CAPITALIST PEACE 171 Capitalism as Pacifism interests when drawing a common geographic boundary (cf.Collins and Lapierre 1997;Holbrooke 1998),it would The security dilemma implies that insecurity is a durable be strange not to consider the existence (or absence)of facet of international affairs.War can result as each coun- common cause in assessing such topics as ideology,norm try fears for its own security,even when neither state in- enforcement,terrorism,or the organization of the global tends aggression(Glaser 1997;Jervis 1978).Yet,insecurity or regional economy. is predicated on the expectation that at least some coun- At least three mechanisms associated with capital- tries are revisionist powers.Even "pessimistic"concep- ism are capable of addressing the security dilemma and tions of world affairs appear more sanguine as we relax the mitigating the causes of war.States with similar policy assumption that insecurity is ubiquitous and immutable. goals have no need to fight to establish policy since little The task before peace theorists,then,is to identify when can be gained from victory,or lost in defeat.States al- and how nations are liberated from the security dilemma. ways have dissimilar interests when it comes to resource The argument here is that capitalism resolves insecurity or territorial issues,but changes in modern economies by creating "powerful pacifists"(Lake 1992),countries often make these differences trivial,as resources can be possessing military strength ensuring that they are largely had more easily through commerce.There can be no basis free from foreign influence or domination,but equally for agreement between two passersby about who should that they lack incentives to act aggressively abroad,at least collect a quarter lying on the sidewalk,but fighting over under certain circumstances.26 25 cents makes little sense.If,however,a sack of $100 bills Warfare results from two stages of interaction.First, falls from the sky,landing on the quarter,then it is en- states must possess the willingness and ability to com- tirely possible that a fight will ensue over who can collect pete.Second,states must be unable,or unwilling,to re- their bag of riches.Yet,even the sack of money need not solve differences through diplomatic means.27 Capabili- lead to violence if the passersby can agree on how to di- ties constrain weak,distant states(Belize and Burundi do vide up the wind fall.States willing and able to fight can not fight each other),but weakness alone is often insuf- still avoid a contest if competitors are able to foresee the ficient,given the relativity of power.Indeed,weakness is likely consequences of fighting and identify appropriate an attractive attribute in a target.For similar reasons,an bargains. unwillingness to fight must also be mutual.For the pur- poses of exposition,imagine that the motives for war are divided between zero-sum(private goods)and nonzero- Economic Development sum(goods with public properties).Private goods compe- tition involves things like attempts to conquer or control Conflict is inherent in the allocation of resources among material resources(land,labor,minerals).28 Competition two or more parties,but need not result in violence if the can also occur over efforts to influence or compel poli- stakes are literally"not worth fighting over"or when bar- cies(norms,alignments,leaders).29 The allocation of re- gains preempt fighting.Imagine two countries attempt- sources is inherently conflictual;two states that claim the ing to divide up a bundle of goods(resources,territory). same territory must compromise,fight,or delay a deci- Comparison of available allocations is zero-sum;any shift sion.The allocation of policies may or may not generate from one allocation to another benefits one country only significant friction,depending on whether,or to what ex- at the expense of the other country.In this framework, tent,state objectives are compatible.While it would be odd a mutual preference for peace requires that the value of to speak of countries as having substantially compatible winning be small relative to the cost of fighting(Morrow 1989;Powell1999). Peace advocates have long championed factors 2Capitalism,like democracy,means many things.The term is used thought to make war prohibitively expensive.Cobden,for here as shorthand for the three processes discussed in the theory. example,claimed optimistically that"Should war break 27Cost-benefit calculus is insufficient to explain war(Fearon 1995), out between two great nations I have no doubt that the im- but can be sufficient to explain the lack of war.Conflict exists in bargaining theory as the result of a set of necessary conditions. mense consumption of material and the rapid destruction The absence of any of these conditions is sufficient to explain the of property would have the effect of very soon bringing absence of fighting. the combatants to reason or exhausting their resources" 28Territory can also have strategic (Fazal 2004),symbolic (Toft ([1867]1903,355).Yet,if war is a process where com- 2003),or reputational(Walter 2003,2006)value. petitors inflict costs on one another,making war more 2A"sphere of influence"suggests precisely a desire to control the expensive will affect who wins,or how long fighting lasts, choices,though not necessarily the territory,of another state. but not whether a contest occurs(Levy and Morgan 1984)
