economic theories of war & peace-final (1)

8/7/2019 Economic Theories of War & Peace-final (1)

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Economic Theories of War

& Peace

Dr Shaheen Akhtar


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Interdependence & peace debate

How economic theories view the question of war &peace? What is the role of economics in war &peace?

What is Marxist perspective on War & Peace?How liberal & realist approaches viewrelationship b/w eco interdependence & war orpeace?

Whetherrising levels of int. eco. independencewould prevent war and promote conditions forpeace?What is the relationship b/w Trade & Conflict?

What is the relationship b/w globalization andconflict?


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Money, War & Peace

War often comes down to one thing: money. The role ofeconomics in both peace & war is the most imp. single factor.

According to broad estimates, the US has spent over $1,024bn since 2001 until the end of July 2010.

A trillion $ would pay for the Afghan budget for 303 years

or give every Afghan, man, woman and child $35,000each,

or provide enough money foreach Afghan to live atpresent low levels of income for 77 years

oronly 44 years adjusted for purchasing power parity.

Kevin Rafferty, Japan Times Aug 4 2010Effects of War on Economics- the debate on US decline-Huge budgetary & trade deficits, rising rate ofunemployment


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Marxist theory of war & Peace

Marxist theory of war is quasi-economicin that it states that

all modern wars are caused by competition

for resources & marketsb/w great(imperialist) powers.

Thus wars are a natural result of the freemarket & class system.

Theory argues, war will only disappearonce a world revolution, over-throwing freemarkets & class systems, has occurred.


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Liberals & Realists Debate on Eco.Interdependence & War

Eco liberalism theory : argues that a liberal ecoorder that allows free eco exchange b/w states makespeace more probable.

Liberals assumptions

Eco. Interdependence lowers likelihood of warby increasing the value of trading over thealternative of aggression.

Interdependent states would rathertrade thaninvade.

As long as high levels of Interdependence can bemaintained, there will be no reason to go to war.


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Major liberal theorists on EI

Richard Cobden ( 1850) asserted that free tradeunites states making each equally anxious for the

prosperity and happiness of both.

Norman Angell (1933) in The Great Illusion even if

war was once profitable, modernization now makes itimpossible to enrich oneself through force; indeedby destroying trading bonds, war is commerciallysuicidal.

Richard Rosecrancebuilds on Cobden-Angell againstthe backdrop of nuclear era. He argues modernconditions push states towards a predominantlytrading mode: wars are not only too costly, but with

peaceful trading option, the benefit that one nationgains from trade can also be realized by others.


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Contd

When the system is highly interdependent the incentive

to wage war is absent.

Trading States recognize that they can do better through

internal eco dev sustained by a worldwide market for

their goods & services.

Robert Kehone & JosephNye: Complex interdependence

(1997) argue: various and complex transnational

connections & interdependencies b/w states and societies

were increasing, while the use of military force andpower balancing are decreasingbut remain important.

The decline of mil force as a policy tool & the increase in

eco. and other forms of interdependence should increase

the probability of cooperation among states.


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Realists argument

Realists argue that high interdependence increasesrather than decreases the likelihood of war.

In anarchy, the state must constantly worry abouttheir security.Accordingly,

interdependence- meaning mutual dependence

& thus vulnerability, gives states an incentive toinitiate war

to ensure continued access to necessary materials

& goods. (US war on Iraq to take control of oilwells.)


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Major Realist theorists on EI

Kenneth Waltz argues that anarchic structure of the Intsystem makes states worry about theirvulnerability, thuscompelling them to control what they depend on or tolessen the extent of their dependency.

John Mearsheimer: argues nations that depend on othersfor critical eco supplies will fear cut off or blackmail intimes of crisis or war. Consequently, they may try toextend Pol control to the sources of supply, giving rise toconflict with the source or its other customers.

Comparison: The main difference is b/w liberals & realistsis do with benefit v costs of interdependence.

Realists highlight potential cost of severing tradingrelationship. The liberals opportunity cost that a statewould experience should trade ends.


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Theory of Trade Expectations

Dale Copelandbuilds theory of Trade Expectationswhich is based on a synthesis of liberal & realistsapproaches to Eco. Interdependence & war.

He fuses liberal insight that the benefits of trade give

states an incentive to avoid war with the realist view that thepotential costs of trade being cut offcan push states to warto secure vital goods.

Copeland introduces the variable of expectation(perception) of the future trading environment & stateslevel of dependence.

Theory shows when expectations for trade are positive,leaders expect to realize the benefits of trade into the future& therefore have less reason for war and trade will indeedconstrain.


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Contd

If however, the leaders are pessimistic about futuretrade, fearing to be cut off from vital goods or

believe that current restrictions will not be relaxed, thenthe negative expected value of peace may make war

a rational strategic choice.The dependence level will function as a parameters foroverall compatibilities of the two economies- highdependence & mutual comparative advantageworking in favour of peace.

Exports but not imports reduce hostile foreignpolicy attitudes. Katja Kleinberg & Benjmin Fordham


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Trade, Conflict and level of development

Havard Hegre argues the relationship b/w Trade & Conflict isdependent on the level of development- interdependence basedon gravity model of the trade.

Development effects the utility calculations of states. Costs ofseizing & holding a territory increases with increaseddevelopment while the utility of occupying decreases.

Since utility of trade increases with increased development, theincreased dev makes it more likely that the expected costs ofbreaking the trade bonds will exceed the gains to be expectedfrom occupation.

Thus relationship b/w trade & conflict is contingent on the levelof development.

The Democratic Peace requires a minimum level of dev to beefficient.


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Debate on Globalization & peace

Globalization has largely superseded the termofinterdependence in rapidlygrowinglinksb/w nations, economies & societies.

Katherine Barbieri& Gerald Schneiderarguesunder globalization the trade will have eithernegligible or even negative impact oninterstate/int conflict.

Marxist and realist critics rejectliberal viewof beneficial or neutral effects ofglobalization.

economic theories of war & peace-final (1)

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