'National traditions'

The idea of ‘national traditions' in economic understanding has a notable if controversial history. Werner Sombart argued that the capitalist spirit was indeed universal, at least in Western civilization, but allowed that the national expression of this spirit would vary over time and place.

Perhaps the most well-known single work on ‘national economy' in the history of economics corpus is Friedrich List's The National System of Political Economy of 1841. Given that mainstream economics has banished the protectionism rationale to a few special instances, List's approach to policy cannot be the model for this volume, but his distinction between national political economy and cosmopolitical or world-wide economy could conceivably be relevant (List, 1904, 98). If there are national against international interests, then might there also be national against international expressions of these interests in economic ideas? Wilhelm Roscher went even further than List, by defining economics as inherently national: ‘By the science of national, or Political Economy, we understand the science... [of] the laws of the development of the economy of a nation' (Whittaker, 1943, 734). Perhaps the older term ‘political economy' lends itself more readily to a national interpretation than does the modern term ‘economics', which is (allegedly) national-politics-free.

There is more recent research on this topic that is worth considering. One well-known example is that by Geert Hofstede on how to measure ‘national culture' using four dimensions of cultural expression: an individualism/collectivism scale, a power distance acceptance measure, an uncertainty avoidance measure, and a masculinity/femininity scale. The first refers to how far individuals look after themselves against their wider communities; the second refers to how far subordinates can express dissent to those higher up in a hierarchy; the third refers to how far ambiguity/uncertainty are tolerated; and the fourth refers to the degree to which assertiveness/aggression are valued over cooperation/friendliness. Hofstede's controversial results have been summarized as follows:

Cultures tend to form around regions that also share common economic systems, history, or environmental characteristics. For example, free-market capitalist societies (e.g. the U.S., Western Europe) tend to have individualist, low power-distance oriented cultures. In contrast, developing nations, in particular those with the Confucian legacy (e.g. China, South Korea), tend to be collectivist and high power distance-oriented. In regions where harsh climates or other factors limit food supply, as in Scandinavian countries, feminine values of equality, harmony, and cooperation prevail. In contrast, societies where competition among people, rather than natural conditions, was the greater challenge, such as Southern Europe, developed masculine values of achievement. Finally, uncertainty avoidance is higher in societies characterized by political and economic volatility and oppression (e.g. Guatemala, Venezuela), while stability and personal safety increases tolerance for uncertainty. In summary... national and regional cultures are significantly and predictably different from one another.

(Taras et al., 2011, 191)

The provider of this summary went on to argue that although these cultural differences were now being eroded by recent globalization trends, they still had some relevance to explaining regional economic characteristics and developments.

It would be easy to suggest that (for example) the masculinity/femininity axis employed by Hofstede illicitly draws upon gender stereotypes, which themselves are the products of particular patriarchal cultures rather than constituting their basic essences, but this volume is not the place to have this debate about fundamentals.

Others problems identified with Hofstede's approach include that it appears to assume homogeneity within a nation, and is applied equally to very large and very small nations (e.g. Russia as against Slovakia). Might not the Western region of Russia differ from the Far East of Russia by just as much as Germany differs from Austria? Also, what about nation-states that have historically subsumed others, e.g. Great Britain versus England/Scotland/Wales? Or native American culture in the USA? Does the subsuming entity simply ‘mix' the constituent parts equally, or is there some new meta-culture that is formed that is separate from the constituent elements?

There is some literature on the economics of the size of nations, which asserts a trade-off between the benefits and costs of varying size. Economies of scale may apply to the provision of public services in larger states, and large nations (or groups of nations such as the EU) are better able to assert their interests on the international stage. On the other hand, larger states often have more diverse populations which can lead to greater internal dissent or problems with national identity. Smaller more homogeneous states might be more stable internally in the long- run, especially in a world without tariff barriers or imperialist expansion (Spolaore, 2008, 519).

But what about any link between national size and national traditions in economics? It might be thought that larger and more powerful states are more able to project their intellectual traditions internationally, and hence the greatest link here is with the overseas dissemination of economics. In the twentieth century, the USA has become the most significant player, but this is not the only key factor: American Institutionalism was not very influential overseas after World War Two, despite it being an indigenous US tradition. And as China grows in economic importance, will Chinese economics take over the intellectual lead from American? Few might predict Asian dominance in economics, especially as the international dissemination process is ‘a history of the flux of economic ideas, rendering any easy generalization difficult' (Kurz et al., 2011, 3). Economic ideas are often transformed through global propagation, sometimes even heavily distorted. There is also an important connection with language: English has become the de facto global language in very recent times, thus giving the nations where English is the first language a potential advantage in their global reach. On the other hand, given that translation software is now freely available to all with computer access, this factor may decline in importance in the near future.