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Capitalism, not democracy leads to peace?

capitalismpeace.JPGDon Boudreaux links to an interesting working paper by Columbia University political scientist Erik Gartzke; The Capitalist Peace.

The following is the conclusion of the paprer.

“This study offers evidence suggesting that capitalism, and not democracy, leads to peace. Additional research is needed to corroborate, extend, and even refute the findings reported here. One must be circumspect in questioning a body of evidence as large and as carefully constructed as that on the democratic peace. Still, economic liberals have long seen in free markets and prosperity the potential to discourage war. A century ago, the “conventional wisdom” looked more like this study and less like that of democratic peace researchers. While past arguments were clearly simplistic and overblown, there does now seem to be grounds for reconsidering liberal economic peace theory.

Critics can differ with my revision of classical arguments, or can plausibly challenge the assumptions on which my version of the capitalist peace is built. The statistical models I develop, and the findings that I present, can be altered, possibly in ways that again show that democracy matters. For now, I hope my claims are coherent, empirically plausible, and at the very least intellectually provocative. What is the “larger” relationship between development, capitalism, and democracy? It might be that democracy actually lies behind the apparent impact of capitalism on peace. Still, the world was not always made up of 50% democracies. Little attempt has been made to rule out the possibility that democracy and peace have common causes. A logical extension of this study is the exploration of determinants of political and economic liberalism, though resolving these more complex causal arrows would seem to require a far more profound set of conclusions about the world, ones that are still under construction in comparative politics, economics, and other fields.

Podcast of the Day- Lecture 3 Reform and Deregulation

The Boyer lectures by Ian Macfarlene, former governor of Reserve Bank of Australia, continuos;
By the 1970s the world's developed economies were stuck in the worst position they had been in since the Great Depression of the 1930s. Australia shared this experience but, propelled by a program of reform and deregulation, it slowly became competitive again and began to register strong rates of growth. In this environment the corporate sector embarked on an era of heightened activity, driven by massive borrowings, takeovers and mergers. It is now apparent that the implications of sudden financial deregulation were not fully understood, and the dawn of the 1990s would bring with it new challenges for those charged with navigating the twin hazards of boom and bust.

Listen to the podcast. Some excerpts below;

“Let me digress for a moment to discuss another epithet routinely applied by those opposed to economic reasoning, which is to refer to economics as the dismal science. Whenever I hear this term, I wonder how many people who use it know its origin. It was coined by Thomas Carlyle, in 1849, in an essay called, Occasional Discourse on the Negro Question, in which he argued for the reintroduction of slavery into the West Indies. He viewed the former slaves as 'indolent, two-legged cattle, who should be subject to the beneficent whip'. It is extraordinary that the author of these views which were reactionary and racist even by the standards of 1849, should have had the temerity to refer to his opponents, the most prominent of whom was John Stuart Mill, as representing the dismal science, when all they were doing was arguing that freed slaves should have the same rights as other free people. Mill wrote a reply to Carlyle expressing views that would be widely held today, but unfortunately it is Carlyle's throwaway line that has endured, not Mills' sensible reply….

More on Milton Friedman

David Friedman, son of Milton Friedman notes the geographical diversity of comments for condolences about his father on his blog. One thing I noticed was that there was not a single Arab country and only three were Muslim nations. I don’t know whether this means anything about the state of mindset about the people of these countries.

Milton Friedman and the Social Responsibility of Business
Milton Friedman: A Tribute
The Draft: Charles Rangel, Milton Friedman, and William Meckling
Milton Friedman's Wisdom and the Impending London Olympics

Milton Friedman, Friedrich Hayek, Augusto Pinochet, and Hu Jintao: Authoritarian Liberalism vs. Liberal Authoritarianism

The other Milton Friedman by Cal Thomas
The Other Milton Friedman: A Conservative With a Social Welfare Program by Robert Frank

Milton Friedman-A heavyweight champ, at five foot two
From the archive-A Tract for the Times;
"Writing in the preface to a later edition, Milton Friedman recalled that his book's views “were so far out of the mainstream that it was not reviewed by any major national publication... though it was reviewed by the London Economist and by the major professional journals.” More than 400,000 copies of “Capitalism and Freedom” were sold in the 18 years after it was first published."


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