Let’s leave the fairy tales behind

Freedom-loving people are almost always nice and genial. I count them among my best friends, and in fact, I think of myself as one. Some of them have sharp intellects, publish great stuff, are brilliant discussants and all of them are prepared to take on the left-leaning, social liberal (for American readers: liberal) majority anytime. They never tire of pointing at the mistaken views of others. Yet at the same time, most libertarians (for sake of brevity I shall not go into the possible subdivisions and other definitional options when using this term) fail to recognize their own weird ideas about international relations. To quote Murray Rothbard: ‘thinking about international affairs is a weak point of libertarians’.

While I am not particularly impressed by Rothbard’s own ideas on international relations, he did make a valid point here. When searching for a particular quaint idea among libertarians, what comes up first is the idea that trade fosters peace. There are variations and the related idea that democracies allegedly do not fight each other will be left aside [which is hardly more convincing though, when closely scrutinizing the methodology and data used in this type of research], the basic idea is that international trade relations promote a peaceful world. There are several main mechanisms behind this. First, at the level of the individual, increasing numbers of international contacts lead to more international friendship and understanding, and consequently a diminishing wish to fight the trading partners . Second, businessmen and other citizens benefitting from trade (e.g. everybody) will act as domestic pressure groups, if need be forcing their leaders to refrain from international military action. Third, economic ties between countries mean these countries become interdependent. War between them would destroy this economic entanglement, therefore it is not the interest of leaders of states to initiate or maintain such destructive conflicts. The overall conclusion is: the more trade, the more peaceful the world becomes.

This is a fairy tale. Even though most libertarians do not go as far as to claim that trade has the capacity to eradicate all international conflict, it is nonsensical to claim that it fosters peace in any consistent way. A few objections. At the individual level, trade does not change human nature. While the rationality needed to preserve peace (acknowledging that war making is sometimes perfectly rational from an individual stance) may dominate the emotions once in a while, it cannot do so perpetually. Let alone in all people, everywhere at the globe. At the collective level, history shows that ‘citizen coalitions for peace’ hardly ever make a difference. Public opinion is often war prone, as for example free trade star Richard Cobden, who strongly argued trade would make public opinion more peaceful, painfully found out during the previous Crimea crisis in the 1850’s. At the political level economic interests are just one factor among many others (geopolitical, religious, domestic, personal, et cetera) when considering international military action. So perhaps sometimes a vital economic interest is too important to risk a war, yet at other times it does not count for much. Take the current Crimea crisis, where President Putin clearly prioritized the strategic objective of ensured naval capacity and access in the Black Sea above possible detrimental effects of economic sanctions.

There are also a number of other counter-arguments against the ‘trade-leads-to peace-hypothesis’. As for example David Hume and Adam Smith acknowledged and emphasized, trade also has the side-effect of promoting conflict. After all free trade make people and countries wealthier. Often this leads to increased defense expenditure, which may then lead to international belligerence, because previously poor states can for example make (renewed) territorial claims. Currently, China is a good example of this. Also, there is the completely neglected question of the nature and volume of trade. Does any amount of trade have peaceful effects, or is there some minimum? Also, does it matter what is traded? Does trade in oil and gas have more or less peaceful effects, compared to say textiles or fruit? Just to claim that ‘trade’ has peace enhancing effects is again unconvincing.  

It is perhaps relatively harmless to foster fairy tale ideas in the study, at universities or to write them down in books and blogs. Yet in my mind these kind of ideas seriously hamper the appeal of libertarianism to other people. In a globalized world, people expect the ideas that guide their political behavior to have serious ideas about world politics. As is the case in for example economics or philosophy, libertarian ideas need to offer serious alternatives to make a difference and have the capacity to convince others. The idea that trade fosters peace is not a serious contribution to international relations discourse. It is high time the liberty loving people leave their fairy tale ideas on international affairs behind.

32 thoughts on “Let’s leave the fairy tales behind

  1. I’m inclined to think that trade inhibits war-to a point. I have done no, and read little, on this but base it completely on the theory that: People who have more stuff are less likely to make war. Why? It tend to break the china. It doesn’t mean they won’t, it just means the threshold is somewhat higher.

  2. Sorry, Mr. van de Haar, but your arguments leave me unmoved. In fact, I found your summary of arguments in favor of free trade (second paragraph) quite well said.

    A couple of responses to your arguments:

    1) “At the individual level, trade does not change human nature.” Maybe not in the most basic sense, but I recall vividly the feelings of harmony, benevolence and self-worth I felt as a kid when trading snow-shovelling services for cash.

