Autarky – a country or state that is entirely economically selfsufficient.

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It supposedly hampers innovation, prevents economic and welfare growth, whilst also failing in every large scale use case in the modern era. Yet, why is it still relevant? As an idea, autarky is ancient. It can be traced back to Classical Greece, but the word itself was not coined until the 1600s. However, as a formal economic concept, it took until 1841, when Friedrich List introduced it to the world. Autarky never ascended to the peaks in the realms of mainstream economic academia however, faltering to its omnipotent antagonist: free trade.

 

Yet, it lives on with great vitality in the political realm – through the Fascist and Nazi regimes of World War Two, the wave of Nationalist Populism of the 2010s, and the effects of the Covid-19 Pandemic and Russo-Ukrainian War in the 2020s. Its persisting relevance exists in two main forms: a politically fuelled, hostile version, and a controlled, measured version, backed up by economic sensibilities. 

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An Eternal Flame

An early, and smaller scale, form of Autarky can be found within the texts of Pythagorean, Stoic and Epicurean schools within Classical Greece. They referred to “Oikonomia,” literally meaning ‘household management,’ and were aimed at household heads of well-off families. Oikonomia placed emphasis on a household’s ability to remain self-sufficient, infused with a contempt for markets and trading. Aristotle had much to say on the matter too when discussing cities; autarky was not only the goal, it was the ideal. That being said, Aristotle did recognise that in the context of the real world, some foreign trade was needed to make up for the lack of efficiency within an autarky.

 

Trade, however, eventually became more ingrained in the commerce of nations. The fruition of mercantilism, along with the birth and development of Classical Economics in Europe signalled that there would be no place for autarky within this new era of economic academia. In particular, Adam Smith and David Ricardo, with their ideas of gains from trade and comparative advantage, made an empirical and intuitive case against autarky. It is also worth considering that the mechanisms of political power at the time enabled this pro-free trade stance to be further embedded within Britain, as the centre of Classical Economics.

 

The fallout of the English Civil War and the Interregnum in the 1600s brought great upheaval to its political system, namely in reducing much of the Monarch’s power, combined with a change in the ruling political class. Power was now shifted from the Crown to Parliament, bringing the gentry that made up much of the House of Commons into dominance, many of whom were traders. Thus, this brought their interests to the forefront of British politics and economics. When combined with William III’s ascension, a King with Dutch origins – a trading powerhouse at the time, the expansion of trade would become the economic goal for Britain. This seemed to still be the case well into the Industrial Revolution. In fact, David Ricardo was a Member of Parliament from 1819 – 1823, and used that platform to advocate for free trade.

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Despite this thorough, centuries-long pummelling, autarky found its way back into large-scale political and economic discussion in the Fascist regimes of Italy and Spain, as well as in Nazi Germany throughout the first half of the 20th Century. A speech in 1931 saw dictator Benito Mussolini proclaim that Italy “would manage alone” economically. This was combined with ‘The Battle for Grain,’ a propagandistic economic policy that sought to focus Italy’s production onto grain to “free Italy from the slavery of foreign bread”. Fascist Spain, led by General Franco, also pursued a ‘closed and autarkic development’, personally ‘opposing all attempts at economic liberalisation.’ Hitler’s approach to autarky was slightly different. To provide economic self-sufficiency for Germany, raw materials would be acquired ‘by conquest of new ‘Lebensraum,’’ translated as ‘living space.’

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For these three regimes, the pursuit of autarky was not one of sound economic reasoning, but purely an avenue to achieve their political goals. This brought economic calamity. In Italy, even though the focus was on agriculture, food consumption by Italian workers, ‘which was already close to subsistence,’ decreased due to low food imports as a result of autarkic policies, and inefficient domestic production. Fascist Spain’s economy, meanwhile, was ‘characterised by technical inadequacy and high levels of corruption.’ As for Nazi Germany, military failures prevented any benefits of the ‘Lebensraum’ system. If these examples show us anything, it is that the blind pursuit of autarky, fuelled by ambitious political goals from authoritarian egos, is a dangerous thing.

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The Modern Wave

Despite this danger, the 2010s saw a sweeping wave of populist nationalism, rooted in a push towards autarky. Although the ends may not be as ambitious, once again, the shift towards autarky was not rooted in economic reasoning, but fuelled by hostile politics guided by authoritarian forces. From the Brexit movement in the UK, to Trump, Le Pen and Bolsonaro, and even though the latter leaders are not in power now, their campaigns and terms still brought about profound changes.

 

One such change is a shift in the Overton window, introduced by Joseph Overton in the 1990s. This ‘window’ describes the set of policies and political ideas that are seen as acceptable by the populace on a left-right political spectrum. The key, however, is that the ‘window’ can shift. In particular, it can respond to changes in the public’s perception of politics. This is especially clear with the aforementioned wave of populist nationalism, with increasingly extreme, usually right-wing political rhetoric being normalised. Most prominently, this has bled onto an ever-escalating US-China trade war. Surely, the breakdown in economic relations between the two current global superpowers, sparked by xenophobic sentiments, cannot be a good thing?

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Two Sides, Same Coin

That all being said, it is of absolute importance that a key distinction is made. This article is not an advocate of free trade, which has many of its own shortcomings. Rather, it is a call for the right motivations behind protectionism.

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At its core, self-sufficiency and economic autonomy are not corrosive goals. Protectionism is still a key aspect of economics, especially regarding development. It can help infant industries grow, domestic firms in strategic industries compete, and promote domestic innovation. The rapid growth of China since the 1980s and the USA’s own meteoric rise to global power since the 1880s took place under backdrops of substantial protectionism – especially within the financial sector. Similarly, South Korea and Japan, now heavyweights in the world of technology, had these very industries heavily subsidised and protected during their infancies. This argument becomes especially clear when considering the debt crisis facing many developing countries that are relying on expensive, debt-fuelled imports of necessities like food and energy. Redirecting investment towards developing domestic capabilities to achieve food and energy sovereignty would help enormously. A controlled, measured and economicallysubstantiated approach can bring prosperity.

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But red flags appear when countries walk down destructive paths. It becomes concerning when protectionism is not driven by economic reasoning. It becomes dangerous when false promises of prosperity are tied with the blind pursuit of autarky. It becomes perilous when this is all fuelled by a hostile, authoritarian political narrative. We are now entering a new era of globalisation, as many of you freshers will learn in ECON0007, and find ourselves at a crossroads. The global supply chain disruptions caused by Covid-19 and the Russo-Ukrainian war has already pushed many governments to prioritise national security over the increasingly sidelined voices of economists. In a world with a history where destructive tendencies are the norm, let’s make sure the coin of autarky lands on the right side.