correct market failures and to improve labour,environmental and other social standards. In fact, some social democraticsocial forces have decried (and overstated) policy competition for creat-ing a ‘race-to-the-bottom’ in terms of these programmes and standards(Barlow and Clarke, 2001).

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On the basis of this opposition to policy competition, many social demo-cratic social forces have opposed the implementation of various trade andinvestment agreements at both the regional and global levels. The resultwas that many commentators described these groups as being inherently‘anti-globalisation’ (Bhagwati, 2004; Gilpin, 2000; Wolf, 2004). However,as with neoliberalism and ‘pro-globalisation’, it should be apparent that‘anti-globalisation’ is not an accurate term. As Hardt and Negri (2000)argue: ‘[a]nti-globalization is not an adequate characterization of theprotestors . . . The protestors are indeed united against the present formof capitalist globalization, but the vast majority of them are not againstglobalizing currents and forces as such; they are not isolationist, separatistor even nationalists’. Thus, rather than being anti-globalisation (or anti-regionalisation in the case of the NAFTA or the SEA), many labour andsocial activists are opposed to having the economy, in the form of free tradeand capital mobility, operate at a level above that of tax and regulatorycapabilities related to wealth redistribution and the correction of marketfailures.

Thus, social democratic social forces have sought to have these tax andregulatory capabilities operate at the same level as capital mobility in or-der to limit the constraints imposed by policy competition. However, it isimportant to note that, in the present context of neoliberal globalisationand regionalisation, this goal can be realised in two different ways. Thefirst is by ‘bringing the economy back down’ to the level of national demo-cratic control through economic nationalism and an end to free trade andcapital mobility. The second is by ‘bringing democratic control up’ to thelevel of the global or regional economy through the harmonisation of taxand regulatory policies related to wealth redistribution and the correctionof market failures; the key components of what has been termed ‘socialdemocratic multilateralism’ (Held, 2004; Held and McGrew, 2002).

In fact, each of these approaches has been advocated by different socialdemocratic social forces in both the global protest movement (Green andGriffith, 2002) and the European Union (Hooghe and Marks, 1997) andit has been the growing shift towards social democratic multilateralismthat helps to explain the rise of neoliberal nationalism. Specifically, whenfaced with policies of economic globalisation or regionalisation, many so-cial democratic social forces initially responded by advocating economicnationalism to bring the economy back down to the level of national demo-cratic control. This was evident in the opposition of unions, social activistsand many left-of-centre political parties to free trade agreements such asthe European Common Market, the SEA, the NAFTA and the variousnegotiations of the WTO (Barlow and Clarke, 2001; Held and McGrew,2002; Hooghe and Marks, 1997). To counter these efforts, economic liberalsand neoliberals responded with an internationalist discourse emphasis-ing economic efficiency and peaceful internationalism (Bhagwati, 2004;

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Wolf, 2004). However, when free trade and capital mobility became moreentrenched, many social democratic social forces increasingly shifted froma strategy of economic nationalism to one of social democratic multilateral-ism (Held and McGrew, 2002). In other words, because it was proving moredifficult to ‘bring the economy back down’ due to the entrenchment of freetrade and capital mobility, many social democrats sought to ‘bring demo-cratic control up’ as an alternate strategy for limiting policy competition.This strategy was also a better fit with their general belief in the efficiencybenefits of free trade and capital mobility as well as the need to correctmarket failures and provide public goods at the regional and global levels(Kaul et al., 1999). Applied practically, this strategy has involved the pro-motion of various multilateral agreements (such as the OECD Initiative onHarmful Tax Competition and the Kyoto Protocol) and side agreements(such as the EU Social Charter and the labour and environmental sideaccords to NAFTA) designed to upwardly harmonise various taxes, reg-ulations and social standards and thus limit the constraints imposed bypolicy competition.

From social democratic nationalism to socialdemocratic multilateralism

Methodologically, this shift in strategy among social democratic socialforces is difficult to demonstrate, given the sheer number and heteroge-neous nature of the different groups within the global protest movementand the national politics of various countries. However, certain proxiesdo provide some initial evidence. One early example occurred when theBritish Trades Union Congress (TUC) as well as the Labour Party aban-doned their long-standing opposition to the European Community andits more recent extension through the SEA. They did so at least partiallyin response to Jacques Delors’ announcement that the SEA would havea social dimension in the form of the Social Charter. The Charter wasdesigned to harmonise various labour and social standards in order toprevent the policy competition and ‘social dumping’ that they believedwould accompany the SEA. Thus, while social democratic social forces inBritain retained their key goal of preventing policy competition by havingthe economy operate at the same level as that of democratic control, theynow saw a different way to pursue it. Specifically, rather than ‘bringing theeconomy back down’ to the level of national democratic control througheconomic nationalism, the TUC and the Labour Party began to advo-cate ‘bringing democratic control up’ to the level of the regional economythrough the Social Charter and broader support for the European Union.As one study noted: ‘The enthusiastic reception given to the Charter bytrade unions suggests that it will assist them. It is noteworthy, in this con-nection, that the British TUC abruptly changed its anti-community stance

