“Doux Commerce,” or the Peacemaking Power of Trade: Just a Dangerous Illusion?

Trade creates peace among nations, so wrote Montesquieu, Adam Smith, and Immanuel Kant—indeed all the optimistic enlightenment thinkers. Especially among modern, complex economies, a war of conquest destroys all wealth; thus, trade with such a country always brings more than war. But since February 2022, the trade relations between the West and the East, which had been built up for thirty years, have been going to pieces. Russia struck the blow by declaring war. Destruction, sanctions, and armament costs are now ruining everything in the West and East.

There is no longer any sign of cool calculation or of economic considerations of the kind that producers, trading companies, and foreign investors are accustomed to. Unfortunately, this is not the first time we have seen the madness of war against rational civic sense—far from it.

Supposedly Peacekeeping Trade Relations

Germany started the two world wars with no goal; the people in charge fantasized about it only after initial successes. The consequences were economically devastating, in the full sense of the word. While the Allied nations paid for both wars with bonds (the state wages war, the state pays), the autocratic Wilhelmine as well as the Nazi heads of state went to the printing press—everything was at the expense of their own people, who eventually became impoverished.

It is especially noteworthy that 1914 European society—accustomed to peace since 1815 and spoiled by an unprecedented economic upswing—had not thought war possible. The economic interdependencies of the “first globalization” were thought to be too interconnected. But the wars of Napoleon and his circle had already torn apart the supposedly peace-securing trade networks. The Continental Blockade, a kind of ‘supersanctions’ against England, was a means of war, and then dragged Napoleon’s giant army into the cold desert of Russia to enforce it. Louis XIV’s ongoing wars served to satisfy his hunger for land and dynastic glory; they ruined France as they did those who were attacked. The Seven Years’ War of Frederick the (so-called) Great, also destroyed value and created none.

Wars on Economic Grounds

Does this mean that wars have never taken place for economic reasons? Certainly not. Of course there have been wars for economic reasons, just not in favor of trade or investment relations. Rather, nations made war for the opposite reason: because of “not having,” or because no economic relations were at stake. Prior to the industrial age, genuine treasury robberies were often cause for war—after 378 A.D., barbarians were squeezing tons of gold outside the walls of Constantinople and Rome—other economic values could not be exploited in the plains, that is, in agrarian societies.

As a byproduct of expansions and wars in the industrial age, predatory instincts occasionally arose. Frederick’s robbery of Silesia in 1740 brought him an early industrial region. Or, even before the Anschluss of Austria, the executives of the Deutsche Bank listed the share packages that were up for grabs in the Vienna Creditanstalt-Bankverein. Göring built up a mega-corporation from looted companies. Bismarck took the prize of victory in the Franco-Prussian War of 1871 in the form of 5 billion gold francs in tribute and with the avenged land left by Louis XIV: Alsace-Lorraine.

Colonies were almost always conquered out of hope of economic gain. As Adam Smith noted, however, at that time England did not derive any net profit from them, but bore many costs. Therefore, he advocated for the release of all colonies. These colonies, according to his correct assessment, would then enthusiastically sign mutually profitable trade agreements with England, and ”doux commerce” would triumph. In our time, the economic historian Paul Bairoch (University of Geneva), who died in 1999, proved the net damage of colonies for the mother countries.

Capitalists Are Not Warmongers; Governments and Politicians Are

The economic interests of the USA in its foreign interventions since 1945 remain controversial. In Vietnam, the Americans were concerned with the long-term safeguarding of the market system against the slice-and-dice tactics of the communists (domino theory). On the other hand, if we attribute the oil interests in Iraq or mineral resources in Afghanistan as incentives for U.S. invasion, then this would assume they overlooked the fact that these two wars each cost about $1 trillion, which could never be recovered.

One has to completely dispense with the popular image of “capitalists” who sit in a room and concoct crises and wars for the sake of profits, as European leftists repeatedly assume. These big capitalists, unlike politicians, are indeed always calculating—and to the nearest decimal point—but that is precisely why peace is more profitable to them.

