Capitalism, Peace, and the Historical Movement of Ideas

March/​April 2012 • Policy Report

Over the last few centuries there have been remarkable changes in many major ideas about the way societies and the world should be arranged. For example, there have been notable declines in formal slavery, capital and corporal punishment, torture, vendetta, blood feuds, monarchy, and smoking, and there has been the rising acceptance of humane prisons, pornography, abortion, racial and class political equality, women’s rights, labor unions, environmentalism, gay rights, and the determined application of the scientific method.

Important in this process are the exertions of idea entrepreneurs. Beginning in the late 19th century, for example, groups began to market the notion that war — or at least war among developed countries — is a bad idea. Despite many setbacks, their efforts seem to have been at least partly responsible for the historically unprecedented absence of major war for most of a century now. Over the course of the last couple of centuries other idea entrepreneurs sought to market the ideas that democracy is the most desirable form of government and that freemarket capitalism is the best way to organize the economy — with what looks today to have been a fair amount of success.

A focus on idea entrepreneurs recommends itself because it is often difficult to come up with material reasons to explain the historical movement of ideas. For example, one might be inclined to argue that the remarkable decline in war among developed states is due to the increasing costs of such wars. But medieval wars were often absolutely devastating, while within a few years after a terrible modern war, World War I, most of the combating nations had substantially recovered economically. Democracy began to take root in substantial countries by the end of the 18th century even though it had been known as a form of government for millennia and even though there seem to have been no technological or economic advances at the time that impelled its acceptance.

None of this is to suggest that the efforts of idea entrepreneurs invariably succeed. Many, probably most, promoted ideas meet with far more failure than success. Indeed, if extensive purposeful promotion could guarantee acceptance, we’d all be driving Edsels. Or, put another way, anyone who can accurately and persistently predict or manipulate tastes and desires would not be writing about it, but would move to Wall Street to become in very short order the richest person on the planet.

Many of the ideas that have grown in acceptance over the last few centuries relate to one another, and sometimes they have been promoted by the same idea entrepreneurs. However, although the ideas have taken parallel — and often overlapping — trajectories, it is not clear that they are necessarily dependent on each other. It is quite possible, for example, for people who strongly oppose abortion on moral grounds to accept capital punishment. In fact, they may be appalled by those who have the opposite predispositions.

Similarly, although the idea strands of peace and free‐​market capitalism have undergone parallel and substantially overlapping historical trajectories, support for capitalism does not on its own necessarily imply war aversion or support for peace. In fact, for people to embrace the slogan “Make money, not war!” as proposed by Nils Petter Gleditsch, they must not only embrace capitalism as an economic system, but must logically accept at least three underlying ideas. They must take economic prosperity as an economic goal; they must see peace as a better motor for progress than war; and they must believe that trade, rather than conquest, is the best way to achieve their chief goal.

For capitalism to have an effect on war aversion, it is necessary, first, to convince people that getting rich is an important goal — for the world to come to value economic well‐​being above passions that are often economically absurd. In other words, it is necessary for the single‐​minded pursuit of wealth to be unashamedly accepted as behavior that is desirable, beneficial, and even honorable.

The general acceptance of capitalism — the notion that the economy should be arranged to allow for the free exchange of goods and services with minimal government intervention — will be of little consequence to those who do not think achieving wealth is an important goal. Traditionally, the notion that one should give favor to people who are acquisitive has been repulsive to those who aspire to values they consider far superior — such as honor, altruism, sacrifice, piety, and patriotism. In contrast, economic motives have been routinely condemned as crass, materialistic, cowardly, and selfish. Thus, as Simon Kuznets has pointed out, the quest for otherworldly eternity and the quest to maintain inborn differences as expressed in class structure have often been taken to be far superior to economic advancement.

An important area in which noneconomic values have commonly dominated is war. For centuries, many great thinkers have held peace to be immoral, materialistic, and base. Prussian General Von Moltke declared “perpetual peace” to be “a dream and not even a beautiful one… . Without war, the world would wallow in materialism.” Aristotle held that “a time of war automatically enforces temperance and justice: a time of the enjoyment of prosperity, and license accompanied by peace, is more apt to make men overbearing.” And five years before writing his treatise “Perpetual Peace,” Immanuel Kant maintained that “a prolonged peace” tended “to degrade the character of the nation” by favoring “the predominance of a mere commercial spirit, and with it a debasing self‐​interest, cowardice, and effeminacy.”

Thus, whether war does or does not advance economic well‐​being has often been of no interest whatever because the people prosecuting the war do not value economic development. An important reason economic development issues have traditionally played such a limited role in war initiation is that full recognition of the notions that economic growth is possible and that wealth can be “created” are fairly new. Over the course of most of history, wealth has routinely been held to be a zero‐​sum game: if one person becomes rich, some other person must become poorer.

