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National Conflicts, Market Liberalism and Social Peace

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For three years, civil war has caused massive death and destruction in the former Yugoslavia. Almost every day, the television evening news has broadcast pictures of devastating artillery bombardments, ruined towns and villages, and multitudes of killed and wounded men, women and children.

Tens of thousands of people have been turned into refugees forced to leave their homes and belongings under the terror of war and threatened mass extermination. At international conferences, the warring factions made up of Serbians, Croatians and Bosnian Moslems have drawn lines on maps tracing out what each side views as their “legitimate” claims for control of populations and territory.

The claims to territories and populations are made on the basis of “history”; either a particular area was once part of a Serbian or Croatian state or national entity or it was a traditional homeland of one of the peoples of the former Yugoslavia.

The Kosovo region of Serb-dominated Yugoslavia is 90 percent Albanian, but the Serbs insist that Kosovo is the location of a famous battle that marks the beginning of Serbian statehood; hence, Kosovo must remain a part of the Serbian nation-state.

Alternatively, the claim is made that a region or area is populated by people who speak the Croatian or Serbian language, or who are members of the same religious group — Catholic or Eastern Orthodox or Moslem — and thus should all be part of the same nation-state.

Finally, the claim is made that an area or territory should belong to one nation-state or another simply because that is how far the successes of military conquest have taken the battlelines up to this point of the civil war; and to withdraw from any portion of this conquered land would be an insult to those who shed their blood and gave their lives for its “liberation.”

And the divisions and conflicts that have torn Yugoslavia apart are being repeated, or have the potential for repetition, in other parts of Eastern Europe. Several wars, civil wars and ethnic conflicts are already shattering the lives of thousands more in the former Soviet Union.

In the wake of the collapse of communism in Eastern Europe, the spirit of nationalism has gripped the minds and the actions of an increasing number of people. And the revived nationalistic spirit has become most troublesome in those countries of the former Soviet Union and Soviet bloc in which a variety of ethnic and linguistic groups live side-by-side. Each ethnic and linguistic group views the others as a threat to its sense of identity and its very existence as a distinct group. Each fears that some other group will use the powers of the state to threaten the economic opportunities and cultural autonomy of its members through political and legal forms of discrimination and prohibition. Rather than seeing the government as an agency for the equal protection of the individual rights of all, the state is viewed as an engine for repression and annihilation of those ethnic and national groups unlucky enough to be a minority in the country in which they live.

And this view of government is the fundamental source of the nationalist and ethnic conflicts that are plaguing this part of the world. The state is considered an instrument for domination and enforced privilege for one ethnic group at the expense of others. The nation-state is considered the exclusive territory for a selected and chosen group defined by historical origin, commonality of language, or similarity of religion. Each individual within the nation-state is defined on the basis of his possessing or not possessing one or more of these characteristics. These determine who and what the individual is in terms of rights, privileges and opportunities in the country in which circumstances or accident of birth have placed him.

The only lasting solution to the nationality problems of Eastern Europe and the former Soviet Union lies in the consistent and thorough application of the principles of market liberalism. Because only market liberalism takes as its founding principle the separation of the state from all economic activity. And by liberating the market from political intervention, the state is restrained from using its powers of coercion to benefit one ethnic or national group to the detriment of another.

Under either socialism or a regulated market economy, the individual’s access to employment opportunities, his ability to open or operate a business, his degree of freedom to practice his religion and educate his children in the language and customs of his choice, or even to live where he wants are all subject to the policy decisions of those who possess political power. Under socialism or a regulated market economy, the state, by definition, has been assigned the responsibility to make decisions to manage or intervene into the economic affairs of life in ways that inevitably must influence the production of goods, the distribution of income, access to resources, and the prices at which commodities may be bought and the wages that may be paid for labor.

Control over the socialist or interventionist state becomes crucial in a social environment in which the members of different ethnic, national and linguistic groups reside side-by-side. One’s own group must attempt to control the state if it is not to be threatened by another national or ethnic group from using the mechanisms of political power for cultural and linguistic dominance. The state can control access to land and resources to build churches and construct schools. The state can manipulate the tax structures and business licensing procedures to make it more or less difficult for members of one ethnic group or another to operate newspapers in their native language, or to enter certain trades, occupations or professions. The state can mandate the use of a particular language and set of customs in public and private discourse and commerce. The individual’s material well-being and cultural or ethnic autonomy are completely in the hands of the national socialist or interventionist state.

Under a regime of market liberalism, ethnic, linguistic and national differences and tensions are depoliticized. When the state is separated from the economy, when all market activities are fully and completely privatized — with the government prohibited from intervening on behalf of any group or special interest — each individual is freed from the fear of coerced cultural, ethnic or linguistic annihilation. Members of different ethnic and linguistic backgrounds can be neither forcibly segregated nor compulsorily integrated into extinction.

Each individual is free to associate predominantly with those of the same group as himself, or interact with or integrate himself into other groups, if he finds it culturally or economically advantageous to do so. Each individual is free to enter the market and privately acquire resources, open businesses, and practice the trade, profession and occupation he chooses.

Each individual is free to send his children to the private school of his choice, in which the curriculum reflects the values he cherishes and the traditions he wishes passed on to his progeny. He may earn his living and raise his children in blissful cultural isolation, or he may become a cosmopolitan — a citizen of the world — speaking many languages and sharing in the customs and cultural contributions of a variety of the national heritages represented in his own country and those beyond the borders of his own state.

But besides reducing, if not eliminating, many of the causes for ethnic conflicts in society, the liberal market order, in which a number of different national groups peacefully and tolerantly live and interact on the basis of voluntary association and mutual respect, also improves the quality and character of the general civil society in which such a diversity of people reside. Indeed, some liberal thinkers have even argued that the existence of a variety of different national groups within one political state is the healthiest of social orders. This was the view, for example, of Lord Acton in his essay “Nationality” (1862):

The combinations of different nations in one State is as necessary a condition of civilized life as the combination of men in society. Inferior races are raised by living in political union with races intellectually superior. Exhausted and decaying nations are revived by the contact of a younger vitality. Nations in which the elements of organization and capacity for government have been lost, either through demoralising influence of despotism, or the disintegrating action of democracy, are restored and educated anew under the discipline of a stronger and less corrupt race. This fertilising and regenerating process can only be obtained by living under one government. . .[T]he fusion takes place by which the vigour, the knowledge, and the capacity of one portion of mankind may be communicated to another. Where political and national boundaries coincide, society ceases to advance, and nations relapse into a condition corresponding to that of men who renounce intercourse with their fellow-men.

For this reason, classical liberals like Lord Acton rejected the dogma and militarism of those who aggressively attempted to impose the ethnically homogeneous nation-state on a geographical area. Nationalism of this sort, Lord Acton argued:

. . . does not aim either at liberty or prosperity, both of which it sacrifices to the imperative necessity of making the nation the mould and measure of the State. Its course will be marked with material as well as moral ruin, in order that a new invention may prevail over the works of God and the interests of mankind.

Rather than being the cause of conflict and war, the multi-ethnic character of many Eastern European countries could be the strength for their rebirth now that the heavy weight of communism has been lifted off them. But this will be the case only if the ideal of market liberalism and a fully depoliticized economic order completely replaces the collectivist institutions and thinking of the past.

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    Richard M. Ebeling is a professor of economics at Northwood University. He was formerly president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).