The vogue word globalization reminds us that in recent decades international trade has mushroomed. Many exogenous developments have made trade easier and cheaper. They include transportation technologies such as the jet airplane and the container ship; electronic communication technologies such as the telex, long-distance telephone, fax, satellite, and Internet; trade agreements that have reduced tariffs and regulations; channels of international finance and currency exchange that make it easier for money to flow across borders; and the increased reliance of modern economies on ideas and information rather than on manual labor and physical stuff.
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The Democratic Peace is sometimes considered a special case of a Liberal Peace --"liberal" in the sense of classical liberalism, with its emphasis on political and economic freedom, rather than left-liberalism. The theory of the Liberal Peace embraces as well the doctrine of gentle commerce, according to which trade is a form of reciprocal altruism which offers positive-sum benefits for both parties and gives each a selfish stake in the well-being of the other. Robert Wright, who gave reciprocity pride of place in Nonzero, his treatise on the expansion of cooperation through history, put it this way: "Among the many reasons I think we shouldn't bomb the Japanese is that they made my minivan."
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History suggests many examples in which freer trade correlates with greater peace. The 18th century saw both a lull in war and an embrace of commerce, when royal charters and monopolies began to give way to free markets, and when the beggar-thy-neighbor mindset of mercantilism gave way to the everybody-wins mindset of international trade. Countries that withdrew from the great power game and its attendant wars, such as the Netherlands in the 18th century and Germany and Japan in the second half of the 20th, often channeled their national aspirations into becoming commercial powers instead. The protectionist tariffs of the 1930s led to a falloff in international trade and perhaps to a rise in international tensions. The current comity between the United States and China, which have little in common except a river of manufactured goods in one direction and dollars in the other, is a recent reminder of the irenic effects of trade. And rivaling the Democratic Peace theory as a categorical factoid about modern conflict prevention is the Golden Arches theory: no two countries with a McDonald's have ever fought in a war. The only unambiguous Big Mac Attack took place in 1999, when NATO briefly bombed Yugoslavia.
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Anecdotes aside, many historians are skeptical that trade, as a general rule, conduces to peace. In 1986, for example, John Gaddis wrote, "These are pleasant things to believe, but there is remarkably little historical evidence to validate them." Certainly, enhancements in the infrastructure supporting trade were not sufficient to yield peace in ancient and medieval times. The technologies that facilitated trade, such as ships and roads, also facilitated plunder, sometimes among the same itinerants, who followed the rule "If there are more of them, trade; if there are more of us, raid." In later centuries, the profits to be gained from trade were so tempting that trade was sometimes imposed with gunboats on colonies and weak countries that resisted it, most infamously in the 19th-century Opium Wars, when Britain fought China to force it to allow British traffickers to sell the addictive drug within its borders. And great power wars often embroiled pairs of countries that had traded with each other a great deal.
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Norman Angell inadvertently set back the reputation of the trade-peace connection when he was seen as claiming that free trade had made war obsolete and five years later World War I broke out. Skeptics like to rub it in by pointing out that the prewar years saw unprecedented levels of financial interdependence, including a large volume of trade between England and Germany. And as Angell himself took pains to point out, the economic futility of war is a reason to avoid it only if nations are interested in prosperity in the first place. Many leaders are willing to sacrifice a bit of prosperity (often much more than a bit) to enhance national grandeur, to implement utopian ideologies, or to rectify what they see as historic injustices. Their citizenries, even in democracies, may go along with them.
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Russett and Oneal, the number-crunching defenders of the Democratic Peace, also sought to test the theory of the Liberal Peace, and they were skeptical of the skeptics. They noted that though international trade hit a local peak just before World War I, it still was a fraction of the level, relative to gross domestic product, that countries would see after World War II (figure 5-24).