This lack of appreciation of the notion of economic growth is understandable because, throughout most of history, economies have, in fact, not grown. In 1750, as can best be determined, all areas of the world were fairly equal economically — equally poor by contemporary standards. Economic historian Paul Bairoch estimates that the ratio in per capita wealth between the richest and poorest countries was then no more than 1.6 to 1. However, beginning in the 19th century, and accelerating thereafter, an enormous gap opened when North America, Europe, and, eventually, Japan began to grow significantly. In more recent years, growth from historic levels has begun to take place worldwide.

Whatever the reasons for this remarkable development, until pretty much the end of the 19th century, the idea that economies could actually grow could scarcely have been appreciated by most people because, in fact, during just about the whole of the previous course of human development, none had.

Michael Howard notes that at one time the developed world was organized into “warrior societies” in which warfare was seen to be “the noblest destiny of mankind.” This was changed, he suggests, by industrialization which “ultimately produces very unwarlike societies dedicated to material welfare rather than heroic achievement.” The main problem with this generalization is that industrialization spoke with a forked tongue. The developed world may have experienced the industrial revolution, but if this experience encouraged some people to abandon the war spirit, it apparently propelled others to fall more fully in love with the institution. Howard himself traces the rise of a militaristic spirit that became wedded to a fierce and expansionist nationalist impetus as industrialization came to Europe in the 19th century. And, of course, in the next century industrialized nations fought two of the greatest wars in history. Thus, industrialization can inspire bellicism as much as pacifism.

The remarkable economic development of the 19th century was accompanied by a rising anti‐​war movement, particularly in its last decade. However, this set of idea entrepreneurs remained a small, gadfly enterprise, and it took the cataclysm of World War I, perhaps embellished by its even more violent successor 20 years later, to fully undercut the appeal of the martial virtues. Capitalist economic development alone, no matter how impressive, was clearly insufficient to do that.

Even if one accepts free‐​market capitalism and holds prosperity to be a dominant goal, it does not necessary follow that peace is the best engine for development and progressive innovation. Many who have accepted the importance of innovation and development have also argued that war is a more progressive engine than peace — that war, and the preparations for it, act as a stimulus to economic and technological innovation and to economic growth.

In 1908, for example, H. G. Wells, who was by no means a warmonger, found commercial advances to be “feeble and irregular” compared to the “steady and rapid development of method and appliances in naval and military affairs.” He noted that the household appliances of his era were “little better than they were fifty years ago” but that the “rifle or battleship of fifty years ago was beyond all comparison inferior to those we now possess.” Wells was hardly alone: the argument that war was an important stimulus to technological development was common in his era.

Taking the consideration further, many have found war to be a key element in promoting civilizational and evolutionary progress more generally. The Prussian historian Heinrich von Treitschke proclaimed that “the great strides which civilization makes against barbarism and unreason are only made actual by the sword” and that “brave people alone have an existence, an evolution or a future; the weak and cowardly perish, and perish justly.” General Friedrich von Bernhardi maintained that war was a “powerful instrument of civilization” and “a political necessity … fought in the interest of biological, social and moral progress.” He warned that “without war inferior or decaying races would easily choke the growth of healthy budding elements, and a universal decadence would follow.”

Treitschke and Bernhardi were reflecting the views of some social Darwinists like the British statistician Karl Pearson: “The path of progress is strewn with the wreck of nations … who found not the narrow way to great perfection. These dead people are, in very truth, the stepping stones on which mankind has arisen to the higher intellectual and deeper emotional life of today.” In 1891, Émile Zola declared that “it is only warlike nations which have prospered: a nation dies as soon as it disarms.” In America, Henry Adams concluded that war “called out the qualities best fitted to survive in the struggle for existence.” In like manner, Russian composer Igor Stravinsky once declared war to be “necessary for human progress.”

In 1795, reflecting a view of Montesquieu and others, Immanuel Kant argued that the “spirit of commerce” is “incompatible with war” and that, as commerce inevitably gains the “upper hand,” states would seek “to promote honorable peace and by mediation to prevent war.” However, this notion is incomplete because, as 19th‐​century British historian Henry Thomas Buckle pointed out, “the commercial spirit” has often been “warlike.”

Buckle did, however, see this changing, and he hailed Adam Smith’s Wealth of Nations as “probably the most important book that has ever been written” because it convincingly shows that true wealth comes not from diminishing the wealth of others, but rather that “the benefits of trade are of necessity reciprocal.” These conclusions are elemental and profound, and, as Buckle suggests, they had once been counterintuitive. Buckle went on to conclude that Smith’s key economic discovery was the “leading way” in which the “warlike spirit” had “been weakened.”

