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Or the state. The second sphere in Klamer's framework is the state, the sphere of compulsion.
Liah Greenwald has argued in an impressive recent book, The Spirit of Capitalism (2001), that "the factor responsible for the reorientation of economic activity towards growth is nationalism." She summarizes her case towards the end of a long chapter on "The Capitalist Spirit and the British Economic Miracle" so: "The redefinition of the English society as a nation, which implied the fundamental equality of all Englishmen, freed economic occupations, specifically those oriented to the pursuit of profit, from the stigma attached to them in traditional Christian thinking." Earlier she had posited that nationalism is "inherently egalitarian" — we all freeborn English together — and "allows for social mobility." Thus the democratic theme in her model.

But more, the very "spirit" of capitalism is raised by nationalism, she writes, which "invested economic growth with a positive value and focused naturally defused social energies on it." That is, Greenwald believes that nationalism redoubled the energy of businesspeople. Britain's success against France inspirited them. "Because of the [British capitalists'] investment in the dignity of the nation, nationalism implies international competition." "Empowered by their proud nationalism. . . . they made their economy boom and provoked [in France, Germany, Japan, for example] wave after wave of reactive nationalisms. . . . Nationalism was the ethical force behind the modern economy of growth."

She is quite right to claim that freeing from a peasant/aristocratic stigma on trade was necessary, and that earlier, as she puts it, "'merchant' was a term of derision in much of Christian Europe [yet not in Northern Italy, the Hanseatic League, the Netherlands north and south]; in England it became an honorable title, and commerce was an occupation of choice for many able and well-positioned people."

The stigma and derision has always been a trifle silly. After all, an ordinary consumer, like you, who looks for the best deal in the Friday market, or an ordinary worker, like you, who will not accept lower wages than he can get, is a species of merchant. It was a rare member of the senatorial class at Rome, officially barred from trade, who did not loan money at interest or run a slum apartment house. As John Wheeler put it in 1601, quoted by Greenfeld, "to contract, truck, merchandise, and traffic with one another" (Greenfeld notes the anticipation in this of Adam Smith's famous phrase) is the habit of "both high and low, yet [some] . . . are shamed and think scorn to be called merchants."

She is also right to claim that England in the early modern world is the place to look. "Economic action was visibly reoriented in Northern Europe," she writes, "specifically in England, somewhere around the 17th century." She brings no evidence to bear, though, on the timing of "action," only of thought. That is a worry. Her heroes are writers: the mercantilists, the economic nationalists of early modern Europe, and especially the Englishmen Gresham, Wheeler, Raleigh, Fortrey, and Defoe. We hear of the rhetoric of economic ideology, which is good, but not much about the actual shape of economies.

But Greenwald is also quite right when she defends Max Weber's argument that, in her words, "the emergence of a modern economy presupposed — that is, could not have occurred without — a set of motivations and a new system of ethics." It is my theme, too, and I join Weber and Greenwald against the economic determinists and the historical materialists. My difference with Weber and Greenwald is that I do not think with Weber that the "new" set was peasantly and Christian, specifically Calvinist, or with Greenwald that it was aristocratic and territorial, specifically nationalist. I am claiming that the new "system of ethics" and "an emergence of new ethical standards" was bourgeois, townly, and libertarian, right from the start.

In keeping with her mercantilist economics, Greenfeld thinks the spirit of capitalism resides in competition, not cooperation, in economic conquest, not economic dealing. With certain other neo-mercantilists nowadays, such as the historian David Landes or the economist Lester Thurow, she believes therefore in an economic World Cup of "competitiveness." She admires the mercantilist Samuel Fortrey's claim in 1663 that England's greatness depended not merely in England's absolute prosperity but, as she put it, on "its economic supremacy (we would call it competitiveness) relative to other nations." "Competitiveness, " she writes, becomes "a measure of success in every sphere . . . and commits societies which define themselves as nations to a race with a relative and therefore forever receding finish line."

