Western Nations Will Have To Transform

Forced de-globalization brings dangers but also the necessity to change. Who will meet the challenge?

The reckless meddling of some in Washington has drawn us all into yet another conflict, which will have terrible economic consequences for ordinary people across much of the world even if, in the best case scenario, it remains a relatively cold war with Russia. But those decisions have already been made, Russia has invaded and now, here we are. Every major national government now knows that if you import the most basic and vital components of your economy required for survival, and you are intertwined with the West, you are in danger of having them cut off at any time. The post-industrial fantasy of apps and windmills is over and the harsh truth of the real economy has been forced back into the picture by sanctions, energy shortages and supply chain disruptions.

Russia has been the main source of solid fossil fuels, crude oil and natural gas into the EU. As of 2019, foreign energy dependency in the EU stood at 61 %. Germany's economic and energy minister has warned of “mass unemployment, poverty, people who can’t heat their homes, people who run out of petrol." Bloomberg News reported “European Industry Starts Shutting Down as Energy Prices Soar.” In America, most forms of industrial output have already declined in the 21st century so far.

Emergency plans are being drawn up in the EU to deal with the problem. The two best options for domestically produced national energy to ensure security and autonomy in the future are hydro power and nuclear, both of which have come under pressure to phase out. Electricity generation from nuclear in the EU already decreased by 25 % between 2006 and 2020 and hydro power, which was the engine of industrial development in the early twentieth century, has also suffered relative underdevelopment, which some attribute to market distortion due to the high subsidies for solar and wind. Germany giving in to pressure to close down its nuclear power right before giving in to pressure to end the Nord Stream 2 Russian gas pipeline could lead to a more prominent role of France in shaping the European future, and France itself could undergo radical change depending on the outcome of the next election.

As energy costs rise, we may see a return of the yellow vests, and a lot more of that style of popular uprising everywhere as the yellow vest class will be hit hardest, ramping up continent-wide class conflict between the activist-managerial class and the truckers. And what will become of the radicalised overproduced educated class who were promised a future of upward mobility in the knowledge economy? The decadent and impractical moral concerns that have dominated political activism for years now are likely to be viewed by the public as not just as a nuisance but a danger to our survival.

If the Eurasian bloc continues to consolidate and grow together as planned, the emergence of this large trading bloc outside the dollar empire will give other nations an escape option. In this new scenario, what will be stopping nationalists in Europe, like Orban’s Hungary, from breaking away and trading with China? When the current feelings of European unity die down, there are many growing tensions that will come to the fore as the economic impact starts to really be felt, in the peripheral debtor countries who were brought into the Eurozone prematurely and in those like Poland, who are being sanctioned by policy makers in Brussels for coal mining in the midst of an energy shortage.

Our universities would need to transform to nurture rare technical genius, encourage real intellectual merit instead of a system of manners and virtue, and the public conversation would have to reward dispassionate non-conformity and free enquiry again. This will come into conflict with an ideological institutional capture that has grown used to getting its way.

National energy investment, reshoring and industrial planning will have to be geared toward autonomy and security. There is also a deeper problem of financialisation and financial rigging, which causes unsustainably distorted costs in vital things like housing and makes it difficult for nation states to direct resources and planning in the long term national interest.

So who, if anyone, will live up to the challenge of the moment? Left parties have already demonstrated their great capacity to squander popular discontent with economic injustice on unpopular moral activist crusades. Growing Nationalist parties in Europe could become champions of national developmentalism, monetary sovereignty, strong borders and law and order, making up for labour shortages and population decline, if needed, through a deliberate policy of bringing their diasporas home. If the EU doesn’t change, they would need to leave to do this.

Is it possible for the establishment center-left and center-right to adapt? It’s not as unimaginable as you might think. People who like being in power can be remarkably ideologically flexible. In response to growing nationalist rivals, Macron has been setting out a vision of stronger European external borders and greater nuclear and industrial power into a more civilisational form of European cosmopolitanism. The Danish Social Democrats have already moved to a more nationalist position on migration while keeping strong social-democratic economic principles.

Looking at the US context, in my first article here almost a year ago, I wrote that we could see a liberal thermidor in which the Biden government ditches the radical cultural left and moves toward a Make America Great Again policy. In his latest speech Biden said he wanted to fund the police, strengthen the border and bring American manufacturing back. Could he actually end up implementing Trumpism? On foreign policy, Douglas Macgregor has suggested Biden has been a force for restraint, holding back the push for more military aggression from other quarters applying pressure to him. If Biden is already integrating elements of Trumpism, could Europe similarly integrate Orbanism?

I think America’s problems are much deeper and more fundamental than Europe’s and an entrenched out-of-control foreign policy establishment and financial system would have to be essentially overthrown. Maybe the coming economic instability could create the conditions for that. Stranger things have happened.

What the shock has shown us is that you can coast by on a decadent, financialised, high importing model for only as long as the producing nations are bullied by a hegemonic power. In the end, industrial power is what will decide the wealth and power of a nation. China banked on this truth decades ago, as many others are noting lately. Just as the German genius for industrial innovation began to grow out of necessity rather than natural abundance after the devastation of the Thirty Years War, European nations will have to make something out of nothing and invent our way out of problems again or painfully decline.