The Nation as Unit of Analysis

by Will Wilkinson on February 11, 2006

Don Boudreaux in the course of a nice post on Jane Jacobs’ anti-nationalism quotes her thusly:

Nations are political and military entities, and so are blocs of nations. But it doesn’t necessarily follow from this that they are also the basic, salient entities of economic life or that they are particularly useful for probing the mysteries of economic structure, the reasons for the rise and decline of wealth.

This is right. But it’s complicated, isn’t it? The more economically open a nation’s institutions are, the less significant is the nation as a unit of analysis. That is, once the political entity gets its institutions right, the economic entity becomes absorbed in a much larger economic network. When the institutions are all wrong, the nation gets cut off from the larger network. The circumstances in which it really makes sense to take the nation as the unit of analysis are those in which the nation is pathological. Sort of like, you don’t pay that much attention to your liver until you get cirrhosis.

Political philosophy suffers from a paralell error. Normative mercantilism? The nation-state does require normative justification. But it is not therefore the primary or largest unit of social interaction demanding normative consideration. I think we’ve been retarded philosophically be the overemphasis on the nation. I’m certainly not sure how to reformulate the main questions of political-social philosophy for a super-nationalist context. So start thinking!

  • Are you looking for a theory of federalism?
  • Will Wilkinson
    Not THE unit of analysis, but A unit.
  • bjt@BJT.COM
    So why were you being so coy? Are you proposing WTO and NAFTA as the unit of analysis? I can think of no topic more sleep inducing than European integration. I'm sure you would agree.
  • Will Wilkinson
    Really? Parts made in Korea, assembled in Mexico, sold in the US, governed by WTO and NAFTA rules?
  • bjt@BJT.COM
    I don't get it. Aren't you talking about economics? A "polycentric system overlapping jurisdictions" would be the auto industry.
  • Will Wilkinson
    You're right, no doubt. So what we need to know how to think about are polycentric systems of overlapping jurisdictions.
  • conchis
    Of course, Jacobs was arguing in the other direction, no? For cities, rather than (super-)nations as the primary (if not the only) unit of analysis.
  • Will Wilkinson
    Robert, I agree about the importance of institutions, and that institutions are often a state level phenomena. But it doesn't make sense to stop there. Because good institutions at the state level are precisely those that facilitate integration into international markets, taking advantage of the broadest system of specialization and exchange. And so, as I was saying, the better you do at the state level, the better positioned you are to take advantage of institutions that transcend the state.
  • Robert Schwartz
    Now the substantive comment:

    A recent study by the World Bank:

    Where is the Wealth of Nations?:Measuring Capital for the 21st Century
    The International Bank for Reconstruction and Development/The World Bank
    http://siteresources.worldbank.org/INTEEI/21457...

    found that:

    ... most of a country’s wealth is captured by what we term intangible capital. ... the intangible capital variable captures all those assets that are unaccounted for in the estimates of produced and natural capital. Intangible assets include the skills and know-how embodied in the labor force. The category also includes social capital, that is, the trust among people in a society and their ability to work together for a common purpose. The residual also accounts for all those governance elements that boost the productivity of labor. For example, if an economy has a very efficient judicial system, clear property rights, and an effective government, the effects will result in a higher total wealth and thus a higher intangible capital residual. The regression analysis in this chapter shows that human capital and rule of law account for the majority of the variation in the residual. Investments in education, the functioning of the justice system, and policies aimed at attracting remittances are the most important means of increasing the intangible components of total wealth."

    Given the key role of laws and legal institutions, perhaps the nation is a good unit of analysis.
  • Robert Schwartz
    That would be Jane Jacobs, the author of The Death and Life of Great American Cities (1961), not Joanne the author of Our School (2005) and a blog:
    http://www.joannejacobs.com/

    While I am snarking, the term "nation-state" does not have much meaning when you use the word nation in the sense of "A relatively large group of people organized under a single, usually independent government; a country." Am Heritage Dictionary 1.a. rather than th older meaning of "A people who share common customs, origins, history, and frequently language; a nationality".

    http://dictionary.reference.com/search?q=nation

    The term nation-state refers to a state that encompasses a single nation e.g. Finland as opposed to a multi-ethnic state, e.g. Great Britain.
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