At the end of her survey of the pamphlet literature of mercantilism before Adam Smith demolished it she praises Defoe's "clarity of vision — of nations racing against one another for economic supremacy." Defoe's metaphors of the economic race are "very suggestive" and "elucidate [the] nature" of England's commercial "supremacy," which she dates from 1690. Commerce, he wrote, "might be said to begin like the starting post or place of a race, where all that run set out exactly upon an equality, whatever advantage is obtained afterwards being the effect of the strength and vigor of the racers." England's outdoing of all the nations in the world began "when standing upon the square with the rest of the world England gave itself a loose and got the start of all the nations about her in trade."

A race is a zero sum game. If Britain exceeds France in the league table of economics growth, then Britain wins, and France loses.

Such race-ism, just incidentally, brings to mind the other meaning of the word, a nascent racism. Race is not Greenfeld's explanation, certainly, though it is not far from the minds of some of her allies. Defoe boasted that a naked Englishman (Robinson Crusoe, for example) could "beat the best men you shall find in the world." And Benjamin Franklin, [her quotes from him.] In less boastful terms David Landes has recurred to 19th-century theories of the superiority of the ancient Germanic community to explain European success since the 16th century: [ quotes from review. ]

Beyond the mercantilist assertions in the pamphlet literature, Greenfeld offers little evidence for her claim that nationalism inspirited the capitalists, leaving them "tense with collective economic ambition," "inspired . . . to incessant activity." She stays at the level of a national character, a personality called "England" or "Britain" who has loves and hates, ambitions and fears: it is to "the original, English, nationalism, to which we owe the forward aspiration of modern economy and its yearning [note the personalization here] for ever greater material power." Greenfeld gives no example of a British merchant letting his enthusiasm for British power get in the way of his private goals. If she would argue that his private goals are just the same as British power

Gain, a rise in status, racing for a finish line is not capitalistic only.

And why would not love for some smaller polity than the nation work just as well? The Italian word campanilismo, that is, parochialism, means the loyalty to neighborhood within the shadow, or at any rate the sound, of the local bell tower. To this day Siena is divided into cantrade, neighborhoods sponsoring a horse and rider in the twice-yearly Palio. Your contrada gives you the pride of a little nation. The pride of a Venice or a Swiss canton gives it, too, and can support economic venturing. Greenfeld praises English mercantilism of the 17th century. But city councils in Lincoln or London probably heard identical arguments for keeping business at home in the 13th century. Were the national boundaries of Europe in 1914 or in 1939 somehow economically stimulating? What is so desirable, economically, about a German Reich or a Soviet Union?

Perhaps large nations improve economies. Largeness itself might aid the gathering of large capital sums, for example, though it was notorious in England that the capital market in the 16th and 17th century was local. And later when part of it — the part financing the nation's wars — became national it also became international, making national boundaries irrelevant. Dutch and French investors financed British navies to fight against the Dutch and the French. During the Napoleonic Wars British investors and exporters continued to deal in Paris. It would be an astonishing accident if what economists call the "optimal currency area," to take one of various possible concepts — the optimal bond-market area, the optimal ironmaking area, the optimal insuring area — happened to match the borders of Britain in 1776 or of Germany in 1871.

Or large nations could improve the economic policy, bringing the wisdom of a Colbert or a List to bear on a wider field than merely local regulations. A French nation could lower internal tariffs — although in fact internal tariffs harried French merchants well into the 18th century check. Or perhaps large nations have wise regulations of quality in production, wiser at any rate than those of Coventry or Lyon on their own — though the mercantilism which Greenfeld admires was local politics writ large. Perhaps large nations encourage the winning industries rather than propping up the losers — with exceptions such as French prohibitions on Indian cotton cloth in the 18th century and the Common Agricultural Policy in the 21st,

Against such claimed advantages should be set the disadvantages of adventurism in pursuit of glory, an adventurism encouraged exactly by the largeness of nations. Napoleonic France or Hitler's Germany achieved glory that smaller nations could not aspire to. France unification [dates yielded a Louis XIV, glorious as the very sun but embroiling Picards and Gascons and Normans pick provinces late absorbed into France] in his wars of intervention. Georgian Britons worried [fix sentence] the threat of their kings and ruling class to waste money in pursuit of empire, or, worse, to bring the armies home.

Greenfeld knows all this, and acknowledges it. That is, she acknowledges that nationalism has had a down side. [her talk of different kinds of nationalism. Why not just call it "British liberties"?]