John L. Campbell. John A. ... Differences and the Danes: Notes on Work-in-Progress. John L. Campbell. Dartmouth College. John Hall ...... Kristensen, Peer Hull.
McGill University Department of Sociology
Difference and the Danes: Notes on Work-in-Progress
John L. Campbell John A. Hall
Working Paper 2007 – 02
Department of Sociology 712 Leacock Building 855 Sherbrooke Street West Montreal, Quebec
Differences and the Danes: Notes on Work-in-Progress
John L. Campbell Dartmouth College John Hall McGill University
http://www.mcgill.ca/sociology/ Please do not cite this paper without permission from the author. The goals of the McGill Working Paper Series are to disseminate original and innovative research insights, and to generate discussions on preliminary research.
Recent social science has given us distinguished work both on the effects of country size on economic performance and on varied aspects of nationalism. We marry these literatures in an argument dealing with the economic consequences of the size of nations. Denmark illustrates our contentions perfectly, as is not surprising since research on this country gave rise to our argument in the first place. But this paper goes beyond the Danish case so as to explain the intellectual and methodological challenges that we face in seeking to set Denmark in a larger comparative frame.
DIFFERENCE AND THE DANES: NOTES ON WORK-IN-PROGRESS It is a great honor to be asked to contribute to a special issue of Politik. It should be made abundantly clear at the start that we are not experts on Denmark. But we have not ceased to think about Denmark since editing National Diversity and the Varieties of Capitalism: The Danish Experience with Ove Pedersen (2006). Very much to the contrary, we have developed an argument suggesting that Danish success is best understood in terms of the economic consequence of the size of its nation. We begin by presenting this argument, before turning to our attempt to move beyond idiography—for we wish, as social scientists, to see if the factors at work in the Danish case are present elsewhere. It is sometimes useful to exhibit a research design in process of development, and that is what will then be attempted here. We conclude by directly addressing the question of multiculturalism, perhaps seen somewhat idiosyncratically given the nature of our understanding of the Danish model. Denmark’s Social Formation Four legacies of Danish history—Lutheranism, statism, the solution of the national question, and the construction of layered homogeneity—stand at the core of Danish life. We review each one here, leaving to the next section a discussion of the consequences of these legacies for Denmark’s socioeconomic performance. The first legacy can be dealt with quickly. The Reformation of 1536 established Lutheranism. And the Treaty of Augsburg of 1555 determined that the religion of the ruler should be the religion of the state. Thus, Lutheranism consolidated its hegemony within the lands ruled by the Oldenburg dynasty, which ruled the Danish kingdom from 1448-‐1863. Recent social science has recognized the importance of such ideological homogeneity in early modern history. Marx (2003) stressed that shared faith was often a precondition for shared national sentiment, while Gorski (2003) stressed the ways in which confessional practices helped create newly disciplined social behavior. The second and third legacies are intertwined insofar as a reduction in the size of the state led to an increase in state capacity and resolution of the nationalism question. Insofar as the statist legacy is concerned, the Danish state once resembled many in Europe in having a composite form whereby the prince was bound to different laws in the various areas over which he ruled. At the end of the sixteenth century, the greatest of Danish kings, Christian IV,
ruled over Denmark, Southern Sweden, Norway, parts of what is now northern Germany, together with various overseas appendages. The complexities of composite rule were particularly clear in the Duchies of Schleswig and Holstein, the latter being part of the German Confederation, which for a long period were ruled by a junior branch of the royal family. At that moment, the Danish state was relatively weak, extensive rather than intensive, lacking in centralized territorial coordination, and sitting atop peoples of different backgrounds and languages. Nevertheless, it had certain comparative advantages, including a magnificent navy, due to the fiscal benefits it gained by controlling the entrance to the Baltic Sea. Ironically, this nascent statist tradition was reinforced over time by Denmark’s habit of losing wars. Pressure from Sweden in the mid-‐seventeenth century led to the loss of Skane, Halland, Blekinge, Bohuslen, Herjedalen, and Gotland, and the introduction of a new absolutist state in 1660. Disagreement exists among specialists as to the causes of the rise of Danish absolutism. Some attribute it to the intensity of post-‐war crises (Kaspersen 2004; Lind 2005, 1994) while others also point to the inability of landholders to resist the growth of the state (Ertman 1997, chap. 6). But the fact remains that, while many absolutist states were but puny leviathans, Denmark came to resemble Prussia in being a genuinely bureaucratic absolutist state with real reach into its society. Its reach was enhanced by the fact that Danish absolutism was mild in the sense that it involved much consultation and compromise between the crown and elites (Østergaard 2006). The third legacy involved solving the national question. The language of the Oldenburg court was German, as was a large part of its administration. But by the late eighteenth century, resentment was developing towards Germans, in large part because they occupied so many elite positions and occasionally ruled in rather arbitrary ways. Various reforms kept these tensions in check for a while, but they came to a head thanks to the geopolitical disasters of the Napoleonic Wars, which ended with the Danish state’s bankruptcy in 1813 and with the loss of Norway a year later. The proportion of Germans in the remaining territories increased, perhaps from 20 to 35 percent, and their salience became more obvious given first cultural and then political unification in the German heartland. Thus began the slow and final dismembering of the Danish state. In 1848 a new and more liberal constitution was introduced. But it was followed by a civil war between Danish and German speakers during which there was direct military intervention by Prussia. Different political options were debated at this time, including a federal solution that sought to give cultural autonomy to the Germans in Schleswig and Holstein. Another solution, proposed by the national liberals, sought ethnic homogeneity by redrawing borders, in particular by letting go some of Schleswig and all of Holstein. The aggressive nationalizing drive of the national liberals in 1863 produced renewed military conflict in which Denmark was completely defeated by Bismarck’s Prussia in 1864. Schleswig and Holstein were lost and with it much of the German speaking population. As a result, the Danish state became something of a rump—a big small state in that it had a legacy of
