The EU’s confidence in and practice of the peace-through-trade policy originates from the theory that an increase in trade leads to universal benefits (which expands to include peace). This notion was first mentioned at around AD 100, when Plutarch wrote about how sea trade allowed man to cooperate and “redress defects” in their relationship with one another through mutual exchange.1 This ideal was given more attention in the 1700s when Montesquieu specified that peace is a “natural” consequence of trade,2 it then gained momentum into the twentieth and twenty-first centuries. This chapter focuses on the theory concerned with the EU’s belief in the peace-through-trade policy. Indeed, it is this belief that led Brussels to implement its peacethrough-trade policy when dealing with foreign states.
- Gross Domestic Product
- Trading Partner
- Asymmetric Distribution
- Liberal Democracy
- World Bank
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Plutarch (ca. AD 100). Quoted in Douglas A. Irwin, Against the Tide: An Intellectual History of Free Trade (Princeton, NJ: Princeton University Press, 1996). 11.
Charles-Louis Montesquieu, The Spirit of the Laws (New York: Hafner, 1966 [17481), 316.
Malthus formulated this policy when referring to corn, in Thomas Malthus (1814). Cited in James P. Huzel, The Popularisation of Malthus in Early Nineteenth-Century England: Martineau, Cobbett and the Pauper Press (United Kingdom: Ashgate, 2006), 31. However, in Malthus’s subsequent publication, Grounds of an Opinion on the Policy of Restricting the Importation of Foreign Corn, 1815, he took a firm position toward advocating government intervention in the sector, in Huzel, The Popularisation of Malthus in Early Nineteenth-Century England, 32.
See: Richard Cobden, The Political and Economic Works of Richard Cobden, 6 vols. (London: Routledge, 1995 );
John Bright, Speeches on Questions of Public Policy (Virginia: Macmillan, 1883);
Norman Angell, The Great Illusion: A Study of the Relation of Military Power to National Advantage (New York: G.P. Putnam’s Sons, 1913);
and Jacob Viner, Studies in the Theory of International Trade (New York: Harper and Brothers, 1937), for early examples of this strand of literature.
Katherine Barbieri, The Liberal Illusion: Does Trade Promote Peace? (Michigan: University of Michigan Press, 2005), 18.
Zeev Maoz and Bruce M. Russett, “Normative and Structural Causes of Democratic Peace, 1946–1986,” American Political Science Review 87:3 (1993): 624.
Andrew Kydd, “Trust, Reassurance, and Cooperation,” International Organization 54:2 (2000): 325–326.
An example is Solomon W. Polachek, “Conflict and Trade,” Journal of Conflict Resolution 24:1 (1980): 55, who determines that welfare gains result from this relationship.
“Liberal democracies” are defined as states that are democratic, have a Liberal market economy, and protect civil and political rights in this sense. Michael Doyle, “Kant, Liberal Legacies, and Foreign Affairs,” Philosophy and Public Affairs 12:3 (1983): 213.
Immanuel Kant, Perpetual Peace (Minneapolis, MN: Filiquarian Publishing, 2007 ), 19.
For examples, see John R. O’Neal and George Russett, “The Classical Liberals Were Right: Democracy, Interdependence, and Conflict, 1950–1985,” International Studies Quarterly 40:2 (1997);
George Russett, John R. O’Neal, and David R. Davis, “The Third Leg of the Kantian Tripod: International Organizations and Militarized Disputes, 1950–85,” International Organization 52:3 (1998);
H. Bliss and B. Russett, “Democratic Trading Partners: The Liberal Connection, 1962–1988,” Journal of Politics 58:4 (1998); J. Morrow, R. Siverson, and T. Tabares, “The Political Determinants of International Trade: The Major Powers, 1907–90,” American Political Science Review 92:3 (1998); S. Y. Kim, “Ties That Bind: The Role of Trade in International Conflict Processes” (PhD thesis, Yale University, 1998); and John R. O’Neal and George Russett, “Assessing Liberal Peace with Alternative Specifications: Trade Still Reduces Conflict,” Journal of Peace Research 36:4 (1999).
Peter Mandelson, “EU Trade Policy and Stability in the Middle East,” EC (Jerusalem: EC, 2005).
Peter Collier, “The Market for Civil War,” Foreign Policy 136 (2003): 38.
Allan Dennis, “The Impact of Regional Trade Agreements and Trade Facilitation on the Middle East and North Africa Region,” Policy Research Working Paper, WB (Washington, DC: WB, February 2006), 2.
