The Capitalist Peace: What Happened to the Golden Arches Theory?

Many are familiar with the Democratic Peace Theory, the idea that two democracies have never waged war against one another. The point is widely recognized as one of the major benefits of democracy, and the hand-in-hand development of more democracies and fewer/less-devastating wars than virtually any other period of human history, is a tempting and enticing explanation.

Now, it is not overly difficult to come up with counter-examples to the Democratic Peace Theory, and indeed there’s an entire Wikipedia page dedicated to it. Here are some notable and obvious counters:

  • Yugoslavian wars of the 1990s
  • First Kashmir War between India and Pakistan War (1947-49)
  • Various wars between Israel and its neighbors (1967, 1973, 2006 etc)
  • The Football war (1969)
  • Paquisha and Cenepa wars (1981, 1995)

Some people even include the First World War and various 18th and 19th century armed conflicts between major powers (American War of Independence comes to mind), but the question of when a country becomes a democracy naturally arises.

There’s another, equally enticing explanation, the main rationale underlying European Integration: The Capitalist Peace, or in a more entertaining and relatable version: The Golden Arches Theory – as advanced by New York Times columnist Thomas Friedman in the mid-1990s:

No two countries that both have a McDonald’s have ever fought a war against one another.

Countries, frankly, “have too much to lose to ever go to war with one another.” As a proposition it seems reasonable, an extension of the phrase apocryphally attributed to Bastiat: “When goods don’t cross borders, soldiers will”. And not because your Big Mac meal comes with a side of peace-and-love or enhanced conflict-resolution skills, but because the introduction of McDonald’s stores represents close economic interdependence and global supply chains. After all, if your suppliers, your customers or your collegues consists of people on the other side of a potential military conflict, a war seems even less useful. Besides – paraphrasing Terry Anderson and Peter Hill in their superb The Not So Wild Wild Westtrading is cheaper than raiding. Even as adamant a critic as George Monbiot admits that a fair number of McDonald’s outlets “symbolised the transition” from poor and potentially trouble-making countries, to richer and peace-loving ones.

Not unlike poor Thomas Malthus, whose convicing theory had been correct up until that  point, reality rapidly decided to invalidate Friedman’s tongue-in-cheek explanation. Not long after it was published, the McDonald’s-ised nations of Pakistan and India decided to up their antics in the Kargil war, quickly undermining its near-flawless explanatory power of Friedman’s. Not one to leave all the fun to others, Russia engaged in no more than two wars in the 2000s to undermine the Golden Arches theory: the 2008 war with Georgia, and more recently the Crimean crisis. Adherring to their namesake creation, McDonald’s pull-out from Crimea was just a tad too late to vindicate Friedman.

The Capitalist Peace, the academic extension of the general truism that trading is cheaper than raiding, came undone pretty quickly thanks in part to our Russian friends. The updated version, the Dell Theory of Conflict Prevention, may unfortunately fall into the same trap as the Democratic Peace Theory: invoking ambiguous definitions that may ultimately collapse to mere than tautologies.

Nightcap

  1. Marx and the morality of capitalism Virgil Storr, Liberty Matters
  2. Adam Smith’s two economies Chris Dillow, Stumbling & Mumbling
  3. 2002 essay on Columbus and the New World Charles Mann, the Atlantic
  4. Polish plans for an American military base, pros and cons Michael Kofman, War on the Rocks

The EU’s laudable Asia Connectivity Strategy

The European Union (EU) has put forward a plan for enhancing connectivity within Asia, and has been dubbed as the Asia Connectivity Strategy.

The EU does not want to give an impression that the Asia Connectivity Strategy (ACS) is a counter to the Belt and Road Initiative (BRI). Yet, senior officials of the EU, while commenting on the broad aims and objectives of the project, have categorically stated that the primary goal of the Asia Connectivity Strategy is enhancing connectivity (physical and digital) while also ensuring that local communities benefit from such a project, and that environmental and social norms are not flouted (this is a clear allusion to the shortcomings of the BRI). There are no clear details with regard to the budget, and other modalities of the project (EU member countries are likely to give a go ahead for this project, before the Asia-Europe Meeting in October 2018). The EU has categorically stated that it would like to ensure that the ACS is economically sustainable.

