Richard Rosecrance THE TRADING STATE IN THE PAST,states were obsessed with land.The international sys- tem with its intermittent wars was founded on the assumption that land was the major factor in both production and power.States could improve their position by building empires or invading other nations to seize territory.To acquire land was a boon:a conquered province contained peasants and grain supplies,and its inhabitants rendered tribute to the new sovereign.Before the age of nationalism,a cap- tured principality willingly obeyed its new ruler.Hence the Hapsburg monarchy,Spain,France,and Russia could become major powers through territorial expansion in Europe between the sixteenth and nineteenth centuries. With the Industrial Revolution,however,capital and labor assumed new importance.Unlike land,they were mobile ingredients of pro- ductive strength.Great Britain innovated in discovering sophisticated uses for the new factors.Natural resources-especially coal,iron,and, later,oil-were still economically vital.Agricultural and mineral re- sources were critical to the development of the United States and other fledgling industrial nations like Australia,Canada,South Africa,and New Zealand in the nineteenth century.Not until late in the twenti- eth century did mobile factors of production become paramount. By that time,land had declined in relative value and become harder for nations to hold.Colonial revolutions in the Third World since World War II have shown that nationalist mobilization of the population in developing societies impedes an imperialist or invader trying to extract resources.A nation may expend the effort to occupy new territory without gaining proportionate economic benefits. In time,nationalist resistance and the shift in the basis of produc- tion should have an impact on the frequency of war.Land,which is fixed,can be physically captured,but labor,capital,and information are mobile and cannot be definitively seized;after an attack,these resources can slip away like quicksilver.Saddam Hussein ransacked the computers in downtown Kuwait City in August 199o only to find that the cash in bank accounts had already been electronically transferred. Even though it had abandoned its territory,the Kuwaiti government could continue to spend billions of dollars to resist Hussein's conquest. [48] FOREIGN AFFAIRS Volume 75 No.4