The Duck of Minerva

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Commercial Peace Update – 9/10/05

September 10, 2005

Dan Drezner provides a link to – and discussion of- a new paper on the commercial peace. The paper, written by Columbia’s Erik Gartzke, argues that:

The transformation of commerce made possible by economic freedom also leads to a transformation in international affairs. Conquest becomes expensive and unprofitable. Wealth in modern economies is much harder to “steal” through force than was the case among agricultural and early industrial societies. This “capitalist peace” has been slow to reach fruition but the tools and evidence are now in place to establish a firmer connection between economic freedom and reductions in conflict. I use the Index of Economic Freedom developed by Gwartney and Lawson and multivariate statistical analysis to show that free markets appear to encourage peace. I also evaluate several other factors often thought to influence whether states fight. Economic freedom is one of the rare factors that generally discourages conflict among nations.

Gartzke’s paper is interesting, in part, because it purports to give some solid evidence for the “commercial peace” argument Rodger’s been mocking on the pages of the Duck.

Gartzke is also attempting to resuscitate what scholars of international relations have long considered to be the least persuasive aspect of Kant’s “Essay on Perpetual Peace” and the family of mechanisms surrounding the Democratic Peace. “World War I” remains the three-word answer to the claim that trade interdependence causes peace, hence Gartzke’s argument that such mechanisms have now “come to fruition” in terms of their effects on international politics.

Dan Drezner wants to believe the results, but asks some skeptical questions. The most important line of criticism, however, comes from one of Dan’s commentators, Kerim Can:

The economic freedom data is from 1970-1995. This is mostly the Cold War during which trade policies and ideologies were pretty parallel. Greece and Turkey came to the edge a few times during Cold War and backed off not because they did not fear the financial markets, but because they feared the US.

Put more bluntly, economic freedom correlates pretty damn well with “non-membership in the Soviet or non-alligned bloc.” Certainly, every significant open economy I can think of was within the US security system for most of this period.

Kerim goes on to argue that this problem isn’t an issue for the Democratic Peace argument, because that uses the COW dataset, which “goes back to 1812.”

Well, yeah, if the number of democracies before World War II weren’t so pathetically small as to make statistical analysis mostly worthless. And if the post-1945 data set didn’t suffer from the same distortions.

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Daniel H. Nexon is a Professor at Georgetown University, with a joint appointment in the Department of Government and the School of Foreign Service. His academic work focuses on international-relations theory, power politics, empires and hegemony, and international order. He has also written on the relationship between popular culture and world politics.