    2) You argue that the increased wealth brings more opportunities for defense spending. So what? Just consider the mass slaughter of Tutsis vs. Hutus in Africa a few years a go, slaughter carried out for the most part with primitive weapons. In fact, history shows a general decline in violence as wealth has increased.

    3) “Does trade in oil and gas have more or less peaceful effects, compared to say textiles or fruit?” This question makes no sense as posed. To compare a situation of opening of trade in oil & gas to another situation of opening trade in textiles or fruit would require specifying the context and particulars of the situations.

    Now, having argued against free international trade, are you prepared to apply your arguments to interstate trade? How about barbed wire and guard towers at state lines to foil the bastards who would dare to truck and barter across state lines? That ought to bring peace and harmony to the land!

  3. Seems like there are plenty of good counter-arguments above me, but I just wanted mention that you seem to avoid distinguishing between “more free trade” vs “making trade more free”. Isn’t an increase in individual freedom to buy, sell, and act fundamentally different from a simple net increase in imports or exports? Seems like the later is what you were arguing against, which isn’t what most libertarians I know would rally behind.

  4. While I agree with the counterpoints that Warren made I would like to use this post as an example for why libertarians need to stop using utilitarian arguments. Whether Free-Trade promotes peace or not is irrelevant. Free trade is the ideal because it requires violence to curb free trade whether it be through taxation or tariffs or direct physical violence in the form of arrest, imprisonment, or abuse.

    We need to stop putting the cart before the horse. There is no need to defend the merits of free-trade when the only other alternative is coercion and violence.

  5. I agree with Edwin and I bid him up:

    “…where President Putin clearly prioritized the strategic objective of ensured naval capacity and access in the Black Sea above possible detrimental effects of economic sanctions.”

    Not only didn’t he prioritize apparently but there was little military advantage to gain by his actions: There was never any threat to the Russian Navy’s hold on its Sebastopol leased base and hence, to its access to the Black Sea. It was less threatened, I think, than the US base leased in Guantanamo, Cuba.

    He sacrificed a phantom and faced the risk of economic sanctions. (Or he just made the bet that there would be no sanctions, no response at all. Not a bad bet, with hindsight.)

    Also, I seem to remember that international trade had never been thicker than right before WWI. (Someone else will check this, I hope; I am too tired or too lazy.)

    This essay fingers one instance of a general situation: If you have a strong libertarian fiber, as I do, it’s difficult to get libertarians to deal openly with items that bother you and that bother them. Several months ago, I posted on this blog a piece about evidence pointing to the idea that, historically, the stronger, better established the nation-state, the smaller the probability of death by violence. If this is true, of course, its devastating to libertarianism. My piece got zero comment, I think.

    International trade is a good thing in its own right because it raises standards of living. That’s good enough for me. (You should read Delacroix on the subject, on factsmatter.wordpress.com.)

    • >”I posted on this blog a piece about evidence pointing to the idea that, historically, the stronger, better established the nation-state, the smaller the probability of death by violence…My piece got zero comment, I think.”

      Here is your comment. It is essentially the same argument that says slaves were better off than industrial workers because of things like better life expectancy. Statistically has some truth but otherwise irrelevant. Ends do not justify means. Period.

    • Adam: I don’t think you read that small piece or you don’t recollect it right. The piece was not about an “argument.” It reported on a book by a scholar attempting to array empirical evidence. Do you care about empirical evidence? Did you give that evidence any thought ? Or, are you merely illustrating my point: “It’s difficult to get libertarians to deal openly….”

      Brandon: I don’t remember the title of that piece or I would have looked it up and checked the comments. I don’t recall any; I am not young.(And what the hell is going with the single commas, like this ‘…comments….’ Have you become British?)

      One more point, about “civility.” (‘civility’): If my writings consists of rantings, feel free to desinvite me from Notes. Or is it just too hard on you to read anything at all critical of libertarians (as opposed to libertarianism)? Take Adam, right above, for example, who does not like to be told that numbers matter: “Statistically has some truth….” Why, you get so furious you violate your own civility principle. N. S. !

    • > Do you care about empirical evidence? Did you give that evidence any thought ?

      My point was that the evidence is missing the point. If a state of absolute slavery existed which resulted in 0 deaths from violence why would that be devastating to the belief that freedom is inherently more just?

      Libertarianism doesn’t mean that the world would magically be free of criminals and it doesn’t try to pretend that it would change human nature. Quite the contrary in fact it is the only philosophy that embraces human nature (self interest) and works within its bounds.

      In short, statistical evidence that a strong state is “safer” for its citizens quite frankly doesn’t matter since that state would necessarily be built upon violence and coercion to begin with.

