Morals of Economic Internationalism

by J. A. Hobson

This harking back to an economic nationalism is a natural reaction of the war, and is fed by a dangerous and precarious peace. Fear, greed, and suspicion prompt the victorious nations to guard their gains by reverting to a close nationalism or a ringed alliance; humiliation, without humility, the bitter pain of thwarted ambitions, resentment at their punishment, dispose the vanquished nations to keep their own company and form if possible, an economic system of their own. A prolonged war, followed by a bad peace, may leave this indelible scar upon the growing economic internationalism of the world.

The richly nourished patriotism of war breeds divisions and antagonisms which are easily exploited afterwards by political, racial, religious, and cultural passions, but most of all by economic interests.

Before the war internationalism was visibly advancing with every fresh decade. The bonds of commercial and financial intercourse between the peoples of different countries were continually woven closer; the policy of self-sufficiency was continually giving way before the superior economy of specialization on a basis of natural or acquired advantages. Any reversal of this policy would be far costlier than may at present appear, even for those countries best qualified by size and resources to stand alone.

For it is not merely the direct sacrifice of the wider world economy of production and exchange, the advantage of a wider over a narrower area of free commerce, that is involved. It is the indirect perils and costs of the policy of close nationalism or restricted economic alliances that count heaviest. For economic nationalism means protective and discriminative tariffs, and a conservation of national, imperial or allied resources within a circle of favored beneficiaries. This is the temptation held out to the British people today by the protectionist interests working upon the animosity of the war spirit and the sentiment of imperialism. The welding of an empire into an independent economic system, the conservation of essential or key industries and the safeguarding of our industries against "dumping," are the ostensible objectives of a policy whose chief driving motive and end is the establishment of strong industrial, commercial and financial trusts and combinations, defended by tariff walls, and endowed with the profits of monopoly.

There are two difficulties in such a course of action, which, though especially urgent in the case of Britain, beset every great country that chooses the same path, and not least, America. The first is the fomentation of a class war, based upon divisions of interests between capital and labor, producer and consumer, protected and unprotected industries. The initial skirmishes of such a conflict are already visible in every country where wages, prices, and profiteering are burning issues. I would most earnestly appeal to thoughtful citizens in this as in my own country to pause before heaping fuel on these fires. For the policy of national self-sufficiency or isolation means nothing less than this. Not merely does it strengthen the power of capitalistic combinations and thereby incite labor unions to direct action, blackmailing demands, and sabotage. Not merely does it let loose upon the business world all sorts of ill-considered governmental interferences for the fixation of prices or subsidies to consumers. It keeps alive and feeds the habit and the spirit of strife. For it was no accident that the great international war left as its legacy smaller international class wars in European countries. Remove from a nation the economic supports it formerly received from other nations, markets wherein to buy and sell, and you starve that nation; and starvation breeds class war and anarchy. Can any one doubt this with the terrible examples of Russia and Hungary before their eyes? But it is not a matter of war conditions alone. Carry through a policy of economic nationalism, under which all the large and well-equipped nations and empires conserve for their exclusive uses the national resources they command, and what happens? The smaller and the poorer nations, however free in the political sense, become their economic bond slaves, at the mercy of the master states for their foods and other necessaries of life. Take the case of Austria under the new conditions, with a thick population concentrated in a great political capital suddenly deprived of all free access to its former sources of supply and the markets it used to serve. For her it is a sentence of economic strangulation. Here is an extreme instance of the effect of economic isolation on a weak country. But the dangerous truth may be more broadly stated. A very few great empires and nations today control the whole available supplies of many of the foods, fabrics, and metals, the shipping and finance, that are essential to the livelihood and progress of every civilized people. Are Britain, America, France, and Japan—and especially the two greatest of these powers—going to absorb or monopolize for their exclusive purposes of trade or consumption these supplies which every country needs, or are they going to let the rest of the world have fair access to them? I think this to be upon the whole the most important of the many urgent issues that confront us. For, if close nationalism or imperialism should prevail, the weaker placed nations could not acquiesce. Close economic nationalism is not for them a possibility. They must win access to the world's supplies, peacefully if possible, or else by force.

The fatality of the great choice is thus evident. Nations must and will fight for the means of life. Close economic nationalism or imperialism on the part of the great empires must, therefore, compel the restricted countries to organize force for their economic liberation. This in turn will compel the great empires to maintain strong military and naval defences. It is impossible for the other nations of the earth to leave the essential supplies of metals, foods, and oils, and the control of transport in the exclusive possession of one or a few close national corporations or a permanent "Big Four." Under such conditions the sacrifices of the great war would have been made in vain. Nothing would have been done to end war, or to rescue the world from the burden of militarism. The pre-war policy of contending alliances and of competing armaments, draining more deeply than ever the surplus incomes of each people, would be resumed. And it would bring no sense of security, but only the postponement of further inevitable conflicts in which the very roots of western civilization might perish.

The renewed and intolerable burdens of such a militarism, with its accompaniments of autocracy, must let loose class war in every nation which has gone through the agony of the European struggle and has seen the great hope of a peaceful internationalism blighted.

It is predominantly upon America and Britain that this great moral economic choice rests, the choice on which the safety and the progress of humanity depend. A refusal by either of these great powers can make any league of nations and any economic internationalism impossible. The confident consent of both can furnish the material and moral support for the new order. If these countries in close concerted action were prepared to place at the service of the new world order their exclusive or superior resources of foods, materials, transport and finance—the economic pillars of civilization—the stronger pooling their resources with the weaker for the rescue work in this dire emergency, this political coöperation would supply that mutual confidence and goodwill without which no governmental machinery of a League of Nations, however skilfully contrived, can begin to work.

I have spoken of Britain and America as the two countries upon whose choice this supreme issue hangs. But the act of choice is not the same for the two. The British imperial policy (apart from that of the self-governing dominions) has been conducted on a basis of free trade or economic internationalism. A reversion to close imperialism would be for her a retrogression. The United States, on the other hand, has practised a distinctively national economy, and the adoption of a free internationalism would be a great act of faith, or—as some would put it—a leap in the dark.

I prefer the former term as indicative of the new truth which is dawning on the world, the conviction that just as an individual can only fully realize his personality in a society of other individuals, that is, a nation, so nations cannot rise to the full stature of nationalism save in a society of nations. For only thus can nationality, either in its economic or its spiritual side, make full use of its special opportunities for the development of a distinctive national character. The supreme challenge is, therefore, not to the continental European nations, not even to Britain, but to America. For her alone the choice has the full quality of moral freedom. For she alone is able to refuse. Other great western nations might seek to stand alone for economic life and for defence. They could not long succeed; they are too deeply implicated in one another's destinies. Even Britain with her vast extra-European territories could not hope to disentangle herself from the affairs of her near neighbors. America could do this, at any rate for some considerable time to come. True she has economic committals in Europe. She has loaned European governments and peoples some ten milliards of money. She is still lending her credit to support the large surplus supplies of foods and other goods she is selling Europe. If this business is to continue, it will implicate her even closer in European affairs. Europe in its present case can hardly be presented as a safe business proposition. If America proceeds along this path, it will be because she looks beyond the immediate risks to the wider future of a safer and more prosperous world. She could now draw out; she could cut the present economic losses of her European loans; she could divert her attention from the European markets to the development of the American continent as the principal area for the disposal of her surplus goods and energies.