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Gerard Roland. Empires, Nation-states and Democracies

13 May 2021
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Keynote lecture by Gerard Roland

Watch his speach “Empires, nation states and democracies” at VoxUkraine Conference “Modernization 2021: the Role of Governance and Institutions”.

Empires have played an important role in history and have existed much longer and in more territories than democracies. The end of World War I signaled the beginning of the end of traditional Empires. We saw the collapse of the Austro-Hungarian Empire, the Ottoman Empire, the German Empire and the Russian Empire (although the latter one was replaced by the Soviet Empire which was even larger). The British Empire collapsed after World War II with decolonization in British colonies, and then, French colonies, etc. The Cold War led to the collapse of the Soviet Empire and to the loss of satellites states as well as republics that were part of the Soviet Union. In today’s world, we still have some Empires: the Russian Empire and the Chinese Empire. 

As the role of empires has declined, the role of nation-states and mostly of democracies has increased.

So, how do Empires, nation-states and democracies coexist? Are there specific common traits to Empires that differentiate them from democracies? Do democracies have specific common traits that are different from those of Empires? What about nation-states? 

These questions are not only academic but have great policy relevance. Ukraine was once part of the Russian and then later the Soviet Empire. It is now an independent state and a large part of the population aspires to become a normal democracy. Another part of the population cares more about Ukraine being a nation-state. 

Ukraine shares borders with the Russian Empire, and parts of its territory have been invaded by Russian troops (in Crimea, Eastern Ukraine). As I speak Ukraine is being threatened by the mobilization of Russian troops close to its borders. So, what can we expect from the coexistence of an Empire and a democracy? These are burning questions. 

Rise and fall of empires

Let’s first talk about the general characteristics of Empires. Empires generally grew out of territorial states, less often out of city-states, such as Roman Empire. Empires have an innate tendency towards territorial expansionism. The rulers of an Empire are interested in territorial expansion up to the point where the marginal benefit of the expansion equals its marginal costs though of course there are many non-convexities. 

The benefits of expansion typically would include taxes on land and trade. Note, however, that land is much less tax elastic than trade. So, it’s possible to tax land more. Trade is more elastic, but in areas with very voluminous trade even with low tax rates it can be important for revenues, especially if the Empire controls trade routes. Empires are typically extractive states where tax revenues are used to fund the army, the police, the private goods of the Emperor like palaces, tombs, imperial administration, etc. The costs of an Empire are mostly the cost of defense against both invaders and internal revolts, as well as the cost of expansion.

Expansionism is a dominant strategy for Empires as long as the marginal costs of additional territory are smaller than the marginal benefits: a larger Empire has, everything else equal, a military advantage over smaller neighboring Empires, whether in offense or in defense. Given the drive towards expansionism, Empires do not generally seek to achieve ethnic homogeneity within their borders. Empires tend thus to be multi-ethnic (e.g. the Austro-Hungarian Empire, the Ottoman Empire, to a certain degree the Russian Empire, and even China today). 

Because of multi-ethnicity, Empires do not generally have an interest in developing nationalist ideology, unless one ethnic group is an overwhelming majority. Religions or ideologies have typically been used instead of nationalism to try to cement empires. This was the role, for example, of Catholicism in the Austro-Hungarian Empire, Orthodox religion in the Russian empire, Islam in the Caliphate and the Ottoman empire, Confucianism in its mentioned dimension in the Chinese Empire, Zoroastrianism in the Persian Empire, etc. 

Rival expansionism between Empires necessarily leads to conflicts. Even in recent history, Russia, for example, took away territories from the Ottoman Empire and also challenged the Austro-Hungarian Empire for domination over the Balkans leading to World War I. Japan, in its Imperial time, inflicted losses on Russia and China in the first half of the 20th century. 

Empires weakened by wars tend to collapse internally, and they are replaced by nation-states, whether democratic or not.

Nevertheless, Empires may still show aggression. The Soviet Empire invaded Central Europe in the aftermath of World War II. The Third Reich followed the German Empire after the episodes of the Weimar Republic. China invaded Tibet a few years after the communists had taken over China. Here, it’s interesting to note that the Western half of Chinese territory (Xinjiang, Tibet etc) is mostly inhabited by non-Han population (although it’s only 7% of China’s total population). We’ve seen Russia’s recent invasion of Crimea and Donbas as a sign of its aggressivity. 

