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Balkanization and Assimilation
Examining the Effects of State-Created Homogeneity
Originally published in Review of Social Economy
This paper investigates the effects of state-created homogeneity on the ability of socially distant individuals to trade. The study shows that where the state is absent, socially distant agents adopt the customs, practices and institutions of outsiders they desire to interact with.
This paper investigates the effects of state-created homogeneity on the ability of socially distant individuals to trade. The study shows that where the state is absent, socially distant agents adopt the customs, practices and institutions of outsiders they desire to interact with. By creating a degree of homogeneity, agents signal their credibility to each other. These signals, in turn, enable inter-group exchange. Formal institutions provided by government can create noise in these signals. This noise incapacitates the information mechanism employed by heterogeneous agents to enable trade.
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