Economic Interdependence = Less Conflict?
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Economic Interdependence = Less Conflict?

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A question came up last week at the International Studies Association (ISA) conference in San Francisco about how U.S.-China economic interdependence relates to maritime security. Through a bit of serendipity, we covered World War I — which marked the close of an age when arguments about the economics/geopolitics interface were much in vogue — this week in Newport. While we spent some time with this subject in seminar, I didn't answer at the ISA panel, lest I hog up more of the Q&A session than I already did. Let's correct that oversight.

Now, I am a professor. As such I reserve the sacred right to answer a question with a question. My non-response at ISA would have run something like this. There's a spectrum of views on this topic. Few would maintain that interdependence bears no relation to geopolitical competition. For one thing, fighting against a trading partner would clearly drive up the costs of the enterprise. Losing a market or a source of imports is no small thing. But fighting at all would tend to elevate the costs, simply because of the prospect that neutral shipping, aircraft, or land conveyances that transport raw materials and finished goods would be caught in the crossfire. Lloyd's of London and other firms would raise insurance rates for cargoes transiting the conflict zone, much as they have for merchantmen traversing pirate-infested waters off Somalia. In Clausewitzian terms, belligerent leaders would have to place high value on their political goals to justify paying such costs.

Short of that, opinions about the extent to which interdependence deters war vary widely. We can put the faces of David Starr Jordan, Norman Angell, and Thomas Friedman on three schools of thought. Jordan, a long-ago president of Stanford University, made a speech in 1913 that began as follows: "What shall we say of the Great War of Europe, ever threatening, ever impending, and which never comes? We shall say that it will never come. Humanly speaking, it is impossible." He wisely left himself an out, conceding the possibility that "some half-crazed archduke or some harassed minister of state" would set the continent ablaze. But after tallying up outstanding debts from past wars and estimating the costs of a general conflagration, Jordan reaffirmed his strong prediction that high costs rule out warfare. No sane statesman would pay such a price.

Angell stopped short of seconding Jordan's estimate of the pacifying effects of economics. An English intellectual and author of The Great Illusion, he argued that economic logic should — but wouldn't — avert war. He accused most everyone of false consciousness. The mathematics of commerce and warfare discouraged the resort to arms, but pacifists were "at one with the veriest fire-eaters" — Alfred Thayer Mahan, call your office — in their assumption that nations could improve their geopolitical fortunes through military might. Where Jordan prophesied, Angell pled. Statesmen would heed economic logic if only they could see the national interest clearly.

Fast-forward a century, to Friedman. A few years back the New York Times columnist told PBS host Charlie Rose that interdependence raises the costs of geopolitical competition but cannot end it altogether. Sounds like common sense to me. There exist human motives apart from dollars and cents. Honor and fear can be the prime movers behind foreign policy, and they color perceptions of what may look like objective interests. Leaders and societies may prove willing to pay an exorbitant price to preserve or improve their standing in the international pecking order, avenge past slights, or burnish their reputation for martial prowess. Such not-strictly-rational motives can deflect policy from the course a David Starr Jordan or Norman Angell would prescribe as the obvious one.

Will economic logic come to govern international politics, driving out the competitive impulse? Sure, when men become angels and lambs lie down with lions. Until then, I'll keep company with the fire-eaters who put their trust in a strong navy. But you knew that already.

Comments
11
Frank
April 16, 2013 at 03:07

Vietnam survived for more than 1000 years for following the non-confrontational policy against China. It should not change that policy based on the misunderstanding of China’s South China Sea policy.

China guarantees the freedom of navigation for ALL in SCS. As long as you are not stealing resources from SCS, you can come and go as your wish.

I think many Vietnamese misunderstood China’s SCS policy.

 

Leonard R.
April 15, 2013 at 08:33

@Brrrr: "Interdependence is only dangerous when the governing elite that lives off tax revenue starts getting bright ideas about profit maximization"

—-

A quote worth remembering. 

 

Brrrrr
April 13, 2013 at 03:12

Economic interdependence didn't seem to stop the continental congress from declaring independence and carrying out a long revolutionary war. Practically every posession held by G. Washington was procured from England, talk about interdependence.

Interdependence is only dangerous when the governing elite that lives off tax revenue starts getting bright ideas about profit maximization.

