World Policy Journal
Volume XV, No 3, Fall 1998

CODA: The Deceitful Dream

By James Chace

Despite the turmoil that seems to exist in much of the world at the end of the twentieth century—“the century of total war,” as French sociologist Raymond Aron called it—the prevailing wisdom in America seems to be that free markets and democracy will bring about peace and prosperity. If only the poor benighted Albanians, Afghans, and Arabs could modernize their economies, all might be well. If only unstable Russia were able to fully privatize its economy and collect its taxes, prosperity would follow and a stable, happy people would threaten no one.

It seems demonstrable that free markets do eventually produce a greater degree of well-being than centralized, planned economies. If countries can survive the often radical therapy required to bring them into a market system, in time a more prosperous populace is likely to emerge. Then there is the question of democracy. Are democracy and market capitalism together the recipe for happiness? Following in the footsteps of Immanuel Kant, many American scholars now believe that democracies do not make war on one another, and therefore, perhaps as Kant envisaged, we can look forward to an age of “perpetual peace.”

In short, democracy—usually interpreted in this country to mean free elections, freedom of speech, and freedom of worship—linked to the magic of the free market will bring not only prosperity but peace among nations. But is this so? Will China and Russia, someday rich and stable, Russia already a democracy, China presumably on a democratic path, behave in a benign fashion? Or, as The Economist recently suggested, will they turn malign? According to a study by the Los Angeles-based RAND Corporation, malignity will occur only if they fail economically.

The American Founding Fathers, however, did not believe that prosperous republics were necessarily peaceloving. In The Federalist (VI), Alexander Hamilton inveighed against those who believe in the possibility of perpetual peace among states. “The genius of republics (say they) is pacific; the spirit of commerce has a tendency to soften the manners of men, and to extinguish those inflammable humors which have so often kindled into wars.” But, he asked, “have republics in practice been less addicted to wars than monarchies?... Are not popular assemblies frequently subject to the impulses of rage, resentment, jealousy, avarice, and of other irregular and violent propensities?”

Hamilton points out that “Sparta, Athens, Rome, and Carthage were all republics; two of them, Athens and Carthage, of the commercial kind. Yet they were as often engaged in wars, offensive and defensive, as the neighboring monarchies of the same times.” In (for Hamilton) more modern times, Venice, Holland, and Britain were all great trading powers, and all were engaged in “furious contests” for domination of the seas. In Britain in particular, where “the representatives of the people compose one branch of the national legislature...few nations, nevertheless, have been more frequently engaged in war; and the wars in which that kingdom has been engaged have, in numerous instances, proceeded from the people.”

Hamilton, believing his case proved, asks Americans not to suppose that we are exempt from the imperfection of other societies. He implores us “to awake from the deceitful dream of a golden age and to adopt as a practical maxim for the direction of our political conduct that we, as well as the other inhabitants of the globe, are yet remote from that happy empire of perfect wisdom and perfect virtue.”

But that does not mean that Americans should not continue to espouse the blessings of democracy, which must include the institutions of liberty (the rule of law, the checks and balances that prevent demagogic parliaments and despotic leaders from exercising decisive control over events), as well as the free market. If Hamilton were with us today, he would surely exhort us to endorse these policies.

Therefore, even while we should admit that we are indeed not free of “the evils incident to society in every shape,” we can nonetheless strive, both for ourselves and for others, to achieve a model of a free economy tempered with social justice and social democracy. This may not bring about perpetual peace, but it is a realist policy with strong moral underpinnings. And it is in the American grain.