The Capitalist Peace Erik Gartzke Columbia University It is widely accepted that democracies are less conflict prone,if only with other democracies.Debate persists,however,about the causes underlying liberal peace.This article offers a contrarian account based on liberal political economy.Economic development,free markets,and similar interstate interests all anticipate a lessening of militarized disputes or wars.This "capitalist peace"also accounts for the effect commonly attributed to regime type in standard statistical tests of the democratic peace. Which Liberal Peace? First,the historic impetus to territorial expansion is tempered by the rising importance of intellectual and The discovery that democracies seldom fight each other financial capital,factors that are more expediently enticed has led,quite reasonably,to the conclusion that democ- than conquered.Land does little to increase the worth racy causes peace,at least within the community of liberal of the advanced economies while resource competition polities.Explanations abound,but a consensus account of is more cheaply pursued through markets than by means the dyadic democratic peace has been surprisingly slow to of military occupation.At the same time,development materialize.I offer a theory of liberal peace based on capi- actually increases the ability of states to project power talism and common interstate interests.Economic devel- when incompatible policy objectives exist.Development opment,capital market integration,and the compatibility affects who states fight (and what they fight over)more of foreign policy preferences supplant the effect of democ- than the overall frequency of warfare.Second,substantial racy in standard statistical tests of the democratic peace.In overlap in the foreign policy goals of developed nations in fact,after controlling for regional heterogeneity,any one the post-World War II period further limits the scope and of these three variables is sufficient to account for effects scale of conflict.Lacking territorial tensions,consensus previously attributed to regime type in standard samples about how to order the international system has allowed of wars,militarized interstate disputes(MIDs),and fatal liberal states to cooperate and to accommodate minor disputes. differences.Whether this affinity among liberal states If war is a product ofincompatible interests and failed will persist in the next century is a question open to or abortive bargaining,peace ensues when states lack dif- debate.Finally,the rise of global capital markets creates a ferences worthy of costly conflict,or when circumstances new mechanism for competition and communication for favor successful diplomacy.Realists and others argue that states that might otherwise be forced to fight.Separately, state interests are inherently incompatible,but this need these processes influence patterns of warfare in the be so only if state interests are narrowly defined or when modern world.Together,they explain the absence of war conquest promises tangible benefits.Peace can result from among states in the developed world and account for the at least three attributes of mature capitalist economies. dyadic observation of the democratic peace. Erik Gartzke is associate professor of political science and a member of the Saltzman Institute of War and Peace Studies.Email: gartzke@columbia.edu.Web:www.columbia.edu/"eg589/.Comments are welcome and appreciated. I thank Charles Boehmer,Bear Braumoeller,Michael Doyle,Monica Duffy Toft,Peter Furia,Kristian S.Gleditsch,Arman Grigorian, J.Joseph Hewitt,Robert Jervis,Stephanie Neuman,John Oneal,Jack Snyder,David Sobek,Kenneth Waltz,Erich Weede,and seminar participants at Notre Dame University,The Ohio State University,the Olin Institute for Strategic Studies,Harvard University,the Oslo Peace Research Institute,the University of Pittsburgh,Princeton University,the University of California,Berkeley,and Uppsala University for comments.Menzie D.Chinn,James Gwartney,and Dennis Quinn provided data.Richard Tucker shared BTSCS and DYADTSCS.An early draft of the study was presented at the Midwest Political Science Association Conference,Chicago,IL,15-28 April,2004.Any errors are my own. Additional tests ofkey variables,model specifications,and possible confounding factors appear in the appendix.A Stata"do"file replicating all aspects of the analysis is available from the author. American Journal of Political Science,Vol.51,No.1,January 2007,Pp.166-191 2007,Midwest Political Science Association ISSN0092-5853 166
The Capitalist Peace Erik Gartzke Columbia University It is widely accepted that democracies are less conflict prone, if only with other democracies. Debate persists, however, about the causes underlying liberal peace. This article offers a contrarian account based on liberal political economy. Economic development, free markets, and similar interstate interests all anticipate a lessening of militarized disputes or wars. This “capitalist peace” also accounts for the effect commonly attributed to regime type in standard statistical tests of the democratic peace. Which Liberal Peace? The discovery that democracies seldom fight each other has led, quite reasonably, to the conclusion that democracy causes peace, at least within the community of liberal polities. Explanations abound, but a consensus account of the dyadic democratic peace has been surprisingly slow to materialize. I offer a theory of liberal peace based on capitalism and common interstate interests. Economic development, capital market integration, and the compatibility of foreign policy preferences supplant the effect of democracy in standard statistical tests of the democratic peace. In fact, after controlling for regional heterogeneity, any one of these three variables is sufficient to account for effects previously attributed to regime type in standard samples of wars, militarized interstate disputes (MIDs), and fatal disputes.1 Ifwar is a product of incompatible interests and failed or abortive bargaining, peace ensues when states lack differences worthy of costly conflict, or when circumstances favor successful diplomacy. Realists and others argue that state interests are inherently incompatible, but this need be so only if state interests are narrowly defined or when conquest promises tangible benefits. Peace can result from at least three attributes of mature capitalist economies. Erik Gartzke is associate professor of political science and a member of the Saltzman Institute of War and Peace Studies. Email: gartzke@columbia.edu. Web: www.columbia.edu/˜eg589/. Comments are welcome and appreciated. I thank Charles Boehmer, Bear Braumoeller, Michael Doyle, Monica Duffy Toft, Peter Furia, Kristian S. Gleditsch, Arman Grigorian, J. Joseph Hewitt, Robert Jervis, Stephanie Neuman, John Oneal, Jack Snyder, David Sobek, Kenneth Waltz, Erich Weede, and seminar participants at Notre Dame University, The Ohio State University, the Olin Institute for Strategic Studies, Harvard University, the Oslo Peace Research Institute, the University of Pittsburgh, Princeton University, the University of California, Berkeley, and Uppsala University for comments. Menzie D. Chinn, James Gwartney, and Dennis Quinn provided data. Richard Tucker shared BTSCS and DYADTSCS. An early draft of the study was presented at the Midwest Political Science Association Conference, Chicago, IL, 15–28 April, 2004. Any errors are my own. 1Additional tests of key variables, model specifications, and possible confounding factors appear in the appendix. AStata “do” file replicating all aspects of the analysis is available from the author. First, the historic impetus to territorial expansion is tempered by the rising importance of intellectual and financial capital, factors that are more expediently enticed than conquered. Land does little to increase the worth of the advanced economies while resource competition is more cheaply pursued through markets than by means of military occupation. At the same time, development actually increases the ability of states to project power when incompatible policy objectives exist. Development affects who states fight (and what they fight over) more than the overall frequency of warfare. Second, substantial overlap in the foreign policy goals of developed nations in the post–World War II period further limits the scope and scale of conflict. Lacking territorial tensions, consensus about how to order the international system has allowed liberal states to cooperate and to accommodate minor differences. Whether this affinity among liberal states will persist in the next century is a question open to debate. Finally, the rise of global capital markets creates a new mechanism for competition and communication for states that might otherwise be forced to fight. Separately, these processes influence patterns of warfare in the modern world. Together, they explain the absence of war among states in the developed world and account for the dyadic observation of the democratic peace. American Journal of Political Science, Vol. 51, No. 1, January 2007, Pp. 166–191 C 2007, Midwest Political Science Association ISSN 0092-5853 166
CAPITALIST PEACE 167 The notion of a capitalist peace is hardly new. claims of classical liberal political economists like Mon- Montesquieu,Paine,Bastiat,Mill,Cobden,Angell,and tesquieu,Richard Cobden,and Norman Angell.As with others saw in market forces the power to end war.Unfortu- previous research,this study finds support for a liberal nately,war continued,leading many to view as overly op- peace,though the key causal variables,and some major timistic classical conceptions of liberal peace.This study policy implications,are considerably changed. can be seen as part of an effort to reexamine capitalist peace theory,revising arguments in line with contempo- rary insights much as Kantian claims were reworked in Two Traditions of Liberal Peace response to evolving evidence of a democratic peace. Existing empirical research on the democratic peace, while addressing many possible alternatives,provides an Liberal scholarship details two paths to peace,one domi- incomplete and uneven treatment of liberal economic nated by democracy,the other guided by the philosophy processes.Most democratic peace research examines trade of market economics.This article briefly reviews each tra- in goods and services but ignores capital markets and of- dition,offering a few critical comments. fers only a cursory assessment of economic development (Maoz and Russett 1992).Several studies explore the im- pact of interests,though these have largely been dismissed The Political Tradition by democratic peace advocates(Oneal and Russett 1999a; Democratic peace research most often attributes its Russett and Oneal 2001).These omissions or oversights intellectual genesis to Kant's essay Perpetual Peace, help to determine the democratic peace result and thus though scholars like Abbe de Saint-Pierre,Rousseau,and shape subsequent research,thinking,and policy on the Bentham all provided similar arguments prior to Kant. subject of liberal peace.This study offers evidence that Early twentieth-century scholar-statesmen like Woodrow liberal economic processes do in fact lead to peace,even Wilson and Nicolas Murray Butler advanced the pacific ef- accounting for the well-documented role of liberal pol- fects of democracy in their writings,and to a lesser extent itics.Democracy cohabitates with peace.It does not,by in practice.After a cold war hiatus,contemporary politi- itself,lead nations to be less conflict prone,not even to- cians like Bill Clinton and George W.Bush have again ward other democracies. picked up the banner of liberal peace in an era of U.S. The argument and evidence provided here are bound hegemony. to draw criticism.Skepticism in the face of controversial Early statistical work questioned the liberal convic- claims is natural,reasonable,even essential for the cumu- tion that democracies are generally less warlike(cf.Wright lation of knowledge.The democratic peace observation 1942).Babst(1964,1972)was the first to identify the spe- is supported by an exceptionally large and sophisticated cial dyadic observation.5 Small and Singer(1976)drew at- body of research.2 At the same time,excessive deference to tention to the topic,paradoxically by seeking to establish previous conclusions privileges conventional wisdom.3 A that Kant was wrong.Rummel(1979,1983,1985)argued willingness to doubt that which we have come to believe for a libertarian peace,incorporating,amongother things, is a hallmark of scientific inquiry.Indeed,the weight of free markets:"The more freedom that individuals have existing evidence does not directly contradict this study in a state,the less the state engages in foreign violence" as previous research has typically failed to address the (1983,27).Doyle (1983a,1983b,1997)examines three traditions of liberalism exemplified by Kant,Machiavelli, 2Empirical regularity cannot be the only reason for broad inter- est in the democratic peace.As Cederman(2003)points out,the relationship between the frequency and intensity of wars is also 4See Jacob(1974)for a compilation of essays.Ceadel notes of the period that"The argument that 'republican'regimes were necessary "lawlike"(literally a power rule).This relationship has generated for peace,...,was already a near-commonplace of Anglo-American little interest and received almost no attention since its discovery radicalism"(2000,16). by Richardson (1960). 3Accumulation is not cumulation.Replication offers a limited form s"Ultimately,the best strategy to ensure our security and to build a durable peace is to support the advance of democracy elsewhere. of robustness.As one author puts it,"Is it surprising that repeat- Democracies don't attack each other"(Clinton 1994)."Democra- edly testing the same primary independent and dependent variables cies don't go to war with each other....I've got great faith in generally produces the same results?"(Van Belle 2006,14).Jervis democracies to promote peace"(Bush 2004). (1976)offers an entertaining parable based on the writings of A.A. Milne.While out hunting"woozles,"Piglet and Winnie-the-Pooh Even proponents appear to acknowledge that democratic pacifism mistake their own tracks in the snow for those of their elusive prey. is at best a considerably weaker phenomenon than the dyadic rela- As the two frightened characters circle back on their own trail,the tionship (Benoit 1996;Chan 1984;Ray 2001;Rousseau et al.1996; "evidence"of woozles mounts.... Rummel 1996;Weede 1984)
