The Invisible Hand of Peace

Events in the Middle East and concern over the likely impact of democratic change in the region on the prospects for peace with Israel, and beyond, raise important questions about the relationship between democratic institutions and stability on the international stage. Optimistic commentary from democratic enthusiasts suggests that democratic reform is likely to improve prospects for peace and stability. According to this view since democratic governments are accountable to their electorates they are less inclined than autocracies to push for aggressive foreign policy positions which may cost the voters directly in terms of blood and treasure. A similar argument associates increased trade connections between nations as a further pacifying dynamic. Proponents of the ‘trade promotes peace’ thesis maintain that high level commercial contacts and interdependencies between nations raise the costs of military conflicts to unacceptable levels for modern economies.

An important book by Patrick J MacDonald, The Invisible Hand of Peace (2009: Cambridge University Press) challenges the conventional wisdom on each of the above fronts and should be essential reading for academics and policy-makers alike. Through a painstaking empirical history of hundreds of conflicts using both quantitative and qualitative research methods MacDonald shows that neither democracy nor trade are the best predictors of peace. On the contrary, it is the propensity of states to pursue an internal policy of laissez faire that is correlated by a reluctance to resort to war.

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Mark Pennington is the author of Robust Political Economy: Classical Liberalism and the Future of Public Policy.

IEA Fellow of Political Economy

Professor Mark Pennington is a fellow in Political Economy at the Institute of Economic Affairs and is also a lecturer in Political Economy at King's College, London. Mark holds a PhD from the London School of Economics, has been published in a number of publications and is co-editor of The Review of Austrian Economics.