≡ Menu

Peace and Free Trade

In this nice and very careful paper in the Fall 2004 issue of The Independent Review, University of Bonn sociologist Erich Weede reviews and summarizes the literature on trade’s effect on promoting peace.

Here’s his conclusion:

Critics of globalization not only forget both the benefits of free trade and globalization for developing countries and for their poor and under-employed workers and the benefits of free trade to consumers everywhere, but they know almost nothing about the international-security benefits of free trade.  Quantitative research has established the viability and prospect of a capitalist peace based on the following causal links between free trade and the avoidance of war: first, there is an indirect link running from free trade or economic openness to prosperity and democracy and ultimately to the democratic peace [the empirically supported claim that democracy reduces a nation’s risks of going to war with other democratic nations]; second, trade and economic interdependence by themselves reduce the risk of military conflict.  By promoting capitalism, economic freedom, trade, and prosperity, we simultaneously promote peace.

It’s a solid rule of business: don’t kill your customers or your suppliers.