Global trade and it's peace dividend- Part 1

The world which we are living today is the most peaceful one in the history of human civilization where in which wars, violence and homicide rates are extremely low when we compare the same with any other period in the human history. According to Steven Pinker, an Evolutionary psychologist at Harvard University, this was due to the pacification  and civilization processes that happened over the last few of centuries, owing to various social, economic, political and technological transformation. In the last few decades, this transformation been accelerated by the Human rights movement which further brought down violence again by a substantial degree
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According to Emmanual Kant, 18 th century French philosopher, the triad of pacifying force that makes the world a peaceful one was

1) Democratic government, 

2) Engagement with International community  and

3) Open economies and global trade. 

There is a high degree of positive correlation between global trade and global peace. You can read a paper in this regard by Patrick J MacDonald here. Conventional wisdom says that, more the trade happens; more would be it's peace dividend. As per that view, this happens mainly because the trade create a large network of inter-dependencies and economic linkages amongst various stakeholders in different countries. These beneficiary stakeholders act as natural buffers against any kind violent aggression and wars. In other words, it assumes that if goods, services and capital flows freely across the state boundaries, its armies and navies are less likely march across those borders.

However, this explanation seems to be inadequate and not fully convincing. Global trade by itself did not prevent wars. European countries were much globalized and international trade as percentage of national GDP was much higher in the first decade of last century. Despite this, it could not prevent World Wars from happening. Similarly, India and China have nearly seventy billion US $ trade happening annually which did not lead to any easing of border tensions. Interestingly China – Taiwan trade exists despite China not even recognising Taiwan as a sovereign nation.

How then the Trade- Peace paradox be explained? Is there is causal relationship amongst the two? And if yes, in which direction the causality runs? Whether the Global trade happening owing to absence of war or the war does not happen because the trade is flourishing? To understand this in perspective, we need to go in to motives and incentives of the leaders and the elites who control the national narrative.

National leaders of modern times and princes of medieval periods alike, have an insatiable ambition for greater honor and prestige by expanding their power and influence. In pre-modern times, the easiest and perhaps the only way to achieve the glory were to annex a foreign land and expropriate its natural resources. National prestige and honor was associated with the physical resources which a country was endowed with. Control and physical possessions of agricultural lands, mines, forest and water resources, etc were the assets with which a Nation was turned in to a powerful one. So, countries fought against each other to posses it, hence the wars were a natural state of affairs and peace was an interim arrangement between two wars. Primary motive was not the land in itself, but the honor, social prestige and recognition associated with its possession. Honor was the most valuable and precious commodity for which every king was ready to send their army to the battlefields, whether it was Napoleon Bonaparte or William Kaiser.  

In medieval times, economic growth was a Zero-sum game and productivity was static. Wars and predations were the primary means to add wealth. In other words, the general belief was ‘I will be prospering only if someone else were doomed’. Trade were happening even in those times as well. However, it was not more than an exchange of surplus and not recognized as an engine of growth. Larger philosophy of it was to appropriate maximum foreign goods and gold from others so to equip own army so that wars can be fought better.

Trade during colonial times were more of exploitery in nature where colonial powers dictated the terms and nature of the trade. It was essentially between colonies and their 'mother' countries and not between two sovereign nations. There were no international bodies to regulate and promote trade and global finance system was not matured enough to fund it. Instead of promoting peace, it created trade wars and violent competition for annexing colonies and expropriating its wealth.

In the 20 th century as well, national leaders had an irresistible urge, but certainly to a lesser degree, to go for war against other countries mainly for economic gains. Increasing democratization had a softening impact on these kinds of impulses. However, Autocrats and fascist leaders were showing the same medieval age mentality for self gratification and establishment of ‘honor’ through national wars and annexing territories for ‘growing population and food’ which resulted in 2 world wars. Meanwhile on the second half of 20 th century, an ideologically polarised world had triggered a large number of conflicts in many parts of the world, both international and intra-national. Communism put the centuries old phenomenon of pacification in to a reverse gear. Global trade got much disrupted and distorted not just by tariff walls but also by  ideological walls and ‘iron curtains’.

                                                                               Continued in Part 2