Abstract

There are two basic ways in which economics may contribute to international peace. First, the Liberal Peace argument claims that increasing international interdependence through trade and finance rises the potential costs of war to a degree that makes warfare an irrational option of foreign policy. Moreover, it promotes international dialogue and economic growth which contributes to democratization and the empirically founded idea of the Democratic Peace. A second possibility is the use of superior economic and military power to harm an actual or potential aggressor’s economy and make him stop preparing or waging war, e.g. by blockade or economic sanctions. This paper provides a short, critical overview of the theoretical as well as the empirical and historical foundations and problems of these two common views of the economics-peace relationship. It is the preliminary version of an article to be published in the UNESCO Encyclopedia of Life Support Systems.