Something that is considered a threat to peace as new states with varying views, make-ups, and beliefs increase the likelihood of conflict, in Richard Saull, “Politics of the ‘State’ in the Cold War,” in Stuart Nagel (ed.), Policymaking and Peace: A Multinational Anthology (Maryland: Lexington Books, 2003), 3–4.
Erik Gartzke, Quan Li, and Charles Boehmer, “Investing in Peace: Economic Interdependence and International Conflict,” International Organisation 55:2 (2001): 418.
Signaling Theory: dictates that exchange between parties involves asymmetric information, therefore leaving room for participants to “bluff” their way in a “deal,” in Arie Y. Lewin, S. T. Cavusgil, and G. T. M. Hult, Thought Leadership in Advancing International Business Research (California: Palgrave Macmillan, 2008), 135.
Erik Gartzke and Quan Li, “War, Peace, and the Invisible Hand: Positive Political Externalities of Economic Globalization,” International Studies Quarterly 47:4 (2003): 581–582.
The Distributed-Lags Model is used to analyze data over a time period whereby current values for dependent variables are based on the current and past explanatory variables, in Michael D. Intriligator, Ronald G. Bodkin, and Cheng Hsiao, Econometric Models, Techniques and Applications (Upper Saddle River, NJ: Prentice Hall, 1996), 223.
John R. O’Neal, George Russett, and Michael L. Berbaum, “Causes of Peace: Democracy, Interdependence, and International Organizations, 1885–1992,” International Studies Quarterly 47:3 (2003): 387.
Polachek, “Why Democracies Cooperate More and Fight Less: The Relationship between International Trade and Cooperation,” Review of International Economics 5:3 (1997): 306.
This line of thought can be traced back to Christian theologian St. Augustine between AD 300 and 400, who noted that “active traders … attain not the grace of God,” as they are concerned with their own grace/benefits, in St. Augustine (between AD 300 and 400). Quoted in Gerald Schneider, Katherine Barbieri, and Nils P. Gleditsch, Globalization and Armed Conflict (Maryland: Rowman and Littlefield, 2003), 6.
Thomas Mun, England’s Treasure by Foreign Trade (London: Elibron Classic’s Series, Adamant Media Corporation, 2005 ), 7.
Brian Hocking and Steven McGuire, Trade Politics (London: Routledge, 2004), 4.
Jean-Baptiste Colbert (1661), in Michael Howard, War in European History (Oxford: Oxford University Press, 2001), 47.
Using the example of gains from acquiring property in Adam Smith, An Inquiry into the Nature of Causes of the Wealth of Nations, Google Ebook (Virginia: University of Virginia, 2009 ), 72, http://books.google.co.uk/books?id=sdxHAAAAYAAJ&pg=PA1 &dq=adam+smith+state+regulation&source=gbs_toc_r&cad=4#v=onepage&q&f=false (accessed November 14, 2013).
Albert O. Hirschman, National Power and the Structure of Foreign Trade (California: University of California Press, 1980), v, xvi.
Gianni Vaggi and Peter Groenewegen, A Concise History of Economic Thought; From Mercantilism to Monetarism (Hampshire: Palgrave Macmillan, 2003), 5.
For literature on the assumptions of Realist thought concerned here, see Kenneth Waltz, Man, the State and War: A Theoretical Analysis (New York: Columbia University Press, 1959); Waltz, Theory of International Politics (New York: Random House, 1979);
E. H. Carr, The Twenty Years Crisis: 1919–1939, an Introduction to the Study of International Relations (London: Harper Torchbooks, 1964);
Hans J. Morgenthau, Politics among Nations: The Struggle for Power and Peace (New York: Knopf, 1973);
Raymond Aron, International Relations: A Theory of Peace and War (New Jersey: Doubleday, 1973);
Robert Gilpin, US Power and the Multinational Cooperation: The Political Economy of Foreign Direct Investment (New York: Basic Books, 1975); and J. M. Grieco, “Anarchy and the Limits of Cooperation: A Realist Critique of the Newest Liberal Institutionalism,” International Organization 42:3 (1988).
Richard G. Shell, “The Trade Stakeholders Model and Participation by Nonstate Parties in the World Trade Organization,” University of Pennsylvania Journal of International Economics 25:2 (2004): 708.
