The Liberal Illusion: Does Trade Promote Peace?

Chapter 5. Alternative Levels of Analysis:The Nation-State and the System

Chapter 5 alternative levels of analysis: the nation-state and the system Throughout this study, I have focused on the impact of trade on dyadic relationships in order to look within the international system to determine whether variations in the trade-con›ict relationship exist. However , people tend to portray discussions about trade as equally applicable to all relationships, including those between people, classes, communities , and the global community as a whole. Liberals have spent a considerable amount of time focusing on the impact that commerce has on transforming states. For this reason, it is important to consider whether states that engage more heavily in trade are more peaceful than others. In addition, while it is dif‹cult to draw close linkages between global forces and the actions of individual states within any given relationship, some consideration of systemwide interdependence is useful. Thus, in this chapter, I seek to look beyond trade’s impact on dyadic relationships to assess its impact on states and the system. Con›ict researchers provide a valuable lesson in revealing that factors associated with con›ict may vary at different levels of analysis. For example , researchers investigating the “democratic peace” proposition (that increased democracy promotes peace) have identi‹ed different relationships between democracy and con›ict at the monadic, dyadic, and system levels of analysis (Gleditsch and Hegre 1997; Ray and Wang 1998). The same may be true with respect to commerce, where the impact may vary at alternative levels of analysis. In this chapter, I examine the extent to which the trade-promotes-peace hypothesis enjoys empirical support at the state and system levels of analysis. A major dif‹culty in assessing trade’s impact across different levels of analysis arises from the ambiguity about the conditions that de‹ne trade dependence or interdependence. As I discussed previously, scholars disagree about the meaning and operationalization of interdependence at the dyadic level. That problem is compounded when I expand my domain of inquiry beyond the dyadic level of analysis. Rather than 97 de‹nitively resolving the issue of the most appropriate measure of trade dependence, I explore a number of ways in which we might conceive of trade’s impact on con›ict behavior at the monadic and system levels. does commerce transform states? The review of theoretical literature presented in chapter 2 showed that classical liberals assumed that trade would have an impact on the con›ict behavior of states. Liberals assume that trading states are more peaceful than those states that refrain from trade. They assume that this pacifying effect on state behavior arises from both the economic motivations to refrain from con›ict and the positive social transformations, including, for some, moral elevation, presumed to be associated with participating in commerce. Despite the wealth of literature outlining trade’s positive effect, scholars have provided little investigative research into the question of whether trading states are more peaceful than other states. In fact, Domke (1988) provides the only comprehensive empirical study of the impact of trade dependence on war involvement. Domke ‹nds that states that depend on trade relative to national production are less likely to become involved in wars than are other states. Scholars seem content to accept Domke’s monadic-level ‹ndings without further exploration, despite some obvious limitations in his research design. For example, Domke focuses exclusively on years in which wars occur, a research strategy that may be biased for not considering all years (nonwar years, as well as war years). That is, years in which wars occur may be different, with respect to trading relationships, than years in which no war occurs. In addition, Domke considers only the bivariate relationship between trade dependence and war involvement and fails to control for other factors believed to be associated with both trade and con›ict. Whether or not one accepts Domke’s basic research design, his monadic-level ‹ndings deserve further consideration to determine whether trading states are more peaceful than other states. In this study, I extend his analysis by considering whether trading states are less likely than others to participate in other forms of militarized con›ict, including, but not limited to wars. Research Design I wish to examine whether the liberal proposition that trade promotes peace applies to a state’s participation in international trade. Does increased trade reduce a state’s con›ict proneness? To examine this ques98 the liberal illusion tion in a...