What is a Nation State?

The concept of nations and nationality has been around for thousands of years. Herodotus wrote about the German nation 2500 years ago. In those days the term did not refer to a country, a government, or a state. It referred to a people. There were dozens of different German tribes with no central authority, but together, they still constituted the Germanic nation. Nations were the sum total of a given “people” who were part of a single ethnic group, with the same language, the same religion, and the same cultural identity.

The development of the nation-state is often called nationalism. It was by far the most powerful political force of the 19th and 20th centuries, and will probably remain the most important political force in the 21st century. The national government has two primary tasks. It is responsible for maintaining national security and protecting the safety of the citizens. Just as important, it is responsible for establishing a regulatory framework to support and protect the market economy. The success or failure of the government in regulating the market economy will determine whether the population enjoys prosperity or suffers from poverty.

When aristocrats began to lose control of Western European society during the 17th century, aristocratic states began the slow and difficult transformation into nation-states. The modern nation-state is a very different kind of society from the earlier aristocratic state. Peasants become farmers. Instead of turning over a portion of their harvest to the aristocrats, they sell it through a system of wholesale and retail markets. The market economy becomes the most important factor in people’s lives. The primary activity of nearly all nation-state governments is to regulate the market economy and make sure that it does not collapse, as recently happened in Argentina.

Market based nation-states do not have to consist of a single ethnic group, with one language, one religion, and one culture, but they have fewer problems when that is the case. The reason has much to do with the market economy. In a market-based society, people must routinely do business with strangers. It is much easier to trust strangers, and do business with them, if they speak the same language and share the same basic cultural identity.

As the market economy grows larger, it must be regulated by the state. The government must define what money is, and establish who has the right to coin or print it. The government must regulate banks, corporations, wholesale markets, retail markets, and a great deal more. Activities that constitute fair market practice must be defined, written into law, and enforced. Activities that do serious harm to the markets, such as theft, fraud, and extortion must be outlawed. Most of the legal code in a nation-state is there to regulate and protect the market system.

The process of developing modern regulatory mechanisms is slow and often painful. Societies that are still in the early stages of developing their nation-states can hardly be faulted for poor economic regulation. It usually takes many generations to design and adopt successful regulatory mechanisms. The process of market development, national development, and regulatory development are all accomplished much more easily if the population and the government share the same ethnicity, language, and culture.

Hereditary monarchs and aristocrats cannot successfully rule a modern nation-state. The monarchy either becomes a ceremonial position or it is ended altogether. All of this takes time. No society has ever transitioned from an aristocratic state to a fully operational nation-state within a single generation. Some things change through a slow, relatively peaceful process of reform and evolution. Other things change through a bloody process of civil war and revolution. That is how the process of nation building has always operated in the past, and that is how it will continue to operate in the future.

The process of establishing and developing a nation-state is not ancient history. It is one of the largest and most important issues of our time. Will the Palestinians have a nation-state of their own? Will Taiwan become a nation-state? Will the Basques, Mayans, Kurds, Berbers, Tibetans, and Native American Indians ever have a nation-state of their own? Will the two different ethnic groups in Northern Ireland ever stop fighting each other and become a unified population? We are talking about the problems of the present and the future, not the problems of the past.

Most countries in Africa were originally established as European colonies. After World War II they became independent. Now the world wonders why so many of them are unable to function as successful nations. You cannot take an imperial colony with a dozen ethnic groups, a dozen languages, three major religions, and very little indigenous market tradition, give it independence, and expect it to become a successful nation-state in two generations. It is not going to happen.

Most colonies functioned essentially as aristocrat peasant societies. The native people were the peasants and the European colonists were the aristocrats. This kind of society can have many different ethnic groups, languages, religions, and cultures. Different people in different villages do not have to get along with each other and do not have to cooperate with each other. Most people seldom left their villages or had business with strangers.

A nation-state is very different. It must have a large, unified, and successful system of markets. It must have a strong central government to closely and competently regulate the market economy. Rules and regulations must be designed to be easy to use, and must encourage increased economic activity. Everyone engaged in the market economy must interact with each other and with the government on a regular basis. They must accept and use the government’s rules, regulations, and laws.

When a country has numerous ethnic groups who are suspicious of each other, jealous of each other, and unwilling to cooperate with each other, who will form the government? How can any government gain the trust of the people? How can it regulate the economy successfully without the trust and cooperation of the people?

There are about two hundred nation-states in the world today. Less than half of them are prosperous and successful. Many countries that have not yet prospered only need time and an ongoing process of development. But many other nations have serious structural problems. Time and patience will not solve these problems. They may eventually be solved by war and ethnic cleansing. If the world wants a better solution, we will have to understand what the problems are, how they started, and how they can be fixed. This is possible. The data needed to understand the process of nation-state development is available. It is sitting in history books on library shelves all over the world.