Money and Markets: Essays in Honor of Leland B. Yeager

224 Laurence S. Mossdeportations. Let us call this type of government intervention the “eliminationistpolicy” (see Goldhagen 1996: 49–79). The macabre logic of efficiency does, however,admit the possibility that an eliminationist social policy can be one powerfulsocial-welfare enhancing policy alternative. It is this aspect of the problem of ethicalnorms and economic science that I shall address here.Plan of this paperI shall proceed as follows. First, I shall pinpoint an important distinction that E.J.Hobsbawm and other writers have advanced about two notions of nationality(Hobsbawm 1990). In section 2, I argue that this modern meaning of the nationstate,when linked to the earlier notion of a nation as an administrative unit, iscrucial for understanding the economic effects when dissenting ethnic minoritiesare segregated, marginalized, and, in exceptional cases, banished from a territory.In section 3, I offer a strictly abstract and fictional model of a large populationwhose members can be conveniently classified according to two behavioralcharacteristics that have a direct and decided impact on both the creation anddivision of gains from trade. By assuming that these behavioral characteristicscluster among ethnic groups, I speculate, in section 4, that the relentless logic ofefficiency can be harnessed in scientific support of segregation, ethnic cleansing,and the like. In section 5, I survey the historical record to find out if the ideaspresented in this paper have any relevance at all to the ethnic problems and abusesof our times. In section 6, I argue that orthodox economic reasoning is incapable ofruling out the normative case for ethnic cleansing and eliminationist policy. Aconcluding section 7 follows.1 Two notions of the nation-stateFollowing Hobsbawm, we must distinguish between two alternative meanings ofthe term nation (Hobsbawm 1990: 101–30). In 1776, Adam Smith offered us acompelling account of the manner and principles by which a nation – any nation– can grow wealthy. His was not a theory about French wine makers, Scottishherders, or London craftsmen. Rather, his great book promulgated generalprinciples to guide policy makers in any geographical area, regardless of what tribesor ethnic groups resided there (Smith 1976 [1776]). Smith criticized the mercantilistand physiocratic “schools of thought” for misunderstanding both the nature andcharacter of national wealth and how it is created and maintained. He did notcriticize them for misunderstanding the British temperament or the historic missionof the English people. His emphasis was on abstract principles of wealth creationthat were applicable to all people, everywhere and at all times.When Smith used terms like “nation” or “national,” he generally meant anorganized whole or independent political unit capable of making and enforcinglaws over a geographic area and entering into treaties with other independentnations. Today, however, another meaning of the word nation has become moreprevalent among sociologists, political scientists, and anthropologists. It is now