Capitalist peace

The interdependent trade theory for the capitalist peace is built on the foundations of classical economic theory. This idea, which can be traced back to Kant, became the original theoretical explanation for the capitalist peace.[8] In 1996, Erich Weede tied trade and free markets to development and peace, proposing that trade interdependence caused peace between nations.[13] Weede followed this up with what he called the "capitalist peace".[14] However, the empirical findings of the link between trade and development have been drawn into question, as one study found that the proportion of GDP to foreign trade is only 0.08, measured by logged GDP per capita.[15] Stephen Gent and Mark Crescenzi have argued that economic interdependence has reduced interstate conflict over market power.[16]

Katherine Barbieri has pushed back on the commercial peace thesis, finding only limited empirical support for the thesis.[17] A 2021 study in International Security by Mariya Grinberg found that states frequently engage in trade even while they are conducting war against each other, which raises questions about the preventive power of trade interdependence.[18] Some scholars argue that asymmetric dependence and relative gains may spur conflict.[19][20][21][22] Henry Farrell and Abraham Newman argue that interdependence may spur conflict by provoking competition for important nodes in global economic networks.[6]

According to Dale Copeland, trade can have a pacifying effects on interstate relations, but only if states believe that they will reap the rewards of trade into the future.[5] Barry Buzan has argued, "Liberal and mercantilist structures each have both positive and negative impacts on the use of force, but these impacts become important only when they are complemented by noneconomic factors governing the use of force."[23]

The outbreak of World War I during a period of unprecedented globalization and economic interdependence has often been cited as an example of how economic interdependence fails to prevent war or even contributes to it.[24] Other scholars dispute that World War I was a failure for liberal theory.[25][26][27] Eric Gartzke and Yonatan Lupu argue that there was a lack of trade interdependence between the states that ignited WWI.[25] Patrick McDonald and Kevin McSweeney argue that globalization in the period prior to WWI revolved around reductions in transportation costs, not due to trade liberalization, which means that the pre-WWI period is not a great case for testing the capitalist peace thesis.[27]

A 2021 PNAS study found that trade openness considerably reduces the risks of conflict over strategic locations close to maritime choke points.[28]

Michael Mousseau has advocated for what he calls "economic norms theory", which entails that leaders of states with advanced market-oriented economies have a strong interest in guarding the principle of self-determination for all states in order to safeguard a robust global marketplace.[4] Leaders of states with weak internal markets have little regard for protecting the global marketplace.[4]

Economic norms theory links the economic conditions of clientelism, which prevail in many lower income societies, and a contract-intensive economy, which prevails in many higher income societies, with divergent political interests and habits.[29][30]

Economic norms theory arose as an alternative explanation to the democratic peace, because it identified the causal relationship between democracy and peace as spurious. Michael Mousseau identified contract-intensive economies as a possible cause of both democracy and peace. He defines contract-intensive economies as those that have high life insurance contracting rates and net immigration rates.[4] The explanation is based on two aspects widely accepted in social science: (1) bounded rationality; and (2) divergent hierarchies between clientelism and contract-intensive economies. In contract-intensive societies, individuals have a loyalty towards the state that enforces the contracts between strangers. As a consequence, individuals in these societies expect that their states enforce contracts reliably and impartially, protect individual rights, and make efforts to enhance the general welfare. Moreover, with the assumption of bounded rationality, individuals routinely dependent on trusting strangers in contracts will develop the habits of trusting strangers and preferring universal rights, impartial law, and liberal democratic government. In contrast, individuals in contract-poor societies will develop the habits of abiding by the commands of group leaders, and distrusting those from out-groups.

According to economic norms theory, the people in contract-rich nations enjoy a permanent and positive peace. As long as their states accede to popular demands and remain reliably impartial, individuals in nations with contract intensive economies have an interest in everyone's rights and material welfare, within and outside the nation. Consequently, contract-intensive nations not only avoid war with each other but engage in intense levels of mutual cooperation specifically aimed at promoting each other's material welfare. Leaders of nations with contract-poor economies, in contrast, pursue the interests of their dominant groups and have no interest in the security or welfare of members of out-groups, whether they are internal or external to the nation. In a 2019 analysis, Mosseau argued that voting patterns at the United Nations General Assembly support economic norms theory.[31]

One concern with Mousseau's theoretical explanation is that he suggests that contracting in life insurance "indicates a highly institutionalized norm of contracting in a society because… to contract in life insurance requires a great deal of trust…";[32] "In contract-intensive societies ... making contracts with strangers promotes loyalty ... to a state that enforces these contracts with... equal application of the rule of law,";[33] And "What distinguishes marketplace societies from others is that property confiscations are carried out with impartiality and in accordance with the rule of law."[34] However, the source that Mousseau references for the life insurance data (Beck and Webb) report that "... the rule of law or corruption cannot explain variation of Life Insurance Density across countries."[35] In contrast, they report that "income per capita, inflation, and banking sector development are the most robust predictors of life insurance consumption across countries and over time."[36] Thus, it is questionable as to whether life insurance truly "indicates a highly institutionalized norm of contracting in a society..."

Another concern with Mousseau's explanation of capitalist peace theory is his omission of almost every Latin American intervention between 1816 and 1992, a fact that allows the author to conclude that "joint highly democratic dyads are about 3 times more likely  …  to resolve their militarized conflicts with mutual concessions’ (Mousseau, 1998, p. 210; see also Bremer, 1993)."[37]

Some scholars argue that nations that have greater trade flows and capital flows are less likely to end up in conflict because they are able to engage in costly signaling. When those countries issue explicit threats, their threats are taken seriously because the issuing of the threat leads investors and traders to pull investments and trade from the country.[38][39][40] This reduces the likelihood that crises inadvertently escalate into war.[39]

Stephen G. Brooks has argued in a number of studies that the globalization of finance and the rise of multinational companies have contributed to a more peaceful international system.[41][42] In a 2005 study, he argues that conquest for economic purposes is pointless and counterproductive in an international system with extensive mobility of capital and elaborate global supply chains.[41] In a 2013 study, he argued, "there are no longer any economic actors who will be favorable toward war and who will lobby the government with this preference... the current structure of the global economy now makes it feasible for foreign direct investment to serve as an effective substitute for conquest in a way that was not possible in previous eras."[42]

Patrick J. McDonald[43][44] has argued that smaller governments are more dependent than larger or socialist governments on raising taxes for fighting wars. This makes the commitments of nations with smaller governments more credible than those with larger ones, allowing for nations with smaller governments, and thus "capitalist" economies, to be better positioned for avoiding conflicts.

This theory, adduces that if men want to oppose war, it is statism that they must oppose. So long as they hold the tribal notion that the individual is sacrificial fodder for the collective, that some men have the right to rule others by force, and that some (any) alleged "good" can justify it—there can be no peace within a nation and no peace among nations.[45]

According to Richard Rosecrance, states can accumulate power and enhance their security through trade and foreign direct investment in an economically open international system, whereas in previous era, states accumulated power through conquest of land.[46] Peter Lieberman has rebutted Rosecrance, arguing that states have reaped benefits from conquest in the 20th century.[47]