Other alternatives to BRI: the US

It is not just the EU, but also the US, along with Japan and Australia, which are trying to create an alternative vision to the BRI.

Continue reading

A short note from New Delhi on the 2018 Eastern Economic Forum

Chinese President Xi Jinping recently attended the Eastern Economic Forum (EEF), hosted by the Russian city of Vladivostok, which was held on September 11th and 12th of 2018. President Xi (who became the first Chinese President to attend the EEF) met with Russian President Vladimir Putin for the third time in as many months. Significantly, Japanese Prime Minister Shinzo Abe also attended the Forum, which was titled “The Russian Far East: Expanding the Range of Possibilities.”

Both Xi and Putin repeatedly referred to not just their close personal rapport (Chinese President Xi Jinping, while referring to their individual ties, stated that his and Putin’s ‘friendship was getting stronger all the time’), but also the deepening of economic and strategic ties between Russia and China, as well as the convergence on key global issues (neither side missed the opportunity to target the US for it’s inward looking economic policies).

China was also participating in military exercises, held in Siberia, which have been dubbed ‘Vostok 2018’ (Beijing clarified that these military exercises were not targeted at any third party). The military exercise (September 11-17, 2018) involves 300,000 troops, 1,000 planes, and a number of warships. China sent over 3,000 People’s Liberation Army personnel for the military exercises.

China-Russia Economic Times

A number of issues were discussed during the course of the Forum. Both sides agreed that there was a need to accelerate bilateral economic ties. Trade has witnessed a significant rise in recent years, while in 2017 it was estimated at over $80 billion. In 2018, bilateral trade could surpass $100 billion. Chinese investments in Russia have also been increasing. According to the Russia-China Investment Fund (RCIF; set up in 2012), 150 representatives from China and Russia have already identified 73 projects estimated at $100 billion. Also according to the RCIF, 7 projects estimated at well over $4 billion have already been undertaken.

Both sides also agreed to promote stronger synergies between the Belt and Road Initiative (BRI) and the Eurasian Economic Union (EEU).

Given the fact that the Forum was held in Russia’s Far Eastern Region (RFE), the need to increase Chinese investment in the RFE was high on the agenda. President Xi stated that China has always been a key participant in development projects in the Eastern parts of Russia. China’s Shandong Hi-Speed Group is also likely to invest in highway projects in the RFE.

Recent years have witnessed an increasing Chinese economic presence in Khabarovsk, which is the second largest city in the Eastern Region and 800 kilometres from Vladivostok. It may also be pertinent to point out that a large number of Russians have been uncomfortable with the growing Chinese economic clout, as well as immigrants. In 2010, the Chinese population in the Russian Far East was estimated at less than 30,000, though according to some estimates the population is much higher.

Protectionism

Both Russia and China warned against growing economic protectionism. Xi stated that he was all for greater international cooperation, and even lashed out at the growing tendency towards protectionism. Xi’s views were echoed by Putin, who stated that ‘the world and global economy are coming up against new forms of protectionism today with different kinds of barriers which are increasing.’

Putin made the point that protectionism was a threat, especially to Asia-Pacific (significantly, the current Trump administration has been using the term ‘Indo-Pacific,’ much to the chagrin of the Chinese).

What was also significant was that Xi came down heavily on ‘unilateralism’ at a time when China itself is being accused of ‘expansionist tendencies’ and promoting ‘Debt Trap Diplomacy.’ What was even more interesting was a reference to ‘UN Charter.’

The message emanating from the forum was clear: that the economic as well as strategic partnership between Moscow and Beijing is likely to strengthen, and both will try to develop an alternative narrative to that currently emerging from Washington.

Significance of meeting: Why India would be watching

New Delhi would be observing the Forum and meetings between Putin and Xi, since it’s own relations between Russia and China are of vital importance. While Russia is important in the security context, economic ties with Beijing are important for New Delhi.