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With examples and counterexamples on both sides, and the many statistical confounds between trade and other good things (democracy, membership in international organizations, membership in alliances, and overall prosperity), it was time once again for multiple regression. For every pair of at-risk nations, Russett and Oneal entered the amount of trade (as a proportion of GDP) for the more trade-dependent member. They found that countries that depended more on trade in a given year were less likely to have a militarized dispute in the subsequent year, even controlling for democracy, power ratio, great power status, and economic growth. Other studies have shown that the pacifying effects of trade depend on the countries' level of development: those that have access to the financial and technological infrastructure that lowers the cost of trade are most likely to resolve their disputes without displays of military force. This is consistent with the suggestions of Angell and Wright that broad historical changes have tilted financial incentives away from war and toward trade.
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Also, trade may work as a pacifying force only when it is underpinned by international agreements that prevent a nation from suddenly lurching toward protectionism and cutting off the air supply of its trading partners. Gat argues that around the turn of the 20th century, Britain and France were making noises about becoming imperial autarkies that would live off trade within their colonial empires. This sent Germany into a panic and gave its leaders the idea that it needed an empire too.
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FIGURE 5-24: International trade relative to GDP, 1885-2000
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Russett and Oneal found that it was not just the level of bilateral trade between the two nations in a pair that contributed to peace, but the dependence of each country on trade across the board: a country that is open to the global economy is less likely to find itself in a militarized dispute. This invites a more expansive version of the theory of gentle commerce. International trade is just one facet of a country's commercial spirit. Others include an openness to foreign investment, the freedom of citizens to enter into enforceable contracts, and their dependence on voluntary financial exchanges as opposed to self-sufficiency, barter, or extortion. The pacifying effects of commerce in this broad sense appear to be even more robust than the pacifying effects of democracy. A democratic peace strongly kicks in only when both members of a pair of countries are democratic, but the effects of commerce are demonstrable when either member of the pair has a market economy.
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Source: Graph from Russett, 2008, based on data from Gleditsch, 2002.
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Such findings have led some political scientists to entertain a heretical idea called the Capitalist Peace. The word liberal in Liberal Peace refers both to the political openness of democracy and to the economic openness of capitalism, and according to the Capitalist Peace heresy, it's the economic openness that does most of the pacifying. In arguments that are sure to leave leftists speechless, advocates claim that many of Kant's arguments about democracy apply just as well to capitalism. Capitalism pertains to an economy that runs by voluntary contracts between citizens rather than government command and control, and that principle can bring some of the same advantages that Kant adduced for democratic republics. The ethic of voluntary negotiation within a country (like the ethic of law-governed transfer of power) is naturally externalized to its relationships with other countries. The transparency and intelligibility of a country with a free market economy can reassure its neighbors that it is not going on a war footing, which can defuse a Hobbesian trap and cramp a leader's freedom to engage in risky bluffing and brinkmanship. And whether or not a leader's power is constrained by the ballot box, in a market economy it is constrained by stakeholders who control the means of production and who might oppose a disruption of international trade that's bad for business. These constraints put a brake on a leader's personal ambition for glory, grandeur, and cosmic justice and on his temptation to respond to a provocation with a reckless escalation.
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Democracies tend to be capitalist and vice versa, but the correlation is imperfect: China, for example, is capitalist but autocratic, and India is democratic but until recently was heavily socialist. Several political scientists have exploited this slippage and have pitted democracy and capitalism against each other in analyses of datasets of militarized disputes or other international crises. Like Russett and Oneal, they all find a clear pacifying effect of capitalist variables such as international trade and openness to the global economy. But some of them disagree with the duo about whether democracy also makes a contribution to peace, once its correlation with capitalism is statistically removed. So while the relative contributions of political and economic liberalism are currently mired in regression wonkery, the overarching theory of the Liberal Peace is on solid ground.
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The very idea of a Capitalist Peace is a shock to those who remember when capitalists were considered "merchants of death" and "masters of war." The irony was not lost on the eminent peace researcher Nils Petter Gleditsch, who ended his 2008 presidential address to the International Studies Association with an updating of the 1960s peace slogan: "Make money, not war."
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