In the past, we have seen phases of decline and revival of Empires. In the modern world, the trend is very clearly towards the reduction of the role of Empires. It’s very unlikely that we will see the formation of new Empires.  ISIS tried to build a new Caliphate but they failed. And it’s very unlikely that they will succeed because would-be empires will in general be preemptively squashed knowing their expansionist tendencies and the threats that they could pose. 

I would even go further to say that Empires are doomed. Why? Historically, the main reward of imperial expansion was land, later – land and slaves, or in some cases natural resources. This is natural because land and slaves were the main factors of production before industrialization. In the modern world (I’m talking about the last 100 years here) human capital has become the main driver of growth. 

Thus the benefits of expansion are the same as before. If a country invades a country where human capital plays a fundamental role in growth, then the invading country is in trouble, because you can’t force people to be productive when the source of their productivity is human capital. You can force slaves through physical labor – this has been done throughout history. But forcing people to be productive by using their human capital is something very difficult – you can’t get into people’s heads. Secondly, natural resources, which still are a big reward for territorial expansion can be much more easily obtained via trade – without the cost of maintaining and defending invaded territory. 

Also, progressive education leads to demand for human and civil rights and for public goods. Of course, different cultures are more or less likely to demand those rights but generally with modernization these demands tend to become more important. 

Development of nation states

Nation-states started to develop since the 16th and 17th century based on innovations in military technology that favored centralization and also economies of scale in warfare. The use of gunpowder and cannons very strongly changed the nature of war. 

Nationalism developed mostly since the 19th century. It was encouraged by the development of national literature, which is relatively recent. Nationalism led to demands for the establishment of nation-states, especially in territories under the domination of Empires among ethnic groups that were marginalized. Nation-states fed by nationalist ideology tend to aspire for ethnic homogeneity within the boundaries of the nation. This doesn’t generally lead to expansionism, but it could, as was the case, for example, for Nazi Germany. Nazi Germany started as a nation-state but then aspired to become an Empire. There are similarities in today’s China that is both nationalist and imperialist.

With nation-states, demands for ethnic homogeneity lead less to expansionism than to ethnic cleansing within the boundaries of the nation, especially in non-democratic nation-states. This is something that we have seen repeatedly: once modern nation-states develop, there tend to be episodes of ethnic cleansing.  For example, when the Ottoman Empire collapsed and the Turkish nation-state developed under the Young Turks, this led to the genocide of Armenians, to the expulsion of Orthodox Christians who had been there for centuries, even millennia. The Nazis in their “Drang nach Osten” committed genocide on Jews but also intended to eliminate the Slavs altogether to create some “Lebensraum” for German setters. 

Imperialist tendencies of nation-states do exist but they go against the general direction of history. 

Nation-states, especially in their non-democratic form, tend to be more inward-looking and closed to the outside world. They tend to reject immigration, are mostly hostile to economic takeovers by foreign capital, and see limited opportunities for international cooperation. When it comes to the international sphere, they have what is called the “realist” view of international relations, seen as a pure balance of power relations in a very Hobbesian world of “the war of all against all”. 

Ethnic nation-states tend to experience frictions at their borders because there’s always an imperfect overlap of national and ethnic boundaries. Nation-states tend to be oppressive towards minorities inside their borders, but also aggressive towards neighboring countries who host ethnic co-nationals. To the extent that may lead to expansionist tendencies, it’s not the same nature as the expansionist tendencies of Empires. The goal here is not territory per se but trying to reach some level of ethnic homogeneity. Hungary under Orban is a very good example. They are illiberal inside, and as they say, they are defenders of ethnic Hungarians in Slovakia and Romania. That, of course, creates frictions. Finally, nation-states have a good capacity of defense against an imperialist aggressor because they are able to mobilize members of the nation, of the ethnic group against an imperialist aggressor.

We do observe some demands for ethnic homogeneity in nation-states that are associated with demands for linguistic homogeneity. There are tendencies towards suppression of dialects and discrimination of minority languages. Even in democracies, a common language helps to reach economies of scale in public goods provision, whereas multiple languages can create diseconomies of scale due to duplication. Most democracies have one dominant language and multilingual countries often face tensions. Belgium or Spain would be an example. Multilingual countries reduce tensions by having federal or confederal institutions (e.g. Switzerland).

Characteristics of democracies

Democracies were most often born in nation-states, but not always. For example, the United Kingdom was still an Empire when democracy was introduced within it – it started to democratize already in the 19th century. But even today it’s not a nation state since it contains different nations and ethnic groups.