The problem is, however, that, even if one embraces material well‐​being as a dominant goal, even if one rejects the notion that war is better than peace as an engine of progress, and even if one accepts the notion that wealth comes from exchange, it does not necessarily follow that war — and particularly conquest — is a bad idea.

Indeed, an important reason why “the commercial spirit” has so frequently been “warlike” is that it is entirely possible that military conquest can be economically beneficial. As free traders would stress, the United States owes much of its prosperity to the fact that it is the world’s largest free‐​trade zone. But its enormous size was quite notably established by various forms of conquest — victory in a war with Mexico and with a series of them against Indians.

Particularly in the early years, West European populations conquered by the Nazis during World War II, while deeply resenting the occupiers, kept out of trouble by cooperating in the sense of carrying out their normal occupations and functions. This, as Norman Rich has observed, “kept the routine business of government and the economy going and thereby enabled the Nazis to rule, and to exploit, the occupied countries with a minimum investment of German personnel.” Indeed, the Germans often found that occupation could be quite profitable. The people of the occupied territories continued to turn out products necessary for Germany’s war, and the occupiers levied taxes, charged “occupation costs,” and engaged in other financial devices to obtain revenue. The sums received were far higher than the actual costs of maintaining the occupying army.

Thus, commerce becomes, in Kant’s phrase, “incompatible with war” only when it is accepted that wealth is best achieved through exchange rather than through conquest. It was with that goal in mind that anti‐​war idea entrepreneurs, such as the English journalist and economic writer Norman Angell, sought to undercut the appeal of empire by convincing people that trade, not conquest, is the best way to accumulate wealth.

In 1908 he declared it “a logical fallacy to regard a nation as increasing its wealth when it increases its territory.” Adopting a free‐​trade perspective, he pointed out that Britain “owned” Canada and Australia in some sense, yet did not get the products of those countries for nothing — it had to pay for them just as though they came “from the lesser tribes in Argentina or the USA.” The popular notion that there were limited supplies in the world and that countries had to fight to get their share was nonsense, Angell argued. Indeed, “the great danger of the modern world is not absolute shortage, but dislocation of the process of exchanges, by which alone the fruits of the earth can be made available for human consumption.” Angell noted that a nation’s “wealth, prosperity, and well‐​being … depend in no way upon its military power,” noting that the citizens of such war‐​avoiding countries as Switzerland, Belgium, or Holland were as well off as the Germans, and much better off than the Austrians or Russians.

Idea entrepreneur Angell helped to crystallize a line of reasoning that has been gaining in acceptability ever since, and this has led to one of the most remarkable changes in world history: the virtual eradication of the ancient and once‐​vital notion of empire. Put another way, people came to accept that free trade furnishes the economic advantages of conquest without the unpleasantness of invasion and the sticky responsibility of imperial control.

Logic suggests, then, that international war is unlikely if people come to accept these three underlying ideas. But there is another consideration. One of the curiosities about the historical movement of ideas is that over the last few centuries ideas that have successfully filtered throughout the world have tended to do so in one direction — from West to East. Indeed, the process has often been called “Westernization.” Thus, Taiwan has become more like Canada than Canada has become like Taiwan. This means there is something of a standard geographic clustering: countries that early embraced war aversion were also generally early to take up democracy, capitalism, science, pornography, gay rights, and abortion, and early as well to abandon slavery, monarchy, blood feuding, capital punishment, and the church.

As suggested earlier, it may in general be best to see each idea movement as an independent phenomenon — rather in the way that skirt lengths are determined far more by fashion whims than by the availability of cloth and thread. There will be a correlation between the acceptance of the ideas, but it may be essentially spurious.

Moreover, insofar as there is a correlation between the rise of free‐​market capitalism and the rise of war aversion, any causal relationship that might exist between the two developments may be just the opposite of what one might expect. It is not so much that free‐​market capitalism and the economic development it spawns cause peace, but rather that peace better facilitates capitalism and its attendant economic development.

However, the relationship by which peace facilitates market capitalism and economic growth is likely to be considerably stronger than the one by which it may facilitate democracy. This presumably holds especially with respect to international trade. The Cold War could be seen in part as a huge trade barrier and with the demise of that politically derived and economically foolish construct, trade has been liberated. And the long and historically unprecedented absence of war among the nations of Western Europe has not been caused by their increasing economic harmony. Rather, their economic harmony has been caused, or at least substantially facilitated, by the long and historically unprecedented peace they have enjoyed.

This line of thought also relates to studies concluding that any democratic peace is conditioned by economic development. As noted, peace does probably facilitate democratic development, but it likely facilitates economic development far more — hence there is a closer relationship between peace and capitalism than between peace and democracy. But the causal relationship is not that democracy and/​or capitalism cause peace. Rather, if other issues are in proper alignment, it is peace that causes — facilitates, makes more possible — democracy and capitalism.

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