CAPITALIST PEACE 171 Capitalism as Pacifism The security dilemma implies that insecurity is a durable facet of international affairs. War can result as each country fears for its own security, even when neither state intends aggression (Glaser 1997; Jervis 1978). Yet, insecurity is predicated on the expectation that at least some countries are revisionist powers. Even “pessimistic” conceptions of world affairs appear more sanguine as we relax the assumption that insecurity is ubiquitous and immutable. The task before peace theorists, then, is to identify when and how nations are liberated from the security dilemma. The argument here is that capitalism resolves insecurity by creating “powerful pacifists” (Lake 1992), countries possessing military strength ensuring that they are largely free from foreign influence or domination, but equally that they lack incentives to act aggressively abroad, at least under certain circumstances.26 Warfare results from two stages of interaction. First, states must possess the willingness and ability to compete. Second, states must be unable, or unwilling, to resolve differences through diplomatic means.27 Capabilities constrain weak, distant states (Belize and Burundi do not fight each other), but weakness alone is often insufficient, given the relativity of power. Indeed, weakness is an attractive attribute in a target. For similar reasons, an unwillingness to fight must also be mutual. For the purposes of exposition, imagine that the motives for war are divided between zero-sum (private goods) and nonzerosum (goods with public properties). Private goods competition involves things like attempts to conquer or control material resources (land, labor, minerals).28 Competition can also occur over efforts to influence or compel policies (norms, alignments, leaders).29 The allocation of resources is inherently conflictual; two states that claim the same territory must compromise, fight, or delay a decision. The allocation of policies may or may not generate significant friction, depending on whether, or to what extent, state objectives are compatible. While it would be odd to speak of countries as having substantially compatible 26Capitalism, like democracy, means many things. The term is used here as shorthand for the three processes discussed in the theory. 27Cost-benefit calculus is insufficient to explain war (Fearon 1995), but can be sufficient to explain the lack of war. Conflict exists in bargaining theory as the result of a set of necessary conditions. The absence of any of these conditions is sufficient to explain the absence of fighting. 28Territory can also have strategic (Fazal 2004), symbolic (Toft 2003), or reputational (Walter 2003, 2006) value. 29A “sphere of influence” suggests precisely a desire to control the choices, though not necessarily the territory, of another state. interests when drawing a common geographic boundary (cf. Collins and Lapierre 1997; Holbrooke 1998), it would be strange not to consider the existence (or absence) of common cause in assessing such topics as ideology, norm enforcement, terrorism, or the organization of the global or regional economy. At least three mechanisms associated with capitalism are capable of addressing the security dilemma and mitigating the causes of war. States with similar policy goals have no need to fight to establish policy since little can be gained from victory, or lost in defeat. States always have dissimilar interests when it comes to resource or territorial issues, but changes in modern economies often make these differences trivial, as resources can be had more easily through commerce. There can be no basis for agreement between two passersby about who should collect a quarter lying on the sidewalk, but fighting over 25 cents makes little sense. If, however, a sack of $100 bills falls from the sky, landing on the quarter, then it is entirely possible that a fight will ensue over who can collect their bag of riches. Yet, even the sack of money need not lead to violence if the passersby can agree on how to divide up the wind fall. States willing and able to fight can still avoid a contest if competitors are able to foresee the likely consequences of fighting and identify appropriate bargains. Economic Development Conflict is inherent in the allocation of resources among two or more parties, but need not result in violence if the stakes are literally “not worth fighting over” or when bargains preempt fighting. Imagine two countries attempting to divide up a bundle of goods (resources, territory). Comparison of available allocations is zero-sum; any shift from one allocation to another benefits one country only at the expense of the other country. In this framework, a mutual preference for peace requires that the value of winning be small relative to the cost of fighting (Morrow 1989; Powell 1999). Peace advocates have long championed factors thought to make war prohibitively expensive. Cobden, for example, claimed optimistically that “Should war break out between two great nations I have no doubt that the immense consumption of material and the rapid destruction of property would have the effect of very soon bringing the combatants to reason or exhausting their resources” ([1867] 1903, 355). Yet, if war is a process where competitors inflict costs on one another, making war more expensive will affect who wins, or how long fighting lasts, but not whether a contest occurs (Levy and Morgan 1984)