    • Jacques:

      Please re-read the plea for civility at the top of the ‘comments’ section. It politely asks readers to “Please Keep It Civil (Unless It Relates to Jacques).” You are Jacques aka Mr Sunshine.

      You have been whining about not getting enough special treatment here at the blog, and now that you have it, you attempt to publicly crucify me! The joys of being an editor…

      Here is your old piece.

  6. I like this post from Dr van de Haar (see his piece in the libertarian journal Independent Review on “Hayekian Spontaneous Order and the International Balance of Power“) a lot. It brings a level of sophistication to our foreign policy discussions that we had not yet reached until now (especially with Dr Delacroix’s embarrassing crackpot rantings!).

    Dr van de Haar is correct: Trade does not equal peace. There is simply no evidence to suggest that it does. As an illustrative point, just look at how nobody has sought to counter any of Edwin’s examples. What the literature on trade does tell us is that trade makes everybody better off. Dr van de Haar does not challenge this notion or suggest that trade should be abandoned.

    I’d like to push the envelope a little further and riff off of Dr Gibson’s point about the US being a free trade zone (“interstate trade”). The free trade zone came about because of the political union that the 13 states forged among themselves. James Madison in particular was worried that without such a union between the states Balkanization would occur between the North, the Middle, and the South.

    Had there been no interstate political union, the 13 states may have traded freely but they would not have been at peace. If history is any guide, the lack of a federal union would have meant war between the states long before 1861, and the conflicts would have lasted a lot longer, too, especially considering how Britain, France, and Spain could have played the states off on each other in the name of “savvy politics.”

    The failure of trade alone to promote peace is one of the major reasons that both FA Hayek and Ludwig von Mises initiated discussions about European federalism after the war. Adam Smith and David Hume wrote longingly about federations as a way towards peace as well.

    My own musings on the blog have tried to echo these ideas. In “Imperialism or Federalism: The Occupation of South Korea” (and especially the ‘comments’ thread) and “The UN Sucks” (and, again, the ‘comments’ section is worth checking out) I’ve attempted to extend the potential for federation beyond North America/Europe and into East Asia. Such an arrangement could go further, like into Australia or Latin America or…you get the idea.

    While federations do enhance state power and territory, they also have the uncanny ability to integrate peoples economically while keeping them politically organized in a decentralized manner. It’s a trade-off that I think works well, especially when one considers the federal states of the Western world and compares them to non-federal systems.

  7. Thanks for the comments! A few remarks:
    1. Just the fact that you have good memories about trading, or doing you everyday shopping does not amount to anything but evidence to my opening statements: libertarians are nice people. Yet not all people are, that is also why trade does not take away the need for police within a country. To make the world peaceful, you have to change people, that is what history shows, and I donot think trading with eachother has that capacity at the end of the day.

    2. The refrence to Rwanda is actually to the point: there we had a situation were former customers and shopkeepers chopped eachother heads off, because of blood ties. No trade relation could do anything about that.

    3. My motivation is to improve the libertarian ideas (more precise: I consider myslef a classical liberal). And if you read the literature the non-specified claim about the peaceful effects of trade comes up time and again. Therefore we have the need to critically scrutinize ourselves.

  8. @Adam
    “Quite the contrary in fact it is the only philosophy that embraces human nature (self interest) and works within its bounds.”

    One of the problems with libertarianism is that it seems to equate human nature with self interest. A stunningly narrow view.

    • “One of the problems with libertarianism is that it seems to equate human nature with self interest. A stunningly narrow view.”

      What is human nature then if not driven by self interest?

  9. Read Adam Smith’s Theory of Moral Sentiments, or Hume Treatise of Human Nature. You will see there is far more to human nature than the notion of self interest. A good grasp of human nature is essential for political theory, as it sets the bounds for theorizing about human capacity. Makes it easy also to go to the heart of the weak points of all (other) theories.

    • I have but Mises wins this one:

      “Human action is defined simply as purposeful behavior. It is therefore sharply distinguishable from those observed movements which, from the point of view of man, are not purposeful. These include all the observed movements of inorganic matter and those types of human behavior that are purely reflex, that are simply involuntary responses to certain stimuli. Human action, on the other hand, can be meaningfully interpreted by other men, for it is governed by a certain purpose that the actor has in view.[2] The purpose of a man’s act is his end; the desire to achieve this end is the man’s motive for instituting the action.”