considerable state capacity but now ruled over a rather small territory occupied almost wholly by Danes of a culturally homogeneous sort relative to what was involved before the wars (Østergaard 2006). After 1864 Denmark was no longer deeply divided nationally. But in another sense the German problem was far from solved. Danish sovereignty was only maintained in 1864 because Britain and Russia objected to an expansion of Germany. Denmark’s sense of vulnerability increased and remained extremely high thereafter—if not fearing Germany, then fearing the Soviet Union. Such vulnerable feelings led to social action. Peter Munch, a journalist turned politician, argued that external threats to the small Danish state would always be present to such an extent that sovereignty might be lost eventually. Hence, an “internal front” should be opened to create an identity so strong that the nation would survive even in the absence of its own state. The Danes achieved this by layering on top of their ethnic and religious homogeneity a popular, democratic, and egalitarian culture, which reinforced a sense of homogeneity and, thus, national solidarity. This layering constitutes the fourth legacy underpinning Denmark’s subsequent success. It involved several steps in addition to those already mentioned. To begin with, the political elite as a whole was discredited by the defeat of 1864. In response, Nikolai Grundtvig and his supporters took it upon themselves during the mid-‐ nineteenth century to define for the Danish population its national identity. The Grundtvigian movement cut across social classes and stressed the importance of individual freedom, classical liberalism, voluntarism, free association, and popular education. Among other things, the Grundtvigians built an alternative educational system for the masses along side that which the state had already established during the period of absolutist rule. This system of alternative folk schools, which the state eventually helped to finance, emphasized the teaching of Danish history, poetry, literature, and the like much more than the traditional educational system and, thus, served as a key mechanism for the dissemination of the Grundtvigian cultural perspective and the development of a shared national identity. What it meant to be Danish changed. No longer did it include being German or involve a Latin educational tradition. This was especially so, at least initially, among the large class of small farmers, which emerged after land reforms during the late eighteenth century and which provided the initial clientele for the Grundtvigian program (Korsgaard 2006). The next layer involved the more overt politics of social democracy. Grundtvig’s emphasis on the popular served as a bridge between the idea of the nation as ethnic and the
idea of the nation as demos. Danish nationalism in 1864 shared its character with that of Germany: both stressed blood and language. But Danish nationalism did not take the German route of self-‐identification in purely ethnic terms (Yahil 1991; Korsgaard 2004). After 1864 moderates from the left and right began to work more closely together and eventually passed a number of social acts that reinforced political stability in part by establishing institutions that would reduce inequality and, thus, further unite the people of the nation (Kaspersen 2006). In 1933 the Social Democrats, led by Thorvald Stauning, forged an historical alliance between farmers and industrial workers, which institutionalized popular democratic politics and social democracy for generations to come (Esping-‐Andersen 1984). This did much to cement the nation in the hearts of the people in such a way that it survived Nazi occupation and behaved with great honor in helping much of its Jewish population to escape the Holocaust (Korsgaard 2006). But it also formalized a politics of reciprocal consent among the social partners and between them and the state that was rooted in a sense of common culture and purpose. A final layer was added after the Second World War by means of welfare state building. Hal Koch in particular argued that democracy could only be real if the people had the material capacity to participate in the polity. The demos accordingly became socialized, with egalitarian leanings already emphasized given the popular character of Danish politics. In fact, the development of fledgling welfare programs began in the late eighteenth century when the monarchy and its agents, influenced by Lutheran Pietism, first established, at least for a time, a comprehensive set of welfare benefits for the Danish people, first in Copenhagen and then in the countryside (Sørensen 1998). Nonetheless, post-‐war welfare state building was extensive and was intended in part to further unify the Danish people (Kaspersen 2006). Today Denmark has one of the most generous welfare states and is among the most economically egalitarian countries in the world. Ralf Dahrendorf (1957, chap. 6) showed that the superimposition of different social cleavages upon each other intensified conflict, lending it a visceral no-‐holds-‐barred quality. Denmark represents the reverse of this situation. The fact that Danes came to believe that they are so similar in so many ways created a deep and powerful sense of national solidarity. As we have shown, the downsizing of the Danish state contributed to and reinforced this sense of solidarity as a result of heightened perceptions of vulnerability. So did Lutheran hegemony, resolution of the nationalism question, and the layering on top of that of a popular, democratic, egalitarian culture. And the statist legacy established the proclivity for state action on behalf of the economy and nation. This laid the foundation for cooperation, sacrifice, flexibility, and concerted state action, four elements of coordination that helped ensure Denmark’s subsequent success. Let us turn to analysis of these mechanisms.