72 ERIK GARTZKE War costs are also endogenous;if fighting is prohibitive, developed economies,especially where developed coun- countries will make themselves a "nice little war."30 In- tries are geographically clustered(Gleditsch 2003).Since creasing the cost of fighting,or alternately increasing the most territorial disputes are between contiguous states benefits of peace-even when possible-shape what each (Vasquez 1993),I hypothesize that developed,contigu- actor will accept in lieu of fighting,but do not tell us which ous dyads are more powerful than either developing or bargains are forged before warfare,and which after.Even noncontiguous dyads.34 the prospect ofnuclear annihilation did not deter disputes during the cold war(Schelling 1960). HI:Development leads contiguous dyads to If,on the other hand,the value of resources in dis- be less likely to experience conflict. pute is small or varies with ownership,then states can be disinclined to fight.Nations have historically used force While development decreases incentives for territo- to acquire land and resources,and subdue foreign pop- ulations.War or treaties that shifted control of territory rial aggrandizement,it greatly enhances the technological changed the balance of resources,and power.Sovereigns, ability of states to project power.Nations with ships and aircraft can engage in distant disputes inconceivable for and to a lesser extent citizens,prospered as the state ex- tended its domain.Development can alter these incen- poor countries.Development may also lead to increased willingness to pursue policy conflicts.If development is tives if modern production processes de-emphasize land, minerals,and rooted labor in favor of intellectual and clustered and neighbors no longer covet territory,capabil- financial capital(Brooks 1999,2005;Rosecrance 1996). ities can be devoted to pursuing the nation's secondary or If the rents from conquest decline,even as occupation tertiary interests.Distributed production networks and costs increase,then states can prefer to buy goods rather greater economic,social,or political integration natu- than steal them.31 As the U.S.invasion of Iraq illustrates, rally also create incentives to seek to influence the for- occupying a reluctant foreign power is extremely labor eign policies ofother countries,sometimes through force. intensive.If soldiers are expensive,then nations can be In contrast to the blanket assertion of classical politi- better off "outsourcing occupation"to local leaders and cal economists,I expect that development actually leads obtaining needed goods through trade.32 countries to be more likely to engage in conflicts far from At the same time that development leads states to home.35 Iraq invaded and occupied Kuwaitin August 1990, prefer trade to theft,developed countries also retain pop- intent on securing its"nineteenth province"and wresting Kuwaiti oil wealth from local leaders.The United States ulations with common identities,cultural affinities,and and its Coalition allies also invaded Kuwait,not to conquer political,social,and economic ties.These states may be reluctant to conquer their neighbors,but they are equally and keep,but to return the Emirate to its previous lead- opposed to arbitrary contractions of their borders.Resi- ers.While Coalition objectives were couched in moralistic rhetoric,the United States was clearly concerned about dents of Gibraltar,for example,prefer British rule,even while Spain,which has fought over this lump of rock for who governed Kuwait,while preferring not to govern the centuries,is today unwilling to provoke a war.33 The com- country itself.Similarly,European colonial powers have bination of a lack of motive for territorial expansion and repeatedly intervened in Africa,Asia,and elsewhere to continued interest in serving and protecting a given pop- prop up or dethrone regimes,impose settlements,or oth- ulation ensures a decline in conflict among states with erwise meddle in the affairs of developing countries. H2:Developmentleads noncontiguous dyads 30In Gunga Din(1939),Sgt.Archibald Cutter(Cary Grant)asks, to be more likely to experience conflict. "How can we get a nice little war going?" 3Boix(2003)argues that development reduces elite opposition to democratization as the bases for wealth become more mobile. Results are comparable to separate regressions of territorial and 3The original U.S.war plan was for Iraqi oil assets to be quickly nonterritorial MIDs (Gartzke 2006a).The contiguity interaction returned to local control (Woodward 2004,322-24).What com- term is convenient here(most territorial disputes involve contigu- merce cannot do-where force is still efficacious-is to supplant ous states).For further discussion of the relationship between ter- obstreperous leaders or to undermine inimical policies. ritory and contiguity,see Hensel(2000). 3As rentier activity becomes unprofitable with economic devel- 3Contrasting effects of development are spatially distinct and tem- opment,political units default to cultural variables.Ambivalence porally sequenced.Technology shocks beginning in the fifteenth about being British has been a near constant in Scotland and Wales, century propelled Europeans abroad in search of loot,land,and but official acceptance of autonomy is a novelty.Conversely,inde- labor.Imperialism first flowed and then ebbed as the cost of main- pendence in Northern Ireland is resisted more robustly as it con- tainingarmiesexceeded the value ofrents from occupation(Gartzke fronts Protestant identity. and Rohner 2006a)