This seems to refute the doctrine of the peacekeeping “doux commerce,” but also the contrary doctrine that wars are only the continuation of commerce. Indeed, those who make commerce and those who make wars are not the same people!

The wars mentioned above were declared by the leading groups of the nations, and the motives starkly differ from those of the cold capitalist calculators in the companies. Ideologies played an outstanding role in the 20^th century—the communist revolutions throughout the world (especially in Asia), nationalism in the 19^th and 20^th centuries, according to which politicians promised to create nations unified according to language, people, and history. This especially led the Balkans before 1914 into almost forgotten wars, with consequences that are felt to this very day. This is also Vladimir Putin’s concern. He strives to make Russia great and to restore Russian territory to its peak. To this end, he promotes so-called philosophers, who in a mystical fashion affirm the superior greatness of the Slavs over Westerners, the latter having been corrupted by the Enlightenment and by their own decadence.

The doctrine of “doux commerce” (as well as the related doctrine of “capitalist peace”) thus proves to be an illusion—at least in the case of these governments that subordinate the economic side, or the prosperity of their country, to nationalist or imperialist zeal, ideological delusion, or the autocratic interests of maintaining power.

Is the West becoming Weak from Economic Progress?

Adam Smith already brought up this topic. It is always topical: If economic progress lulls a people into security and lets them wallow in pleasure, they lose the “warlike spirit,” and are content with standing, bought armies, and no longer make economic and personal sacrifices for their freedom. How true! Western Europe, for example, has relied on its economic ties with Russia, neglected armaments, and blindly trusted in “doux commerce.” The fact that other powers—from Russia to Iran to the Taliban and North Korea—have politicians  little concern for this  is something that has eluded Western Europe.

Authoritarian regimes wage wars with no regard for their people or voters. Their young men march, albeit without enthusiasm, because they are simply put in the trenches—shoot or die. The liberal Western nations, after all, mustered the necessary toughness for resistance in the 20^th century after a certain initial resistance. Today’s politicians would do better to familiarize the electorate with this prospect of the resistance that will again be necessary, instead of staving off problems such as oil prices, the rising cost of food, and the supply of energy to industry with ever new debts by simply financing through government.

In the face of China’s threats against Taiwan, this will have to be done quickly. Taiwan is also defined as a “breakaway province” from China’s territorial peak: like Russia’s Ukraine. Surprisingly, it is precisely the business sense of “doux commerce” that is currently working against a confrontation, as many companies are pulling their branches out of China, which suddenly seems geopolitically uncertain. These companies are shying away from the financial center there and looking around for other supply chains. Western investment in China is also falling significantly. Therefore, before one applies sanctions, one must show signal an economic penalty and hope it affects Beijing.

The Primacy of Freedom and the Superiority of Democratic Societies

However, as history shows, ideology and land grabbing have always been more important to autocrats. Leaders of liberal democratic governments should at any rate warn against this in advance—as well as credibly mark out and hammer down the stakes of resistance. For Western consumers, many things will become more expensive in the process, and supply chains could halt to a standstill. That is no reason to complain or even to fold out of weakness. Adam Smith saw it clearly: Cowardice is “mental mutiliation”! (The Wealth of Nations, Book V, Ch. 1).

Many cultural pessimists—along with Adam Smith—argue that prosperity makes us weaker. If we are to refute this thesis, then democratic Western societies must cultivate the economic drivers of prosperity (the market and private property) but still be nevertheless capable of valuing freedom, effort, and hardship more highly in an emergency. The Western reaction to the Russian aggression against Ukraine and the sanctions, which are also hurting the West, shows that this is not a lost cause, and so on the contrary, it should prove promising. Such measures are also a good start for discouraging the China from reaching for Taiwan in the future. In open societies, there is a chance of making only minor but correctable mistakes, whereas autocrats like Putin or Xi must always rule out entire bundles of possible solutions, be path-dependent, and make immense and irreparable mistakes.

Translation from German by Thomas and Kira Howes.