Does the Capitalist Peace Exist? Yes, it did! but will it Apply to China and the West?

Abstract

Capitalist peace theory asserts that economic freedom or capitalism, contract-intensity, trade, foreign investment, financial openness, or the avoidance of state property ownership promote peace. But the capitalist peace also includes the democratic peace. If democracy itself is an effect of economic freedom or the prosperity generated by it, then the democratic peace is no more than a mere component of the capitalist peace. Then capitalism and economic interdependence promote peace by two or even three routes, directly and indirectly, through democracy and, possibly, by common memberships in intergovernmental organizations, too. Admittedly, this argument relies on compiling lots of diverse pieces of evidence, some of which are still debated in the scientific community. The idea that capitalism might be more important as well as more beneficial for peace than democracy rests on two reasons. First, without capitalism or the prosperity it promotes, democracy might no longer be viable. Under capitalism, nations may enjoy prosperity and peace together. Better still, poor nations benefit from the existence of more advanced ones that are sources of technology, models for emulation, and markets for labor-intensive products. Second, democratic peace theory has invited the dangerous idea that one might or even should promote democracy by war. The consequences of the financial crisis of 2008 and the political responses to it, however, threaten to undermine globalization. That is why the capitalist peace faces an uncertain future at a time when we need it. The rapid economic rise of Asia, in particular of China and somewhat later probably of India to great power status, is likely to undermine the global pecking order and to imply some power transitions. In the past, power transitions have been related to increased risks of war. That is why we need a capitalist peace between China and the West.

Citation

Weede, E. (2011), "Does the Capitalist Peace Exist? Yes, it did! but will it Apply to China and the West?", Chatterji, M., Gopal, D. and Singh, S. (Ed.) Governance, Development and Conflict (Contributions to Conflict Management, Peace Economics and Development, Vol. 18), Emerald Group Publishing Limited, Leeds, pp. 1-29. https://doi.org/10.1108/S1572-8323(2011)0000018005