172 ERIK GARTZKE War costs are also endogenous; if fighting is prohibitive, countries will make themselves a “nice little war.”30 Increasing the cost of fighting, or alternately increasing the benefits of peace—even when possible—shape what each actor will accept in lieu of fighting, but do not tell us which bargains are forged before warfare, and which after. Even the prospect of nuclear annihilation did not deter disputes during the cold war (Schelling 1960). If, on the other hand, the value of resources in dispute is small or varies with ownership, then states can be disinclined to fight. Nations have historically used force to acquire land and resources, and subdue foreign populations. War or treaties that shifted control of territory changed the balance of resources, and power. Sovereigns, and to a lesser extent citizens, prospered as the state extended its domain. Development can alter these incentives if modern production processes de-emphasize land, minerals, and rooted labor in favor of intellectual and financial capital (Brooks 1999, 2005; Rosecrance 1996). If the rents from conquest decline, even as occupation costs increase, then states can prefer to buy goods rather than steal them.31 As the U.S. invasion of Iraq illustrates, occupying a reluctant foreign power is extremely labor intensive. If soldiers are expensive, then nations can be better off “outsourcing occupation” to local leaders and obtaining needed goods through trade.32 At the same time that development leads states to prefer trade to theft, developed countries also retain populations with common identities, cultural affinities, and political, social, and economic ties. These states may be reluctant to conquer their neighbors, but they are equally opposed to arbitrary contractions of their borders. Residents of Gibraltar, for example, prefer British rule, even while Spain, which has fought over this lump of rock for centuries, is today unwilling to provoke a war.33 The combination of a lack of motive for territorial expansion and continued interest in serving and protecting a given population ensures a decline in conflict among states with 30In Gunga Din (1939), Sgt. Archibald Cutter (Cary Grant) asks, “How can we get a nice little war going?” 31Boix (2003) argues that development reduces elite opposition to democratization as the bases for wealth become more mobile. 32The original U.S. war plan was for Iraqi oil assets to be quickly returned to local control (Woodward 2004, 322–24). What commerce cannot do—where force is still efficacious—is to supplant obstreperous leaders or to undermine inimical policies. 33As rentier activity becomes unprofitable with economic development, political units default to cultural variables. Ambivalence about being British has been a near constant in Scotland and Wales, but official acceptance of autonomy is a novelty. Conversely, independence in Northern Ireland is resisted more robustly as it confronts Protestant identity. developed economies, especially where developed countries are geographically clustered (Gleditsch 2003). Since most territorial disputes are between contiguous states (Vasquez 1993), I hypothesize that developed, contiguous dyads are more powerful than either developing or noncontiguous dyads.34 H1: Development leads contiguous dyads to be less likely to experience conflict. While development decreases incentives for territorial aggrandizement, it greatly enhances the technological ability of states to project power. Nations with ships and aircraft can engage in distant disputes inconceivable for poor countries. Development may also lead to increased willingness to pursue policy conflicts. If development is clustered and neighbors no longer covet territory, capabilities can be devoted to pursuing the nation’s secondary or tertiary interests. Distributed production networks and greater economic, social, or political integration naturally also create incentives to seek to influence the foreign policies of other countries, sometimes through force. In contrast to the blanket assertion of classical political economists, I expect that development actually leads countries to be more likely to engage in conflicts far from home.35 Iraq invaded and occupied Kuwait in August 1990, intent on securing its “nineteenth province” and wresting Kuwaiti oil wealth from local leaders. The United States and its Coalition allies also invaded Kuwait, not to conquer and keep, but to return the Emirate to its previous leaders. While Coalition objectives were couched in moralistic rhetoric, the United States was clearly concerned about who governed Kuwait, while preferring not to govern the country itself. Similarly, European colonial powers have repeatedly intervened in Africa, Asia, and elsewhere to prop up or dethrone regimes, impose settlements, or otherwise meddle in the affairs of developing countries. H2: Development leads noncontiguous dyads to be more likely to experience conflict. 34Results are comparable to separate regressions of territorial and nonterritorial MIDs (Gartzke 2006a). The contiguity interaction term is convenient here (most territorial disputes involve contiguous states). For further discussion of the relationship between territory and contiguity, see Hensel (2000). 35Contrasting effects of development are spatially distinct and temporally sequenced. Technology shocks beginning in the fifteenth century propelled Europeans abroad in search of loot, land, and labor. Imperialism first flowed and then ebbed as the cost of maintaining armies exceeded the value of rents from occupation (Gartzke and Rohner 2006a)