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in 1988 in response to the advantages it perceived as emanating from theestablishment of a Community-wide plinth of social rights’ (Addison andSiebert, 1991: 618).

At the more ‘global’ level, another representative example of the shiftamong social democratic social forces occurred in 2002 when Oxfam In-ternational, a well-known development non-governmental organisation(NGO) and prominent member of the global protest movement, issueda report entitled Rigged Rules and Double Standards (Watkins and Fowler,2002). In the report, Oxfam announced its support for greater free tradeincluding an end to the developed country subsidies which hurt develop-ing country exporters. At the same time, the report also advocated moremultilateral rules and side agreements to govern international trade suchas higher labour standards and more effective social programmes for dis-placed workers. A similar example occurred in 2003 when the well-knownBritish columnist and activist George Monbiot wrote a column in the UKGuardian entitled I Was Wrong About Trade (Monbiot, 2003). In the column,Monbiot noted that he had come to accept the efficiency and interdepen-dence arguments in favour of free trade. He also noted that, rather thanbeing against trade and globalisation, activists should advocate for a more‘rules-based’ international economy.

Beyond the issue of trade, a further indicator of the broad shift among so-cial democratic social forces away from economic nationalism and towardsa strategy of social democratic multilateralism has been the publicationof various blueprints for a more socially democratic form of globalisation.Among academics, a number of blueprints have emerged with titles suchas Taming Globalization (Held and Koenig-Archibugi, 2003), CivilizingGlobalization (Sandbrook, 2003), Global Covenant (Held, 2004) and MakingGlobalization Work (Stiglitz, 2006). At the same time, the United NationsDevelopment Programme has been promoting a similar approach throughtheir concept of ‘global public goods’ (Kaul et al., 1999). Among activists,one of the most prominent blueprints was produced by the InternationalForum on Globalization, an international coalition of high profile intel-lectuals and activists who together account for much of the ‘leadership’of the global protest movement. Examples include well-known activistssuch as Maude Barlow, Tony Clarke, Walden Bello and Vandana Shiva. Inearly 2002, the Forum published a report entitled A Better World Is Possible:Alternatives to Economic Globalization. As the Financial Times reported, thisdocument ‘set out an alternative agenda calling for new institutions ofglobal governance under a reformed United Nations’ and that it provided‘a sense of what is becoming the unifying theme of an inchoate movement:the creation of democratic institutions of global governance’ (Harding,2002). Taken together, these examples do provide initial support for theview that a shift has occurred in the approach of many social democratic so-cial forces away from economic nationalism and towards a broad strategy

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of social democratic multilateralism. As this has occurred, proponents ofneoliberalism have increasingly begun to employ a nationalist discourse,and an advocacy of fiscal and regulatory sovereignty, in order to counteractthem.

The rise of neoliberal nationalism

In his 2000 paper in Foreign Affairs, entitled ‘The New Sovereigntists: Amer-ican Exceptionalism and Its False Prophets’, Spiro identifies the rise ofright-of-centre nationalism among a number of US policy elites. However,while Spiro provides a strong outline of the new right-of-centre nation-alism, he treats its proponents as a homogeneous group who draw uponrealism’s normative suspicion of international law. As Sprio argues, theapproach of the new sovereigntists ‘echoes the realist conception of inter-national relations as a matter of might, not right, a sticks-and-stones viewof international law’ (2000: 13). But in addition to these more neoconser-vative anti-internationalists, it seems apparent that the new sovereigntismalso includes those who are nationalist for more neoliberal reasons. AsSpiro recognises: ‘[o]nly the free-trade agreements – provided they arelimited to trade and do not include the environment, labour issues, orhuman rights – pass muster under New Sovereigntism because they arethought to serve American interests’ (Ibid.: 10).