CAPITALIST PEACE 167 The notion of a capitalist peace is hardly new. Montesquieu, Paine, Bastiat, Mill, Cobden, Angell, and others saw in market forces the power to end war. Unfortunately, war continued, leading many to view as overly optimistic classical conceptions of liberal peace. This study can be seen as part of an effort to reexamine capitalist peace theory, revising arguments in line with contemporary insights much as Kantian claims were reworked in response to evolving evidence of a democratic peace. Existing empirical research on the democratic peace, while addressing many possible alternatives, provides an incomplete and uneven treatment of liberal economic processes. Most democratic peace research examines trade in goods and services but ignores capital markets and offers only a cursory assessment of economic development (Maoz and Russett 1992). Several studies explore the impact of interests, though these have largely been dismissed by democratic peace advocates (Oneal and Russett 1999a; Russett and Oneal 2001). These omissions or oversights help to determine the democratic peace result and thus shape subsequent research, thinking, and policy on the subject of liberal peace. This study offers evidence that liberal economic processes do in fact lead to peace, even accounting for the well-documented role of liberal politics. Democracy cohabitates with peace. It does not, by itself, lead nations to be less conflict prone, not even toward other democracies. The argument and evidence provided here are bound to draw criticism. Skepticism in the face of controversial claims is natural, reasonable, even essential for the cumulation of knowledge. The democratic peace observation is supported by an exceptionally large and sophisticated body of research.2 At the same time, excessive deference to previous conclusions privileges conventional wisdom.3 A willingness to doubt that which we have come to believe is a hallmark of scientific inquiry. Indeed, the weight of existing evidence does not directly contradict this study as previous research has typically failed to address the 2Empirical regularity cannot be the only reason for broad interest in the democratic peace. As Cederman (2003) points out, the relationship between the frequency and intensity of wars is also “lawlike” (literally a power rule). This relationship has generated little interest and received almost no attention since its discovery by Richardson (1960). 3Accumulation is not cumulation. Replication offers a limited form of robustness. As one author puts it, “Is it surprising that repeatedly testing the same primary independent and dependent variables generally produces the same results?” (Van Belle 2006, 14). Jervis (1976) offers an entertaining parable based on the writings of A. A. Milne. While out hunting “woozles,” Piglet and Winnie-the-Pooh mistake their own tracks in the snow for those of their elusive prey. As the two frightened characters circle back on their own trail, the “evidence” of woozles mounts. ... claims of classical liberal political economists like Montesquieu, Richard Cobden, and Norman Angell. As with previous research, this study finds support for a liberal peace, though the key causal variables, and some major policy implications, are considerably changed. Two Traditions of Liberal Peace Liberal scholarship details two paths to peace, one dominated by democracy, the other guided by the philosophy of market economics. This article briefly reviews each tradition, offering a few critical comments. The Political Tradition Democratic peace research most often attributes its intellectual genesis to Kant’s essay Perpetual Peace, though scholars like Abbe de Saint-Pierre, Rousseau, and Bentham all provided similar arguments prior to Kant.4 Early twentieth-century scholar-statesmen like Woodrow Wilson and Nicolas Murray Butler advanced the pacific effects of democracy in their writings, and to a lesser extent in practice. After a cold war hiatus, contemporary politicians like Bill Clinton and George W. Bush have again picked up the banner of liberal peace in an era of U.S. hegemony.5 Early statistical work questioned the liberal conviction that democracies are generally less warlike (cf. Wright 1942). Babst (1964, 1972) was the first to identify the special dyadic observation.6 Small and Singer (1976) drew attention to the topic, paradoxically by seeking to establish that Kant was wrong. Rummel (1979, 1983, 1985) argued for a libertarian peace, incorporating, among other things, free markets: “The more freedom that individuals have in a state, the less the state engages in foreign violence” (1983, 27). Doyle (1983a, 1983b, 1997) examines three traditions of liberalism exemplified by Kant, Machiavelli, 4See Jacob (1974) for a compilation of essays. Ceadel notes of the period that “The argument that ‘republican’ regimes were necessary for peace, . . ., was already a near-commonplace of Anglo-American radicalism” (2000, 16). 5“Ultimately, the best strategy to ensure our security and to build a durable peace is to support the advance of democracy elsewhere. Democracies don’t attack each other” (Clinton 1994). “Democracies don’t go to war with each other. . . . I’ve got great faith in democracies to promote peace” (Bush 2004). 6Even proponents appear to acknowledge that democratic pacifism is at best a considerably weaker phenomenon than the dyadic relationship (Benoit 1996; Chan 1984; Ray 2001; Rousseau et al. 1996; Rummel 1996; Weede 1984)
168 ERIK GARTZKE and Schumpeter,favoring Kantian republicanism.?Levy saw constitutional constraints as inhibiting the sovereign's (1988)characterized the democratic peace as"lawlike",s innate proclivity toward warfare.Norms explanations as- anticipating the bulk of quantitative research.Numerous sign an analogous role to informal processes said to evolve studies have now reported a negative statistical association in mature democracies(Dixon 1993,1994;Ember,Ember, between dyadic democracy and disputes,crises,or wars, and Russett 1992;Mintzand Geva 1993;Owen 1994,1997; especially in the post-World War II period(Beck,Katz, Russett 1993).12 Constructivists argue that warfare is be- and Tucker 1998;Bremer 1992,1993;Gelpi and Griesdorf coming socially unacceptable(Cederman 2001a,2001b; 1997;Gleditsch 1995;Gleditsch and Hegre 1997;Gleditsch Cederman and Rao 2001;Mueller 1989;Risse-Kappen and Ward 1997;Hensel,Goertz,and Diehl2000;Hermann 1995,1997;Wendt 1999).13 Some see the evolution of and Kegley 1995,1996;Hewitt and Wilkenfeld 1996; a common identity (Deutsch 1978;Flynn and Farrell Huth and Allee 2002,2003;Maoz and Abdoladi 1989; 1999).14 Others claim that mature democracies do not Maoz and Russett 1992,1993;Morgan and Campbell go to war with states that they perceive as democratic,but 1991;Morgan and Schwebach 1992;Oneal and Russett may fight with unrecognized democracies(Weart 1994, 1997,1999a,1999c;Oneal,Russett,and Berbaum 2003; 1998).15 Oneal et al.1996;Raknerud and Hegre 1997;Ray 1993, Constraint theories have been criticized as ad hoc and 1995;Russett 1993;Russett and Oneal 2001;Russett, deductively flawed(Bueno de Mesquita et al.1999;Gates, Oneal,and Davis 1998;Senese 1997;Van Belle 1997;Ward Knutsen,and Moses 1996;Layne 2003;Rosato 2003).Note and Gleditsch 1998;Weede 1992).10 that the statement"democracies behave differently toward Theories of democratic peace have also proliferated, each other than toward nondemocracies"characterizes, in no small part because of the difficulty in accounting in broad strokes,both the observation and many of the for the special dyadic nature of the observation.1 Ini- theories designed to explain the observation.Efforts to tial accounts focused on linking domestic liberal norms avoid a circularity between theory and evidence benefit or institutions to constraints on the use of force.Institu- most from new empirical content(Huth and Allee 2003). tional explanations assert that elements of the apparatus Work by Mousseau(2000),Hegre(2000),and Mousseau, of liberal government interfere with the exercise of mili- Hegre,and Oneal(2003),for example,restricts the do- tary foreign policy(Bueno de Mesquita and Lalman 1992; main of the democratic peace to states with advanced Maoz and Russett 1993;Russett 1993).Kant (17951957) industrialized economies.It is not obvious from existing explanations for the democratic peace why norms,insti- 7Doyle chooses Schumpeter(1950,1955)because his views differ tutions,or other factors would inhibit conflict among rich from the tradition of liberal political economy and because he "saw the interaction of capitalism and democracy as the foundation of democracies but fail to do so for poor democratic states.16 liberal pacifism"(Doyle 1986,1152).Thus,even Doyle's attempt Bueno de Mesquita et al.(1999,2003)offer an elab- at synthesis assumes away an independent effect of capitalism on orate and carefully constructed explanation in which peace. 8Waltz asserts that "theories explain laws"(1979,6),suggesting a need in international relations for more laws or fewer theories. Part of the intellectual appeal of the democratic peace is that it is 2Old democratic dyads appear about as dispute prone as newer dyads(Enterline 1998;Ward and Gleditsch 1998) something to explain. For reviews,seeChan(1993,1997),Gleditsch(1992),Maoz(1997), 13Kaysen(1990)offers a critique of Mueller's theory and an under- appreciated perspective on the liberal peace. Morgan(1993),and Ray(1997,1998,2000). Several authors claim that the democratic peace relationship ex- The argument potentially applies to autocratic regimes with a common identity (Peceny,Beer,and Sanchez-Terry 2002). isted in the nineteenth century(Gochman 1997;Oneal and Russett 1999c;Tucker 1997).Others find evidence in the Italian Renaissance 15Liberal leaders(or populations)can also intentionally downplay (Sobek 2003)or classical Greece (Weart 1994,1998).Russett and the“democraticness”of another regime(Oren 1995).“Simply be- Antholis (1992)and Russett (1993,chapter 3)identify the "frag- cause it won the votes of a desperate people is no reason to grant ile emergence"(1993,43)of norms of democratic cooperation, even the slightest scrap of legitimacy...to Hamas"(Mortimer B. though Bachteler(1997)views Delian cooperation as a product of Zukerman,U.S.News and World Report,February 13,2006,page Athenian hegemony (see also Russett 1997).Dixon,Mullenbach, 63). and Carbetta (2000)suggest that democratic peace arises in the twentieth century.Hewitt and Young(2001)date the origins of the 16Mousseau(2003)argues that capitalism creates a culture of con- democratic peace at somewhere between 1924(for wars)and 1930 tracts,which then conditions democratic peace.Strangely,his anal- (for MIDs).For additional debate about the ancient evidence,see ysis focuses on an interaction term between democracy and eco- Robinson(2001a,2001b)and Weart(2001). nomic development,rather than examining free market activity, laissez-faire policies,or the availability or enforceability of con- "The growing consensus that democracies rarely ifever fight each tracts.Trading democracies should presumably also be affected, other is not matched by any agreement as to how best to explain this since trade involves extensive contracting.However,Mousseau, strong empirical regularity(Levy 2002,359).Lipson quips about Hegre,and Oneal report that the interaction term between democ- the democratic peace that "We know it works in practice.Now we racy and trade dependence is statistically insignificant(2003,Table have to see if it works in theory!"(2005,1). 2,296)