CAPITALIST PEACE 173 Similar Interests Li 2003;Gartzke,Li,and Boehmer 2001).Competition creates incentives to bluff,to exaggerate capabilities or re- There is a second salient difference between the two sets solve.Anarchy makes it difficult for states to compel hon- of motives for invading Kuwait.Suppose that Iraq had est answers from one another except through the threat formed an alliance,like the U.S.Coalition.Spoils from or imposition of harm.Contests inform by being costly, the conquest of Kuwait would have had to be divided forcing actors to choose between bearing the burden of up in some manner.Each new member of an Iraqi-led competition and backing down.Of course,one can signal alliance would dilute the spoils,diminishing each mem- by "burning money,expending valuable resources au- ber's "slice."By going it alone,Iraq kept all of the wealth tonomously,but such acts create a relative as well as abso- of Kuwait to itself,at least for a little while.In contrast, lute loss.Tactics that impart costs only as a byproduct of U.S.objectives were not much diluted by the size of its imposing costs on an opponent can produce relative gains, coalition.Since there was no resource "pie"to distribute, while tactics such as burning money only harm the initia- the size of the Coalition was not a hindrance in allocating tor.States with economies integrated into global markets benefits,though reasons for reconstituting Kuwait dif- face autonomous investors with incentives to reallocate fered markedly among the members,another source of capital away from risk.A leader's threats against another tension that could have led to conflict(Baker 1995). state become costly when threats spark market repercus- Students of war often treat state interests as largely sions.Participants learn from watching the reactions of uniform,and largely incompatible.International com- leaders to the differential incentives of economic cost and petition forces nations-large and small-to be secu- political reward.Two economically integrated states can rity seekers (Waltz 1959,1979),or to lust after power more often avoid military violence,since market integra- (Mearsheimer 2001).A different conception of interests tion combines mechanisms for revelation and coercion. comes from utilitarianism (Bentham [1781]2000;Mill An economically integrated target can be coerced by the [1861]1998)and rational theory (Black 1948;Downs threat of losing valuable exchange,but a nonintegrated 1957;Riker 1963),one in which interests are variable and initiator cannot make its threats credible or informative. are often logical primitives.Many countries may share to Conversely,a globalized initiator can signal but has little a greater or lesser extent compatible worldviews or ob- incentive to hamper its own markets when a noninte- jectives(cf.Keohane and Nye 1989).Conversely,strong grated target does not suffer (Gartzke 2006b). policy differences can lead to conflict,and possibly to war (Bueno de Mesquita 1981,1985,1989;Morrow 1985).For H4:Financial or monetary integration leads example,World War II and the cold war were "ideologi- dyads to be less likely to experience conflict. cal contests"which pitted coalitions of countries with in- compatible visions of an appropriate world order against Research Design each other.Since policy interests vary,while interests over resource allocations are more nearly constant(in their I next analyze the hypotheses in a standard statistical test fundamental incompatibility),policy conflict should also of the democratic peace,using a sample of all dyad years vary.The range of policy issues over which state pref- (1950-92).This sample is well documented by previous erences might vary is literally innumerable.This article studies.The democratic peace is thought to be most ro- adopts an axiomatic approach,making the broadest the- bust in the post-World War II period.36 Unless noted, oretical claim,and then using a policy interest index to variables are coded as described in Oneal and Russett operationalize interest affinity in testing (1999a).Adopting the assumptions of this canonical re- search program allows for ready comparison of results H3:Similar state policy interests lead dyads and diminishes the danger that my findings result from to be less likely to experience conflict. idiosyncrasies in coding or model specification.Oneal and Russett(1999a)appear to offer the most appropriate Globalization of Capital baseline for the analysis.Subsequent research focuses on While policy differences or resource competition can gen- other aspects of their Kantian tripartite liberal explanation erate conflict,they need not produce contests if states can resolve differences diplomatically.Liberal theory em- 36If the democratic peace exists anywhere,the post-World War II period is the obvious place tolook."Indeed,the past several decades phasizes the pacifying effect of cross-border economic when there were the most democracies'provide the best temporal linkages.Markets are arguably most relevant as mech- span to give 'the hardest test of the proposition that democracies do anisms for revealing information,however,rather than not make war on each other'(R.J.Rummel,International Studies Association,Foreign Policy Internet Communication,20 January for adding to the risks or costs of fighting(Gartzke and 1995),"cited in Kegley and Hermann (1996,312)