Further reinforcing the idea that the new sovereigntism is as much aboutneoliberal nationalism as it is about neoconservative anti-internationalismis the way that Spiro points to the work of Cornell political scien-tist Jeremy Rabkin. Interestingly, Rabkin has published his two mainanti-internationalist works – Why Sovereignty Matters and The Case ForSovereignty (1998, 2004) – under the auspices of the AEI ’s FederalismProject which, it will be remembered, is explicitly based on promotingBuchanan’s neoliberal ‘competitive federalism’. This institutional locationfor Rabkin’s work is understandable given that both books draw explicitlyon the key principles of competitive federalism in order to make a detailedcase against regional and global forms of tax and regulatory cooperation.In the case of the Kyoto Protocol, for example, Rabkin argues: ‘It is, byalmost every criterion, a disturbing challenge to constitutional limitationson the treaty power’ (1998: 80). In contrast, he argues: ‘the trading sys-tem is fundamentally compatible with traditional notions of sovereignty’(Ibid.: 86).

Thus, we see how the discourse of the business-sponsored AEI can takeon a decidedly nationalist character. While fully internationalist whenit comes to free trade and capital mobility, the AEI becomes a staunchdefender of national sovereignty in the face of international agreementsseeking to achieve the upward harmonisation in social standards associ-ated with social democratic multilateralism. It is for this reason that the

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AEI and other neoliberal social forces have staunchly opposed any at-tempts at multilateral tax and regulatory cooperation. Noting this trendin a detailed study on multinational corporations (MNCs) and regimes,Levy and Prakash argue that MNCs ‘tend to support the creation of mar-ket enabling regimes at the international level, and prefer to keep social orenvironmental regulation under national or private authority’ (2003: 131).Equally relevant, they also note: ‘[t]he preferences of NGOs are frequentlythe inverse of MNCs; they tend to oppose the expansion of internationalmarket enabling regimes, but support international-level governance forregulatory regimes such as ozone depletion or labour rights’ (Ibid.; 137).

In fact, given this recent shift in strategy among social democratic socialforces, it seems that social democratic multilateralism has recently becomeas important a target for neoliberals as anti-globalisation precisely becauseit threatens to disrupt the benefits of policy competition. Demonstratingthis point, AEI fellow Roger Bate (2004) argues:

. . . there has been a slow and now accelerating push for global gover-nance, and away from the sovereignty of nation-states . . . The globalgovernance institutions that pressure groups, bureaucrats and politi-cians promote include international treaties on numerous issues suchas climate change, chemicals, and tobacco. There are also proposalspushed by powerful and respected international bodies for agree-ments on labour standards, environmental protection, and tax har-monization. These entail an entirely different form of globalization,one that is beginning to have a significant, and deleterious, effect.

Echoing these points, Ronald Bailey (1997: 32) cautions readers of theneoliberal National Review magazine that a ‘small cadre of obscure in-ternational bureaucrats are hard at work devising a system of “globalgovernance” that is slowly gaining control over Americans’ lives’.

Of particular concern for neoliberals has been the issue of multilateraltax harmonisation such as the OECD’s Harmful Tax Competition Initiativeand the UN’s proposals for the creation of an International Tax Organi-zation. As Bate notes: ‘It’s tax harmonization that can lead to the greatestloss of national sovereignty’ (Opcit.). This is the case to the extent thatneoliberals consider policy competition as having been particularly effec-tive in the realm of fiscal policy. The Cato Institute, for example, recentlycame to this conclusion in a study titled ‘International Tax Competition:A 21st-Century Restraint on Government’ (Edwards and de Rugy, 2002).As the study notes: ‘[h]igh tax rates are more difficult to sustain in thenew economic environment. That is particularly true for taxes on capital,which include taxes on business profits and taxes on individual receiptsof dividends, interest, and capital gains . . . In our view, international taxcompetition may indeed hamper income redistribution, but that is a bene-ficial outcome because redistribution has progressed to a remarkably high

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degree in most industrial countries’ (Ibid.: 2–3). Tax harmonisation, in con-trast, would threaten these already obtained benefits of policy competition.As a result, the study goes on to provide detailed critiques of recent pro-posals for tax harmonisation such as those put forward by the EuropeanParliament (2000) and the OECD (1998). Similar arguments against taxharmonisation have been made by the AEI and the Heritage Foundation.In the former case, Allan Meltzer (2003) argues that when it comes to inter-national agreements, the United States ‘should give up only the amountof sovereignty that we want to give up! Do we want the tax laws for theUnited States to be made in Europe by a non-elected government in Brus-sels, or by the WTO, rather than by the Congress of the United States orthe state legislatures’. In the latter case, Daniel Mitchell refers to the OECDproposal as ‘an attack on sovereignty’ (2000: 2).

