… is from page 322 of the 1951 Augustus M. Kelly reissue of Frank Knight‘s 1935 collection The Ethics of Competition; specifically, it’s from Knight’s 1934 essay entitled “Economic Theory and Nationalism” (original emphasis; footnote omitted):
And this is what nationalism seems to mean. The individual gives up the effort to treat the world, material or human, as his oyster, and tries to put himself in mystical unity with his group, meaning the more or less racial, cultural “nation” which is already the object of his strongest political allegiance. Along with this growth in a kind of sentimental gregariousness, he swings from an active to a passive attitude toward society, and from a reflective to an emotional, impulsive attitude toward the world at large. He swings from “rationalism” to “romanticism.” In particular, the individual reacts from the notion of reaching validity by general discussion – which he has seen degenerate into a contest in “selling” – to a faith in “strong” individual leadership, which also represents a reaction from moral and intellectual equalitarianism to hero worship. The movement also involves a shift from the actor interest to the spectator interest in society, and in part to a merging of the two in an experience of mystical participation. Men want action, but by the group, i.e., the government or its outstanding personalities. They do not want to act.