Consequential Comparative Advantages To begin with, a culture of cooperation developed that was rooted in Denmark’s solidaristic legacies and politics of reciprocal consent. Two benefits followed. One was political and stemmed from the realization after 1864 by the monarch, landed elites, and representatives from other social classes that further territorial loss could obliterate Denmark as a sovereign nation-‐state. This helped to dampen social conflict and facilitate cross-‐class consensus, which has marked Danish politics ever since. As noted earlier, this led to the farmer-‐worker alliance of 1933, which, not coincidentally, was reached on the day Hitler first came to power in Germany. Huge Keynesian-‐style public investments followed to solve the unemployment crisis of the Depression. And after the Second World War corporatist wage bargaining and other cross-‐class agreements led to a variety of policies and institutions designed to bolster Denmark’s international economic competitiveness. We will have more to say about these shortly. But the key lesson is that all of this was rooted in the solidaristic politics of reciprocal consent. The other benefit of a culture of cooperation was the spread of cooperatives and associations in civil society during the nineteenth and early twentieth centuries. Agricultural cooperatives came into their own in response to national crisis during the 1870s when, having lost its southern provinces to Prussia and with its grain production devastated by foreign commerce, Denmark worked its way back to prosperity by shifting from grain to the production of high-‐quality dairy and meat products, and by pooling the strengths of her farmers in a variety of production cooperatives (Rodgers 1998, chap. 8). No fewer than 1,066 such agricultural cooperatives were established by 1900 (Korsgaard 2006, p. 146). As Kevin O’Rourke (2006) has shown, the origins of these cooperatives owed much to the fact that the rural class was culturally homogeneous. Similarly, Denmark’s culturally homogeneous labor movement organized people in the cities not only into strong trade unions, but also into schools, sports clubs, theater groups, insurance groups, housing cooperatives, and more. The point is that since the last quarter of the nineteenth century commerce and working life became increasingly organized—due in part to the country’s cultural homogeneity. Today, virtually all interests in Denmark are organized regardless of whether they are in the worlds of work, business, culture, or leisure (Bille 2002). This has contributed greatly to the capacity of Danes to overcome narrow parochial interests, articulate a notion of the national common good, and cooperate in order to respond to political economic vulnerability (Nielsen and Pedersen 1991). The results have been impressive. For instance, Denmark became famous for the agricultural technologies it developed through its cooperatives, such as expensive cream separators, which
allowed it to compete very successfully in international markets for processed goods, such as butter and cheese, beginning in the late nineteenth century. In turn, this paved the way for the development of domestic markets for a variety of goods required in the country side which then led to industrialization (O’Rourke 2006; Senghaas 1985, pp. 95-‐122). Danish agricultural products have continued to be extremely competitive internationally. And the capacities for organized cooperation between industrial workers and employers has enabled Danish firms to implement the latest production technologies and brainstorm production and design problems in ways that have elevated productivity and enhanced international competitiveness (Kristensen 2006). It has also led to significant improvements in job training and skill formation, which has further boosted competitiveness (Martin 2005, 2006). Second, a willingness to sacrifice developed. Nationalism provided an important solidaristic frame for mobilizing people to sacrifice for the collective good. For example, all the political parties agreed during the late 1910s that proportional representation should replace the winner-‐take-‐all electoral system. Everyone agreed to the new rules even though some realized that they would lose power as a result. But they did so in the belief that this would promote more egalitarian politics thereby serving the national interest by further unifying the country and better institutionalizing the politics of cooperation and reciprocal consent, which, as we have just argued, contributed to Denmark’s socioeconomic success. More recently, all the political parties agreed during the 1980s that it was in the national interest to reduce the tax deduction for interest on property and houses, tax the interest income and currency gains from pension funds, and reduce the payroll taxes that business paid in order to shore up government finances and make firms more competitive internationally. Furthermore, the unions, center-‐right government, and Social Democrats agreed to minimize pay increases in order to avoid weakening Denmark’s economic competitiveness internationally. Most recently, the conservative government and the Social Democrats agreed that demographic pressures have created a pension crisis that could undermine the state budget, generate higher interest rates, jeopardize currency stability, and, thus, compromise Danish international competitiveness. So, again in the interests of the nation, all the political parties accepted an increase in the retirement age (Lykketoft 2006). In all of these cases, concern for the national good was put first; sacrifices were made; and nationally coordinated and consensus oriented policies resulted. We do not mean to be naïve. Political parties and others could come to consensus on many issues during the twentieth century in part because people generally recognized that they could not let partisanship and special interests undermine what was good for the country, especially during times of extreme vulnerability or crisis. But power politics were involved too. Denmark has had a nearly continuous succession of fragile minority coalition governments
since 1920 when proportional representation was established. And the Social Liberal party was often the lynch pin holding these governments together. Still, the Social Liberals demanded that the parties in power and in opposition reach consensus for the good of the nation, which was a key part of the Social Liberal ideology. Hence, most major reforms since the early 1930s, including those discussed throughout this paper, have required compromise “across the center” between the left and right as a result of the intermingling of nationalism and party politics.1 Third, a capacity for flexibility emerged. The nationalism that emerged from small-‐state vulnerability helped to produce the sort of education and human capital that Gellner believed was crucial for economic development and industrialization, and that often underpins policy learning and flexibility. Notably, the rise of Grundtvigianism, and with it a national system of folk high schools designed to educate the masses, was a central part of the nation building project and did much to elevate the educational level and skills of the general population. The results are clear. The improvement in education among Danes contributed directly to the country’s rapid albeit late economic development (Senghaas 1985). Furthermore, Danish workers are now among the most highly skilled in the OECD (Lorenz and Valeyre 2004), which boosts productivity and competitiveness as noted above. For instance, a highly skilled labor force is one reason why the level of labor market mobility in Denmark is now among the highest in the OECD—a factor that has contributed to the ability of firms and workers to adapt flexibly to new market opportunities when they arise and, thus, to improve Denmark’s productivity and competitiveness in international markets (Campbell and Pedersen 2007). More generally, the educational system puts great emphasis on teaching how to interact with other people and on how to improvise (Lykketoft 2006, p. 10)—skills that enhance the sort of flexibility that Katzenstein (1985) argued was necessary for small states to succeed. Fourth, the ability to cooperate, sacrifice, learn, and be flexible as a result of small size and homogeneity led frequently to concerted state action in the interest of improving socioeconomic performance. This, of course, was consistent with Denmark’s statist legacy, which stretched back to the days of empire and absolutism, as well as its strong sense of national unity. Friedrich List’s (1904) theory of economic development is relevant here—but with a twist. List’s advice was for Germany, a large state, and the key policy that he recommended—protectionism—proved to be attractive thereafter to many large states. But 1
