On the Problem of Scale (I)

Every beneficial system has a characteristic scale. When migration, trade or territorial control exceeds it, scale distortion and scale entanglement turn advantage into crisis.

Most political arguments begin too late. By the time we ask whether immigration is good or bad, trade should be freer or more protected, or territorial expansion strengthens or weakens Israel, we have accepted the wrong unit of analysis. The decisive question is not whether a process is beneficial in the abstract, but whether it is operating at the scale at which its benefits still exceed its costs.

Leopold Kohr and E. F. Schumacher gave modern political economy its clearest language for this problem. Kohr argued that bigness changes the character of institutions. A large state is not simply a small state with more people and territory: as size and power accumulate, feedback weakens, errors are amplified, administration becomes remote and coercion can substitute for consent. Schumacher’s defence of smallness was not a command to make everything small. His principle was appropriateness: every activity has a scale suited to its purpose.

In my research, I describe the psychological starting point as the Tower of Babel syndrome – the belief that if some growth is good, more must be better. Yet systems do not expand indefinitely without changing form. Each has a characteristic scale: the range within which its parts remain proportionate to its purpose, resources and feedback mechanisms. Below that range, a system may be too small to coordinate or survive. Above it, enlargement produces congestion, remoteness, fragility and loss of control.

Two mechanisms drive that transition. Scale distortion occurs when the size, speed or jurisdiction of a system becomes disproportionate to the function it must perform. Scale entanglement occurs when local, national and global systems are coupled so tightly that they cannot adjust independently: gains are captured at one level, costs imposed at another, and disturbances cascade through the whole. When distortion and entanglement meet, the system approaches critical scale. Ordinary adjustment then gives way to nonlinear crisis. Collapse, in this account, is often a brutal correction of scale.

During the 2018 Coase-Sandor Summer Institute in Law and Economics at the University of Chicago Law School, I discussed this argument with Omri Ben-Shahar. As I recall our conversations, we agreed that scale was not a marginal consideration but a recurrent organising problem – one lying at the core of most, if not all, failures across legal, economic, political and ecological systems. The point was not that every system should be small, but that every system has limits beyond which its organising logic begins to defeat its purpose.

Immigration has a characteristic scale

At an appropriate scale, immigration can replenish an ageing workforce, fill genuine skill shortages, create businesses and strengthen the tax base. At too small a scale, a society may lose population, productive capacity and dynamism.

Those gains are not infinitely scalable. Immigration becomes scale-distorted when the volume, rate, composition or geographic concentration of arrivals exceeds the receiving society’s capacity to build housing, expand transport, staff schools and hospitals, police exploitation, create pathways into work and sustain civic integration. The problem is not the ethnicity or religion of migrants. It is disproportionality between the flow and the absorptive capacity of the places receiving it.

The relevant scale is rarely the nation as an undifferentiated whole. Immigration is lived in particular suburbs, housing markets, classrooms, workplaces and municipalities. A national intake that appears modest as a percentage of total population may be overwhelming when concentrated in a few cities or sectors. A society may absorb a large number over a generation yet fail to absorb a smaller number arriving rapidly. Rate matters as much as stock; distribution as much as volume.

Scale entanglement makes the politics combustible. Central governments determine entry numbers; employers and universities may receive immediate benefits; national treasuries collect revenue. Adjustment costs often fall on local councils, renters, schools, hospitals and lower-income workers. Global forces create the movement, national policy authorises it, and local communities carry it. A scale-sensitive policy would link intake to demonstrated local capacity, invest before bottlenecks become crises, distribute arrivals more intelligently and restore feedback from the communities doing the absorbing. That is neither open nor closed borders. It is proportion.

International trade has a characteristic scale

At an appropriate scale, trade enables specialisation, lowers prices, spreads knowledge and opens markets no local economy could reproduce internally. Too little trade can mean stagnation, protected monopolies and expensive self-sufficiency.