      “To sum up what we have learned thus far about human action: The distinguishing characteristic of human beings is that all humans act. Action is purposeful behavior directed toward the attainment of ends in some future period which will involve the fulfillment of wants otherwise remaining unsatisfied. Action in­volves the expectation of a less imperfectly satisfied state as a result of the action. The individual actor chooses to employ elements in his environment as means to the expected achievement of his ends, economizing them by directing them toward his most valued ends (leaving his least valued ones unsatisfied), and in the ways that his reason tells him are most appropriate to attain these ends. His method—his chosen means—may or may not turn out to be in­appropriate.”

      Human being always act to “remove a certain uneasiness”. Even the most charitable actions are driven by the desire to improve oneself. How often is the phrase “I just couldn’t live with myself if I didn’t…” uttered. Sure there are degrees of self-interest. One person may help anyone at anytime another may never lift a finger for another person but in the end all actions are taken in an effort to obtain comfort or avoid discomfort for the self. It just happens that in many cases those actions benefit others as well.

      Also, please do not make an argument by telling me to go read a book. If you have an argument to make quote the relevant passages.

  10. @Edwin
    I need to quit using such a broad brush when talking about libertarianism. Thanks for the reminder.

  11. @Adam
    Citing scripture doesn’t cut it. There is an abundance of social science that has accumulated over many decades that shows conclusively that human beings are much more than homo economicus. Not to mention the humanities, the arts, and other areas of human endeavors. I’m not inclined to continue the discourse though for much the same reason that I don’t argue theology with fundamentalist Christians. True Believers make for poor conversation.

    • Citing scripture is more than what you have done. Namely making vague statements and then not supporting them.

      But for the record are you really trying to argue that artists aren’t engaging in purposeful action to better themselves? They aren’t acting to obtain a psychic profit?

  12. Ah, the classic circular definition: whatever anyone does is driven by self-interest, how do we know it’s self interest, because they did it. Being true by definition is so convenient isn’t it? Your use of ‘psychic profit’ is the same as the Marxist ‘false consciousness’. If the proletariat develops class consciousness Marxism is right. If they don’t it’s because of ‘false consciousness’ and Marx is still right. Yay! A theory that can’t be falsified!

    Being weaned from simplistic notions can be traumatic; best done in baby steps. Here’s a first small step

    Click to access prospect_theory.pdf

    • Also been dealt with by Austrian Scholars.

      “By introducing psychology into economics one obliterates the generality of the theory, and renders it useless. This is precisely what Daniel Kahneman, the recipient of this year’s Nobel in economics, and his followers are doing.

      Through various tests that he has conducted, Kahneman has concluded that people are not always behaving rationally, i.e., in accordance with the premises of mainstream economics. What, however, Kahneman has discovered has nothing to do with whether people are rational or not. It has to do with the flawed premise of popular economics i.e. that peoples preferences are constant. In short, the proposition that people are like machines that never change their minds.

      Now, if preferences are constant then it is possible to compress these preferences into a mathematical formulation, i.e., one can capture people’s wishes by means of a formula, so it is held. This is labelled by mainstream economics as a utility function. Curiously, the assumption of constancy is labelled as an important characteristic of rationality by popular economics. Obviously, people do change their minds, so it is not surprising that Kahneman has “discovered” that real people’s behaviour systematically deviates from the one of the human machine.

      Notwithstanding all this, Kahneman’s findings appear to seriously challenge the dogma of mainstream economics. Careful examination of Kahneman’s work however, reveals that this is not the case. Rather than dismissing the assumption of constant preferences, Kahneman has retained this assumption and has only modified the mathematical formulation of consumers preferences, i.e. the utility function, in order to bring supposedly more realism into the bankrupt model of mainstream economics. In his highly praised work Kahneman wrote,

      Hence, the derived value (utility) function of an individual does not always reflect “pure” attitudes to money, since it could be affected by additional consequences associated with specific amounts. Such perturbations can readily produce convex regions in the value function for gains and concave regions in the value function for losses. The latter case may be more common since large losses often necessitate changes in lifestyle.[10]
      While the original utility function was made up by von Neumann and Morgenstern[11], Kahneman has been engaged in fine tuning the original formulation through the introduction of modifications in line with the outcome of psychological tests that he has conducted. In short, he has introduced a different form of mathematical function. In this regard he has continued with the same absurd model of mainstream economics that doesn’t deal with human beings but with machines.

      It would appear that our Laureate wasn’t concerned so much with economics but rather with finding a formula that would correspond to the data from his psychological tests. In short, he has been engaged in curve fitting. If in future tests he will discover some other peculiar results then he will modify his formula again. In other words, we will be presented with a more sophisticated human machine.

