Since the fall of the Soviet Union, globalization and capitalism have been the driving forces for international cooperation. Why would you attack a country that contributes economic activity to you and your friends? Rare earth minerals from China, guns from America, oil from Saudi Arabia. Digital trade is arguably more critical: computer chips from China, the latest hacking software from Israel, and America’s churn of Big Tech. The interdependence of one state’s economy on many others makes conflict a rarity, one that deprives a nation-state of opportunity, allies, and sustainability. This idea is called capitalist peace theory. Its ardent supporters argue that capitalism and trade are instrumental, if not necessary, components of global peace. Thomas Friedman notably expanded the public’s understanding of capitalist peace theory with phrases like the “Golden arches theory” and the “Dell theory”. While Friedman was disproven months after publishing The Lexus and the Olive Tree in the Kosovo War, when bombing campaigns and protests led to the closure of Mcdonald’s locations in Serbia, the idea still was granted merit. Now that the Golden arches (and thousands of other western companies) have commercially exited Russia, capitalist peace theory deserves critical reconsideration.
Conflict is often said to be children sent off to their deaths and ever-lasting trauma by richer, more powerful men in charge. The working class has nothing to gain from conflict, only the richest among the victors do. From the Nye Committee following World War I to Eisenhower’s military-industrial complex, the connection of money and war enjoys a well-established history of existence, outrage, and thoughtful forgetfulness in the US. In many ways, capitalist peace theory extols the opposite connection. Instead of money backing wars to make more money, money prevents war to make more money. The change that led to this conclusion was because, as Friedman puts it, “[the] democratization of technology globalizes production”. If a war breaks out anywhere, production is harmed in some way. Per the Dell theory, supply chains are broken and both companies and governments aren’t too keen on that.
There are two major flaws in all of this. The capacity for nation-states to ignore or bear through economic damages, and the mechanism by which capital prevents conflict.
Explaining the former, Russia has been the main ‘violator’ of capitalist peace theory. The country’s ability to withstand global sanctions is well-demonstrated. Tactics like de-dollarization and increasing trade with China have worked. The war between Russia and Ukraine did hurt supply chains, we’ve all read about it, but that didn’t matter to Putin. The near decoupling back in 2014 largely prepared the country to be self-dependent give or take a few steadfast allies, a situation that capitalist peace theory doesn’t have an answer for. Of course, Russia is still facing a brain drain and a GDP decline, but nothing like the economic collapse that some have predicted. In a globalized world, the way to engage in conflict is to avoid globalization. For the successor to the USSR, this was already second nature.
Could China do something similar? I mean, why not? There are already several global sanctions on China ranging from human rights reactions to IP protections. It’s not like decoupling doesn’t affect an adversary’s economy, rather it’s just something that might end up being negligible in a few years and not potent enough to cause short-term problems that force a return to peace. All in all, capital and the desire for its preservation have little power in dissuading conflict.
It’s also difficult to explicitly see how capital could prevent conflict at all. The mechanisms on which capitalist peace theory relies are cloudy at best. If it’s about companies worrying that their production will be hampered by conflict, then they can pursue government-supported diversification where production happens. Intel’s upcoming plant in Ohio is a great example. I believe that it is easier for companies to alter their supply chains than to stop wars. In addition, it’s not like the military-industrial complex went away. As such, capitalist peace theory relies on a substantial economic connection between two countries or two spheres of influence. If that doesn’t exist or is slowly degraded over time, conflict is more likely to happen. Moreover, this is part of a spiral effect that is happening more frequently. Antagonization leads to economic sanctions or some other decrease in interconnectivity which leads to more antagonization. Eventually, there is so little economic cooperation that capitalist peace theory fails to hold; companies throughout the spiral divest and divert, and the MIC flames its fuels with competing military propaganda. Oh no, World War III.
Concluding Thoughts
Is this all a little depressing? Yeah. Most of this is just to say that capitalist peace theory won’t be a saving grace in a conflict between the US, Russia, and China. Yet, I don’t think that war or even increasing conflict is inevitable. A nationalistic ideology underpins all three countries’ motivations for conflict. Tackling that seems pretty important.