which their princes had conquered; on the contrary, they sympathized with the aspirations of the Polish and the Italian liberals to establish independent Polish and Italian democracies. They were eager to promote the welfare of the German nation, but they did not believe that oppression of foreign nations and inflicting harm on foreigners best served their own nation.
Neither is nationalism identical with patriotism. Patriotism is the zeal for one’s own nation’s welfare, flowering, and freedom. Nationalism is one of the various methods proposed for the attainment of these ends. But the liberals contend that the means recommended by nationalism are inappropriate, and that their application would not only not realize the ends sought but on the contrary must result in disaster for the nation. The liberals too are patriots, but their opinions with regard to the right ways toward national prosperity and greatness radically differ from those of the nationalists. They recommend free trade, international division of labor, good will, and peace among the nations, not for the sake of foreigners but for the promotion of the happiness of their own nation.
It is the aim of nationalism to promote the well-being of the whole nation or of some groups of its citizens by inflicting harm on foreigners. The outstanding method of modern nationalism is discrimination against foreigners in the economic sphere. Foreign goods are excluded from the domestic market or admitted only after the payment of an import duty. Foreign labor is barred from competition in the domestic labor market. Foreign capital is liable to confiscation. This economic nationalism must result in war whenever those injured believe that they are strong enough to brush away by armed violent action the measures detrimental to their own welfare.
A nation’s policy forms an integral whole. Foreign policy and domestic policy are closely linked together; they are but one system; they condition each other. Economic nationalism is the corollary of the present-day domestic policies of government interference with business and of national planning, as free trade was the complement of domestic economic freedom. There can be protectionism in a country with domestic free trade, but where there is no domestic free trade protectionism is indispensable. A national government’s might is limited to the territory subject to its sovereignty. It does not have the power to interfere directly with conditions abroad. Where there is free trade, foreign competition would even in the short run frustrate the aims sought by the various measures of government intervention with domestic business. When the domestic market is not to some extent insulated from foreign markets, there can be no question of government control. The further a nation goes on the road toward public regulation and regimentation, the more it is pushed toward economic isolation. International division of labor becomes suspect because it hinders the full use of national sovereignty. The trend toward autarky is essentially a trend of domestic economic policies; it is the outcome of the endeavor to make the state paramount in economic matters.
Within a world of free trade and democracy there are no incentives for war and conquest. In such a world it is of no concern whether a nation’s sovereignty stretches over a larger or a smaller territory. Its citizens cannot derive any advantage from the annexation of a province. Thus territorial problems can be treated without bias and passion; it is not painful to be fair to other people’s claims for self-determination. Free-trade Great Britain freely granted dominion status, i.e., virtual autonomy and political independence, to the British settlements overseas, and ceded the Ionian Islands to Greece. Sweden did not venture military action to prevent the rupture of the bond linking Norway to Sweden; the royal house of Bernadotte lost its Norwegian crown, but for the individual citizen of Sweden it was immaterial whether or not his king was sovereign of Norway too. In the days of liberalism people could believe that plebiscites and the decisions of international tribunals would peacefully settle all disputes among nations. What was needed to safeguard peace was the overthrow of antiliberal governments. Some wars and revolutions were still considered unavoidable in order to eliminate the last tyrants and to destroy some still-existing trade walls. And if this goal were ever attained, no more causes for war would be left. Mankind would be in a position to devote all its efforts to the promotion of the general welfare.
But while the humanitarians indulged in depicting the blessings of this liberal utopia, they did not realize that new ideologies were on the way to supplant liberalism and to shape a new order arousing antagonisms for which no peaceful solution could be found. They did not see it because they viewed these new mentalities and policies as the continuation and fulfillment of the essential tenets of liberalism. Antiliberalism captured the popular mind disguised as true and genuine liberalism. Today those styling themselves liberals are supporting programs entirely opposed to the tenets and doctrines of the old liberalism. They disparage private ownership of the means of production and the market economy, and are enthusiastic friends of totalitarian methods of economic management. They are striving for government omnipotence, and hail every measure giving more power to officialdom and government agencies. They condemn as a reactionary and an economic royalist whoever does not share their predilection for regimentation.
These self-styled liberals and progressives are honestly convinced that they are true democrats. But their notion of democracy is just the opposite of that of the nineteenth century. They confuse democracy with socialism. They not only do not see that socialism and democracy are incompatible but they believe that socialism alone means real democracy. Entangled in this error, they consider the Soviet system a variety of popular government.
European governments and parliaments have been eager for more than sixty years to hamper the operation of the market, to interfere with business, and to cripple capitalism. They have blithely ignored the warnings of economists. They have erected trade barriers, they have fostered credit expansion and an easy money policy, they have taken recourse to price control, to minimum wage rates, and to subsidies. They have transformed taxation into confiscation and expropriation; they have proclaimed heedless spending as the best method to increase wealth and welfare. But when the inevitable consequences of such policies, long before predicted by the economists, became more and more obvious, public opinion did not place the blame on these cherished policies; it indicted capitalism. In the eyes of the public not anticapitalistic policies but capitalism is the root cause of economic depression, of unemployment, of inflation and rising prices, of monopoly and of waste, of social unrest and of war.
The fateful error that frustrated all the endeavors to safeguard peace was precisely that people did not grasp the fact that only within a world of pure, perfect, and unhampered capitalism are there no incentives for aggression and conquest. President Wilson was guided by the idea that only autocratic governments are warlike, while democracies cannot derive any profit from conquest and therefore cling to peace. What President Wilson and the other founders of the League of Nations did not see was that this is valid only within a system of private ownership of the means of production, free enterprise, and unhampered market economy. Where there is no economic freedom, things are entirely different. In our world of etatism,* in which every nation is eager to insulate itself and to strive toward autarky, it is quite wrong to assert that no man can derive any gain from conquest. In this age of trade walls and migration barriers, of foreign exchange control and of expropriation of foreign capital, there are ample incentives for war and conquest. Nearly every citizen has a material interest in the nullification of measures by which foreign governments may injure him. Nearly every citizen is therefore eager to see his own country mighty and powerful, because he expects personal advantage from its military might. The enlargement of the territory subject to the sovereignty of its own government means at least relief from the evils which a foreign government has inflicted upon him.
We may for the moment abstain from dealing with the problem of whether democracy can survive under a system of government interference with business or of socialism. At any rate it is beyond doubt that under etatism the plain citizens themselves turn toward aggression, provided the military prospects for success are favorable. Small nations cannot help being victimized by other nations’ economic nationalism. But big nations place confidence in the valor of their armed forces. Present-day bellicosity is not the outcome of the greed of princes and of Junker oligarchies; it is a pressure group policy whose distinctive mark lies in the methods applied but not in the incentives and motives. German, Italian,