CAPITALIST PEACE 173 Similar Interests There is a second salient difference between the two sets of motives for invading Kuwait. Suppose that Iraq had formed an alliance, like the U.S. Coalition. Spoils from the conquest of Kuwait would have had to be divided up in some manner. Each new member of an Iraqi-led alliance would dilute the spoils, diminishing each member’s “slice.” By going it alone, Iraq kept all of the wealth of Kuwait to itself, at least for a little while. In contrast, U.S. objectives were not much diluted by the size of its coalition. Since there was no resource “pie” to distribute, the size of the Coalition was not a hindrance in allocating benefits, though reasons for reconstituting Kuwait differed markedly among the members, another source of tension that could have led to conflict (Baker 1995). Students of war often treat state interests as largely uniform, and largely incompatible. International competition forces nations—large and small—to be security seekers (Waltz 1959, 1979), or to lust after power (Mearsheimer 2001). A different conception of interests comes from utilitarianism (Bentham [1781] 2000; Mill [1861] 1998) and rational theory (Black 1948; Downs 1957; Riker 1963), one in which interests are variable and are often logical primitives. Many countries may share to a greater or lesser extent compatible worldviews or objectives (cf. Keohane and Nye 1989). Conversely, strong policy differences can lead to conflict, and possibly to war (Bueno de Mesquita 1981, 1985, 1989; Morrow 1985). For example, World War II and the cold war were “ideological contests” which pitted coalitions of countries with incompatible visions of an appropriate world order against each other. Since policy interests vary, while interests over resource allocations are more nearly constant (in their fundamental incompatibility), policy conflict should also vary. The range of policy issues over which state preferences might vary is literally innumerable. This article adopts an axiomatic approach, making the broadest theoretical claim, and then using a policy interest index to operationalize interest affinity in testing. H3: Similar state policy interests lead dyads to be less likely to experience conflict. Globalization of Capital While policy differences or resource competition can generate conflict, they need not produce contests if states can resolve differences diplomatically. Liberal theory emphasizes the pacifying effect of cross-border economic linkages. Markets are arguably most relevant as mechanisms for revealing information, however, rather than for adding to the risks or costs of fighting (Gartzke and Li 2003; Gartzke, Li, and Boehmer 2001). Competition creates incentives to bluff, to exaggerate capabilities or resolve. Anarchy makes it difficult for states to compel honest answers from one another except through the threat or imposition of harm. Contests inform by being costly, forcing actors to choose between bearing the burden of competition and backing down. Of course, one can signal by “burning money,” expending valuable resources autonomously, but such acts create a relative as well as absolute loss. Tactics that impart costs only as a byproduct of imposing costs on an opponent can produce relative gains, while tactics such as burning money only harm the initiator. States with economies integrated into global markets face autonomous investors with incentives to reallocate capital away from risk. A leader’s threats against another state become costly when threats spark market repercussions. Participants learn from watching the reactions of leaders to the differential incentives of economic cost and political reward. Two economically integrated states can more often avoid military violence, since market integration combines mechanisms for revelation and coercion. An economically integrated target can be coerced by the threat of losing valuable exchange, but a nonintegrated initiator cannot make its threats credible or informative. Conversely, a globalized initiator can signal but has little incentive to hamper its own markets when a nonintegrated target does not suffer (Gartzke 2006b). H4: Financial or monetary integration leads dyads to be less likely to experience conflict. Research Design I next analyze the hypotheses in a standard statistical test of the democratic peace, using a sample of all dyad years (1950–92). This sample is well documented by previous studies. The democratic peace is thought to be most robust in the post–World War II period.36 Unless noted, variables are coded as described in Oneal and Russett (1999a). Adopting the assumptions of this canonical research program allows for ready comparison of results and diminishes the danger that my findings result from idiosyncrasies in coding or model specification. Oneal and Russett (1999a) appear to offer the most appropriate baseline for the analysis. Subsequent research focuses on other aspects of their Kantian tripartite liberal explanation 36If the democratic peace exists anywhere, the post–World War II period is the obvious place to look. “Indeed, the past several decades ‘when there were the most democracies’ provide the best temporal span to give ‘the hardest test of the proposition that democracies do not make war on each other’ (R. J. Rummel, International Studies Association, Foreign Policy Internet Communication, 20 January 1995),” cited in Kegley and Hermann (1996, 312)