We thank Mogens Lykketoft and Lars Bille for this insight. Please note that we are interested in the economic consequences of the size of nations in countries that do not belong to the OECD, and intend to extend our research in this regard in the near future. 3 In this regard, we recognize that there is slippage between our qualitative and quantitative analyses in this paper. The former emphasizes the “subjective” or politicized—that is, the socially constructed— cultural homogeneity of Denmark while the latter emphasizes the “objectively” given cultural homogeneity. As noted above, this difference needs to be taken seriously in the construction of any quantitative index of national homogeneity as well as in qualitative comparative case studies. One might consider, for 2
protectionism for small countries is often mistaken given the limited size of the internal market. The Danish state generally chose an activist approach after 1864 that might be called free trade Listianism. Geopolitical vulnerability led Danish elites to encourage a move away from trade with Germany so as to foster strong economic ties with Britain in the hope that she would become a powerful ally in the event that Denmark’s sovereignty was threatened again. The state played a large role in this, such as by building a railway across the country to Esbjerg on the west coast, whose expansion it then helped to fund. Thereafter Danish agriculture sought international markets thus integrating itself into the international economy (Kaspersen 2006). Denmark has been a comparatively open economy ever since with the state continuing to play a significant role in directing it, such as by encouraging another reversal of trade—this time from Britain to Germany—after accession to the European Union. In short, Denmark has learned over a long period of time to adapt to the vulnerabilities of economic openness— precisely the sort of vulnerabilities that many nation-‐states face as economic globalization advances—and to do so by utilizing the capacities of the state. The state has continued to help Danish firms identify and exploit international niche markets for a wide variety of products, such as insulin, medical equipment, wind turbines, and hearing aids, promote public-‐private partnerships, provide top notch infrastructure for the private sector, and do other things that have contributed significantly to the country’s recent socioeconomic success (Lykketoft 2006, p. 11). The state is even planning to launch a series of initiatives that will increase the supply of venture capital and entrepreneurial training to encourage more internationally competitive private sector start-‐ups (Globalization Council 2006). To sum up, as a consequence of the historical legacies associated with its diminution in size and its increase in national homogeneity, Denmark enjoyed several advantages that enhanced its capacities for coordination and adaptability. These, in turn, contributed to its socioeconomic success. Danes learned to cooperate and compromise particularly when the nation-‐state was vulnerable to economic or geopolitical crisis as seen, for example, in the 1933 Stauning agreement and various policy and institution building initiatives since then that required compromise across the center, including the development of an extensive welfare state. Danes learned to sacrifice for the common good as seen in various examples of electoral reform, wage restraint, pension reform, and changes to the tax code. Danes learned to be flexible in part due to mass education and skill training, which elevated human capital in ways that facilitated industrialization and, more recently, flexibility in the labor market and on the shop floor in ways that improved Denmark’s international competitiveness. Mass education (i.e., Grundtvigian folk schools) also helped forge the national identity that contributed to the Danish willingness for cooperation and sacrifice in the first place. The educational system continues to stress cooperation and flexibility today. And the Danish state learned to help producers compete through its free trade Listian approach to economic development and state action. Thus, cooperation, sacrifice, flexibility, and concerted state action—rooted in key
historical legacies—have been essential components of the capacity to coordinate institutions and policy in ways that benefit socioeconomic performance in this small homogeneous nation-‐ state. A First Expansion of the Argument This view of Denmark’s historical experience seems to show that a small and nationally homogeneous society has the capacity to flexibly react to external pressures to which it is, so to speak, all-‐too-‐sensitive. Naturally, as social scientists we wish, as noted, to see if this combination of small scale and national homogeneity is at work elsewhere—not least since its presence elsewhere would make us feel more confident that we have truly captured the character. To that end, we compared the 30 OECD countries in terms of their scale, cultural composition, and socioeconomic performance during the early twenty-‐first century.2 First, using data in table 1, we identified four groups of countries: small/homogeneous (Austria, Denmark, Finland, Hungary, Iceland, Ireland, Netherlands, Norway, Portugal, Sweden), small/heterogeneous (Belgium, Czech Republic, Luxembourg, New Zealand, Slovak Republic, Switzerland), large/homogeneous (Australia, France, Germany, Greece, Italy, Japan, Poland, South Korea, United Kingdom), and large/heterogeneous (Canada, Mexico, Spain, Turkey, United States). To begin with, closely following Katzenstein (1985), scale was based on a country’s economic openness, measured as the value of total trade as a percentage of GDP; natural resources available for exploitation, measured in square kilometers of arable land mass; and size of domestic market, measured by population size. Recall that Katzenstein’s interest in scale stemmed from his belief that small countries were more vulnerable than large ones. Our measures of scale represent the economic vulnerabilities associated with size as he depicted them. Economic openness and size of domestic market are proxies for vulnerability to global market forces. Natural resource availability is a proxy for the vulnerability associated with being dependent on the external world for raw materials. Hence, smaller countries are more open to international trade, have less arable land mass, and have smaller populations than large countries. We ranked countries on all three measures. In each case, smaller numbers reflected smaller size; larger numbers reflected larger size. For each country we added its three rankings and then divided the total by 3 to obtain its average ranking. Based on these scores we then calculated the mean ranking for all 30 countries, which was 15.5. Using this mean as a cutting point, we then divided countries into two groups. We defined large countries as having 2
Please note that we are interested in the economic consequences of the size of nations in countries that do not belong to the OECD, and intend to extend our research in this regard in the near future.