It all depends on the nature of the governing elites and how easily they can be replaced. Nutty old George III wasn't going anywhere, and thus you get Yorktown, Saratoga etc.

 

Linh_My
April 12, 2013 at 18:38

Tom F

"Given Vietnam's somewhat schizophrenic relations with the major powers of the world, I would have thought it would be better to leverage it to re-brand itself as a neutral country, like Switzerland, and give Shanghai and Tokyo a run for their money in terms of being the Asian financial capital. IMHO, 'strong military' is not the key to peace and prosperity for Vietnam and many other countries."

Actually, post "Doi Moi" in 1986 this has been Viet Nam's plan untill China declaired that the entire region of the Pacific Ocean from the shores of Japan to the shores of the Philippines, to the shores of Malaysia and to the shores of Viet Nam are internal Chineese waters and no one is allowed to trespass with out Chinese approval. That changed the game.

19k30 retired

 

Matt
April 12, 2013 at 05:07

It seems China is making decisions based on their self-described past "humiliation". This might be why they are willing to risk war with Japan and the US despite the very beneficial economic relationships. North Korea is obviously choosing to have nukes instead of an economy capable of even feeding their people. We need to stop believing our own wishful thinking and start listening to what the other sides are saying. They just might be telling us what they intend to do if we can stop talking long enough to listen.

Leonard R.
April 12, 2013 at 04:47

Accusing Thomas Friedman of common sense is taking it a bit far professor. History is full of examples of wars between trading partners. According to Vannevar Bush's autobiography, Imperial Japan continued to pay royalties to Pratt & Whitney for the propellors used on Japanese Zeroes. Likewise, World War One didn't stop Germany from purchasing rubber from Great Britain.

http://www.amazon.com/End-All-Wars-Rebellion-1914-1918/dp/0618758283/ref=sr_1_1?ie=UTF8&qid=1325555092&sr=8-1/marginalrevol-20

Larger national economies tend to make for larger military industrial complexes. And these are intended specifically to make wars. So as long as nations build weapons – those weapons likely will be used.mthe more of them there are – the more likely war becomes.

Tom F
April 12, 2013 at 00:50

This is such a pessimistic perspective on things. It's probably true in certain theatre, at certain phases of conflict, but I wouldn't say it's the accepted norm for foreign relations.

Given your nick, I assume you're from Vietnam, where despite relatively modest means (military wise), defeated the USA, defeated China multiple times throughout its history, even managed to create lasting peace with its junior neighbours (some of whom willingly gave up their own sovereignty to merge with Vietnam). Your own country discounted your theory.

The Swiss Canton, military wise, not significant. Yet, it maintained peace, and prosperity right through the most recent world war. This is a country with which Vietnam should study closely. Neutrality gives rise to stability, which gives rise to confidence, and attraction of capital. London managed built itself into a major financial centre as a result of US WWII funding funnelled via London. Vietnam actually had that role prior to 1970, many major banks actually established operations in Saigon to assist the US with war funding, alas the opportunity for Saigon to be an international financial centre was squandered by the communist regime that strangled the country to near death. 

Given Vietnam's somewhat schizophrenic relations with the major powers of the world, I would have thought it would be better to leverage it to re-brand itself as a neutral country, like Switzerland, and give Shanghai and Tokyo a run for their money in terms of being the Asian financial capital. IMHO, 'strong military' is not the key to peace and prosperity for Vietnam and many other countries.

Frank
April 11, 2013 at 23:53

It is true

Economic Interdependence = Less desire for Conflict

Also

Mutually Assured Destruction with Nukes = Lessor desire for Conflict

Therefore

Economic Interdependence + Mutually Assured Destruction with Nukes = Peace

 

Bankotsu
April 11, 2013 at 21:09

"Will economic logic come to govern international politics, driving out the competitive impulse?"

But economic logic lies within an international political system making and enforcing economic norms and rules.

And that inernational political system is backed solely by military power. This, the U.S. knows. 

David Hilton
April 11, 2013 at 19:39

This is another free-market ideological delusion underpinned by the simplistic reasoning that humans always act in their rational best interest. The most intense period of globalisation preceded WWI. Fredric Bastiat's maxim that "where goods don't cross borders, armies often do" has not been borne out by history.

Nguyen
April 11, 2013 at 14:17

There is no substitution for a strong military . Only Peace through strength, because there will always be a Bully somewhere at some time to deal with.

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