168 ERIK GARTZKE and Schumpeter, favoring Kantian republicanism.7 Levy (1988) characterized the democratic peace as “lawlike”,8 anticipating the bulk of quantitative research.9 Numerous studies have now reported a negative statistical association between dyadic democracy and disputes, crises, or wars, especially in the post–World War II period (Beck, Katz, and Tucker 1998; Bremer 1992, 1993; Gelpi and Griesdorf 1997; Gleditsch 1995; Gleditsch and Hegre 1997; Gleditsch and Ward 1997; Hensel, Goertz, and Diehl 2000; Hermann and Kegley 1995, 1996; Hewitt and Wilkenfeld 1996; Huth and Allee 2002, 2003; Maoz and Abdoladi 1989; Maoz and Russett 1992, 1993; Morgan and Campbell 1991; Morgan and Schwebach 1992; Oneal and Russett 1997, 1999a, 1999c; Oneal, Russett, and Berbaum 2003; Oneal et al. 1996; Raknerud and Hegre 1997; Ray 1993, 1995; Russett 1993; Russett and Oneal 2001; Russett, Oneal, and Davis 1998; Senese 1997; Van Belle 1997; Ward and Gleditsch 1998; Weede 1992).10 Theories of democratic peace have also proliferated, in no small part because of the difficulty in accounting for the special dyadic nature of the observation.11 Initial accounts focused on linking domestic liberal norms or institutions to constraints on the use of force. Institutional explanations assert that elements of the apparatus of liberal government interfere with the exercise of military foreign policy (Bueno de Mesquita and Lalman 1992; Maoz and Russett 1993; Russett 1993). Kant ([1795]1957) 7Doyle chooses Schumpeter (1950, 1955) because his views differ from the tradition of liberal political economy and because he “saw the interaction of capitalism and democracy as the foundation of liberal pacifism” (Doyle 1986, 1152). Thus, even Doyle’s attempt at synthesis assumes away an independent effect of capitalism on peace. 8Waltz asserts that “theories explain laws” (1979, 6), suggesting a need in international relations for more laws or fewer theories. Part of the intellectual appeal of the democratic peace is that it is something to explain. 9For reviews, see Chan (1993, 1997), Gleditsch (1992), Maoz (1997), Morgan (1993), and Ray (1997, 1998, 2000). 10Several authors claim that the democratic peace relationship existed in the nineteenth century (Gochman 1997; Oneal and Russett 1999c; Tucker 1997). Others find evidence in the Italian Renaissance (Sobek 2003) or classical Greece (Weart 1994, 1998). Russett and Antholis (1992) and Russett (1993, chapter 3) identify the “fragile emergence” (1993, 43) of norms of democratic cooperation, though Bachteler (1997) views Delian cooperation as a product of Athenian hegemony (see also Russett 1997). Dixon, Mullenbach, and Carbetta (2000) suggest that democratic peace arises in the twentieth century. Hewitt and Young (2001) date the origins of the democratic peace at somewhere between 1924 (for wars) and 1930 (for MIDs). For additional debate about the ancient evidence, see Robinson (2001a, 2001b) and Weart (2001). 11“The growing consensus that democracies rarely if ever fight each other is not matched by any agreement as to how best to explain this strong empirical regularity” (Levy 2002, 359). Lipson quips about the democratic peace that “We know it works in practice. Now we have to see if it works in theory!” (2005, 1). saw constitutional constraints as inhibiting the sovereign’s innate proclivity toward warfare. Norms explanations assign an analogous role to informal processes said to evolve in mature democracies (Dixon 1993, 1994; Ember, Ember, and Russett 1992; Mintz and Geva 1993; Owen 1994, 1997; Russett 1993).12 Constructivists argue that warfare is becoming socially unacceptable (Cederman 2001a, 2001b; Cederman and Rao 2001; Mueller 1989; Risse-Kappen 1995, 1997; Wendt 1999).13 Some see the evolution of a common identity (Deutsch 1978; Flynn and Farrell 1999).14 Others claim that mature democracies do not go to war with states that they perceive as democratic, but may fight with unrecognized democracies (Weart 1994, 1998).15 Constraint theories have been criticized as ad hoc and deductively flawed (Bueno de Mesquita et al. 1999; Gates, Knutsen, and Moses 1996; Layne 2003; Rosato 2003). Note that the statement “democracies behave differently toward each other than toward nondemocracies” characterizes, in broad strokes, both the observation and many of the theories designed to explain the observation. Efforts to avoid a circularity between theory and evidence benefit most from new empirical content (Huth and Allee 2003). Work by Mousseau (2000), Hegre (2000), and Mousseau, Hegre, and Oneal (2003), for example, restricts the domain of the democratic peace to states with advanced industrialized economies. It is not obvious from existing explanations for the democratic peace why norms, institutions, or other factors would inhibit conflict among rich democracies but fail to do so for poor democratic states.16 Bueno de Mesquita et al. (1999, 2003) offer an elaborate and carefully constructed explanation in which 12Old democratic dyads appear about as dispute prone as newer dyads (Enterline 1998; Ward and Gleditsch 1998). 13Kaysen (1990) offers a critique of Mueller’s theory and an underappreciated perspective on the liberal peace. 14The argument potentially applies to autocratic regimes with a common identity (Peceny, Beer, and Sanchez-Terry 2002). 15Liberal leaders (or populations) can also intentionally downplay the “democraticness” of another regime (Oren 1995). “Simply because it won the votes of a desperate people is no reason to grant even the slightest scrap of legitimacy ... to Hamas” (Mortimer B. Zukerman, U.S. News and World Report, February 13, 2006, page 63). 16Mousseau (2003) argues that capitalism creates a culture of contracts, which then conditions democratic peace. Strangely, his analysis focuses on an interaction term between democracy and economic development, rather than examining free market activity, laissez-faire policies, or the availability or enforceability of contracts. Trading democracies should presumably also be affected, since trade involves extensive contracting. However, Mousseau, Hegre, and Oneal report that the interaction term between democracy and trade dependence is statistically insignificant (2003, Table 2, 296)
CAPITALIST PEACE 169 leaders intent on remaining in office seek to retain the Which explanations for the democratic peace are support of a winning coalition drawn from the group of most nearly"right?"Givenso manyaccounts,it is a safe bet politically relevant citizens (the selectorate).Size matters that at least some theories must be in error.Still,whittling in this theory,as leaders in societies with small winning away at the panoply of plausible arguments has proven coalitions (autocracies)can efficiently target benefits to difficult.Textbook social science begins with deductive key supporters,while leaders facing big winning coali- theories,implications of which are then tested empiri- tions(democracies)are better off providing public goods cally.The evolution of democratic peace research has been to stay in power.Democracies fight harder because lead- messier,with the bulk of explanations coming in response ers with large winning coalitions are more likely to be to the observation.Several authors seek to critically eval- replaced in the event of defeat.Two democracies,taken uate democratic peace theory (Gates,Knutsen,and Moses together,promise particularly expensive contests,leading 1996;Layne 1994;Rosato 2003),but culling theories de- democrats more often to prefer negotiated settlements.17 ductively is problematic.A poorly crafted argument could Comparisons of the costs or risks of war often tell us still be fundamentally sound.Conversely,explanations more about who gets what than about whether force is that are seen to be flawed are often revised,escaping in- needed to get there.Since disputes typically end in some tellectual death.Other theories might be deductively co- division of the stakes,the democratic peace can be de- herent,but remain products,rather than predictors,of the scribed in terms of the timing of bargains,rather than observation.It is not clear,for example,how to reconcile about tactics.Several authors view democracies as more the persuasive theory of Bueno de Mesquita et al.(2003) transparent(Mitchell 1998;Small 1996;Van Belle 1997).18 about large selectorates,with the persuasive evidence of Others argue that"audience costs"or opposition groups Mousseau,Hegre,and Oneal(2003)that only some large allow democracies better to signal resolve (Fearon 1994; selectorates matter.Given the malleability ofassumptions, Schultz 1998,1999;Smith 1998).Properly understood, one should be able to develop numerous logically coherent however,these explanations anticipate monadic demo- explanations for almost any given empirical relationship. cratic pacifism,not the dyadic democratic peace relation- Indeed,given the flexibility of assumptions,and the num- ship.Contests should be less likely in all dyads possess- ber of bright minds engaged,it is rather a riddle that the ing at least one democratic state,regardless of the regime democratic peace has yet to produce numerous logically type of the dyadic partner.19 As Schultzacknowledges,do- coherent theoretical explanations. mestic signaling arguments"...are fundamentally claims Statistical testing is necessary to substantiate any the- about democratic states,rather than democratic dyads" oretical claim that is at variance with the established (1999,243).20 democratic peace observation.21 This same evidence is also sufficient to challenge existing theories of the demo- 17To my knowledge,Bueno de Mesquita et al.(2003)are unique cratic peace.Rather than seek to show that every con- in providing a formal logic consistent with the democratic peace ceivable attribute of democracy cannot possibly influence observation.To achieve this result,however,the authors appear to the propensity toward interstate violence-an impossible essentially turn Kant's original intuition on its head.Where Kant argues that war"does not require of the ruler...the least sacrifice" task-this article focuses on comparing democratic and and is“a poor game”for citizens“decreeing for themselves all the capitalist variants of the liberal peace empirically. calamities of war"including,among other things,"having to pay the costs of war from their own resources"([1795]1957,11),Bueno de Mesquita et al.assume elites bear the burden of improving the The Economic Tradition war effort:"By trying harder,B's leader reduces the amount of resources available to reward her supporters through private goods" What else but democracy could account for liberal (2003,232).Where Kant sees sovereigns and their key followers peace?One answer might be capitalism.The association as the principal beneficiaries of victory,Bueno de Mesquita et al. treat the spoils of war as public goods:"A military victory benefits everyone in nation B"(2003,233).Kant sees war as redistributing 2While some quantitative critiques of the democratic peace chal- welfare from the population to political elites.Bueno de Mesquita lenge its statistical validity (Spiro 1994),cultural bias(Henderson et al.argue that war is costly to elites and victory profitable to 1998),or generalizability (Henderson 2002),other studies treat populations. democracy as a product of peace(James,Solberg,and Wolfson 1999;Thompson 1996).Critics also offer a variety of alterna- isFinel and Lord(1999)argue,and provide some evidence,that tives,including alliance structures(Gowa 1994,1995),the cold war transparency can lead to greater noise and confusion. (Farber and Gowa 1995;Gowa 1999),satisfaction with the global 9Rational actors with common priors,and the same information, status quo (Kacowicz 1995;Lemke and Reed 1996),and com- should have identical beliefs(Myerson 1991,67-83). mon interstate interests (Farber and Gowa 1997;Gartzke 1998, 2000).Mansfield and Snyder (1995a,1995b,2002a,2002b)and 20Domesticopposition groups can revealinformation,orpool,con- Braumoeller (1997)argue that new democracies are more war- fusing observers,depending on electoral conditions(Ramsay 2003; like,while accepting that mature republics are peaceful.Enterline Trager 2004).Increased credibility also provides new incentives for (1996)and Thompson and Tucker (1997)attempt to counter this leaders to bluff (Nalebuff 1991). argument
CAPITALIST PEACE 169 leaders intent on remaining in office seek to retain the support of a winning coalition drawn from the group of politically relevant citizens (the selectorate). Size matters in this theory, as leaders in societies with small winning coalitions (autocracies) can efficiently target benefits to key supporters, while leaders facing big winning coalitions (democracies) are better off providing public goods to stay in power. Democracies fight harder because leaders with large winning coalitions are more likely to be replaced in the event of defeat. Two democracies, taken together, promise particularly expensive contests, leading democrats more often to prefer negotiated settlements.17 Comparisons of the costs or risks of war often tell us more about who gets what than about whether force is needed to get there. Since disputes typically end in some division of the stakes, the democratic peace can be described in terms of the timing of bargains, rather than about tactics. Several authors view democracies as more transparent (Mitchell 1998; Small 1996; Van Belle 1997).18 Others argue that “audience costs” or opposition groups allow democracies better to signal resolve (Fearon 1994; Schultz 1998, 1999; Smith 1998). Properly understood, however, these explanations anticipate monadic democratic pacifism, not the dyadic democratic peace relationship. Contests should be less likely in all dyads possessing at least one democratic state, regardless of the regime type of the dyadic partner.19 As Schultz acknowledges, domestic signaling arguments “... are fundamentally claims about democratic states, rather than democratic dyads” (1999, 243).20 17To my knowledge, Bueno de Mesquita et al. (2003) are unique in providing a formal logic consistent with the democratic peace observation. To achieve this result, however, the authors appear to essentially turn Kant’s original intuition on its head. Where Kant argues that war “does not require of the ruler . . . the least sacrifice” and is “a poor game” for citizens “decreeing for themselves all the calamities of war” including, among other things, “having to pay the costs of war from their own resources” ([1795] 1957, 11), Bueno de Mesquita et al. assume elites bear the burden of improving the war effort: “By trying harder, B’s leader reduces the amount of resources available to reward her supporters through private goods” (2003, 232). Where Kant sees sovereigns and their key followers as the principal beneficiaries of victory, Bueno de Mesquita et al. treat the spoils of war as public goods: “A military victory benefits everyone in nation B” (2003, 233). Kant sees war as redistributing welfare from the population to political elites. Bueno de Mesquita et al. argue that war is costly to elites and victory profitable to populations. 18Finel and Lord (1999) argue, and provide some evidence, that transparency can lead to greater noise and confusion. 19Rational actors with common priors, and the same information, should have identical beliefs (Myerson 1991, 67–83). 