Realist IR Theory is also attacked by a body of literature, which is not based on Liberal IR Theory. The institutionalist view underlines the idea of states acting as rational actors, or even in the central interests of their nation, due to other forces influencing their decision-making. This is a useful mode to analyze a policymaker’s decision-making process. However, as this book is concerned with the macro-level of trade and peace, it does not pursue this lens in the main body of analysis. For studies on external forces affecting policy decisions, see Graham T. Allison, “Conceptual Models and the Cuban Missile Crisis,” The American Political Science Review 63:3 (1969);
Ole R. Holsti, Crisis Escalation War (Montreal: McGill University Press, 1970);
John D. Steinbruner, The Cybernetic Theory of Decision (Princeton, NJ: Princeton University Press, 1974); Robert Jervis, Perception and Misperception in International Politics (Princeton, NJ: Princeton University Press, 1976); and Irving J. Janis, Groupthink (Boston: Houghton Mifflin, 1980).
Including work from Benjamin J. Cohen, The Question of Imperialism (New York: Basic Books, 1973); Waltz, Theory of International Politics; Barry Buzan, “Economic Structure and International Security: The Limits of the Liberal Case,” International Organization 38:4 (1984);
Jack S. Levy, “The Causes of War: A Review of Theories and Evidence,” in P. E. Tetlock et al. (eds.), Behaviour, Society, and Nuclear War, vol. 1 (Oxford: Oxford University Press, 1989);
Nazli Choucri and Robert C. North, Nations in Conflict (San Francisco, CA: Freeman, 1975); Nazli Choucri and Robert C. North, “Lateral Pressure in International Relations: Concept and Theory,” in Manus I. Midlarsky (ed.), Handbook of War Studies (Boston: Unwin Hyman, 1989); Norrin M. Ripsman and Jean-Marc F. Blanchard, “Commercial Liberalism under Fire: Evidence from 1914 and 1936,” Security Studies 6:2 (1996).
This work being Katherine Barbieri, “Economic Interdependence: A Path to Peace or a Source of Interstate Conflict?,” Journal of Peace Research 33:1(1996); “Sleeping with the Enemy: The Impact of War on Trade,” Journal of Peace Research 36:4 (1999); “Does War Impede Trade? A Response to Anderton & Carter,” Journal of Peace Research 38:5 (2001); “Measure for Mis-measure: A Response to Gartzke & Li,” Journal of Peace Research 40:6 (2003).
Eirik G. Furubotn and Rudolph Richter, Institutions and Economic Theory: The Contribution of the New Institutional Economics (Michigan: University of Michigan Press, 2005), 48.
Walter J. Wessels, Economics (New York: Barrons Educational Series, 2006), 339.
Rafael Reuveny and Heejoon Kang, “Bilateral Trade and Political Conflict/ Cooperation: Do Goods Matter?,” Journal of Peace Research 35:5 (1998): 597.
Ernest Mandel, An Introduction to Marxist Economic Theory (New York: Resistance Books, 1970), 26.
Karl Marx, Critique of the Gotha Programme (Maryland: Wildside Press, 2008 ), 39.
Frederic S. Burin, “The Communist Doctrine of the Inevitability of War,” The American Political Science Review 57:2 (1963): 334.
Karl Marx and F. Engels (1848), The Communist Manifesto, online, http://www.marxists.org/archive/marx/works/1848/communist-manifesto/index.htm (accessed November 30, 2009).
Andrea Maneschi, Comparative Advantage in International Trade: A Historical Perspective (Cheltenham, UK: Edward Elgar Publishing, 1998), 51–52. As well as James Mill who also developed the theory, see John Aldrich, “The Discovery of Comparative Advantage,” The Journal of the History of Economic Thought 26:3 (2004): 379.
Robert Torrens, An Essay on the External Corn Trade (London: Hatchard, Digitized by tine Internet Archive in 2007 ), 321, online, https://ia600309.us.archive.org/25/items/essayonexternalc00torriala/essay onexternalc00torriala_bw.pdf (accessed May 15, 2014).
David Ricardo, On the Principles of Political Economy and Taxation (Library of Economics and Liberty, 2014 ), paragraph 7.10, online, http://www.econlib.org/library/Ricardo/ricP2a.html (accessed May 15, 2014).
© 2015 Amir M. Kamel
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Kamel, A.M. (2015). The Trade-Peace Theory. In: The Political Economy of EU Ties with Iraq and Iran. The Political Economy of the Middle East. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137439802_2
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