New Delhi attaches immense significance to ties with Moscow

There are many in analysts in New Delhi who argue that India should be cautious in strengthening strategic ties with the US, given that this could cause friction in New Delhi’s relations with Moscow (Russia’s improved defense ties with Pakistan are often cited as a consequence of New Delhi moving too close to Washington DC). There are others who argue that New Delhi’s ties with Moscow are robust and time-tested, and will not be impacted by close ties with Washington DC. Russian President Vladimir Putin will be visiting India in October 2018 (for the 19th annual India-Russia Summit), while Indian External Affairs Minister Sushma Swaraj, during her Moscow visit, met with Deputy Prime Minister Yuri Borisov. Both of them jointly chaired the 23rd India-Russia Inter-Governmental Commission on Trade, Economic, Scientific, Technical, and Cultural Cooperation (IRIGC-TEC) meeting. A number of issues, including the need to boost bilateral trade and enhance people-to-people contact, were discussed. Significantly, this was Swaraj’s third visit to Russia in 11 months and she stated that India accorded ‘high priority’ to ties with Russia.

The fact that Swaraj’s visit to Russia took place after a successful 2+2 dialogue with the US, where a number of important defense agreements including COMCASA were signed, shows that New Delhi realizes the importance of ties with Russia. India is likely to sign a deal with Russia for the procurement of the S-400 air defence system, even though the USA has not given India any assurances with regard to a waiver from CAATSA (Countering America’s Adversaries through Sanctions Act) if India purchases defence equipment from Russia. During the visit, India is also likely to go ahead with an agreement with Russia for four frigates for the Indian Navy. While two of these will be manufactured in Kaliningrad, two will be manufactured in Goa.

New Delhi-Beijing ties

The issue of trade tariffs, which was highlighted by Putin and Xi, has also not gone unnoticed by New Delhi. One of the reasons (apart from the desire for peace and tranquility on borders) why India has been pro-actively reaching out to China is a convergence on economic issues. In fact, days after the 2+2 Summit, US President Trump, while referring to India and China, stated that the US has been providing subsidies to India and China for far too long and can not afford to do so any longer.

In terms of investments, there has not been much progress so far due to political disputes, but there is scope for greater economic cooperation between both countries through enhanced connectivity. New Delhi, on its part, should be open to projects like BCIM Corridor (Bangladesh, China, India, Myanmar). The recent proposal out of Beijing to start a railway line from Kunming to Kolkata may not seem possible in the short run, but in the long run it is definitely worth examining, and would give a boost to economies of India’s Eastern and North Eastern states. Interestingly, on September 9th, 2018, Myanmar signed a memorandum of understanding (MoU) with China for agreeing to establish the China-Myanmar Economic Corridor (CMEC). New Delhi should see this connectivity project as an opportunity rather than an obstacle.

Conclusion

New Delhi, while enhancing strategic cooperation with Washington, needs to keep in mind that there is a plethora of economic as well as other issues of global importance where New Delhi can find common ground with Beijing and Moscow. India bilaterally shares robust economic ties with China, and a strategic relationship with Russia. All three countries are also working closely in BRICS as well as SCO. New Delhi also needs to keep in mind that while strategic ties with Washington are important, Trump’s unpredictability will compel New Delhi to keep all its options open and think in a nuanced manner. While historically New Delhi shares close ties with Moscow, the logic of geography can not be ignored in the context of India-China ties.

Nightcap

  1. Artificial Intelligence: How the Enlightenment ends Henry Kissinger, the Atlantic
  2. What if we have already been ruled by an Intelligent Machine – and we are better off being so? Federico Sosa Valle, NOL
  3. We are in a very, very grave period for the world Henry Kissinger (interview), Financial Times
  4. What should universities do? Rick Weber, NOL

Ottomanism, Nationalism, Republicanism VI

The end of World War Two placed Turkey between the Soviet Communist world and the western democracies. It’s Middle Eastern neighbours consisted of one outright colony (thinly disguised as a League of Nations mandate), French Syria; one de facto colony of Britain, Iraq (formally independent after a mandate period); one country whose sovereignty was highly compromised by United States and British ‘interests’, that is Iran. After decades of rule by the secularist-nationalist Republican People’s Party (CHP is the Turkish acronym), the idea of a Middle Eastern orientation was not a major one at any kind of obvious level, and had limited practical applicability even for those oriented towards the kind of traditionalist Islam which inevitably looks for some kind of connection with the original Muslim heartland.