But maximising trade is not the same as optimising it. When production is fragmented across too many borders, concentrated in too few suppliers and organised only around the lowest immediate price, efficiency consumes resilience. Productive knowledge disappears, inventories shrink, strategic inputs depend on distant jurisdictions and communities lose the capacity to adapt. Comparative advantage can become comparative vulnerability.

Trade’s characteristic scale is determined not only by volume, but by distance, supplier concentration, substitutability, border crossings and the importance of the good. A global chain for ordinary consumer goods can tolerate more extension than one for food, energy, medicines, communications or defence. The system becomes critically entangled when a port closure, war, sanction, pandemic, cyberattack or political decision in one jurisdiction can interrupt production across continents. Gains are dispersed globally; closures, shortages and unemployment are experienced locally.

The answer is not indiscriminate deglobalisation, but a nested trading order: local capacity where failure would be catastrophic, regional networks where proximity adds resilience, and global exchange where suppliers are diverse and substitution is realistic. Strategic redundancy, inventories and alternative routes look inefficient only until disruption occurs. Trade should be extensive enough to capture the gains from exchange, but not so concentrated that interdependence becomes dependence.

Israel and the scale of territory

Israel is an unusually compressed test of scale. A small territory contains dense populations, overlapping historical claims, sacred sites, shared infrastructure and security threats linking the local, national, regional and global. Yet the territorial argument is usually presented as a straight line: more land means more security, or less land means more peace. Neither relationship is linear.

Territorial control may initially provide tactical depth, command of access routes or bargaining leverage. Beyond a characteristic scale, however, each additional area brings population, legal responsibility, policing, infrastructure, diplomatic exposure and military burden. Frontiers lengthen, forces disperse, consent becomes harder to secure and a local conflict becomes further entangled with regional rivalries and great-power politics. Strategic depth can become strategic overextension. Territory acquired for security can, at a distorted scale, generate permanent mobilisation and new insecurity.

Contraction can also be mis-scaled. An arrangement that leaves borders indefensible, fragments transport, or lacks workable institutions for water, energy, trade, holy sites, civilian movement and cross-border security may operate below the minimum scale required for stability. A boundary can divide jurisdictions; it cannot make aquifers, electricity grids, roads, markets, families or armed threats disappear.

Israel’s characteristic territorial scale cannot therefore be measured in kilometres alone. Different functions require different scales. Municipal life and community identity should be governed as locally as possible. National self-determination and defence require viable political units. Water, energy, transport, commerce, environmental protection and some dimensions of security require wider coordination. The answer is neither indiscriminate expansion nor abstract withdrawal, but subsidiarity: authority at the lowest scale capable of performing a function, nested within larger institutions where coordination is indispensable.

That is the deeper lesson of Kohr and Schumacher. Immigration can turn from renewal into dislocation; trade from exchange into dependency; territorial expansion from security into overextension. The change occurs not because the activity has suddenly become evil, but because it has crossed its characteristic scale. Serious policy must ask: how much, how fast, where, at what institutional level, and with what buffers? Until politics asks those questions, crises will appear as surprises when they are systems correcting the scale we refused to recognise.

Author’s note

The account of the author’s 2018 discussion with Professor Omri Ben-Shahar reflects the author’s personal recollection. It is not presented as a statement of Professor Ben-Shahar’s published position.

Selected sources and further reading

1. Leopold Kohr, The Breakdown of Nations (1957).
2. Leopold Kohr, The Overdeveloped Nations: The Diseconomies of Scale (1978).
3. E. F. Schumacher, Small Is Beautiful: Economics as if People Mattered (1973), especially “A Question of Size”.
4. Benjamen F. Gussen, “On the Problem of Scale: Hayek, Kohr, Jacobs and the Reinvention of the Political State”, Constitutional Political Economy 24 (2013): 19-42.
5. Benjamen F. Gussen, “On the Problem of Scale (II): Symmetry, Scale, Complexity, and Collapse” (working paper, 2012).
6. Benjamen Gussen, Axial Shift: City Subsidiarity and the World System in the 21st Century (Springer, 2019).