The below is taken from the Globalization Institute:
Economic freedom is the key to prosperity. Many persist in regretting this equation, but few now doubt its truth. But classical liberals also argue that economic freedom causes peace, and now comes new evidence that the causal link between economic freedom and peace is real, and significant.
Economic freedom is almost 50 times more effective than democracy in diminishing violent conflict between nations, according to the Economic Freedom of the World: 2005 Annual Report, released today by The Fraser Institute.
In new research published in this year’s report, Erik Gartzke, a political scientist from Columbia University, compares the impact of economic freedom on peace to that of democracy on peace.
Says co-author James Gwartney:
Researchers have long known democracies go to war about as often as other nations but tend not to go to war with each other. However, stable democracies typically have strong levels of economic freedom, leading to the question of whether it is democracy or economic freedom that affects the probability of violent conflict.
So, which is it, democracy or economic freedom?
When measures of both economic freedom and democracy are included in a statistical study, economic freedom is about 50 times more effective than democracy in diminishing violent conflict. The impact of economic freedom on whether states fight or have a military dispute is highly significant, while democracy is not a statistically significant predictor of conflict.
Nations with a low score for economic freedom (below 2 out of 10) are 14 times more prone to conflict than states with a high score (over 8). The overall pattern of results does not shift when additional variables, such as membership in the European Union, nuclear capability, and regional factors, are added.
I look at China now and see a country embracing capitalism - some of the leaders may be doing this in order begin a war - but by the time they are able to fight they will not want a war because of capitalism. Why? Capitalism leads to democracy and democracies don’t go to war against one another. This is not just empirically so but it makes sense theoretically, after all, in war the people suffer. China is going through a process just like the USSR in the late 20th century did and the West did in the late 19th and early 20th centuries. Thus China will have both economic freedom and democracy diminishing the chances of war. It is already moving fastly in the direction of the former, the latter is a matter of time.
Also philosophically I think the world is doing rather well relatively speaking. Keynesism is dead, nationalism is weak and globalization is increasing all the time, for example the EU will abolish many quotas in a few years. We are in the second Golden Age - massive tranfers of money occur, war is far less rife than it was, say 80 years ago, communism is dead, left wingers are being defeated, for example Germany, and a HUGE market is opening (China) who many believe will be the next USA.