Observing the Capitalist Peace: Examining Market-Mediated Signaling and Other Mechanisms

Bluff to peace: How economic dependence promotes peace despite increasing deception and uncertainty

“…Further research, such as an experimental design, can provide a closer look at the informational mechanism. Second, given that states and leaders typically seek to impose asymmetrically higher costs on an adversary while reducing or avoiding costs on themselves (Dafoe and Kelsey, 2014; Gartzke and Westerwinter, 2016), an important question in order is how does imposing asymmetric costs affect the prospect of peace? 33 That is, there are two opposing forces: (a) reducing one’s economic pains reveals lack of resolve, incentivizes resistance, and stokes conflict; and (b) imposing higher economic costs on a target induces concession and suppresses conflict.…”

“…The variable b 1 resonates with the theory of costly signaling (Gartzke et al, 2001; Morrow, 1999; Reed, 2003a): State 2 is coerced by an informative threat because self-inflicted costs improve credibility. Analogously, b 2 echoes the reasoning of opportunity costs (Polachek and Xiang, 2010; Dafoe and Kelsey, 2014): State 2 concedes to a threat that capitalizes on her economic vulnerability (even though it is less credible). Each theory underscores either the informational or coercive function of economic dependence.…”

“…However, it is critical to the further development of the literature not least because it can undermine the overarching theme of trade’s pacifying effect. In addition, recent studies also emphasize that imposing costs is a more common practice than inflicting costs on oneself, thereby casting doubt on the underlying logic of costly signaling (Dafoe and Kelsey, 2014). Lastly, it also addresses one area that the opportunity costs theory has overlooked—the issue of incomplete information, which formal theories have identified as a key cause of conflict (Fearon, 1995; cf.…”

“…Explaining whether and why this incentive to coerce and deceive stokes or reduces conflict is critical to the further development of commercial liberalism. Above all, this question speaks to the overarching theme of trade’s pacifying effect and the ongoing debate between the opportunity costs and costly signaling theories in the field (Gartzke et al, 2001; Dafoe and Kelsey, 2014). Building on a crisis bargaining model, I argue that economic dependence can still promote peace despite producing a higher likelihood of deception and uncertainty.…”

Money Talks: Finance, War, and Great Power Politics in the Nineteenth Century

“…First, the theoretical argument discussed in the preceding text expects that in some scenarios wars do not emerge and would thus be missed by methodologies that focus only on observable wars. Second, a case design allows the analysis to distinguish between signaling mechanisms and constraining mechanisms, effects that are not easily separable in noncase methodologies (Dafoe and Kelsey 2014;Schultz 1999).…”