174 ERIK GARTZKE (Oneal and Russett 1999c;Russett and Oneal 2001),or Markets:Democratic peace research examines trade on extending the temporal domain (Oneal and Russett interdependence (Oneal et al.1996,2003;Oneal and 1999b;Oneal,Russett,and Berbaum 2003). Russett 1997,1999a,1999b,1999c;Russett and Oneal I estimated coefficients using logit and GEE in Stata 2001).Capital and monetary integration may be more (v.8)with Huber/White robust standard errors,though relevant to conflict than trade (Gartzke and Li 2003; for brevity only the logit estimates are reported.Results Gartzke,Li,and Boehmer 2001).Liberalization cre- using GEE are generally equivalent or more favorable to ates valuable linkages and institutional constraints on the hypotheses.Independent variables are lagged one year a state's ability to intervene in market processes.Be- behind the dependent variable to control for endogeneity. cause states may be tempted to interfere with market The Beck,Katz,and Tucker(1998)method of temporal responses to interstate crises,both robust markets and spline variables was adopted to control for duration de- laissez-faire policies matter. pendence.37 The International Monetary Fund (IMF)pro- vides several indicators of market size,robustness,and Dependent Variable liberalization.The IMF publication Annual Reports on Exchange Arrangements and Exchange Restrictions Zeev Maoz's construction of dyadic militarized interstate (AREAER)lists a series of variables measuring eco- disputes(DYMID)is used as the dependent variable,with nomic openness.I use an index evaluated in previous the standard dichotomous coding of"1"for the initial studies that takes the difference between eight and the year of a MID in the dyad and "0"otherwise(Gochman sum of eight types of government restrictions on for- and Maoz 1984;Jones,Bremer,and Singer 1996).38 The eign exchange,current,and capital accounts(Gartzke Maoz data are intentionally formatted in dyads.Maoz also and Li 2003;Gartzke,Li,and Boehmer 2001).IMF FIN. corrects for coding errors in the MID 2.1 dataset.39 OPEN.(Low)reports the lower monadic score in the dyad.40 High values of IMF FIN.OPEN.(Low)are thus expected to reduce the likelihood of militarized dis- Key Independent Variables putes.The IMF only reports data on member countries, Democracy:Researchers differ over how to measure systematically reducing variance and biasing against democracy,both monadically and dyadically.I rely on statistical significance. three different datasets and three variable construc- I also include indicators of trade to assess whether tions to represent dyadic democracy.The standard in trade influences militarized disputes independent of democratic peace research is the Gurr Polity IV data capital liberalization.I use both the trade data pro- (Jaggers and Gurr 1995).I first prepared monadic val- vided by Oneal and Russett,and data from Gleditsch ues by combining Polity democracy(DEMOC)and au- (2002).41 Again,I follow the Oneal and Russett op- tocracy (AUTOC)scales as follows:[(DEMOC;-AUTOC;) erationalization.Monadic values are first constructed 10]/2,(where i [A,B]).The variable differs mod- using a ratio of bilateral trade over GDP to measure the estly from Oneal and Russett in that I add 10 so that importance of trade relative to a state's total economy. all values are nonnegative and divide by 2 to yield TRADE DEP.(Low)denotes the lower trade dependence the 0-10 range of Polity variables.DEMOCRACY (Low) statistic in the dyad(Bliss and Russett 1998;Oneal and and DEMOCRACY(HIGH),respectively,report the lower Russett 1997,1999a,1999b).Trade interdependence is and higher of democracy values in the dyad.DEMOC- expected to modestly decrease MID propensity. RACY Ax B is the product of monadic values.BoTH Development:Economic development leads to a secular DEMOC.(>7)equals one ("1")if each dyad member decline in the valuation of conquerable resources while has a monadic score of at least seven and zero ("0") intellectual and financial capital critical to productiv- otherwise. ity in modern economies must be enticed rather than coerced.Conversely,wealth and the technology effect 37A Stata"do"file is available from the author replicating all aspects allow for greater power projection.Poor countries sel- of data construction and analysis. dom fight abroad because they cannot,and because 38MID coding rules produce a selection bias(Smith 1998).For example,a state that threatens and then uses force is only coded as using force.Whether threats become uses also depends on whether 40 Bilateral data on financial openness is not available for alarge sam- a target acquiesces or resists. ple of countries.Signaling should occur monadically,though two integrated economies probably increase the effect.Unlike democ- 3DYMID is available at http://spirit.tau.ac.il/poli/faculty/maoz/ dyadmid.html.In subsequent research,I will extend analysis to the racy,economic freedom has a monadic effect (Gartzke 2005a). new MID 3 data(once other variables are coded or made available), 4Oneal,Russett,and Berbaum(2003)advocate use of the Gleditsch and the ICB data. (2002)data since these data contain fewer missing observations