      Furthermore, the mathematical and statistical methods that our author is extensively employing are not valid in the sphere of human actions. Take for instance the application of numerical probability, which requires events to be repeatable. However, in human action events are not repeatable. An entrepreneur, in making his decisions, is confronted with unique cases about which he has some knowledge and which have only limited parallelism to other cases (see Rothbard, Toward a Reconstruction of Utility and Welfare Economics). ”


  13. The first small step was a foray into behavioral economics, where economists confront cognitive psychology. On the one hand it’s a theory of choice but it shows that human behavior is much more complicated than “What is human nature then if not driven by self interest?”

    Personally, I think some of the best stuff here is in marketing [the consumer behavior people]. Companies with money on the line can’t afford naïve notions about their customers. I admit that being in a biz school may bias my opinion.

    A second small step is to confront some neuroscience. There’s more than just cognition going on.


    • This also has been covered by Mises.

      “One does not further the comprehension of the fundamental problem of human action by the methods of instinct-sociology. This school classifies the various concrete goals of human action and assigns to each class a special instinct as its motive. Man appears as a being driven by various innate instincts and dispositions. It is assumed that this explanation demolishes once for all the odious teachings of economics and utilitarian ethics. However, Feuerbach has already justly observed that every instinct is an instinct to happiness [2]. The method of instinct-psychology and instinct-sociology consists in an arbitrary classification of the immediate goals of action and in a hypostasis of each. Whereas praxeology says that the goal of an action is to remove [p. 16] a certain uneasiness, instinct-psychology says it is the satisfaction of an instinctive urge.

      Many champions of the instinct school are convinced that they have proved that action is not determined by reason, but stems from the profound depths of innate forces, impulses, instincts, and dispositions which are not open to any rational elucidation. They are certain they have succeeded in exposing the shallowness of rationalism and disparage economics as “a tissue of false conclusions drawn from false psychological assumptions.” [3] Yet rationalism, praxeology, and economics do not deal with the ultimate springs and goals of action, but with the means applied for the attainment of an end sought. However unfathomable the depths may be from which an impulse or instinct emerges, the means which man chooses for its satisfaction are determined by a rational consideration of expense and success. [4]

      He who acts under an emotional impulse also acts. What distinguishes an emotional action from other actions is the valuation of input and output. Emotions disarrange valuations. Inflamed with passion, man sees the goal as more desirable and the price he has to pay for it as less burdensome than he would in cool deliberation. Men have never doubted that even in the state of emotion means and ends are pondered and that it is possible to influence the outcome of this deliberation by rendering more costly the yielding to the passionate impulse.”

    • Lol citing scripture again.

      “However unfathomable the depths may be from which an impulse or instinct emerges, the means which man chooses for its satisfaction are determined by a rational consideration of expense and success.”

      False. Given the choice between empirical neuroscience and your scripture….well, I’m not a True Believer. No worries though, I’ll be embarrassed for you.

      Another small step away from silliness comes with what’s called a “habit”

      It’s possible that your citing of scripture is the result of habit. Just out of curiosity do you bite your fingernails while looking for scripture?

    • Could you please act like an adult and stop with the senseless insults in an attempt to provoke me?

      Mises on Habit:

      “Most of a man’s daily behavior is simple routine. He performs [p. 47] certain acts without paying special attention to them. He does many things because he was trained in his childhood to do them, because other people behave in the same way, and because it is customary in his environment. He acquires habits, he develops automatic reactions. But he indulges in these habits only because he welcomes their effects. As soon as he discovers that the pursuit of the habitual way may hinder the attainment of ends considered as more desirable, he changes his attitude. A man brought up in an area in which the water is clean acquires the habit of heedlessly drinking, washing, and bathing. When he moves to a place in which the water is polluted by morbific germs, he will devote the most careful attention to procedures about which he never bothered before. He will watch himself permanently in order not to hurt himself by indulging unthinkingly in his traditional routine and his automatic reactions. The fact that an action is in the regular course of affairs performed spontaneously, as it were, does not mean that it is not due to a conscious volition and to a deliberate choice. Indulgence in a routine which possibly could be changed is action.”

  14. Your reliance on citing scripture deserves nothing but derision. Can you cite a single piece of work to support your nonsense? No. You’re like some religious fundamentalist refuting natural selection by citing Genesis. Pathetic.

  15. @ adam: the lines you quote are not about human nature but about human action. You would have recognized this if you had read the books I recommendend. Both these works are completely on human nature, so donot ask me to copy them. I agree with Mises, so don’t get me wrong, but his definition of human action depends on a certain classical liberal view on human nature, which he shared ad took form Hume and Smith. If you read page 17-35 of my book on classical liberalism (and no I am not going to write down any quotes) this should become clearer.

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