an average score greater than the mean while small countries had an average score less than the mean. For instance, Denmark ranked ninth in trade openness, thirteenth in arable land mass, and seventh in population for a mean score of 9.66 whereas the United States ranked 29, 30, and 30 in trade, arable land mass, and population, respectively, for a mean score of 29.67. Hence, Denmark was classified as a small country and the United States was classified as a large country. It is worth noting that Katzenstein (1985) classified 12 countries in his study as being either large (France, Japan, Britain, Germany, the United States) or small (Austria, Denmark, Netherlands, Norway, Sweden, Belgium, Switzerland). Our sorting of these countries matched his perfectly, which suggests that our approach is reliable. Table 1 about here Next, we sorted countries according to how culturally homogeneous they were. Our measure of homogeneity is the composite measure of ethnic fractionalization developed initially by Soviet anthropologists and recently updated and improved by Alesina et al. (2002), which combines measures of both racial and linguistic homogeneity. The ethnic fractionalization score represents the odds that two people picked at random in a country will be from different ethnic groups as defined by race and language. Scores may range from 0 to 1. Higher scores mean that the odds of selecting two people from different racial and/or linguistic groups (as defined by the individual’s native language) are relatively great. For example, Belgium received a score of 0.5554 whereas Denmark received a score of .0819. Hence, the odds of randomly selecting two people from different ethnic groups are roughly 55 out of 100 in Belgium but only about 8 out of 100 in Denmark. In this sense, Belgium is far more culturally heterogeneous than Denmark. The mean ethnic fractionalization score for the 30 OECD countries was .2302. Based on this mean we divided countries into two groups. Culturally homogeneous countries were defined as having an ethnic fractionalization score lower than the mean while culturally heterogeneous countries had a score greater than the mean. Hence, Denmark was a homogeneous country and Belgium was a heterogeneous country. Based on these calculations we identified four groups of countries: small/homogeneous (Austria, Denmark, Finland, Hungary, Iceland, Ireland, Netherlands, Norway, Portugal, Sweden), small/heterogeneous (Belgium, Czech Republic, Luxembourg, New Zealand, Slovak Republic, Switzerland), large/homogeneous (Australia, France, Germany, Greece, Italy, Japan, Poland, South Korea, United Kingdom), and large/heterogeneous (Canada, Mexico, Spain, Turkey, United States).
Finally, we examined the average socioeconomic performance for each group of countries. We looked at overall socioeconomic development as measured by the United Nations Human Development Index (United Nations 2004). HDI is a composite score given to each country based on measures of life expectancy at birth, adult literacy rate, gross school enrollment, and GDP per capita. As such, it reflects the long-‐term development profile of a country. Scores may range from 0 to 1. Higher scores reflect higher levels of development. We calculated the mean and median HDI score for each of the four groups of countries. We also examined the rankings of countries in terms of their HDI scores relative to all countries in the world and then relative to just the 30 OECD countries. Then we calculated the mean and median for each group’s world rankings and OECD rankings. For the rankings, smaller numbers reflected better performance (i.e., larger average HDI scores) than larger numbers. The results are shown in Figure 1. A comparison of the means for HDI, HDI world rank, and HDI OECD rank shows that the small/homogeneous group of countries had on average the highest level of socioeconomic development. This group was followed in turn by the large/homogeneous group, the small/heterogeneous group, and finally the large/heterogeneous group, which fared the worst. The results were somewhat less consistent for the medians, but in every case the small/homogeneous group performed the best while the large/heterogeneous group performed the worst. Figure 1 about here Overall, this figure suggests that during the early twenty-‐first century the socioeconomic performance of small, culturally homogeneous countries appears to have been better on average than other types of countries within the OECD. It is worth emphasizing in the strongest terms that this is but a preliminary suggestion, the merest beginnings of any sort of proof that small scale and homogeneity helps breed societal success. We are our own most severe critics as to the limitations of these calculations. Specifying some of those limitations is what is now helping us to design better research. Problems and Solutions, together with New Questions An immediate set of problems concern the data used to this point. An immediate set of problems concerns the Ethnic Fractionalization Index which we used to calculate homogeneity and heterogeneity. There are general problems with any index of this sort. For one thing, individuals can have multiple identities: these have characteristically not been caught by varied
