Commerce and conflict: Reexamining commercial liberalism

Does international commerce lead to international peace? This dissertation reexamines the long standing liberal assertion that international commerce and econornic interdependence significantly reduces international military conflict, and lead to a more stable international environment. This idea has received renewed interest in policy making circles in recent years, and has been the theoretical foundation motivating the policies of “engagement.” This study reexamines the traditional liberal hypothesis, providing a micro-foudnational theory of the link between international commerce and international conflict. The study employs quantitative analysis to test the competing implications of the traditional liberal view and the alternative hypotheses raised in the dissertation against the empirical commerce-conflict record for the years 1950 to 1992.; The study challenges the traditional liberal view of the commerce-conflict relation in two areas. First, I argue that the liberal hypotheses ignores the incentives faced by states and microeconomic actors in managing their trade relations in the context of political risks. The empirical analysis finds that states and microeconomic actors adjust their economic activity in response to impending political conflict. When this behavior is taken into account, the ability of commerce to constrain conflict is significantly reduced. However, I find that this behavior does reveal useful information about state intent in the bargaining leading up to the initiation of hostilities. Second, I argue that the short term consequences of trade liberalization can be highly disruptive of domestic political and social relations. This political instability may, in turn, manifest itself in the form of a more hostile foreign policy. The empirical analysis finds that the liberalization of commerce leads to greater propensity for conflict, at least in the short run.; The theoretical arguments and the empirical findings contained in this study casts considerable doubt on the notion that commerce can successfully bring about stability in international politics, and cautions against policies that seek to use commerces as a means to achieving peace.