20Domestic opposition groups can reveal information, or pool, confusing observers, depending on electoral conditions (Ramsay 2003; Trager 2004). Increased credibility also provides new incentives for leaders to bluff (Nalebuff 1991). Which explanations for the democratic peace are most nearly “right?” Given so many accounts, it is a safe bet that at least some theories must be in error. Still, whittling away at the panoply of plausible arguments has proven difficult. Textbook social science begins with deductive theories, implications of which are then tested empirically. The evolution of democratic peace research has been messier, with the bulk of explanations coming in response to the observation. Several authors seek to critically evaluate democratic peace theory (Gates, Knutsen, and Moses 1996; Layne 1994; Rosato 2003), but culling theories deductively is problematic. A poorly crafted argument could still be fundamentally sound. Conversely, explanations that are seen to be flawed are often revised, escaping intellectual death. Other theories might be deductively coherent, but remain products, rather than predictors, of the observation. It is not clear, for example, how to reconcile the persuasive theory of Bueno de Mesquita et al. (2003) about large selectorates, with the persuasive evidence of Mousseau, Hegre, and Oneal (2003) that only some large selectorates matter. Given the malleability of assumptions, one should be able to develop numerous logically coherent explanations for almost any given empirical relationship. Indeed, given the flexibility of assumptions, and the number of bright minds engaged, it is rather a riddle that the democratic peace has yet to produce numerous logically coherent theoretical explanations. Statistical testing is necessary to substantiate any theoretical claim that is at variance with the established democratic peace observation.21 This same evidence is also sufficient to challenge existing theories of the democratic peace. Rather than seek to show that every conceivable attribute of democracy cannot possibly influence the propensity toward interstate violence—an impossible task—this article focuses on comparing democratic and capitalist variants of the liberal peace empirically. The Economic Tradition What else but democracy could account for liberal peace? One answer might be capitalism. The association 21While some quantitative critiques of the democratic peace challenge its statistical validity (Spiro 1994), cultural bias (Henderson 1998), or generalizability (Henderson 2002), other studies treat democracy as a product of peace (James, Solberg, and Wolfson 1999; Thompson 1996). Critics also offer a variety of alternatives, including alliance structures (Gowa 1994, 1995), the cold war (Farber and Gowa 1995; Gowa 1999), satisfaction with the global status quo (Kacowicz 1995; Lemke and Reed 1996), and common interstate interests (Farber and Gowa 1997; Gartzke 1998, 2000). Mansfield and Snyder (1995a, 1995b, 2002a, 2002b) and Braumoeller (1997) argue that new democracies are more warlike, while accepting that mature republics are peaceful. Enterline (1996) and Thompson and Tucker (1997) attempt to counter this argument
170 ERIK GARTZKE between economic freedom and interstate peace has deep The chief challenge to the arguments of Angell and intellectual roots,though the liberal political economy other political economists is that they turned out to be tradition has received little attention in recent decades.22 wrong(Carr 1939;Morgenthau 1948).Two world wars Enlightenment figures like Montesquieu and Smith ar- and associated economic upheaval reversed the trend to- gued that market interests abominate war.Paine wrote ward globalization and dissolved optimism about a capi- that"commerce diminishes the spirit,both of patriotism talist peace.24 Cold war tensions ensured that scholarship and military defense"(cited in Walker 2000,59).Cob- was preoccupied with balancing and deterrence (Jervis den called trade "the grand panacea"([1867]1903,36). 1978;Richardson 1960;Snyder 1961;Waltz 1959,1979), Mill saw market forces as"rapidly rendering war obsolete" and that subsequent generations of researchers remained (1902,390).Angell argued that it had become "impossi- skepticalabout the prospects for liberal peace(Waltz 1970, ble for one nation to seize by force the wealth or trade 1999,2000).These same events led to the long hiatus of another...war,even when victorious,can no longer in democratic peace research.However,when interest in achieve those aims for which peoples strive"(1933,60). liberal peace returned,attention centered on democracy. Angell (1933)serves as a useful point of departure Kantian theory was given a thorough rewrite in an attempt in attempting to identify how capitalism contributes to to conform to the evolving evidence,while the capitalist interstate peace.Angell highlights two processes thought peace received little attention. to diminish the appeal of conquest among countries with Of the factors emphasized by liberal political modern industrial economies.First,changes in the na- economists,trade has been by far the most closely evalu- ture of production make it difficult to cheaply subdue and ated in contemporary scholarship(Bliss and Russett 1998; to profitably manage modern economies through force. Keohane and Nye 1989;Oneal and Ray 1997;Oneal et al. Industrial economies are increasingly dependent on in- 1996;Onealand Russett 1997,1999a;Polachek 1980,1997; puts that are more easily and cheaply obtained through Polachek,Robst,and Chang 1999).25 Yet,of the elements commerce than through coercion.Relating tales of Viking of global capitalism,trade is arguably the least impor- raids on the English countryside,Angell asks why,now tant in terms of mitigating warfare.Classical political that the tables have turned,he did not see "our navy economists had yet to consider the strategic nature of con- loading up a goodly part of our mercantile marine with flict(Schelling 1966).Iftrade makes one partner more pli- the agricultural and industrial wealth of the Scandina- ant,it should allow other states to become more aggressive vian peninsular"(1933,103).Governments,like individ- (Morrow 1999;Wagner 1988),so that the overall decline uals,choose between trade and theft in obtaining needed in warfare is small or nonexistent(Beck,Katz,and Tucker goods and services.Modernity made it easier to profit 1998;Gartzke,Li,and Boehmer 2001).Economic devel- from production and trade,and harder to draw wealth opment,financial markets,and monetary policy coordi- from conquered lands or confiscated loot.23 nation all arguably play a more critical role in promoting The second process Angell outlines involves eco- peace(Gartzke and Li 2003).Much of the impact of free nomic globalization.The integration of world markets markets on peace will be missed if much of what com- not only facilitates commerce,but also creates new inter- prises capitalism is omitted or ignored. ests inimical to war.Financial interdependence ensures What are the "aims for which peoples strive,"which that damage inflicted on one economy travels through Angell mentions?Much like realists,classical political the global system,afflicting even aggressors.Angell imag- economists assumed that warfare results from resource ines a Teutonic army descending on London:"the German competition.If there are other reasons why nations fight, General,while trying to sack the Bank of England,might then some wars will occur,despite the basic validity of capi- find his own balance in the Bank of Germany had van- talist peace arguments.It is then necessary to revise,rather ished,and the value of even the best of his investments than reject out of hand,economic explanations for lib- reduced"(1933,106-7).As wealth becomes less tangible, eral peace.This article next offers the outlines of a revised more mobile,distributed,and more dependent on the theory of capitalist peace. good will of investors,it also becomes more difficult to coerce (Brooks 1999;Rosecrance 1985) 24Kant himselfis pessimistic about human nature:"the natural state 2Notable exceptions include,but are not limited to,Mousseau is one of war."Citizens curb the warlike tendencies of leaders,the (2000),Tures(2004),and Weede(2003,2004,2005). same citizens that are in turn constrained by government.Kant 2The first edition appears in 1909 under the title Europe's Optical explicitly rejects the notion that individuals or nations are able to cooperate spontaneously."A state of peace,therefore,must be Illusion.Subsequent printings appeared in 1910/1912 as The Great established"(Kant [1795]1957,10). Illusion.The world wars are widely viewed as having repudiated Angell's capitalist peace thesis,along with the claims of Kant and 25See McMillan(1997)and Mansfield and Pollins(2001)for reviews Wilson (see Gartzke 2007). of the literature on interdependence and conflict
170 ERIK GARTZKE between economic freedom and interstate peace has deep intellectual roots, though the liberal political economy tradition has received little attention in recent decades.22 Enlightenment figures like Montesquieu and Smith argued that market interests abominate war. Paine wrote that “commerce diminishes the spirit, both of patriotism and military defense” (cited in Walker 2000, 59). Cobden called trade “the grand panacea” ([1867] 1903, 36). Mill saw market forces as “rapidly rendering war obsolete” (1902, 390). Angell argued that it had become “impossible for one nation to seize by force the wealth or trade of another ... war, even when victorious, can no longer achieve those aims for which peoples strive” (1933, 60). Angell (1933) serves as a useful point of departure in attempting to identify how capitalism contributes to interstate peace. Angell highlights two processes thought to diminish the appeal of conquest among countries with modern industrial economies. First, changes in the nature of production make it difficult to cheaply subdue and to profitably manage modern economies through force. Industrial economies are increasingly dependent on inputs that are more easily and cheaply obtained through commerce than through coercion. Relating tales of Viking raids on the English countryside, Angell asks why, now that the tables have turned, he did not see “our navy loading up a goodly part of our mercantile marine with the agricultural and industrial wealth of the Scandinavian peninsular” (1933, 103). Governments, like individuals, choose between trade and theft in obtaining needed goods and services. Modernity made it easier to profit from production and trade, and harder to draw wealth from conquered lands or confiscated loot.23 The second process Angell outlines involves economic globalization. The integration of world markets not only facilitates commerce, but also creates new interests inimical to war. Financial interdependence ensures that damage inflicted on one economy travels through the global system, afflicting even aggressors. Angell imagines a Teutonic army descending on London: “the German General, while trying to sack the Bank of England, might find his own balance in the Bank of Germany had vanished, and the value of even the best of his investments reduced” (1933, 106–7). As wealth becomes less tangible, more mobile, distributed, and more dependent on the good will of investors, it also becomes more difficult to coerce (Brooks 1999; Rosecrance 1985). 22Notable exceptions include, but are not limited to, Mousseau (2000), Tures (2004), and Weede (2003, 2004, 2005). 23The first edition appears in 1909 under the title Europe’s Optical Illusion. Subsequent printings appeared in 1910/1912 as The Great Illusion. The world wars are widely viewed as having repudiated Angell’s capitalist peace thesis, along with the claims of Kant and Wilson (see Gartzke 2007). The chief challenge to the arguments of Angell and other political economists is that they turned out to be wrong (Carr 1939; Morgenthau 1948). Two world wars and associated economic upheaval reversed the trend toward globalization and dissolved optimism about a capitalist peace.24 Cold war tensions ensured that scholarship was preoccupied with balancing and deterrence (Jervis 1978; Richardson 1960; Snyder 1961; Waltz 1959, 1979), and that subsequent generations of researchers remained skeptical about the prospects for liberal peace (Waltz 1970, 1999, 2000). These same events led to the long hiatus in democratic peace research. However, when interest in liberal peace returned, attention centered on democracy. Kantian theory was given a thorough rewrite in an attempt to conform to the evolving evidence, while the capitalist peace received little attention. Of the factors emphasized by liberal political economists, trade has been by far the most closely evaluated in contemporary scholarship (Bliss and Russett 1998; Keohane and Nye 1989; Oneal and Ray 1997; Oneal et al. 1996; Oneal and Russett 1997, 1999a; Polachek 1980, 1997; Polachek, Robst, and Chang 1999).25 Yet, of the elements of global capitalism, trade is arguably the least important in terms of mitigating warfare. Classical political economists had yet to consider the strategic nature of conflict (Schelling 1966). If trade makes one partner more pliant, it should allow other states to become more aggressive (Morrow 1999; Wagner 1988), so that the overall decline in warfare is small or nonexistent (Beck, Katz, and Tucker 1998; Gartzke, Li, and Boehmer 2001). Economic development, financial markets, and monetary policy coordination all arguably play a more critical role in promoting peace (Gartzke and Li 2003). Much of the impact of free markets on peace will be missed if much of what comprises capitalism is omitted or ignored. What are the “aims for which peoples strive,” which Angell mentions? Much like realists, classical political economists assumed that warfare results from resource competition. If there are other reasons why nations fight, then some wars will occur, despite the basic validity of capitalist peace arguments. It is then necessary to revise, rather than reject out of hand, economic explanations for liberal peace. This article next offers the outlines of a revised theory of capitalist peace. 24Kant himself is pessimistic about human nature: “the natural state is one of war.” Citizens curb the warlike tendencies of leaders, the same citizens that are in turn constrained by government. Kant explicitly rejects the notion that individuals or nations are able to cooperate spontaneously. “A state of peace, therefore, must be established” (Kant [1795] 1957, 10). 25See McMillan (1997) and Mansfield and Pollins (2001) for reviews of the literature on interdependence and conflict
