Diplomatic Barter: The value of reality
By Bryan
I will pose the question first, then give you the background below.
Question: How do countries decide to go to war? What role do economics play in choosing to pursue military action?
Please share your thoughts! I know we have intelligent readers and I would love to know what you have surmised on this issue.
I have begun reading Conflict After the Cold War: Arguments on Causes of War and Peace by Richard K. Betts (an assigned class reading). Richard Betts is a long time fixture of U.S. foreign relations and is now a professor at Columbia. In his book, Betts proposes to collect the great prose regarding war and peace in an effort to search for global stability. So far, I have been quite disappointed. Betts is a realist, and as such he has begun his book with an obvious bent toward his fellow theorists and through the first 200 pages he ignores liberal ideals and economic theory almost entirely. The next section is titled "Economics: Interests and Interdependence" so there may be hope yet.
Two of the early featured authors are John Mearsheimer and Geoffery Blainey; both are realists, and therefore focus on the balance of power dynamic between nations. Mearsheimer completely ignores the economics, and therefore the decision science, of war, going so far as to reject it when he wrote, "... the main assumption underpinning [liberal economics] is wrong. States are not primarily motivated by the desire to achieve prosperity (Betts 26)." The bulk or Mearsheimer's argument is that a state of bipolarity, with two major powers of equal military might, is the most stable global power configuration.
Blainey is more open minded, after reading his article, I see room for integrating economic theory. Blainey's primary argument lies in that war is the last resort of failed diplomacy. In other terms, Blainey examines the diplomatic process as a barter transaction and he sees war as the final action when double coincidence of wants does not occur. Much as in a barter transaction between a pedestrian and a mugger might go.
Mugger: Give me your wallet and your watch!Pedestrian: My wallet and my watch are quite valuable. What do you offer in barter for my property?
Mugger: I hate mugging economists, I've got to stop prowling George Mason University! I offer you your life in exchange for your property.
Pedestrian: Your terms are not reasonable. I think that I have more might than you do, I choose the tools of war to settle this transaction.
Mugger: Damn, you called my bluff. I'm just a political science major using this street corner as a political science lab, since we cannot otherwise test our hypotheses in real life. Thank you for your participation.
The more subtle aspect of Blainey's argument is that in order for war to occur, both parties must disagree about the military strength of the other party and believe the costs of war will be less than the payoff for winning. As you can see, the mugger and the pedestrian disagree, but they do not both want war.
Blainey does not however come right out and recognize our economic tools in this article. He merely leaves room for insertion of cost & benefit analysis, game theory and economic value. Most other authors in this book have so far dismissed economics as well. Franco Fornari writes, "...economic, political, ideological factors are specifically generators of conflicts but are not specific factors of war." In other words, countries might disagree over economics, but they don't go to war because of economics.
Primarily, these author's either assume economics is only the study transactions involving money, or they reject the idea of competition for resources in general and just assume that power hungry nations always choose war if they have enough power to do so.
As a student of economics, I am convinced that these authors are missing the boat. I realize my bias is present in assuming that economics can help to explain, well, basically everything, but certainly war.
I will be happy to share more thoughts on war as this class will continue for a few more weeks.
If you are interested in more on this topic, you may read the whole paper: The Value of Reality (PDF).
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