sorts of data, most obviously by national censuses which have tended to ask respondents to give a single identity. For another, not every “objective” difference becomes politicized. Differently put, one really needs an index of politically charged ethnic differences, something altogether harder to create (Posner, 2004a, 2004b). These points are not designed to say that indices are not needed, merely to insist that they must be carefully constructed. A further critical point needs to be made about the Alesina index upon which we relied. It is deeply flawed. First, the Czech Republic and the Slovak Republics, to note only the most striking example, are now homogeneous—the Czechs particularly so in that their country contains only their own ethnicity whilst having very co-‐cultural members in any external homeland. (The fact that both are doing rather well, and almost certainly better than would have been the case had the stalemate in the years before 1992 continued, is very much in line with our general argument). Second, the Alesina index focuses only on racial and linguistic homogeneity at the expense of other potentially important aspects of homogeneity. In the Danish case, for example, religious and ethnic homogeneity—a very strong sense of a shared cultural ethnos—is crucial in the story we have told. But this is not captured in the quantitative index. Third, the fractionalization scores only really deal with differences within the native born population. But many countries have had significant flows of immigrants in the last three decades. If an immediate task is that of improving the index to take account of this, as important a consideration is that of analyzing whether economic success has been helped or hindered by immigration. Then our measure of scale—based upon arable land mass, population and openness to world trade—is also open to critique. There is a danger in the last element in our measure: if openness is a measure of success and a measure of small size, there the argument can become circular and tautological. More specifically, our argument has produced one obvious error: Greece, to whose character we turn in a moment, is not a large state. It becomes a small state immediately one drops openness to trade as a measure of size—albeit to do so then turns Sweden into a large state! Moreover, we are not so naïve as to suggest that only the size and cultural composition of the nation state affect long-‐term economic performance. A whole range of factors— necessary, sufficient, and intermediate—are woven together to affect this outcome variable. Insofar as quantitative analysis is concerned, these additional factors must be controlled for in more sophisticated statistical analyses.
Finally, a snapshot of economic performance at a particular time has two obvious failings: it draws attention away from periods of poorer performance, and does not naturally link to discussions of path dependency. One wants to know, to give but one example, whether Danish institutions were so clearly established that the poorer performance of the 1970s was a mere hiccough in an established trajectory. It is certainly vital to study periods in which models of performance are under stress, and we look forward to doing a good deal more research of this type. So a first element of our developing research design concerns the need for improved statistics. An obvious idea is to better classify the states in table 1 and figure 1. This is not just a case of improving fractionalization data dealing with the Czechs, Slovaks and Greeks. To the contrary, a serious argument can be mounted to the effect that the United States is a homogeneous large state—on the grounds that it retains the capacity to turn immigrants into Americans in short order (Hall and Lindholm, 2001). Equally, we need to improve and reconsider the data on size. Further, it may be possible to use some data that runs for longer periods. GDP data is available, albeit rather varied forms for over a hundred years, albeit HDI data is of much more recent provenance, requiring us to use a different index of success if we choose to produce historically sensitive data. A second general element of an improved research design is intimately connected with this first point. Comparative case analysis must be a vital component of any research on the economic consequences of the size of nations. For one thing, it may well be that only fine-‐ grained historical sociological analysis will allow for the location and understanding of the character and formation of politically relevant ethnic divisions.3 For another only very detailed analysis can identify mechanisms in other countries that are comparable to those noted above for Denmark. To that end, we have begun work on two further cases, Finland and Ireland. At first sight Finland seems rather different from the rest of Scandinavia because of the extreme brutality of its civil war. But a case can be made that this war was, in a certain sense, accidental. The Finnish nation developed smoothly during most of the nineteenth century. For one thing, the Tsars allowed this overdeveloped peripheral society effective home rule. For 3
In this regard, we recognize that there is slippage between our qualitative and quantitative analyses in this paper. The former emphasizes the “subjective” or politicized—that is, the socially constructed— cultural homogeneity of Denmark while the latter emphasizes the “objectively” given cultural homogeneity. As noted above, this difference needs to be taken seriously in the construction of any quantitative index of national homogeneity as well as in qualitative comparative case studies. One might consider, for instance, including measures of shared egalitarian , civic, or liberal values (i.e., “culture of citizenship”) in the construction of an index of homogeneity, such as those found in the World Values Survey.