CAPITALIST PEACE 171 Capitalism as Pacifism interests when drawing a common geographic boundary (cf.Collins and Lapierre 1997;Holbrooke 1998),it would The security dilemma implies that insecurity is a durable be strange not to consider the existence (or absence)of facet of international affairs.War can result as each coun- common cause in assessing such topics as ideology,norm try fears for its own security,even when neither state in- enforcement,terrorism,or the organization of the global tends aggression(Glaser 1997;Jervis 1978).Yet,insecurity or regional economy. is predicated on the expectation that at least some coun- At least three mechanisms associated with capital- tries are revisionist powers.Even "pessimistic"concep- ism are capable of addressing the security dilemma and tions of world affairs appear more sanguine as we relax the mitigating the causes of war.States with similar policy assumption that insecurity is ubiquitous and immutable. goals have no need to fight to establish policy since little The task before peace theorists,then,is to identify when can be gained from victory,or lost in defeat.States al- and how nations are liberated from the security dilemma. ways have dissimilar interests when it comes to resource The argument here is that capitalism resolves insecurity or territorial issues,but changes in modern economies by creating "powerful pacifists"(Lake 1992),countries often make these differences trivial,as resources can be possessing military strength ensuring that they are largely had more easily through commerce.There can be no basis free from foreign influence or domination,but equally for agreement between two passersby about who should that they lack incentives to act aggressively abroad,at least collect a quarter lying on the sidewalk,but fighting over under certain circumstances.26 25 cents makes little sense.If,however,a sack of $100 bills Warfare results from two stages of interaction.First, falls from the sky,landing on the quarter,then it is en- states must possess the willingness and ability to com- tirely possible that a fight will ensue over who can collect pete.Second,states must be unable,or unwilling,to re- their bag of riches.Yet,even the sack of money need not solve differences through diplomatic means.27 Capabili- lead to violence if the passersby can agree on how to di- ties constrain weak,distant states(Belize and Burundi do vide up the wind fall.States willing and able to fight can not fight each other),but weakness alone is often insuf- still avoid a contest if competitors are able to foresee the ficient,given the relativity of power.Indeed,weakness is likely consequences of fighting and identify appropriate an attractive attribute in a target.For similar reasons,an bargains. unwillingness to fight must also be mutual.For the pur- poses of exposition,imagine that the motives for war are divided between zero-sum(private goods)and nonzero- Economic Development sum(goods with public properties).Private goods compe- tition involves things like attempts to conquer or control Conflict is inherent in the allocation of resources among material resources(land,labor,minerals).28 Competition two or more parties,but need not result in violence if the can also occur over efforts to influence or compel poli- stakes are literally"not worth fighting over"or when bar- cies(norms,alignments,leaders).29 The allocation of re- gains preempt fighting.Imagine two countries attempt- sources is inherently conflictual;two states that claim the ing to divide up a bundle of goods(resources,territory). same territory must compromise,fight,or delay a deci- Comparison of available allocations is zero-sum;any shift sion.The allocation of policies may or may not generate from one allocation to another benefits one country only significant friction,depending on whether,or to what ex- at the expense of the other country.In this framework, tent,state objectives are compatible.While it would be odd a mutual preference for peace requires that the value of to speak of countries as having substantially compatible winning be small relative to the cost of fighting(Morrow 1989;Powell1999). Peace advocates have long championed factors 2Capitalism,like democracy,means many things.The term is used thought to make war prohibitively expensive.Cobden,for here as shorthand for the three processes discussed in the theory. example,claimed optimistically that"Should war break 27Cost-benefit calculus is insufficient to explain war(Fearon 1995), out between two great nations I have no doubt that the im- but can be sufficient to explain the lack of war.Conflict exists in bargaining theory as the result of a set of necessary conditions. mense consumption of material and the rapid destruction The absence of any of these conditions is sufficient to explain the of property would have the effect of very soon bringing absence of fighting. the combatants to reason or exhausting their resources" 28Territory can also have strategic (Fazal 2004),symbolic (Toft ([1867]1903,355).Yet,if war is a process where com- 2003),or reputational(Walter 2003,2006)value. petitors inflict costs on one another,making war more 2A"sphere of influence"suggests precisely a desire to control the expensive will affect who wins,or how long fighting lasts, choices,though not necessarily the territory,of another state. but not whether a contest occurs(Levy and Morgan 1984)
CAPITALIST PEACE 171 Capitalism as Pacifism The security dilemma implies that insecurity is a durable facet of international affairs. War can result as each country fears for its own security, even when neither state intends aggression (Glaser 1997; Jervis 1978). Yet, insecurity is predicated on the expectation that at least some countries are revisionist powers. Even “pessimistic” conceptions of world affairs appear more sanguine as we relax the assumption that insecurity is ubiquitous and immutable. The task before peace theorists, then, is to identify when and how nations are liberated from the security dilemma. The argument here is that capitalism resolves insecurity by creating “powerful pacifists” (Lake 1992), countries possessing military strength ensuring that they are largely free from foreign influence or domination, but equally that they lack incentives to act aggressively abroad, at least under certain circumstances.26 Warfare results from two stages of interaction. First, states must possess the willingness and ability to compete. Second, states must be unable, or unwilling, to resolve differences through diplomatic means.27 Capabilities constrain weak, distant states (Belize and Burundi do not fight each other), but weakness alone is often insufficient, given the relativity of power. Indeed, weakness is an attractive attribute in a target. For similar reasons, an unwillingness to fight must also be mutual. For the purposes of exposition, imagine that the motives for war are divided between zero-sum (private goods) and nonzerosum (goods with public properties). Private goods competition involves things like attempts to conquer or control material resources (land, labor, minerals).28 Competition can also occur over efforts to influence or compel policies (norms, alignments, leaders).29 The allocation of resources is inherently conflictual; two states that claim the same territory must compromise, fight, or delay a decision. The allocation of policies may or may not generate significant friction, depending on whether, or to what extent, state objectives are compatible. While it would be odd to speak of countries as having substantially compatible 26Capitalism, like democracy, means many things. The term is used here as shorthand for the three processes discussed in the theory. 27Cost-benefit calculus is insufficient to explain war (Fearon 1995), but can be sufficient to explain the lack of war. Conflict exists in bargaining theory as the result of a set of necessary conditions. The absence of any of these conditions is sufficient to explain the absence of fighting. 28Territory can also have strategic (Fazal 2004), symbolic (Toft 2003), or reputational (Walter 2003, 2006) value. 29A “sphere of influence” suggests precisely a desire to control the choices, though not necessarily the territory, of another state. interests when drawing a common geographic boundary (cf. Collins and Lapierre 1997; Holbrooke 1998), it would be strange not to consider the existence (or absence) of common cause in assessing such topics as ideology, norm enforcement, terrorism, or the organization of the global or regional economy. At least three mechanisms associated with capitalism are capable of addressing the security dilemma and mitigating the causes of war. States with similar policy goals have no need to fight to establish policy since little can be gained from victory, or lost in defeat. States always have dissimilar interests when it comes to resource or territorial issues, but changes in modern economies often make these differences trivial, as resources can be had more easily through commerce. There can be no basis for agreement between two passersby about who should collect a quarter lying on the sidewalk, but fighting over 25 cents makes little sense. If, however, a sack of $100 bills falls from the sky, landing on the quarter, then it is entirely possible that a fight will ensue over who can collect their bag of riches. Yet, even the sack of money need not lead to violence if the passersby can agree on how to divide up the wind fall. States willing and able to fight can still avoid a contest if competitors are able to foresee the likely consequences of fighting and identify appropriate bargains. Economic Development Conflict is inherent in the allocation of resources among two or more parties, but need not result in violence if the stakes are literally “not worth fighting over” or when bargains preempt fighting. Imagine two countries attempting to divide up a bundle of goods (resources, territory). Comparison of available allocations is zero-sum; any shift from one allocation to another benefits one country only at the expense of the other country. In this framework, a mutual preference for peace requires that the value of winning be small relative to the cost of fighting (Morrow 1989; Powell 1999). Peace advocates have long championed factors thought to make war prohibitively expensive. Cobden, for example, claimed optimistically that “Should war break out between two great nations I have no doubt that the immense consumption of material and the rapid destruction of property would have the effect of very soon bringing the combatants to reason or exhausting their resources” ([1867] 1903, 355). Yet, if war is a process where competitors inflict costs on one another, making war more expensive will affect who wins, or how long fighting lasts, but not whether a contest occurs (Levy and Morgan 1984)
72 ERIK GARTZKE War costs are also endogenous;if fighting is prohibitive, developed economies,especially where developed coun- countries will make themselves a "nice little war."30 In- tries are geographically clustered(Gleditsch 2003).Since creasing the cost of fighting,or alternately increasing the most territorial disputes are between contiguous states benefits of peace-even when possible-shape what each (Vasquez 1993),I hypothesize that developed,contigu- actor will accept in lieu of fighting,but do not tell us which ous dyads are more powerful than either developing or bargains are forged before warfare,and which after.Even noncontiguous dyads.34 the prospect ofnuclear annihilation did not deter disputes during the cold war(Schelling 1960). HI:Development leads contiguous dyads to If,on the other hand,the value of resources in dis- be less likely to experience conflict. pute is small or varies with ownership,then states can be disinclined to fight.Nations have historically used force While development decreases incentives for territo- to acquire land and resources,and subdue foreign pop- ulations.War or treaties that shifted control of territory rial aggrandizement,it greatly enhances the technological changed the balance of resources,and power.Sovereigns, ability of states to project power.Nations with ships and aircraft can engage in distant disputes inconceivable for and to a lesser extent citizens,prospered as the state ex- tended its domain.Development can alter these incen- poor countries.Development may also lead to increased willingness to pursue policy conflicts.If development is tives if modern production processes de-emphasize land, minerals,and rooted labor in favor of intellectual and clustered and neighbors no longer covet territory,capabil- financial capital(Brooks 1999,2005;Rosecrance 1996). ities can be devoted to pursuing the nation's secondary or If the rents from conquest decline,even as occupation tertiary interests.Distributed production networks and costs increase,then states can prefer to buy goods rather greater economic,social,or political