Nationalism is at base a compulsion to dominate. We are expected to put forth its claims vehemently and without hesitation, because after all, the truths we spout are self-evident. However, since Nationalism is a general emotional perversion of power supported by a collective belief which people identify with, it--albeit strangely--doesn't just apply to actual nations.
Perversions of power can manifest in any number of ways--racism, sexism, to name a few--but as AC Grayling mentions in his essay about Nationalism, Get Rid of Those National Anthems, Nationalism indeed has a few worthy tenets; people want to represent themselves, and they want to share experiences with their fellow community members. However this ideal of community and in-group is where unworthy (negative, power-compulsed) mechanisms branch off from the worthy (interested in the development and clear intra-communication of in-group, not at the expense or cost of another group). This branching-off initiates a psychological change within the members of the in-group, developing and responding to a basic premise: Since we are a collective, others can hurt us, so others become Others. Members of a male collective become leery of females; members of the white collective become leery of non-whites; members of a production-based economy become leery of those who appreciate primitivism. The list goes on and on, with each of these collective in-groups thinking and behaving nationalistically due to their psychological power-perversion. It's important to keep in mind that for a nationalistic mindset to set in, another group (Other) doesn't have to pose an actual or even immediate threat. The in-group's attack-mechanism is thus perceived as a protective mechanism. Hence, nationalism is an ideal that can exist regardless of sample population size; White Nation, Black Nation, Chinese, Italian, Hispanic, Man, Woman, Athlete, Politician, so on and so forth. As long as an in-group psychologically convinces themselves their freedom is jeopardized by another group, the compulsions they create to "defend" it are nationalistic, or as Grayling says, "unworthy."
George Orwell writes an excellent essay on this topic, named Notes on Nationalism, where he sets out explaining Nationalism against the English backdrop of his day. Essentially, Nationalism is a feeling that thrives on competitive prestige, bundles individuals into collectives, and separates those collectives from Others whom threaten the Us' very existence. It's built upon the expectant-attack premise--which allow other axioms like kill or be killed and might is right easy to conclude--and thus creates a hunger for power. Nationalism and the dominance it exhibits is as stagnant as it is optimistic, despite displaying otherwise.
Many thinkers have gone into detail about Nationalism because in the moment its claims feel so good and so right. Every single President of the United States gives speeches about democracy and freedom, while earmarking billions of dollars in the budget to go overseas to "wage" democracy on other countries. I don't know if or how many WMD's Iraq had, but you're fooling yourself if you think America didn't/doesn't kill for oil. It's the most highly depended upon energy source of a powerful production-based nation; of course we kill for it. However, the Nationalistic premises given to us through the air waves and out of our televisions embody peace and liberty, representing "universal" human rights. Our American, media-spun Nationalism operates with such heavy sleight-of-hand that we don't even know when we're propagandizing those who live, love, and have families on the ground above "our" oil, or believe in different economic or political systems. As Derrick Jensen says, "How dare they live above our oil." The nerve to be different.
Nationalism thus hides its negativity through positivity, which is why there's a proportional relationship between Nationalism and propaganda. Think about the Nazis, one of the most fiercely Nationalistic groups in recent history. As National Socialists--which is a type of Fascism--they believed that "their race" was superior to others, which made them responsible for and entitled to wage war upon any other who didn't capitulate to their truth. If it was an absolute truth, then why did they rely so heavily on persuasive propaganda? Because at base the Nazi beliefs were not truths about humankind, and thus required constant hate-laced booster shots to mesmerize and energize the storm troopers to continue detaining, medically experimenting, and mass-murdering Others, instead of fellow human beings.
Does this mean individuals are less nationalistic than groups? No, because attaching oneself to an Us group doesn't require actual other Us.' We can self-associate with a collective ideal, and begin the power-perversion process of labeling Others that are destructive to our Us. As Orwell says in his essay, "Indifference to objective truth is encouraged by the sealing-off of one part of the world from another, which makes it harder and harder to discover what is actually happening...Moreover, although endlessly brooding on power, victory, defeat, revenge, the Nationalist is often somewhat uninterested in what happens in the real world. What he wants is to feel that his own unit is getting the better of some other unit, and he can more easily do this by scoring off an adversary than by examining the facts to see whether they support him...The point is that as soon as fear, hatred, jealousy and power worship are involved, the sense of reality becomes unhinged. And as I have pointed out already, the sense of right and wrong becomes unhinged also." This brooding hatred, this compulsion for victory and phobia for defeat thus blinds us toward actual objective reflection which would temper our power perversions. And Nationalism in any form is certainly a perversion of power.
This distinction between Us and Other is indeed instinctual, but really all that means is it's immediate and responsive. We can rewrite our Us and Other distinctions willingly, so long as--to rely on Orwell again--we aren't indifferent to reality, preserving our mental processes so that we can make informed moral decisions, and not just power perversions out of fear and hatred. We'll still make mistakes, however we'll care about having made them, which is a care that will be extended toward Others, allowing them to become simply others, and quite possibly, Us.
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