another, the upper class had weak social roots—looking to Sweden rather than to St Petersburg—and so joined rather than opposed national awakening. Tsarist attempts to homogenize their territory in the decades before the end of the empire did create resistance; so too, and much more seriously, did refusal of the new Russian state to recognize the elections of 1918. The accident of civil war came about because of this blocking of normal political avenues, in combination with a revolutionary model next door and the return of anti-‐ communist soldiers from Germany (Alapuro, 1988). But what is noticeable all the same is the way in which national imagining very quickly found a way to heal wounds, and to create a flexible society blessed with great intelligence in the state. One can note three further points. First, the fascist route was effectively barred by the presence of key popular elements of Scandinavian social structure, which blocked any consolidation of elite power. Second, the Finnish situation very clearly depends, and at virtually every moment, on visceral awareness of geopolitical insecurity. Finally, social discipline was further enhanced by the civil war itself: the very fact that it had been so bloody, and so divisive for many families, did much to knock heads together, to push people towards avoiding any repetition. Ireland is at once different and similar to Finland. It was a backward part of an empire, and it did not benefit from home rule—despite attempts throughout the nineteenth century to achieve this. Still, Ireland also had a civil war, and essentially for the same reason—namely that political opportunities were blocked by the failure to recognize the results of the 1919 election. However, the civil war was noticeably less bloody, with Ireland thereafter facing rather little geopolitical pressure given that Britain became comparatively tolerant once secession had taken place. The end result of these factors was an inability for a rather long period to bury political differences (Kissane, 2002). Nonetheless, once that did happen—once the losing party in the civil war became `system-‐loyal’ in 1937—the benefits of homogeneity began to kick in. The Celtic Tiger in recent years has been one of the most striking examples of the benefits of small size in combination with cultural homogeneity. If these two cases look set to give support to our general thesis, further comparative analysis will make it necessary to specify the precise claims being made. First, it is necessary to note that the violence of civil war can sometimes be so great that it proves just about impossible to forget it. Differently put, political division within a rather homogeneous world can sometimes prevent the emergence of cultural co-‐ordination based on ethnic similarity. This seems to be true in Greece, and we now take sustained interest in Serbia—to see if a shared national self-‐perception will trump political division given achieved internal homogeneity, albeit of course in the presence of many Serbs living outside the homeland. Second, we do not claim that there is by one formula for success, our ambition being rather to capture the causes and dynamics of a particular route. Two points must be made in this connection. On one hand, the
fact that Switzerland tops the World Economic Forum rankings and is a small, seemingly culturally heterogeneous country with four national languages suggests that cultural homogeneity may not be imperative for success. The most sophisticated account of the Swiss case suggests that it achieved a high level of tolerant civic nationalism by a different route than Denmark’s—one that involved a series of political accommodations, not least in light of a civil war, that were eventually institutionalized in Switzerland’s famous decentralized, federated political structure (Steinberg 1996). We are not yet in a position to judge this account, but have a measure of initial skepticism towards it. Perhaps the Swiss are more homogenous than one imagines—differently put, what might well matter here is that objective differences of language and religion very rarely became politically charged. On the other hand, we know full well that large states have advantages, not least in long production runs that allow them a measure of insulation against market pressures. Advantages of this sort have helped large states in the past, and they may do so again. However, a part of the interest of our research lies in the fact that states are, so to speak, shrinking in the face of the increased tempo and salience of global interchanges of all sorts. A final question of great interest leads towards the conclusion. Are there costs as well as advantages to homogeneity? By this, we do not mean what is obvious, namely that forcibly homogenizing populations through ethnic cleansing, population transfer and genocide is often catastrophic and always repulsive. We certainly do not advocate policies of this sort. But one wonders if heterogeneity may have greater benefits in a world of increasing economic competition. Homogeneity can lead to the politics of co-‐ordination, but heterogeneity may breed innovation. But heterogeneity can of course only bring this advantage if societies, whether large or small, manage to combine difference with social peace—a challenge not met by Europe in the last hundred years. A Multicultural Denmark? The tenor of our conclusion follows from a central precept of the Montesquieu’s social theory, namely that any reform of law should fit with the customs of a country—rather than being abstract, and thereby either ineffective or excessively harsh. What might this mean for Denmark? Let us take it for granted that there is an immigrant community, and that there will be new Danes—that is, let us not take seriously any notion of expulsion and bear in mind that further immigration may well be needed, given the failure of Danish women to have enough children to achieve demographic replacement. In these circumstances, a society is faced with two choices, multiculturalism or civic nationalism. Which should Denmark choose—in dealing with, one should insist, what is in objective terms a rather small proportion of its population? Bluntly, Denmark has been so homogeneous in the past that it would be unwise to attempt to become a genuinely multicultural society. It would go too much against the grain. And two further points should be noted. First, the numbers involved, together with the fact that
immigrants have very different origins, make multiculturalism less than a necessity. Secondly, recent events, especially in Great Britain, make one realize that liberal multiculturalism is by no means easy to achieve. Differently put, multiculturalism may allow for the caging of immigrants and their descendants in a wholly illiberal way. There can be dangers in illiberal multiculturalism. Accordingly, there is everything to be said for turning to the inclusiveness promised by civic nationalism. But what does inclusion really mean? It behoves Europeans, given the surge— understandable in itself—of anti-Americanism to recognize two major achievements of the United States, a society one should note that runs along civic nationalism for all its talk of multiculturalism. On the one hand, Americans have a genius for changing their national-self perception, for forgetting their past so as to re-imaging a future. On the other hand, American society has extraordinarily high rates of intermarriage, except for African-Americans. It is accordingly possible to `get in’ to American society in perhaps the most important of all dimensions—making it thereby impossible for ethnic groups to cage their own members. When one adds to these factors a relatively low rate of unemployment (albeit a rate artificially reduced by not counting the huge prison population) it becomes obvious that the United States historical ability to serve as a melting pot remains undiminished. Looking as friends on Denmark, as Shakespeare’s Hamlet has it, we tentatively suggest two points. First, a great deal of work needs to be done to make inclusion real, for immigrants and new Danes. There is of course danger in not including immigrants, for radicalism can emergence when the promise of citizenship is not fulfilled. Intermarriage cannot, of course, be mandated from above. But it is surely more likely if really significant resources are devoted to language and employment training. Perhaps too Danish national self-perception might change somewhat: after all, Denmark was once a composite monarchy with significant overseas possessions, something which could usefully be included in a new social imaginary. The second point is perhaps more contentious, and certainly harder to resolve, and it is more in the nature of a hunch than the result of sustained inquiry. It may be that nationalism is changing its colours, as has happened so often in the past. Rather than being an elite project, nationalism may now develop as the resentment of those left outside. One can see what this means in Europe with reference to a scheme of language repertoires produced by the brilliant American political scientist David Laitin (1997). Full European citizenship requires a two plus or minus one language repertoire in this scheme, that is, the ability to speak English and the language of a national state, with the minus referring to Great Britain and the plus to situation faced by groups such as the Basque and Catalans, national minorities within a national state. Laitin is an optimist, imaging this repertoire to be easily available. But real proficiency in two or more languages is class related, as are feelings towards the European Union in general. The point to be made here is simple. Denmark has a wonderful tradition of social solidarity. If it obviously needs to include `new’ Danes, as important a task is that of recalibrating its traditions so that `native’ Danes feel themselves to be part of the national project, not least since to do so may help achieve the former task. Citizenship struggles never end, and Denmark faces new challenges—but, let it be said again, blessed with a cultural tradition that ought to help it surmount them.