integration natu- than steal them.31 As the U.S.invasion of Iraq illustrates, rally also create incentives to seek to influence the for- occupying a reluctant foreign power is extremely labor eign policies ofother countries,sometimes through force. intensive.If soldiers are expensive,then nations can be In contrast to the blanket assertion of classical politi- better off "outsourcing occupation"to local leaders and cal economists,I expect that development actually leads obtaining needed goods through trade.32 countries to be more likely to engage in conflicts far from At the same time that development leads states to home.35 Iraq invaded and occupied Kuwaitin August 1990, prefer trade to theft,developed countries also retain pop- intent on securing its"nineteenth province"and wresting Kuwaiti oil wealth from local leaders.The United States ulations with common identities,cultural affinities,and and its Coalition allies also invaded Kuwait,not to conquer political,social,and economic ties.These states may be reluctant to conquer their neighbors,but they are equally and keep,but to return the Emirate to its previous lead- opposed to arbitrary contractions of their borders.Resi- ers.While Coalition objectives were couched in moralistic rhetoric,the United States was clearly concerned about dents of Gibraltar,for example,prefer British rule,even while Spain,which has fought over this lump of rock for who governed Kuwait,while preferring not to govern the centuries,is today unwilling to provoke a war.33 The com- country itself.Similarly,European colonial powers have bination of a lack of motive for territorial expansion and repeatedly intervened in Africa,Asia,and elsewhere to continued interest in serving and protecting a given pop- prop up or dethrone regimes,impose settlements,or oth- ulation ensures a decline in conflict among states with erwise meddle in the affairs of developing countries. H2:Developmentleads noncontiguous dyads 30In Gunga Din(1939),Sgt.Archibald Cutter(Cary Grant)asks, to be more likely to experience conflict. "How can we get a nice little war going?" 3Boix(2003)argues that development reduces elite opposition to democratization as the bases for wealth become more mobile. Results are comparable to separate regressions of territorial and 3The original U.S.war plan was for Iraqi oil assets to be quickly nonterritorial MIDs (Gartzke 2006a).The contiguity interaction returned to local control (Woodward 2004,322-24).What com- term is convenient here(most territorial disputes involve contigu- merce cannot do-where force is still efficacious-is to supplant ous states).For further discussion of the relationship between ter- obstreperous leaders or to undermine inimical policies. ritory and contiguity,see Hensel(2000). 3As rentier activity becomes unprofitable with economic devel- 3Contrasting effects of development are spatially distinct and tem- opment,political units default to cultural variables.Ambivalence porally sequenced.Technology shocks beginning in the fifteenth about being British has been a near constant in Scotland and Wales, century propelled Europeans abroad in search of loot,land,and but official acceptance of autonomy is a novelty.Conversely,inde- labor.Imperialism first flowed and then ebbed as the cost of main- pendence in Northern Ireland is resisted more robustly as it con- tainingarmiesexceeded the value ofrents from occupation(Gartzke fronts Protestant identity. and Rohner 2006a)
172 ERIK GARTZKE War costs are also endogenous; if fighting is prohibitive, countries will make themselves a “nice little war.”30 Increasing the cost of fighting, or alternately increasing the benefits of peace—even when possible—shape what each actor will accept in lieu of fighting, but do not tell us which bargains are forged before warfare, and which after. Even the prospect of nuclear annihilation did not deter disputes during the cold war (Schelling 1960). If, on the other hand, the value of resources in dispute is small or varies with ownership, then states can be disinclined to fight. Nations have historically used force to acquire land and resources, and subdue foreign populations. War or treaties that shifted control of territory changed the balance of resources, and power. Sovereigns, and to a lesser extent citizens, prospered as the state extended its domain. Development can alter these incentives if modern production processes de-emphasize land, minerals, and rooted labor in favor of intellectual and financial capital (Brooks 1999, 2005; Rosecrance 1996). If the rents from conquest decline, even as occupation costs increase, then states can prefer to buy goods rather than steal them.31 As the U.S. invasion of Iraq illustrates, occupying a reluctant foreign power is extremely labor intensive. If soldiers are expensive, then nations can be better off “outsourcing occupation” to local leaders and obtaining needed goods through trade.32 At the same time that development leads states to prefer trade to theft, developed countries also retain populations with common identities, cultural affinities, and political, social, and economic ties. These states may be reluctant to conquer their neighbors, but they are equally opposed to arbitrary contractions of their borders. Residents of Gibraltar, for example, prefer British rule, even while Spain, which has fought over this lump of rock for centuries, is today unwilling to provoke a war.33 The combination of a lack of motive for territorial expansion and continued interest in serving and protecting a given population ensures a decline in conflict among states with 30In Gunga Din (1939), Sgt. Archibald Cutter (Cary Grant) asks, “How can we get a nice little war going?” 31Boix (2003) argues that development reduces elite opposition to democratization as the bases for wealth become more mobile. 32The original U.S. war plan was for Iraqi oil assets to be quickly returned to local control (Woodward 2004, 322–24). What commerce cannot do—where force is still efficacious—is to supplant obstreperous leaders or to undermine inimical policies. 33As rentier activity becomes unprofitable with economic development, political units default to cultural variables. Ambivalence about being British has been a near constant in Scotland and Wales, but official acceptance of autonomy is a novelty. Conversely, independence in Northern Ireland is resisted more robustly as it confronts Protestant identity. developed economies, especially where developed countries are geographically clustered (Gleditsch 2003). Since most territorial disputes are between contiguous states (Vasquez 1993), I hypothesize that developed, contiguous dyads are more powerful than either developing or noncontiguous dyads.34 H1: Development leads contiguous dyads to be less likely to experience conflict. While development decreases incentives for territorial aggrandizement, it greatly enhances the technological ability of states to project power. Nations with ships and aircraft can engage in distant disputes inconceivable for poor countries. Development may also lead to increased willingness to pursue policy conflicts. If development is clustered and neighbors no longer covet territory, capabilities can be devoted to pursuing the nation’s secondary or tertiary interests. Distributed production networks and greater economic, social, or political integration naturally also create incentives to seek to influence the foreign policies of other countries, sometimes through force. In contrast to the blanket assertion of classical political economists, I expect that development actually leads countries to be more likely to engage in conflicts far from home.35 Iraq invaded and occupied Kuwait in August 1990, intent on securing its “nineteenth province” and wresting Kuwaiti oil wealth from local leaders. The United States and its Coalition allies also invaded Kuwait, not to conquer and keep, but to return the Emirate to its previous leaders. While Coalition objectives were couched in moralistic rhetoric, the United States was clearly concerned about who governed Kuwait, while preferring not to govern the country itself. Similarly, European colonial powers have repeatedly intervened in Africa, Asia, and elsewhere to prop up or dethrone regimes, impose settlements, or otherwise meddle in the affairs of developing countries. H2: Development leads noncontiguous dyads to be more likely to experience conflict. 34Results are comparable to separate regressions of territorial and nonterritorial MIDs (Gartzke 2006a). The contiguity interaction term is convenient here (most territorial disputes involve contiguous states). For further discussion of the relationship between territory and contiguity, see Hensel (2000). 35Contrasting effects of development are spatially distinct and temporally sequenced. Technology shocks beginning in the fifteenth century propelled Europeans abroad in search of loot, land, and labor. Imperialism first flowed and then ebbed as the cost of maintaining armies exceeded the value of rents from occupation (Gartzke and Rohner 2006a)
CAPITALIST PEACE 173 Similar Interests Li 2003;Gartzke,Li,and Boehmer 2001).Competition creates incentives to bluff,to exaggerate capabilities or re- There is a second salient difference between the two sets solve.Anarchy makes it difficult for states to compel hon- of motives for invading Kuwait.Suppose that Iraq had est answers from one another except through the threat formed an alliance,like the U.S.Coalition.Spoils from or imposition of harm.Contests inform by being costly, the conquest of Kuwait would have had to be divided forcing actors to choose between bearing the burden of up in some manner.Each new member of an Iraqi-led competition and backing down.Of course,one can signal alliance would dilute the spoils,diminishing each mem- by "burning money,expending valuable resources au- ber's "slice."By going it alone,Iraq kept all of the wealth tonomously,but such acts create a relative as well as abso- of Kuwait to itself,at least for a little while.In contrast, lute loss.Tactics that impart costs only as a byproduct of U.S.objectives were not much diluted by the size of its imposing costs on an opponent can produce relative gains, coalition.Since there was no resource "pie"to distribute, while tactics such as burning money only harm the initia- the size of the Coalition was not a hindrance in allocating tor.States with economies integrated into global markets benefits,though reasons for reconstituting Kuwait dif- face autonomous investors with incentives to reallocate fered markedly among the members,another source of capital away from risk.A leader's threats against another tension that could have led to conflict(Baker 1995). state become costly when threats spark market repercus- Students of war often treat state interests as largely sions.Participants learn from watching the reactions of uniform,and largely incompatible.International com- leaders to the differential incentives of economic cost and petition forces nations-large and small-to be secu- political reward.Two economically integrated states can rity seekers (Waltz 1959,1979),or to lust after power more often avoid military violence,since market integra- (Mearsheimer 2001).A different conception of interests tion combines mechanisms for revelation and coercion. comes from utilitarianism (Bentham [1781]2000;Mill An economically integrated target can be coerced by the [1861]1998)and rational theory (Black 1948;Downs threat of losing valuable exchange,but a nonintegrated 1957;Riker 1963),one in which interests are variable and initiator cannot make its threats credible or informative. are often logical primitives.Many countries may share to Conversely,a globalized initiator can signal but has little a greater or lesser extent compatible worldviews or ob- incentive to hamper its own markets when a noninte- jectives(cf.Keohane and Nye 1989).Conversely,strong grated target does not suffer (Gartzke 2006b). policy differences can lead to conflict,and possibly to war (Bueno de Mesquita 1981,1985,1989;Morrow 1985).For H4:Financial or monetary integration leads example,World War II and the cold war were "ideologi- dyads to be less likely to experience conflict. cal contests"which pitted coalitions of countries with in- compatible visions of an appropriate world order against Research Design each other.Since policy interests vary,while interests over resource allocations are more nearly constant(in their I next analyze the hypotheses in a standard statistical test fundamental incompatibility),policy conflict should also of the democratic peace,using a sample of all dyad years vary.The range of policy issues over which state pref- (1950-92).This sample is well documented by previous erences might vary is literally innumerable.This article studies.The democratic peace is thought to be most ro- adopts an axiomatic approach,making the broadest the- bust in the post-World War II period.36 Unless noted, oretical claim,and then using a policy interest index to variables are coded as described in Oneal and Russett operationalize interest affinity in testing (1999a).Adopting the assumptions of this canonical re- search program allows for ready comparison of results H3:Similar state policy interests lead dyads and diminishes the danger that my findings result from to be less likely to experience conflict. idiosyncrasies in coding or model specification.Oneal and Russett(1999a)appear to offer the most appropriate Globalization of Capital baseline for the analysis.Subsequent research focuses on While policy differences or resource competition can gen- other aspects of their Kantian tripartite liberal explanation erate conflict,they need not produce contests if states can resolve differences diplomatically.Liberal theory em- 36If the democratic peace exists anywhere,the post-World War II period is the obvious place tolook."Indeed,the past several decades phasizes the pacifying effect of cross-border economic when there were the most democracies'provide the best temporal linkages.Markets are arguably most relevant as mech- span to give 'the hardest test of the proposition that democracies do anisms for revealing information,however,rather than not make war on each other'(R.J.Rummel,International Studies Association,Foreign Policy Internet Communication,20 January for adding to the risks or costs of fighting(Gartzke and 1995),"cited in Kegley and Hermann (1996,312)