174 ERIK GARTZKE (Oneal and Russett 1999c; Russett and Oneal 2001), or on extending the temporal domain (Oneal and Russett 1999b; Oneal, Russett, and Berbaum 2003). I estimated coefficients using logit and GEE in Stata (v. 8) with Huber/White robust standard errors, though for brevity only the logit estimates are reported. Results using GEE are generally equivalent or more favorable to the hypotheses. Independent variables are lagged one year behind the dependent variable to control for endogeneity. The Beck, Katz, and Tucker (1998) method of temporal spline variables was adopted to control for duration dependence.37 Dependent Variable Zeev Maoz’s construction of dyadic militarized interstate disputes (DYMID) is used as the dependent variable, with the standard dichotomous coding of “1” for the initial year of a MID in the dyad and “0” otherwise (Gochman and Maoz 1984; Jones, Bremer, and Singer 1996).38 The Maoz data are intentionally formatted in dyads. Maoz also corrects for coding errors in the MID 2.1 dataset.39 Key Independent Variables • Democracy: Researchers differ over how to measure democracy, both monadically and dyadically. I rely on three different datasets and three variable constructions to represent dyadic democracy. The standard in democratic peace research is the Gurr Polity IV data (Jaggers and Gurr 1995). I first prepared monadic values by combining Polity democracy (DEMOC) and autocracy (AUTOC) scales as follows: [(DEMOCi – AUTOCi) + 10]/2, (where i ∈ [A,B]). The variable differs modestly from Oneal and Russett in that I add 10 so that all values are nonnegative and divide by 2 to yield the 0–10 range of Polity variables. DEMOCRACY (LOW) and DEMOCRACY (HIGH), respectively, report the lower and higher of democracy values in the dyad. DEMOCRACY A × B is the product of monadic values. BOTH DEMOC. (≥7) equals one (“1”) if each dyad member has a monadic score of at least seven and zero (“0”) otherwise. 37A Stata “do” file is available from the author replicating all aspects of data construction and analysis. 38MID coding rules produce a selection bias (Smith 1998). For example, a state that threatens and then uses force is only coded as using force. Whether threats become uses also depends on whether a target acquiesces or resists. 39DYMID is available at http://spirit.tau.ac.il/poli/faculty/maoz/ dyadmid.html. In subsequent research, I will extend analysis to the new MID 3 data (once other variables are coded or made available), and the ICB data. • Markets: Democratic peace research examines trade interdependence (Oneal et al. 1996, 2003; Oneal and Russett 1997, 1999a, 1999b, 1999c; Russett and Oneal 2001). Capital and monetary integration may be more relevant to conflict than trade (Gartzke and Li 2003; Gartzke, Li, and Boehmer 2001). Liberalization creates valuable linkages and institutional constraints on a state’s ability to intervene in market processes. Because states may be tempted to interfere with market responses to interstate crises, both robust markets and laissez-faire policies matter. The International Monetary Fund (IMF) provides several indicators of market size, robustness, and liberalization. The IMF publication Annual Reports on Exchange Arrangements and Exchange Restrictions (AREAER) lists a series of variables measuring economic openness. I use an index evaluated in previous studies that takes the difference between eight and the sum of eight types of government restrictions on foreign exchange, current, and capital accounts (Gartzke and Li 2003; Gartzke, Li, and Boehmer 2001). IMF FIN. OPEN. (LOW) reports the lower monadic score in the dyad.40 High values of IMF FIN. OPEN. (LOW) are thus expected to reduce the likelihood of militarized disputes. The IMF only reports data on member countries, systematically reducing variance and biasing against statistical significance. I also include indicators of trade to assess whether trade influences militarized disputes independent of capital liberalization. I use both the trade data provided by Oneal and Russett, and data from Gleditsch (2002).41 Again, I follow the Oneal and Russett operationalization. Monadic values are first constructed using a ratio of bilateral trade over GDP to measure the importance of trade relative to a state’s total economy. TRADE DEP. (LOW) denotes the lower trade dependence statistic in the dyad (Bliss and Russett 1998; Oneal and Russett 1997, 1999a, 1999b). Trade interdependence is expected to modestly decrease MID propensity. • Development: Economic development leads to a secular decline in the valuation of conquerable resources while intellectual and financial capital critical to productivity in modern economies must be enticed rather than coerced. Conversely, wealth and the technology effect allow for greater power projection. Poor countries seldom fight abroad because they cannot, and because 40Bilateral data on financial openness is not available for a large sample of countries. Signaling should occur monadically, though two integrated economies probably increase the effect. Unlike democracy, economic freedom has a monadic effect (Gartzke 2005a). 41Oneal, Russett, and Berbaum (2003) advocate use of the Gleditsch (2002) data since these data contain fewer missing observations