Economic freedom and conflict reduction: evidence from the 1970s, 1980s, and 1990s.

• Author: Tures, John A.

The last three decades have witnessed an unprecedented expansion of market-based reforms and the profusion of economic freedom in the international system. This shift in economic policy has sparked a debate about whether free markets are superior to state controls. Numerous studies have compared the neoliberal and statist policies on issues of production capacity, economic growth, commercial volumes, and egalitarianism. An overlooked research agenda, however, is the relationship between levels of economic freedom and violence within countries.

Proponents of the statist approach might note that a strong government can bend the market to its will, directing activity toward policies necessary to achieve greater levels of gross domestic product and growth. By extracting more resources for the economy, a powerful state can redistribute benefits to keep the populace happy. Higher taxes can also pay for an army and police force that intimidate people. Such governments range from command economies of totalitarian systems to autocratic dictators and military juntas. Other economically unfree systems include some of the authoritarian "Asian tigers."

A combination of historical evidence, modern theorists, and statistical findings, however, has indicated that a reduced role for the state in regulating economic transactions is associated with a decrease in internal conflicts. Countries where the government dominates the commercial realm experience an increase in the level of domestic violence. Scholars have traced the history of revolutions to explain the relationship between statism and internal upheavals. Contemporary authors also posit a relationship between economic liberty and peace. Statistical tests show a strong connection between economic freedom and conflict reduction during the past three decades.

Relevant Literature

Historical analysis of regime changes reveals that internal violence, whether it takes the form of a coup d'etat, revolution, rebellion, or war of liberation, occurs as a result of financial failures and administrative incompetence (Eckstein 1965; Kamenka 1970: 117). But as Leiden and Schmitt (1968: 42) point out, economic deterioration and decline alone do not produce a revolution. Analysis of the English, American, and French revolutions, in fact, indicates that those upheavals occurred largely because governments attenuated economic liberties (Davies 1970).

Current critics of economic statism find a connection between a government stranglehold on the economy and internal political violence. Amartya Sen (1996: 139) uncovers evidence that free countries do not experience famines. Unfree governments, on the other hand, have used famines to weaken opponents, as the Sudanese government of Lt. General Umar al-Bashir has done to the Christian Animists.

In addition to critiquing the ills of economically unfree governing systems, modern writers also praise the benefits of commercial freedom. Sen (1999: 16) contends that economic growth emerges more from a friendlier economic climate than a harsh political system. Barbara Crossette (1997: 200) finds a relationship between the economic growth attributable to globalization and peace. During times of peace, people are free to plant crops, develop crafts, and otherwise channel their energies into economic activities. She cites Stanford economist Gavin Wright, who also finds a connection between globalization (in the form of unregulated transfers of technology) and peace. Michael Klare (2001: 23) also argues that global market forces have encouraged the nonviolent resolution of conflicts. People are realizing that the economic benefits of compromise are greater than the likely costs of war.

Research Design

To test the association between economic freedom and conflict, I begin by operationally defining those terms. To represent the dependent variable "conflict," I employ the KOSIMO data set from the Heidelberg Institute for International Conflict Research (1998-99). The Heidelberg Institute defines conflict as "the clashing of overlapping interests (positional differences) around national values and issues (independence, self-determination, borders and territory, access to or distribution of domestic or...