The Muslim Brotherhood was formed in (British dominated) Egypt in 1928 and that becomes more important in Turkey over time. A Turkish version, National View, was founded by Necmettin Erbakan in 1969, and forms the core of the AKP today, led by Recep Tayyıp Erdoğan. Turkish history from the 1940s to the AKP coming to power in 2002 can look like an inevitable process, and with some qualifications that is probably a reasonable one-sentence way of thinking. Qualifications include the dangers of seeing history as the inevitable unfolding of a single unified process, and the constant possibility that better decisions by secular leaders at various time could have prevented this outcome. The decisions of the small numbers of self-defined liberals in Turkey were not really any better, sad to say.

İnönü’s response to the post-war world was to adopt multi-partyism. The Democrat Party was allowed to form under Adnan Menderes, who had been a member of the short-lived Free Republican Party and then a CHP deputy, and former prime minister Celâl Bayar. The DP contested the 1946 election, which was not all fully free and fair, but came to power in a more properly conducted election in 1950. Bayâr became President and Menderes became Prime Minister. This worked more as the Turkish constitution suggested than when the CHP was the only party in the national assembly. The result was that Menderes was the decision making person.

This political opening up helped Turkey into the Council of Europe (the grouping of European democracies) in 1949 and made it eligible for Marshall Aid under İnönü. Under Menderes, Turkey joined NATO in 1952. Acceptance into NATO was helped by substantial Turkish participation in the Korean War. The participation of conscript peasant soliders from Anatolia is still remembered in folk songs.

All these ways in which Turkey was acknowledged as part of the community of European democracies took place simultaneously for Greece, so the countries were taken as a pair during this period. The peaceful transfer of power through election from İnönü and the CHP to Menderes and the DP was the first such occasion in Turkish and Ottoman history. Some have seen İnönü as ‘only’ responding to US pressure and therefore denied him credit. This has, in the past, been the default position of most Turkish liberals though I believe that the latest historical work shows that İnönü was much more of an active enthusiast for the transition to genuine elections. On this matter, and others, it looks like time for the default ‘liberal’ position to change.

In any case, the whole idea that İnönü only responded to pressure is unsatisfactory. Of course he made his decision in a context of international balances of power of the time. Others made different decisions. In Spain, for instance, Francisco Franco stuck to ultra-conservative, Fascist-influenced dictatorship, accepting US military bases and continuing previous valuable trading relations. In Portugal, the corporatist dictatorship of António de Oliveira Salazar joined NATO after the adoption of an absurd imitation of party pluralism, with a purely token licensed opposition. Spain and Portugal were not aid recipients, but were able to get considerable trade advantages from the differing deals they made to associate with North Atlantic democracies. İnönü could have found ways to stay in power for ever, but did not.

There were limits to İnönü’s moves towards political pluralism and it was certainly not the ideal process. To some degree, it was one part of the CHP agreeing to the demands of the other part (which left to form DP) to have its turn in power after the current, most favourable to state-led joint secularism and modernity had been in power for so long. More on the DP in the next post.

Returning to İnönü’s rule after the war, the left became victims after a period relative tolerance in the latter years of World War Two, when it looked like the western allies would win in alliance with the US, so the Turkish state showed more tolerance of leftists and less of pan-Turkish nationalists who had the most tolerance of Fascism and Nazism (there has never been a self-identified fascist or national socialist political movement in Turkey).

Not only did İnönü oppress leftist groups outside the CHP as he moved towards genuinely contested elections, he identified left-Kemalist loyalists to the regime as communists who needed to be purged. This was at least in part to gain favour in the US by presenting himself as the main enemy of a real communist threat. Left-Kemalist academics who lost their university jobs at the time included Neyazi Berkes, the most notable Kemalist intellectual of any kind, who went onto an academic career in the west. Measures against left groups outside the CHP included using a religious conservative gang to smash the printing presses of a left newspaper. The willingness of the state to tolerate, and even promote, illegal violence by far right groups supposed threats to the regime and has been a frequent occurrence ever since.

To be continued

Eye Candy: 2026 World Cup votes, by country

NOL map World Cup 2026 vote
Click here to zoom

My only question is why did 3 countries that could easily (and have, in the past) host the World Cup on their own gang together? Mexico, Canada, and the United States are wealthy countries. Why gang up?

My guess is that wealthier countries are going to have to do a lot more cooperating if they want to host world-level events from now on, due to the fact that the selection process for these types of events has become democratized. Economist Branko Milanovic has a thoughtful piece on FIFA (the governing body for world-level soccer events) and corruption that ties in to all of this.