In The Lure of Economic Nationalism, Kenneth A. Reinert looks at the historical roots of economic nationalism and its consequences for international trade, politics and cooperation. Reinert provides a meticulous analysis of unilateralism, ethno-nationalism and the pitfalls of zero-sum economic thinking and envisages meaningful alternatives such as multilateralism and civic nationalism, writes Ivan Radanović. But is a more radical re-appraisal of the growth imperative in economics required to tackle the crises we face?

The Lure of Economic Nationalism: Beyond Zero Sum. Kenneth A. Reinert. Anthem Press. 2025 (paperback); 2023 (hardback).

Socioeconomic failings that trouble our contemporary moment such as recession, rising inflation and a declining international solidarity have shaken public faith both in global capitalism and liberal democracy, and motivate scholarly enquiry into the workings of these systems that order the world. Recent notable works  include current Nobel laureates Acemoglu and Robinson (The Narrow Corridor, 2020) who wrote about the implications on governance and liberty, Shannon K. O’Neil who analysed the limits of globalisation (The Globalization Myth, 2022) and Čedomir Nestorović, who examined the issue from a geopolitical perspective (Geopolitics and  Business, 2023). In this new book, K.A. Reinert, a Professor of Public Policy and an experienced international economist, interrogates the rise of economic nationalism and its impact on global trade and politics. 

The roots of economic nationalism 

Reinert begins by exploring the mercantilist roots of economic nationalism with a focus on the role of Friedrich List (1789-1846), an economist, diplomat, and the father of the movement. As Reinert states, List had a goal to influence the economic policies of “second- and third-rate industrialised nations (USA, Germany, France, and Russia) so they could catch up with Britain. Believing industry to be the key lever of economic development, List’s main idea from The National System of Political Economy (1841) was of infant industry protection – the use of tariffs (taxes on imports) in a targeted and time limited way.

Economic nationalists appeal to industry as a hope for economic revival. But in an era of all-pervading global value chains (GVCs) industrialisation may no longer be the best way for economic growth. 

That argument is reasonable according to Reinert, but List also had several arguments that were either controversial (support for German expansion) or too liberal (support for immigration) which contemporary economic nationalists tend to overlook. This selectivity is a problem, especially because of the way in which economic nationalists appeal to industry as a hope for economic revival. But in an era of all-pervading global value chains (GVCs) industrialisation may no longer be the best way for economic growth. As Reinert shows using the well-known “smile curve”, the greatest value added is located in upstream tasks such as research and development, branding, and design, as well as in downstream tasks such as distribution, marketing, and after-sales service. “The smallest amount of value added is often to be found in the manufacturing or assembly stage of the GVC”, he writes.

Reinert analyses zero-sum thinking in economic nationalism. This idea asserts that in international economic transactions, someone must lose in order for another to gain.

Zero-sum economics

In the fourth chapter, Reinert analyses zero-sum thinking in economic nationalism. This idea asserts that in international economic transactions, someone must lose in order for another to gain. Exports are a win – imports are a loss. Even though this formula diverges from empirical results, it still holds because, as the author writes, it seems to be hardwired in human psychology. And this is not only reflected in the layman’s understanding of economics, prone to “heuristic substitutions” (when one tries to understand something by seeing countries as businesses, overall trade as trade in goods, and exports as sales).  

The US trade deficit during Trump’s first term illustrates this. Although he signed an executive order with the aim to reduce “significant trade deficits” in January 2017, they have increased. Why? Basic macroeconomics. Tax cuts reduced government savings, which led to a reduction of aggregate domestic savings and lifted the trade deficit. Simply put: a rise in disposable income in consumeristic culture leads to higher consumption of (imported) goods and services.   

Zero-sum thinking beyond trade

Reinert addresses this type of thinking in a broader political sense as well. Drawing from research on social psychological features of fascism, and especially from the work of Theodor Adorno and colleagues, the author points out the troubling link between zero-sum thinking and authoritarianism. It tends to undermine democratic processes, through the projection of zero-sum mindsets to both everyday political life and to political opponents.

Multilateralism was an American construction but, regardless of that and the immense network effects created by the most-favoured nation clause, Trump did everything he could to undermine the functioning of the WTO.