CAPITALIST PEACE 173 Similar Interests There is a second salient difference between the two sets of motives for invading Kuwait. Suppose that Iraq had formed an alliance, like the U.S. Coalition. Spoils from the conquest of Kuwait would have had to be divided up in some manner. Each new member of an Iraqi-led alliance would dilute the spoils, diminishing each member’s “slice.” By going it alone, Iraq kept all of the wealth of Kuwait to itself, at least for a little while. In contrast, U.S. objectives were not much diluted by the size of its coalition. Since there was no resource “pie” to distribute, the size of the Coalition was not a hindrance in allocating benefits, though reasons for reconstituting Kuwait differed markedly among the members, another source of tension that could have led to conflict (Baker 1995). Students of war often treat state interests as largely uniform, and largely incompatible. International competition forces nations—large and small—to be security seekers (Waltz 1959, 1979), or to lust after power (Mearsheimer 2001). A different conception of interests comes from utilitarianism (Bentham [1781] 2000; Mill [1861] 1998) and rational theory (Black 1948; Downs 1957; Riker 1963), one in which interests are variable and are often logical primitives. Many countries may share to a greater or lesser extent compatible worldviews or objectives (cf. Keohane and Nye 1989). Conversely, strong policy differences can lead to conflict, and possibly to war (Bueno de Mesquita 1981, 1985, 1989; Morrow 1985). For example, World War II and the cold war were “ideological contests” which pitted coalitions of countries with incompatible visions of an appropriate world order against each other. Since policy interests vary, while interests over resource allocations are more nearly constant (in their fundamental incompatibility), policy conflict should also vary. The range of policy issues over which state preferences might vary is literally innumerable. This article adopts an axiomatic approach, making the broadest theoretical claim, and then using a policy interest index to operationalize interest affinity in testing. H3: Similar state policy interests lead dyads to be less likely to experience conflict. Globalization of Capital While policy differences or resource competition can generate conflict, they need not produce contests if states can resolve differences diplomatically. Liberal theory emphasizes the pacifying effect of cross-border economic linkages. Markets are arguably most relevant as mechanisms for revealing information, however, rather than for adding to the risks or costs of fighting (Gartzke and Li 2003; Gartzke, Li, and Boehmer 2001). Competition creates incentives to bluff, to exaggerate capabilities or resolve. Anarchy makes it difficult for states to compel honest answers from one another except through the threat or imposition of harm. Contests inform by being costly, forcing actors to choose between bearing the burden of competition and backing down. Of course, one can signal by “burning money,” expending valuable resources autonomously, but such acts create a relative as well as absolute loss. Tactics that impart costs only as a byproduct of imposing costs on an opponent can produce relative gains, while tactics such as burning money only harm the initiator. States with economies integrated into global markets face autonomous investors with incentives to reallocate capital away from risk. A leader’s threats against another state become costly when threats spark market repercussions. Participants learn from watching the reactions of leaders to the differential incentives of economic cost and political reward. Two economically integrated states can more often avoid military violence, since market integration combines mechanisms for revelation and coercion. An economically integrated target can be coerced by the threat of losing valuable exchange, but a nonintegrated initiator cannot make its threats credible or informative. Conversely, a globalized initiator can signal but has little incentive to hamper its own markets when a nonintegrated target does not suffer (Gartzke 2006b). H4: Financial or monetary integration leads dyads to be less likely to experience conflict. Research Design I next analyze the hypotheses in a standard statistical test of the democratic peace, using a sample of all dyad years (1950–92). This sample is well documented by previous studies. The democratic peace is thought to be most robust in the post–World War II period.36 Unless noted, variables are coded as described in Oneal and Russett (1999a). Adopting the assumptions of this canonical research program allows for ready comparison of results and diminishes the danger that my findings result from idiosyncrasies in coding or model specification. Oneal and Russett (1999a) appear to offer the most appropriate baseline for the analysis. Subsequent research focuses on other aspects of their Kantian tripartite liberal explanation 36If the democratic peace exists anywhere, the post–World War II period is the obvious place to look. “Indeed, the past several decades ‘when there were the most democracies’ provide the best temporal span to give ‘the hardest test of the proposition that democracies do not make war on each other’ (R. J. Rummel, International Studies Association, Foreign Policy Internet Communication, 20 January 1995),” cited in Kegley and Hermann (1996, 312)
174 ERIK GARTZKE (Oneal and Russett 1999c;Russett and Oneal 2001),or Markets:Democratic peace research examines trade on extending the temporal domain (Oneal and Russett interdependence (Oneal et al.1996,2003;Oneal and 1999b;Oneal,Russett,and Berbaum 2003). Russett 1997,1999a,1999b,1999c;Russett and Oneal I estimated coefficients using logit and GEE in Stata 2001).Capital and monetary integration may be more (v.8)with Huber/White robust standard errors,though relevant to conflict than trade (Gartzke and Li 2003; for brevity only the logit estimates are reported.Results Gartzke,Li,and Boehmer 2001).Liberalization cre- using GEE are generally equivalent or more favorable to ates valuable linkages and institutional constraints on the hypotheses.Independent variables are lagged one year a state's ability to intervene in market processes.Be- behind the dependent variable to control for endogeneity. cause states may be tempted to interfere with market The Beck,Katz,and Tucker(1998)method of temporal responses to interstate crises,both robust markets and spline variables was adopted to control for duration de- laissez-faire policies matter. pendence.37 The International Monetary Fund (IMF)pro- vides several indicators of market size,robustness,and Dependent Variable liberalization.The IMF publication Annual Reports on Exchange Arrangements and Exchange Restrictions Zeev Maoz's construction of dyadic militarized interstate (AREAER)lists a series of variables measuring eco- disputes(DYMID)is used as the dependent variable,with nomic openness.I use an index evaluated in previous the standard dichotomous coding of"1"for the initial studies that takes the difference between eight and the year of a MID in the dyad and "0"otherwise(Gochman sum of eight types of government restrictions on for- and Maoz 1984;Jones,Bremer,and Singer 1996).38 The eign exchange,current,and capital accounts(Gartzke Maoz data are intentionally formatted in dyads.Maoz also and Li 2003;Gartzke,Li,and Boehmer 2001).IMF FIN. corrects for coding errors in the MID 2.1 dataset.39 OPEN.(Low)reports the lower monadic score in the dyad.40 High values of IMF FIN.OPEN.(Low)are thus expected to reduce the likelihood of militarized dis- Key Independent Variables putes.The IMF only reports data on member countries, Democracy:Researchers differ over how to measure systematically reducing variance and biasing against democracy,both monadically and dyadically.I rely on statistical significance. three different datasets and three variable construc- I also include indicators of trade to assess whether tions to represent dyadic democracy.The standard in trade influences militarized disputes independent of democratic peace research is the Gurr Polity IV data capital liberalization.I use both the trade data pro- (Jaggers and Gurr 1995).I first prepared monadic val- vided by Oneal and Russett,and data from Gleditsch ues by combining Polity democracy(DEMOC)and au- (2002).41 Again,I follow the Oneal and Russett op- tocracy (AUTOC)scales as follows:[(DEMOC;-AUTOC;) erationalization.Monadic values are first constructed 10]/2,(where i [A,B]).The variable differs mod- using a ratio of bilateral trade over GDP to measure the estly from Oneal and Russett in that I add 10 so that importance of trade relative to a state's total economy. all values are nonnegative and divide by 2 to yield TRADE DEP.(Low)denotes the lower trade dependence the 0-10 range of Polity variables.DEMOCRACY (Low) statistic in the dyad(Bliss and Russett 1998;Oneal and and DEMOCRACY(HIGH),respectively,report the lower Russett 1997,1999a,1999b).Trade interdependence is and higher of democracy values in the dyad.DEMOC- expected to modestly decrease MID propensity. RACY Ax B is the product of monadic values.BoTH Development:Economic development leads to a secular DEMOC.(>7)equals one ("1")if each dyad member decline in the valuation of conquerable resources while has a monadic score of at least seven and zero ("0") intellectual and financial capital critical to productiv- otherwise. ity in modern economies must be enticed rather than coerced.Conversely,wealth and the technology effect 37A Stata"do"file is available from the author replicating all aspects allow for greater power projection.Poor countries sel- of data construction and analysis. dom fight abroad because they cannot,and because 38MID coding rules produce a selection bias(Smith 1998).For example,a state that threatens and then uses force is only coded as using force.Whether threats become uses also depends on whether 40 Bilateral data on financial openness is not available for alarge sam- a target acquiesces or resists. ple of countries.Signaling should occur monadically,though two integrated economies probably increase the effect.Unlike democ- 3DYMID is available at http://spirit.tau.ac.il/poli/faculty/maoz/ dyadmid.html.In subsequent research,I will extend analysis to the racy,economic freedom has a monadic effect (Gartzke 2005a). new MID 3 data(once other variables are coded or made available), 4Oneal,Russett,and Berbaum(2003)advocate use of the Gleditsch and the ICB data. (2002)data since these data contain fewer missing observations
174 ERIK GARTZKE (Oneal and Russett 1999c; Russett and Oneal 2001), or on extending the temporal domain (Oneal and Russett 1999b; Oneal, Russett, and Berbaum 2003). I estimated coefficients using logit and GEE in Stata (v. 8) with Huber/White robust standard errors, though for brevity only the logit estimates are reported. Results using GEE are generally equivalent or more favorable to the hypotheses. Independent variables are lagged one year behind the dependent variable to control for endogeneity. The Beck, Katz, and Tucker (1998) method of temporal spline variables was adopted to control for duration dependence.37 Dependent Variable Zeev Maoz’s construction of dyadic militarized interstate disputes (DYMID) is used as the dependent variable, with the standard dichotomous coding of “1” for the initial year of a MID in the dyad and “0” otherwise (Gochman and Maoz 1984; Jones, Bremer, and Singer 1996).38 The Maoz data are intentionally formatted in dyads. Maoz also corrects for coding errors in the MID 2.1 dataset.39 Key Independent Variables • Democracy: Researchers differ over how to measure democracy, both monadically and dyadically. I rely on three different datasets and three variable constructions to represent dyadic democracy. The standard in democratic peace research is the Gurr Polity IV data (Jaggers and Gurr 1995). I first prepared monadic values by combining Polity democracy (DEMOC) and autocracy (AUTOC) scales as follows: [(DEMOCi – AUTOCi) + 10]/2, (where i ∈ [A,B]). The variable differs modestly from Oneal and Russett in that I add 10 so that all values are nonnegative and divide by 2 to yield the 0–10 range of Polity variables. DEMOCRACY (LOW) and DEMOCRACY (HIGH), respectively, report the lower and higher of democracy values in the dyad. DEMOCRACY A × B is the product of monadic values. BOTH DEMOC. (≥7) equals one (“1”) if each dyad member has a monadic score of at least seven and zero (“0”) otherwise. 37A Stata “do” file is available from the author replicating all aspects of data construction and analysis. 38MID coding rules produce a selection bias (Smith 1998). For example, a state that threatens and then uses force is only coded as using force. Whether threats become uses also depends on whether a target acquiesces or resists. 