Trade Leads To Peace: Liberals and Realists Agree!



The notion that trade leads to peace has been around sinceat least the first century. In the year 100 AD, Plutarch the Greek Philosopher, on the subject of sea trade, noted how the exchange of goods could bring about cooperation and friendship. Since then, the logistics and testing of the trade-peace relationship have resulted in a rich vein of literature concerned with the theoretical and empirical link between these two variables. Consequently, a myriad of foreign policy actors have calibrated and implemented this peace-through-trade policy when dealing with one another. This has been the case, specifically when concerned with nations, supra-national and international organizations which are driven by the norms and ideals set out in Liberal theory. I put this peace-through-trade notion to the test in the theoretical chapter of my latest book titled: The Political Economy of EU Ties with Iraq and Iran: An Assessment of the Trade-Peace Relationship.

The idea from the Liberal perspective is that the more actors trade with one another, the more confidence is instilled between them, and from this confidence, an ability to share and influence norms and behavior. Additionally through this increased ‘interaction’, both actors accrue mutual benefits, not just economically (in terms of goods, services, GDP growth, etc.), but also politically (in terms of capabilities, political agreements, increased understanding, etc.).

Conversely, Plutarch’s notion was challenged by the more Realist interpretation of interaction between two or more actors. French Foreign Minister Jean-Baptiste Colbert emphatically declared in 1661 that ‘trade is a form of war’. Indeed, Colbert was one of the first practitioners of this Realist perspective, as he implemented a policy which ensured that France exported more goods and services than what it imported into the country.

This conflict-through-trade idea derived from the notion that in order for an actor to flourish or grow, it must achieve a surplus over its trade counterpart. This conservative outlook is based on the assumption that ties between two actors are asymmetric in nature, i.e. that there is always a ‘winner’ and a ‘loser’ in a trading relationship. However, in my book I contend that Realists do in fact agree with Liberals on the matter, under certain conditions.

The Realist premise is based on a superior actor having an incentive to attain a surplus, again either economically or politically, over their inferior counterpart. However, imagine a scenario where the superior actor would benefit from increased trade with their inferior partner. For example, a superior actor may have a vested interest in ensuring that their inferior counterpart is in a state of peace and stability. These vested interests can range from securing and attaining resources to acquiring and maintaining influence in the particular country or region in question. Therefore, the superior actor would be incentivized to provide the facilities, knowledge or aid to ensure stability and stave off political or violent unrest in the inferior state. In this instance, the ‘winner’ would be incentivized to increase trade with the ‘loser’ in the relationship. As a result, the Realist would be in favor of increased trade.

There is of course an increasing number of theoretical approaches to assessing the international system, and indeed in my book I also assess the trade-peace relationship when operating under Marxist assumptions. But to focus this post, my contention is that in spite of their differences, Liberals and Realists agree on the peace-through-trade theory under certain conditions.

Image: Plutarch the Greek Philosopher, courtesy of Wikimedia Commons.

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