Economic Sovereignty in the Age of New Political Capitalism

Very short summary: This essay argues that the emergence of new political capitalism makes the notion of economic sovereignty more relevant than ever. New political capitalism is characterized by deep collusion between economic and political elites to secure domination at both national and global levels. By destroying the global rule-based order, new political capitalism raises concerns about economic sovereignty in many countries. However, considerations of economic sovereignty risk creating opportunities for further collusion between economic and political elites.

Sovereignty is a concept often used in academic and popular discourse. There is first individual sovereignty, i.e., the idea that individuals should be free and able to make autonomous decisions based on their own assessments of the ends to pursue and the means to achieve those ends. There is then political sovereignty, i.e., the ability of a people (a nation) to self-govern. Finally, there is economic sovereignty, i.e., the control that a people (a nation) has over decisions regarding its economic affairs and policies.

Economic sovereignty represents a component of political sovereignty. Self-governance means that a group of individuals is individually and collectively in control of its destiny. That surely implies that this group should be able to make independent economic decisions. More specifically, economic sovereignty depends on considerations such as resource control, fiscal and monetary policy autonomy, trade policy independence, and regulatory autonomy. A more controversial condition of economic sovereignty (at least from an economic perspective) that is often mentioned in popular debates is the extent of control over supply chains and industries. Talks about “reindustrialization” betray the belief that a nation cannot be economically sovereign if most of the goods and services it needs are produced elsewhere by foreign economic agents.

Globalization has made the very idea of economic sovereignty look anachronistic over the past decades. Economic sovereignty makes less sense in a global economy where national markets are largely interconnected. International trade and division of labor mean that there is no advantage in producing a good that other economies can produce more cheaply. Goods can be bought instead of being produced. Of course, there are economic consequences from losing one’s industries and turning into an economy of services. Jobs are destroyed, and those who lost their jobs will not necessarily find a new one in a completely different economic sector. In the same way, there is a cost for a national economy in losing part of its regulatory, fiscal, ...