Nations and spacial regions

Another way to think about nation-states is as spatially defined regions of economic activity, i.e. as geographical territories. In this field various existing approaches have been developed with economics, such as location theory, optimal currency theory, market linkages theory, external/urbanized economies and so on.

But can economics as the theoretical expression of business and trade be conceived as part of a common national history? Some recent research suggests this is a fruitful approach to pursue. For example, different approaches to financial accounting based on geographical associations have been identified: a continental European approach leading to either stock or flow models (assets-liabilities or revenues-expenses), and a US approach leading to either a proprietary theory or an entity theory, both of which are based on inquiring into the relations between enterprise and stakeholders (Biondi, 2013, 487).

Perhaps one basic way to differentiate here is to distinguish between economic theories that declare they are explicitly internationalist in application, i.e. maintain that that they are equally valid in the context of the USA or Cambodia, and economic theories which explicitly limit their application to a specific nation, region or a spatial geography.

Another question is the link between economic regions and economic systems. The West (often defined to include Europe, North America plus so-called ‘New World' countries like Australia) is often seen as essentially capitalist, while the East is sometimes seen as systemically distinct, either as non-capitalist (e.g. Russia until very recently) or more state-orientated (e.g. China today). The question of applying mainstream economic theory to non-capitalist states can be a confusing one. Even while accepting that the USSR was a type of socialist economy, some Western theorists applied ‘conventional' economic theory to it, and came up with notions such as coloured markets (with differing degrees of legality), repressed inflation, and even shadow prices, as if underneath the planned economy of the USSR there existed a more fundamental level of reality, which was merely a distorted version of ‘real' (i.e. market) economics.

The problem of this universalist view is clearly illustrated through the development of the post-Soviet economies after 2000. Russia, it has often been declared, now has a market economy. But if this is so, then how can Russia's ongoing political hostility to the West, and the development of its own unique brand of ‘oligarch-capitalism', be convincingly explained? If market economics is universal, how come the contemporary Russian economy does not function in the same manner as that of Sweden? Surely, maintains the universal-economist, it cannot be due to cultural or historical factors, as economics is entirely separate from such contingencies.

Those who accept the ‘universal market' approach often refer to the lack of a stable legal framework or other institutions to explain the Russian economic ‘anomaly', but this in itself requires an explanation. Could it be cultural factors generating this lacuna? If so, then economics is not quite as separate from cultural/national factors as some would have us believe. Recent book titles, such as Varieties of Capitalism in Post-Communist Countries, suggest that some recog­nition has taken place of the fact that factors outside of the purely economic can affect how economies operate (Lane and Myant, 2006).

Another interesting example is the concept of trade in American Aboriginal thought before any Aboriginal contact with Europeans. Trade certainly occurred in Aboriginal economic prac­tice, but in addition to the conventional market function of facilitating economic gains from exchange, Aboriginal trade also had socio-political functions such as cementing alliances, buying-off enemies and settling non-economic disputes (Cicarelli, 2012, 101). These additional layers of meaning are usually absent from mainstream Western economics as it is constituted today, although this does not necessarily mean that in contemporary economic practice, trade does not sometimes serve this type of extra function as well.

Moreover, could national specificity help to explain why an original current in economics like the German Historical School was initially centred in Germany rather than in another nearby European state? And was it just an accident that the Cambridge school was developed at Cambridge University and not in (say) Oxford, or were the long-standing cultural traditions of Cambridge (not just its economics heritage) also important? J.M. Keynes famously straddled Cambridge and Bloomsbury (in central London), and The General Theory is sometimes seen as a mixture of the two traditions (weighted according to taste), but this further supports the idea of geographical impacts on economics.

Some historians of science accept a link between geography and scientific ideas very clearly. Cambridge University was described by Jagdish Mehra as a ‘unique place in England' that enabled Paul Dirac's early ^-number contributions to the development of quantum theory (Mehra, 1982, 24). Cambridge provided a very different environment from that experienced by German quantum pioneers like Werner Heisenberg, the originator of the distinct matrix mechanics formulation of quantum theory. If national culture influenced the creation of quantum mechanics to some degree, then it might also influence economic theory.