39DYMID is available at http://spirit.tau.ac.il/poli/faculty/maoz/ dyadmid.html. In subsequent research, I will extend analysis to the new MID 3 data (once other variables are coded or made available), and the ICB data. • Markets: Democratic peace research examines trade interdependence (Oneal et al. 1996, 2003; Oneal and Russett 1997, 1999a, 1999b, 1999c; Russett and Oneal 2001). Capital and monetary integration may be more relevant to conflict than trade (Gartzke and Li 2003; Gartzke, Li, and Boehmer 2001). Liberalization creates valuable linkages and institutional constraints on a state’s ability to intervene in market processes. Because states may be tempted to interfere with market responses to interstate crises, both robust markets and laissez-faire policies matter. The International Monetary Fund (IMF) provides several indicators of market size, robustness, and liberalization. The IMF publication Annual Reports on Exchange Arrangements and Exchange Restrictions (AREAER) lists a series of variables measuring economic openness. I use an index evaluated in previous studies that takes the difference between eight and the sum of eight types of government restrictions on foreign exchange, current, and capital accounts (Gartzke and Li 2003; Gartzke, Li, and Boehmer 2001). IMF FIN. OPEN. (LOW) reports the lower monadic score in the dyad.40 High values of IMF FIN. OPEN. (LOW) are thus expected to reduce the likelihood of militarized disputes. The IMF only reports data on member countries, systematically reducing variance and biasing against statistical significance. I also include indicators of trade to assess whether trade influences militarized disputes independent of capital liberalization. I use both the trade data provided by Oneal and Russett, and data from Gleditsch (2002).41 Again, I follow the Oneal and Russett operationalization. Monadic values are first constructed using a ratio of bilateral trade over GDP to measure the importance of trade relative to a state’s total economy. TRADE DEP. (LOW) denotes the lower trade dependence statistic in the dyad (Bliss and Russett 1998; Oneal and Russett 1997, 1999a, 1999b). Trade interdependence is expected to modestly decrease MID propensity. • Development: Economic development leads to a secular decline in the valuation of conquerable resources while intellectual and financial capital critical to productivity in modern economies must be enticed rather than coerced. Conversely, wealth and the technology effect allow for greater power projection. Poor countries seldom fight abroad because they cannot, and because 40Bilateral data on financial openness is not available for a large sample of countries. Signaling should occur monadically, though two integrated economies probably increase the effect. Unlike democracy, economic freedom has a monadic effect (Gartzke 2005a). 41Oneal, Russett, and Berbaum (2003) advocate use of the Gleditsch (2002) data since these data contain fewer missing observations
CAPITALIST PEACE 175 their governments are preoccupied with existing terri- sus theory of national preferences,nor is one likely to tory.Development brings with it the ability to project be constructed in a reasonable time.Empirical research power,encouraging contests over both policy and re- on conflict must thus choose between measuring inter- sources,while the richest states lose much of their will- ests imperfectly,and not measuring them at all.I have ingness to steal resources associated with territory. chosen the former,while being mindful of the many Early quantitative studies of the democratic peace potential pitfalls involved in this approach.The argu- included GDP/pop(the consensus measure of develop- ment supplied here is consistent with other research ment),but the variable was not found to be significant in arguing that variable state interests are an impor- (Maoz and Russett 1992).I argue that per capita GDP tant indicator of foreign policy behavior(cf.Bueno de has contrasting effects on disputes.Gartzke and Rohner Mesquita 1981;Voeten 2000).If we cannot know the (2006b)examine this argument directly by splitting the myriad causes of preferences,we can at least go some sample of disputes between territorial and nonterrito- way in measuring their manifestation and their effects. rial conflicts,and by looking at initiators and targets. Measuring interests provides a number of empiri- Here,however,I need to adhere to an established re- cal challenges.Preferences are not directly observable, search design.To parse out the contrasting effects of so one must identify conditions that appear to reflect development on war and peace,I include two variables. state preferences.Using data on United Nations Gen- GDPPC (Low)measures the lower of the two monadic eral Assembly voting available for the period covered population weighted gross domestic product statistics by the Oneal and Russett (1999a)data (1946-96),I for a given dyad(Gleditsch 2002).I also examine the construct an AFFINTrY index.Data on "revealed"pref- natural log of GDPPC(Low)to limit multicollinearity erences are an imperfect representation of an actor's among variables.42 A second variable isolates the effect real ranking over outcomes.Still,UN voting arguably of wealth on likely subjects of territorial aggression. distorts preferences less than available alternatives such GDPPC x CONTIG (Low)interacts contiguity and the as alliance portfolios(Gartzke 1998,2000).I examine development variable.It is most likely that a decline in other indicators in the appendix(I also use the residuals the value of conquest will manifest itself in relations of AFFINITY as a proxy,after regressing the interest vari- with neighbors,where territorial claims are most com- able on democracy and other variables,and show that mon and aggression most practical.43 the residuals have similar effects).The Affinity index Interest Similarity:Many students of international re- reports the similarity of dyadic UN voting patterns,us- lations reject as excessively narrow the realist empha- ing the "S"coding(Signorino and Ritter 2001).Values sis on uniform,monolithic interests and argue instead range between one,"most similar,and negative one, that state objectives vary with a complex variety of "least similar."I expect a threshold effect of interests. factors (cf.Moravcsik 1997).Relations between the AFFINITY should be negatively associated with disputes, United States and Israel,and between the United States with the more dissimilar values (closer to-1)being and India have been quite different in the post-World disproportionately likely to fight.44 War II period,even accounting for capabilities,geog- raphy,regime type,and so on.National interests also Additional Variables change over time;elections in Bolivia and Germany re- sulted in two very different leaders,one who is moving Iinclude the same"control"variables as Onealand Russett her country closer to the United States,and one who is (1999a)to facilitate comparison of results.45 moving farther away. Ideally,researchers in international relations would possess a model of state interests that would estimate 4Readers who prefer can ignore the interest argument without altering the effects of development or markets.Russett and Oneal the effects of a number of relevant causal variables. (2001)suggest that UN voting patterns are explained by democracy. The same could be said for democracy,however,and Gartzke (2000)reports that even the residuals from a regression of for measures of national capabilities,economic devel- democracy and other variables on AFFINTTY account for the effect of democracy on conflict in politically relevant dyads.Regressing both opment,alliance ties,and so on.There exists no consen- monadic DEMOCRACY variables on AFFINTTY in the all dyads sample yields an R2 of 0.0658(93%of the variance is left unexplained), 42None of the key variables correlates at above 0.38(Democracy while adding an indicator of liberalization,GDPPC (Low),and [Low]and GDP per capita).Results are available from the author. dummies for NATO and Warsaw Pact membership increase R2to See Vasquez(1993)for a discussion of the close relationship be- only0.0936. tween contiguity and territorial disputes or wars.Data measuring 45There are reasons to be cautious about the arbitrary effects of con- territorial conflict cannot be used in the research design required trol variables (Achen 2005;Clarke 2005;Ray 2003,2005).However, to replicate existing democratic peace research (Tir et al.1998). a study of this type needs to replicate existing canonical models
CAPITALIST PEACE 175 their governments are preoccupied with existing territory. Development brings with it the ability to project power, encouraging contests over both policy and resources, while the richest states lose much of their willingness to steal resources associated with territory. Early quantitative studies of the democratic peace included GDP/pop (the consensus measure of development), but the variable was not found to be significant (Maoz and Russett 1992). I argue that per capita GDP has contrasting effects on disputes. Gartzke and Rohner (2006b) examine this argument directly by splitting the sample of disputes between territorial and nonterritorial conflicts, and by looking at initiators and targets. Here, however, I need to adhere to an established research design. To parse out the contrasting effects of development on war and peace, I include two variables. GDPPC (LOW) measures the lower of the two monadic population weighted gross domestic product statistics foragiven dyad (Gleditsch 2002). I also examine the natural log of GDPPC (LOW) to limit multicollinearity among variables.42 A second variable isolates the effect of wealth on likely subjects of territorial aggression. GDPPC × CONTIG (LOW) interacts contiguity and the development variable. It is most likely that a decline in the value of conquest will manifest itself in relations with neighbors, where territorial claims are most common and aggression most practical.43 • Interest Similarity: Many students of international relations reject as excessively narrow the realist emphasis on uniform, monolithic interests and argue instead that state objectives vary with a complex variety of factors (cf. Moravcsik 1997). Relations between the United States and Israel, and between the United States and India have been quite different in the post–World War II period, even accounting for capabilities, geography, regime type, and so on. National interests also change over time; elections in Bolivia and Germany resulted in two very different leaders, one who is moving her country closer to the United States, and one who is moving farther away. Ideally, researchers in international relations would possess a model of state interests that would estimate the effects of a number of relevant causal variables. The same could be said for democracy, however, and for measures of national capabilities, economic development, alliance ties, and so on. There exists no consen- 42None of the key variables correlates at above 0.38 (Democracy [Low] and GDP per capita). Results are available from the author. 43See Vasquez (1993) for a discussion of the close relationship between contiguity and territorial disputes or wars. Data measuring territorial conflict cannot be used in the research design required to replicate existing democratic peace research (Tir et al. 1998). sus theory of national preferences, nor is one likely to be constructed in a reasonable time. Empirical research on conflict must thus choose between measuring interests imperfectly, and not measuring them at all. I have chosen the former, while being mindful of the many potential pitfalls involved in this approach. The argument supplied here is consistent with other research in arguing that variable state interests are an important indicator of foreign policy behavior (cf. Bueno de Mesquita 1981; Voeten 2000). If we cannot know the myriad causes of preferences, we can at least go some way in measuring their manifestation and their effects. Measuring interests provides a number of empirical challenges. Preferences are not directly observable, so one must identify conditions that appear to reflect state preferences. Using data on United Nations General Assembly voting available for the period covered by the Oneal and Russett (1999a) data (1946–96), I construct an AFFINITY index. Data on “revealed” preferences are an imperfect representation of an actor’s real ranking over outcomes. Still, UN voting arguably distorts preferences less than available alternatives such as alliance portfolios (Gartzke 1998, 2000). I examine other indicators in the appendix (I also use the residuals of AFFINITY as a proxy, after regressing the interest variable on democracy and other variables, and show that the residuals have similar effects). The Affinity index reports the similarity of dyadic UN voting patterns, using the “S” coding (Signorino and Ritter 2001). Values range between one, “most similar,” and negative one, “least similar.” I expect a threshold effect of interests. AFFINITY should be negatively associated with disputes, with the more dissimilar values (closer to −1) being disproportionately likely to fight.44 Additional Variables Iinclude the same “control” variables as Oneal and Russett (1999a) to facilitate comparison of results.45 44Readers who prefer can ignore the interest argument without altering the effects of development or markets. Russett and Oneal (2001) suggest that UN voting patterns are explained by democracy. Gartzke (2000) reports that even the residuals from a regression of democracy and other variables on AFFINITY account for the effect of democracy on conflict in politically relevant dyads. Regressing both monadic DEMOCRACY variables on AFFINITY in the all dyads sample yields an R2 of 0.0658 (93% of the variance is left unexplained), while adding an indicator of liberalization, GDPPC (LOW), and dummies for NATO and Warsaw Pact membership increase R2 to only 0.0936. 45There are reasons to be cautious about the arbitrary effects of control variables (Achen 2005; Clarke 2005; Ray 2003, 2005). However, a study of this type needs to replicate existing canonical models