Italy was composed of city-states throughout its history until it became a unified nation in the second half of the 19th century. Because of this tradition of city-states, ethnic groups within Italy were never well-defined, in contrast to citizenship. 

Citizenship is a fundamental concept for democracies. The tradition of citizenship developed from Roman civil law and is based on the rights and responsibilities of individual citizens who are supposed to be equal before the law. 

In democracies, redistribution of income is an inevitable and often a very desirable feature since it reduces inequality. It is related to the fact that every citizen has one vote. Since the poor are in the majority, that will lead to redistribution. But redistribution can lead to secessionist tendencies. The reason is that certain territories, not necessarily based on eithnic groups, may choose to bear the cost of secession to reduce redistributive taxation. 

One can say that secessionist tendencies in Catalonia may be related to language and ethnicity. But if you take Italy where ethnicity was never well defined, there have been secessionist tendencies between the North and the South. At some point it was the South, later it was the North. However, secession is not automatic given the cost of it, and sometimes it will lead to forms of federalism or confederalism. 

Compared to Empires or nation-states, democracies are the least expansionist. They are the only regime that will tend to secession and to an increase in the number of countries of smaller size. Democracies have the best basis for international cooperation with other democracies based on shared values of citizenship and the universality of human rights.

Democracies have further advantages. 

They provide a solution to the capital levy problem. The capital levy problem is that capital is very mobile before we make an investment, but once you made an investment, it becomes much less mobile. Thus there’s a commitment problem, a tendency of the state to try to attract capital but once it’s there – to try to tax it. This problem has been increasing with industrialization when capital accumulation has become the fundamental driver of growth. So far democracy has provided the best solution to the capital levy problem by creating institutions that prevent arbitrariness in taxation. It’s never perfect, but much better than what we would see in Empires. 

Democracy provides protection of rights – human rights, civil rights, property rights. It also provides protection against what we can call techno-autocracies, where with the development of artificial intelligence, telecommunications, technology, the possibilities for autocracy to monitor its citizens become endless. What you see today in China with social credit scoring is probably more terrible than in the Orwell’s “1984”. 

Let me finish with the special case of US imperialism.  The modern US started as a settler colony of different empires – the UK, Spain and France. After independence, the US project was definitely imperialist, as territories were conquered over Native Americans, over Spanish and French. 

At the same time, the US also developed democratic governance much earlier than other countries and did face the secessionist tendencies of democracies. Civil War was a dramatic example of that. Colonialist tendencies of the US were short-lived and mostly unsuccessful. They tried to colonize Cuba – it didn’t work. They tried to colonize the Philippines – it worked only for a short time. 

US democracy has led to strong isolationist tendencies. But it’s been sucked into an alliance with other democracies in World War I and World War II. The rise of the Soviet Empire and the spread of communist regimes after World War II led to the US leading an alliance of democracies in the Cold War.

The Cold War itself led to imperialist-like interventions of the US in Asia, Latin America, and Africa. Any regime that claimed to be anticommunist, however repressive, was supported by the US, and the US often treated them as quasi colonies. The US has been alternating between democratic isolationism and demand for intervention by allies. In today’s world, it is the biggest international counterbalance to the Russian and the Chinese Empires, which are not democracies. 

To conclude, the coexistence of Empires, nation-states and democracies is problematic and may lead to all sorts of instabilities. It is important to understand the nature of each country’s regime in order to understand its external and internal behavior. In principle, the remaining Empires should further decline in the future. Thus, even though it’s very threatening right now, the Russian Empire is much smaller and weaker than the Soviet Empire was in all dimensions – economically, territorially, militarily, etc. And it will further weaken, both economically and demographically.

The Chinese Empire is currently in expansion mode but it’s facing huge costs of maintaining the Empire. The most well-known are Xinjiang and Tibet, but there are also inner Mongolia, Yunnan, NingXia… As I said, the whole Western half of China is occupied by national minorities. Moreover, the cost of invasion by communist Empires is higher than for traditional Empires. So, absorbing Hong Kong is proving very costly. Absorbing Taiwan may prove to be a tipping point for the Chinese Empire. It is also militarily inferior and is facing major demographic challenges. 

Hence, a world of small democracies building supranational institutions to regulate their relations on the basis of commonly accepted rules may hopefully be the way of the future. 

The conference takes place within the framework of Budget Watchdog project supported by the German government via the project “Effective public finance management III” implemented by the Deutsche Gesellshaft für Internationale Zusammenarbeit (GIZ) GmbH.

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