Free markets key to peace
Bandow, fellow at Cato Institute, 05
(Doug Bandow, fellow at Cato Institute, 11/10/05, http://www.cato.org/pub_display.php?pub_id=5193)
In a world that seems constantly aflame, one naturally asks: What causes peace
? Many people, including U.S. President
George W. Bush, hope that spreading democracy will discourage war. But new research suggests that
expanding free markets is a far more important
factor, leading to what Columbia University's Erik Gartzke calls a
"capitalist peace." It's a reason for even the left
to support free markets
The capitalist peace theory isn't new: Montesquieu and Adam Smith believed in it. Many of Britain's classical liberals, such
as Richard Cobden, pushed free markets while opposing imperialism.
But World War I demonstrated that increased trade was not enough. The prospect of economic ruin did not prevent rampant
nationalism, ethnic hatred, and security fears from trumping the power of markets.
An even greater conflict followed a generation later. Thankfully, World War II left war essentially unthinkable among
leading industrialized - and democratic - states. Support grew for the argument, going back to Immanual Kant, that
republics are less warlike than other systems.
Today's corollary is that creating democracies out of dictatorships will reduce conflict. This contention animated some
support outside as well as inside the United States for the invasion of Iraq.
But Gartzke argues that "the 'democratic peace' is a mirage created by the overlap between economic and political
freedom." That is, democracies typically have freer economies than do authoritarian states.
Thus, while "democracy is desirable for many reasons," he notes in a chapter in the latest volume of Economic Freedom in
the World, created by the Fraser Institute, "representative governments are unlikely to contribute directly to international
peace." Capitalism is by far the more important factor
The shift from statist mercantilism to high-tech capitalism has transformed the economics behind war.
Markets generate economic opportunities that make war less desirable. Territorial aggrandizement no
longer provides the best path to riches.
Free-flowing capital markets and other aspects of globalization simultaneously draw nations together
and raise the economic price of military conflict. Moreover, sanctions, which interfere with economic
prosperity, provides a coercive step short of war to achieve foreign policy ends.
Positive economic trends are not enough to prevent war, but then, neither is democracy. It long has been obvious that
democracies are willing to fight, just usually not each other. Contends Gartzke, "liberal political systems, in and of
themselves, have no impact on whether states fight."
In particular, poorer democracies perform like non-democracies. He explains: "Democracy does not have a measurable
impact, while nations with very low levels of economic freedom are 14 times more prone to conflict than those with very