War Peace and Trade The Effect of Trade on Nations Prosperity

How Trade Has Affected Societies

Trade has tended to bring about peace more often than not. However, to control trade, nations have been willing to go to war. Thus, trade can be seen as a double-edged sword—one that cuts both ways throughout history from the time of the Silk Road to now. Trade can cut one way towards peace, and the mere fact that trade can be so lucrative and that control of trade routes means control over a great many nations has also meant that trade can lead to war when one nation feels it is in its own best interests to assert itself. This paper will show how trade has affected societies for 2000 years by being the motivation for both peace and war.

The Silk Road was an ancient trade between the East and the West that existed from approximately the second century BC to the 15th century AD. Silk was a commodity that the East had to offer in abundance and it was much desired in the West. While war and peace can be seen throughout all those centuries in which the Silk Road persisted, one fact never changed—trade helped to develop nations. Commodities such as silk and spices were not the only things to trade hands; ideas, religions, and technology did as well. Trade allowed different people from different societies to connect, share information and goods, and learn from one another. In many cases, trade promoted and fostered peace because so many stakeholders had an interest in peace thanks to the benefits that peace could bring to trade.

One of the first instances of this, for example, is the Pax Romana that the Roman Empire implemented in the first century AD (Khan Academy). It lasted for nearly 200 years and during that time there were very few wars. What the Han dynasty in China understood was the same that Rome saw: peace bred stability which bred prosperity via trade. As Adam Smith would explain several centuries later, nations that are good at producing something will naturally find it in everyone’s best interests to be on a good fitting with other nations so that they can trade what they are good at producing for what the other nations are also good at producing.

Buddhism, which originated in India, spread to China thanks to the Silk Road. Today, Buddhism is often associated with China, even though that it is not where it originated. This is but one example of how nations become well-known for something that did not even originate with them. Tomato sauce coming from Italy is another example—tomatoes are not native to Italy but were brought there through trade with the Americas. Thus, one could argue that Italian food actually came from America. That of course would not happen until after 1492, when Columbus would sail West to find the Indies and discover by accident the Americas.

Controlling not only the Silk Road through the Middle East but also the resources that were so valuable to trade became an important issue throughout the Middle Ages. The rise of Islam brought about various wars as groups sought to close or open the various trade routes. When Byzantium learned how the silk worm produces its silk, the monopoly on silk that China enjoyed came to an end—it was no longer able to control the resource, and thus dependence upon China as a trade partner came to a momentary halt. The control of resources has always been a factor in how trade impacts the world. When one part of the world controls important resources—such as oil or gas or rare earth metals—it makes other parts of the world dependent upon them, and that can lead to war especially if those other parts of the world are unwilling to adopt a dependent posture. WW1 and WW2 in the 20th century were every bit about securing access to the Middle East, what with the British Empire undermining the Ottoman Empire and its alliance with Germany: England allied with the House of Saud against the Ottomans and the rest is history. WW2 saw a rejuvenated Germany imposing its will in a way that made England, France and Soviet Russia uncomfortable. A strong Germany would mean that trade dominance by England would always be threatened.

Even after WW2, the Korean and Vietnam Wars showed the extent to which trade could lead to war. The US had risen in the aftermath of WW2 to be the de facto world power alongside Soviet Russia. Containing Russia thus became a top priority. Russia was exporting ideology at the time—Communism—and the US was not willing to see the trafficking of this socioeconomic ideology. It wanted it stopped and in Vietnam it aimed to suppress it and prevent it from spreading throughout Asia. It failed horribly. It took root in China and spread to the Americas and to Africa. This example shows how difficult it is to control trade and how when trade prompts a nation to go to war it often ends in failure.

However, when nations see the opening of trade routes as a good thing, they can prosper. Of course, it all depends upon what one does over the course of the trade (more shall be said on that momentarily with respect to Nixon’s opening of trade with China in the 1970s). First, an earlier example of how the opening of trade can facilitate peace and prosperity is in order. This was what happened at the dawn of the Renaissance era when the Mongol invasion opened up previously closed trade routes between the East and the West.

The Pax Mongolica, like the Pax Romana that preceded it by some 15 centuries, reopened trade routes that had been closed as a result of various states fighting for control of trade posts along the Silk Road. The Mongolian Conquest effectively brought new ownership and thus stability to these trade posts, which in turn facilitated a new era of exploration. Marco Polo was soon off to explore Eurasia, and a great transfer of wealth, knowledge and power followed. Wealth flowed into Italy as a result of its traders having the most access to the reopened trade routes. This wealth meant that Italian families could wield more political power and influence than before. Issues of investing, banking, usury and so forth became major ones and suddenly the once greatly marginalize Jewish community found itself more and more in demand as a result of the need for elite families to see that their money was managed adequately (Jones).

Christendom, which up to that point had resisted usury as the Church deemed it a grievous offense against God, now began engaging in it; and that miscalculation fueled the anger of various Protestant voices, which then helped to tear the unity of Europe/Christendom into tatters. If one follows the dominoes as they tumble one can see a direct link between the cycle of effects that trade has on societies: first, it is opened, and societies flourish; however, if societies alter too much it risks destabilization; when destabilization occurs, various states vie for power and control of resources; they seek to control trade routes as trade is viewed as the secret to their power in the first place. Thus, by 1492, as the Protestant Reformation was getting ready to go full steam ahead, Columbus set sail under the Spanish flag for God, gold and glory. That ushered the new era of the modern world. The Industrial Revolution threw that world into warp speed and made it seem much, much smaller. Jumping forward once more to the 20th century and one can see how the ultimate effect of trade on societies has led to an insistence by the West on a zero-sum game, while nations like China and Russia seek a more balanced multi-polar world in which various nations share in the power that the globalized world affords (Hebron and Stack).

Nixon’s opening of trade with Communist China was the first step in ending a hostile approach by the US towards stifling the self-determination of nations by attempting to restrict their influence in the trafficking of ideologies. It was meant to be seen as a positive step for capitalism. However, the problem that emerged, particularly in the 1990s was that the US began exporting labor, offshoring jobs so that companies could cut costs by hiring cheap labor in Asia. This effectively killed manufacturing in the US. China became the dominant producer of goods in the world and it did so on the cheap. Its economy grew while the middle class in the US began to shrink. In the 21st century, Trump has called on US companies to bring manufacturing back to the US and has initiated a trade war with China for this reason.