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Table 1. Country Type: Scale and Cultural Composition Trade
(%GDP)a
Small/Homogeneous
(sq. km.)
Arable Population Population Ethnic Land Rank (millions) Rank Fractionalizationb
Austria
51.7
8
14,255.35
8
8.1
10
0.1068
Denmark
41.5
9
23,260.50
13
5.4
7
0.0819
Finland
34.5
15
23,670.15
14
5.2
6
0.1315
Hungary
65.1
6
46,515.00
19
9.9
12
0.1522
Iceland
38.6
13
72.10
1
0.3
1
0.0798
Ireland
85.2
2
11,245.12
7
4.0
4
0.1206
Netherlands
60.1
7
11,212.02
6
16.1
17
0.1054
Norway
34.3
16
9,716.34
5
4.5
5
0.0586
Portugal
33.9
17
19,566.80
12
10.1
13
0.0468
Sweden
40.7
10
31,497.48
16
8.9
11
0.0600
Mean
48.56
10.30
19,101.09
10.10
7.25
8.60
0.0944
Standard deviation
16.95
4.85
13,086.03
5.59
4.36
4.84
0.0346
Median
41.10
9.50
16,911.08
10.00
6.75
8.50
0.0937
Small/Heterogeneous
Arable Land
Trade Rank
Belgium
82.0
3
7,935.20
4
10.3
15
0.5554
Czech Republic
66.3
5
31,545.60
17
10.2
14
0.3222
Luxembourg
136.9
1
690.00
2
0.5
2
0.5302
New Zealand
31.5
19
16,232.04
10
3.9
3
0.3969
Slovak Republic
75.4
4
14,710.00
9
5.4
8
0.2539
Switzerland
40.5
11
4,129.30
3
7.2
9
0.5314
Mean
72.10
7.17
12,540.44
7.50
6.25
8.50
0.4317
Standard deviation
37.39
6.71
11,062.74
5.68
3.80
5.39
0.1263
Median
70.85
4.50
11,322.85
6.50
6.30
8.50
0.4636
Large/Homogeneous Australia
20.9
28
460,938.00
28
19.7
18
0.0929
France
26.1
26
184,948.10
25
60.1
25
0.1032
Germany
33.9
18
121,675.12
22
82.5
27
0.1682
Greece
25.1
27
27,710.97
15
11.0
16
0.1576
Italy
26.5
25
84,348.60
21
57.4
23
0.1145
Japan
10.6
30
45,327.24
18
127.7
29
0.0119
Poland
31.3
20
140,707.35
23
38.6
20
0.1183
South Korea
34.6
14
16,876.58
11
47.7
22
0.0020
United Kingdom
27.7
24
58,208.16
20
59.3
24
0.1211
Mean
26.30
23.56
126,748.90
20.33
56.00
22.67
0.0989
Standard deviation
7.34
5.20
137,065.51
5.15
34.62
4.18
0.0574
Median
26.50
25.00
84,348.60
21.00
57.40
23.00
0.1145
Large/Heterogeneous Canada
39.7
12
498,530.50
29
31.5
19
0.7124
Mexico
27.8
23
256,430.85
26
103.5
28
0.5418
Spain
29.1
22
141,338.96
24
41.1
21
0.4165
Turkey
30.0
21
265,013.68
27
71.3
26
0.3200
United States
11.7
29
1,780,795.90
30
294.0
30
0.4901
27.66
21.40
588,421.98
27.20
108.28
24.80
0.4962
Mean
Standard deviation
10.09
6.11
679,067.43
2.39
107.58
4.66
0.1468
Median
29.10
22.00
265,013.68
27.00
71.30
26.00
0.4901
a
Trade is defined as the total value of imports and exports in current prices as a percentage of GDP. So for Luxembourg (136.9) the value of her imports and exports exceeded the value of the GDP produced that year. Trade figures are for 2002. b
Ethnic fractionalization measures are from various years during the 1990s or early 2000s, except for Australia (1986) and Italy (1983). Sources: Trade data are from OECD (2005); arable land mass and population data are from The Economist (2005); ethnic fractionalization data are from Alesina et al. (2002).
Figure 1. Country Type and Human Development Index Performance
Heterogeneous
Homogeneous
Small
Large
HDI Score
HDI World Rank
HDI OECD Rank
Mean
.927
13.30
11.90
Median
.936
11.50
11.50
HDI Score
HDI World Rank
HDI OECD Rank
Mean
.908
20.67
17.17
Median
.930
16.50
16.50
HDI Score
HDI World Rank
HDI OECD Rank
Mean
.915
18.78
16.89
Median
.925
19.00
19.00
HDI Score
HDI World Rank
HDI OECD Rank
Mean
.871
34.60
18.20
Median
.922
20.00
20.00