Beyond the issue of tax harmonisation, neoliberal nationalism was par-ticularly evident in the opposition to the Kyoto Protocol. For example,beyond the US examples mentioned above, neoliberal social forces inCanada – including business-sponsored lobby groups and think tanks,federal and provincial Conservative parties, and various business media– opposed Canada’s participation in Kyoto through direct appeals to na-tional sovereignty. This was most evident in the way that these groupspromoted a ‘made-in-Canada’ solution to climate change. Created by apublic relations firm for the business-sponsored Canadian Coalition forResponsible Environmental Solutions, the ‘made-in-Canada’ phrase waswidely used among business leaders as well as conservative pundits andpoliticians. In the latter case, the premier of the province of Alberta ar-gued that the Kyoto Protocol was ‘not a Canadian plan’ but, rather, wasdreamed up by ‘international theorists’ (cited in Cormier, 2006: 19). In re-sponse to the arrival of the Obama administration, Jack Mintz, a prominentneoliberal economist, argued: ‘With a newly found exuberance for carbonpricing in the United States, Canada faces a conundrum. Either it harmo-nizes its policies with those of the U.S. which reflects the politics there, oradopts a made-in-Canada plan to reduce carbon emissions with a betterapproach’ (Mintz, 2009). Similar appeals to nationalism were found amongUS opponents to Kyoto including Republican Senator Chuck Hagel whoargued that the Protocol is ‘one of the clearest examples of how a nationcan lose much of its sovereignty through a well-intentioned relationshipwith other nations’ (cited in AEI, 1998). On the basis of these examples,it becomes apparent that a variety of neoliberal social forces – includingMNCs, business-sponsored think tanks and lobby groups and neoliberalelements within right-of-centre political parties – have begun to employ astrategy of neoliberal nationalism in response to various policies associatedwith social democratic multilateralism.

Finally, while a full discussion is beyond the scope of this paper, itwould seem that neoliberal nationalism also comprises a key component

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of right-of-centre anti-internationalism – or ‘Euroscepticism’ – in the Eu-ropean Union, one which is mostly compatible with, but distinct from,the anti-European nationalism advanced by populist conservatives andneoconservatives. As Hooghe and Marks observe:

Neoliberals have skilfully combined economic internationalism andpolitical nationalism in an effort to create national governance andinternational market competition. They have linked their cause tonationalism to block the development of a Euro-polity capable ofregulating the European economy . . . Yet, unlike nationalists, ne-oliberals have goals that stretch beyond defending the sovereigntyof national states. They have sought to limit the capacity of any polit-ical actor, including national states themselves, to regulate economicactivity (1997: 9).

Therefore, in contrast to David Harvey’s view quoted earlier, not allforms of Euroscepticism are incompatible with neoliberalism. Highlight-ing this point is the now-famous speech given by Margaret Thatcher inBruges, Belgium, where she argued: ‘We have not successfully rolled backthe frontiers of the state in Britain, only to see them re-imposed at theEuropean level’ (cited in Yergin and Stanislaw, 1998: 315).

CONCLUSION

This paper sought to demonstrate how certain nationalist policies and dis-courses can be genuinely compatible with neoliberal values. Moreover, bydisaggregating the views of various social forces, it also sought to demon-strate why this form of ‘neoliberal nationalism’ is distinct from both thenationalism of populist and neoconservatives as well as from the viewsof classical economic liberals. These differences were argued to be signif-icant in that they lead us to expect neoliberal social forces to employ aninternationalist discourse to promote free trade and capital mobility anda nationalist discourse to discourage social democratic multilateralism.They also lead us to expect the potential for a split among economicallyliberal social forces in terms of their response to social democratic multilat-eralism. In addition to these theoretical points, this paper also argued thatthis form of neoliberal nationalism may be on the rise due to a seemingshift in the strategy of social democratic social forces away from economicnationalism and towards social democratic multilateralism. It then arguedthat neoliberals have responded to this shift with an increasingly nation-alist discourse, one that is likely to grow in response to further proposalsfor social democratic multilateralism.

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NOTES ON CONTRIBUTOR

Dr. Adam Harmes is an Associate Professor in the Department of Political Scienceat the University of Western Ontario in Canada. He is the author of various articleson the political economy of global finance and as well as Unseen Power: How MutualFunds Threaten the Political and Economic Wealth of Nations and The Return of the State:Protestors, Power-Brokers and the New Global Compromise. His current work focuseson the political economy of multilevel governance.

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The rise of neoliberal nationalism

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