Thursday, October 27, 2005

Frederick List not Adam Smith!

Doug Brandow on Reasonline.com (‘free minds and free markets’) under the heading ‘A Capitalist Peace: markets, more than democracy, may be the key to preventing war’.

It begins: “…new research suggests that expanding free markets is a far more important factor, leading to what Columbia University's
Erik Gartzke calls a "capitalist peace." It's a reason for even the left to support free markets.

The thesis about markets versus democracy and peace is worth considering, but the use of words like ‘capitalist’ raise other questions, well rehearsed here.

Brandow continues:


“The capitalist peace theory isn't new: Montesquieu and Adam Smith believed in it. Many of Britain's classical liberals, such as Richard Cobden, pushed free markets while opposing imperialism.”

This is problematic. Given that ‘capitalist’ was first used in 1792, how did Smith ‘believe’ in it?’ (he died in 1790), let alone Montesquieu (‘Spirit of the Law’, 1748)?

"President George W. Bush's foreign policy is predicated on
the idea that spreading democracy will discourage war. But new research suggests that expanding free markets is a far more important factor, leading to what Columbia University's Erik Gartzke calls a "capitalist peace." It's a reason for even the left to support free markets."

Brandow almost gets the association correct between commercial markets and peace:


“The shift from statist mercantilism to high-tech capitalism has transformed the economics behind war. Markets generate economic opportunities that make war less desirable.”

We can agree with that – so could Adam Smith. The gap between ‘statist mercantilism’ and ‘capitalism’ (first used as a word in 1854) was well past the time of Adam Smith and Montesquieu.

Brandow could have referred to Frederick List’s work, “The National System of Political Economy” (1856) which argues his case for him, if only negatively: a shrill case against Adam Smith on free markets and free trade (with Smith’s well known caveats to the fore to show his ‘hypocrisy’) and the case of a German unification along pure nationalist lines which were to become embedded in the national consciousness of the German states, well articulated by List.That democracy does not guarantee peace is unarguable; that free markets do it better is accepted. That this had anything to do with Smith’s analysis of commercial markets (NOT capitalism!) is problematical to say the least.

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