This narrows the space for political negotiation and implementation of possible policies where some degree of consensus is to be found. Zero-sum mindsets have been implicated as well in a lack of commitment to voting rights and the legitimacy of political violence (55). Perhaps most dangerously, it undermines trust on which representative democracy depends. Fukuyama pointed this out thirty years ago but, unfortunately, Trump does not look too much on it. He once said that the Paris Climate Agreement was not designed to solve the climate crisis but to “kill the American economy” (165).

Trump’s undermining of the WTO

One major victim of this kind of thinking is the World Trade Organization (WTO), which inherited the General Agreement on Tariffs and Trade (GATT) in 1995. It has come under wide-ranging criticism but few critics, Reinert argues, really take time to try to understand it. “Despite many flaws, this institution embodies the principle of multilateralism,” he writes and continues, “which refers to coordinating relations among three or more states in accordance with certain principles.” Multilateralism was an American construction but, regardless of that and the immense network effects created by the most-favoured nation clause, Trump did everything he could to undermine the functioning of the WTO. His administration’s strategy from 2017 was to starve its Dispute Settlement Body of the staff it needed to function, namely of its Appellate Body. By late 2019, it had ceased to function. 

Techno-nationalism, according to Reinert, threatens to divide the world into closed, supposedly techno-independent regions which minimise the exchange of technology and knowledge.

And it’s not just about Trump. Reinert discusses “Brexit blunder” (Chapter Seven) as well as the problems of ethno-nationalism and the cult of personality in India, Brazil, and Hungary (Chapter Six). In the eighth chapter, Reinert analyses the pandemic, when erroneous zero-sum thinking combined with the character flaws of populist leaders. These were a tendency to claim to represent the “will of the people”, a promotion of the hatred of minorities, the undermining of institutions, and disrespectful attitudes to the rule of law and science.

The rise of techno-nationalism

One of the consequences of ignorance towards science is techno-nationalism – the notion that technology and cross-border technological exchanges are directly linked with the national security. Reinert writes that it is emerging in multiple directions, e.g., in calls for both the EU and the US to push back against China in realms such as 5G networks, AI, quantum computing and semiconductors. This is done via regulatory restrictions such as export controls, blacklists, and sanctions. 

Techno-nationalism, according to Reinert, threatens to divide the world into closed, supposedly techno-independent regions which minimise the exchange of technology and knowledge. But technological progress is a cumulative, collective and uncertain process – populist closure can only raise uncertainty. 

Questioning economic fundamentals

Reinert argues convincingly that security and certainty are achieved on the principle of multilateralism, because even powerful countries are dependent on international institutions. Other strengths of the book are its well-substantiated claims, broad scope reflected in many cited works and compelling argument against ethnonationalism. As Reinert underscores, civic nationalism, wherein the allegiance is not to race or ethnicity but primarily to civic institutions (94) indeed, deserves more consideration. What holds a society together is neither common roots –nor its leaders–but democratically shaped laws.

The ‘marginal utility’ of global economic growth is falling, and the price most people pay (ecological collapse, inequalities, alienation) is rising. Current international trade patterns contribute to this trend.

The author’s value neutrality is ambivalent, the benefit of which is that it is neither market fundamentalist nor ultra-heterodox. However, given the scale of the global environmental and inequality crises – driven by dependence on economic growth – Reinert could have interrogated the capitalist logic underpinning the system he writes about: what drives economic nationalism? What connects it with the fact that all populist leaders are also capitalists, Trump chief among them? And what drives so much international trade, given the evidence that much of the developing world is denied its rewards? 

It is the imperative of GDP growth which shows its limits. The “marginal utility” of global economic growth is falling, and the price most people pay (ecological collapse, inequalities, alienation) is rising. Current international trade patterns contribute to this trend. The author is right when he states that we must resist the lure of the zero-sum mindset. But more fundamentally, we must rethink the endless pursuit of economic growth which has detrimental consequences for our lives and planet. Otherwise, we are bound towards an outcome neither zero-sum nor positive-sum – but altogether disastrous.

Note: This review gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

Image: Lightspring on Shutterstock.

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