Somewhere between flag and field, border and market, crown and coin, the modern world was born. Not in a single stroke, not with one theory or one treaty, but slowly — as the idea of the national state and the economic system began to intertwine. What had once been a tangle of kingdoms, fiefdoms, and city-states, bound by custom and creed, began to cohere into a new vision: the nation as manager, the economy as mechanism.
It is easy now to forget that these ideas are not natural. They were imagined, constructed, contested. They emerged not as inevitabilities, but as answers to the question that haunts all societies:
How shall we live together, and how shall we share what we need?
To explore the link between the national state and the economic system is to return to the architecture of modernity. To trace how power began to take economic form — and how economics became the language of power.
It is not just a history. It is the foundation of the world we still live in.
The Birth of the Nation, the Rise of the Ledger
The emergence of the national state was not merely a political event. It was an economic revolution.
In early modern Europe, as feudal bonds frayed and empires faltered, a new kind of political body took shape — centralized, bordered, and increasingly bureaucratic. Kings became rulers not just of people, but of populations. Laws became tools not just of justice, but of administration. And with this shift came a new imperative: to govern economically.
No longer could a ruler rely on sporadic tribute or church tithes. To build armies, expand infrastructure, and assert sovereignty, the state needed a steady flow of resources. It needed revenue. It needed information. It needed, quite suddenly, a way to see the economy as a system — something to tax, regulate, expand, defend.
Thus was born a new way of thinking: the economy as a national concern.
Mercantilism and the Economic State
This is the world in which mercantilism took root — not as a doctrine, but as a practice of statecraft.
Mercantilist thinkers and officials did not speak in the language of invisible hands or free markets. They spoke of balance of trade, national surplus, bullion reserves, industrial promotion. Their goal was not efficiency — it was sovereignty. Not freedom — but security.
They understood the state not as a neutral referee, but as the architect of economic life. And they saw the economic system not as a natural order, but as a terrain of strategy — where the strength of the nation depended on its productive power.
Trade was war by other means. Currency was a matter of confidence and control. Colonies became supply chains. And tariffs, regulations, monopolies — all became tools in the state’s great project of survival and expansion.
This was not yet modern economics. But it was the cradle of economic policy.
The System Takes Shape
As the national state matured, the idea of an economic system became more coherent. It was not just a collection of transactions. It was a structure — with institutions, incentives, actors, flows.
Thinkers like François Quesnay tried to chart it, literally. His Tableau Économique envisioned the economy like a human body, with income and expenditure circulating like blood. Adam Smith, while often read as a champion of markets, was in fact deeply concerned with the state’s role in creating the conditions for growth, justice, and moral stability.
In all these visions, the economy was now something the state must understand, shape, and sometimes protect. It was no longer a peripheral concern of rulers. It was central.
And with this recognition, political economy was born.
State and System: A Tension Unresolved
The relationship between the national state and the economic system has always been tense. Is the state a guardian, ensuring fairness and stability? Or a manager, optimizing resources and directing growth? Or is it an obstacle, to be minimized in the name of liberty and innovation?
Different eras have given different answers.
– The liberal turn of the 19th century sought to free the market from the state, though never completely.
– The Keynesian consensus of the 20th century re-empowered the state as stabilizer and spender.
– The neoliberal resurgence of the late 20th century sought to shrink it again, even as global finance expanded.
And today, in the face of ecological crisis, inequality, and geopolitical fragmentation, the question returns with urgency:
What is the rightful role of the nation in the economy? And what does the economy owe to the people who live within its borders?
The Fragility of the Frame
One of the great myths of our time is that the economy is a natural system — self-regulating, apolitical, pre-social. But the history of the state and the system tells a different story.
The very idea of an “economy” is inseparable from how we count, what we tax, what we allow, and what we protect.
GDP is not just a statistic — it is a choice.
Debt is not just a number — it is a story.
Markets do not emerge — they are made, often by laws and borders and soldiers.
To see the economic system without seeing the state is to mistake the map for the terrain.
A Reckoning, Not an Answer
Today, as the boundaries between state and market blur — as private firms hold public power, as governments intervene to save economies from collapse, as nationalism and globalization collide — we must return to the questions that first shaped political economy:
– What is the economy for?
– Who is it meant to serve?
– What role must the state play in shaping its outcomes?
These are not technical questions. They are moral, historical, and deeply human.
In the beginning, there was no economy — only life, and the need to share it.
Then came the state, to defend and divide.
And then came the system, to measure, to manage, to multiply.
Now we live within that system — but we still build it every day.
And perhaps the task now is not to choose between state and market,
but to remember that neither is inevitable.
Both are ours to shape — if we dare to ask not only how they work,
but why they should exist at all.