Books Discussed in This Review Essay

Political scientists and economists have long been interested in the role of special interests in the policymaking process. Scholars frequently portray special interests as motivated actors with specific policy preferences who lobby politicians to advance them. Such a focus on lobbying by interest groups was the hallmark of the pluralist perspective championed by Truman, Dahl, and others that was extremely influential within political science during the 1950s and 1960s.Footnote ¹ Although the salience of lobbying never disappeared within political science, the pluralist perspective eventually came under sharp attack and faded in salience after the 1960s.Footnote ² From the 1970s through the early 1990s, many of the most prominent theoretical analyses of lobbying by special interest groups were written by economists. Some of the most influential works of political economy from the twentieth century take exactly this approach: Stigler's analysis of how firms influence the structure of regulation, Becker's examination of how competition for political influence among interest groups affects subsidies and taxes, and Grossman's and Helpman's study of how contributions by special interest groups influence the structure trade of protection.Footnote ³ Eventually, theoretical interest in lobbying became reignited within political science, with a wave of studies emerging over the past quarter century emphasizing that special interest groups have the potential to alter policy outcomes by providing information, campaign contributions, or other valuable resources to politicians.Footnote ⁴ Scholars have emphasized that lobbying can influence either by altering the positions of opponents or shoring up natural allies.

In the political science literature on lobbying, most recent attention has come from scholars of American politics and comparative politics.Footnote ⁵ In light of the great prominence of lobbying within the economics literature on trade policy, it is not surprising that there are a number of studies within the international political economy literature on the domestic determinants of foreign policy that also highlight lobbying as an influence on international economic policies.Footnote ⁶ At the same time, there has long been a dearth of studies that specifically examine lobbying by special interest groups within the security subfield, although the controversial recent book by Walt and Mearsheimer examining the Israel lobby has certainly brought increased attention to this dynamic in recent years.Footnote ⁷ As a result, there is still much scholars do not know about how and whether lobbying by special interest groups influences security affairs.

In this analysis, I aim to contribute to the base of knowledge regarding economic actors' potential lobbying influence on the prospects for war and peace. Economists as well as many political scientists often focus on the political role of economic actors—which includes firms, owners of firms, financiers, entrepreneurs, banks, and other private financial institutions—in part because, as Stigler puts, “many, many industries fulfill in good measure the small number condition” that is conducive to collective action.Footnote ⁸ By pursuing lobbying objectives that favor them, economic actors are seen as having the potential to secure benefits for themselves, perhaps at the expense of the collective interests of the public and/or other economic actors that are less able to engage in effective lobbying.Footnote ⁹ For the field of international relations (IR), this brings up an important question that has long been neglected in the literature: If lobbying by economic actors can have an influence on economic openness and other international economic policies, is the same true for security policy?

For many centuries, analysts have posited that the foreign policy preferences of economic actors can have a great influence on security affairs; Adam Smith, Joseph Schumpeter, and Vladimir Lenin are some of the more prominent thinkers who have posited this.Footnote ¹⁰ But these earlier analyses lacked empirical backup for such assertions; until recently, there have been few analyses that provide systematic examinations of whether and how economic actors have a general influence on the prospects for war and peace. A series of interesting analyses appeared in the 1990s and early 2000s examining a variety of ways in which domestic political economy and security issues interact, but none of them specifically direct their attention to whether lobbying by economic actors can have a general influence on the likelihood of conflict.Footnote ¹¹ And although a large literature exists on how trade influences the likelihood of conflict, McDonald correctly notes that there has long been a dearth of research on “the mechanisms by which the economic interests of private individuals exposed to international markets get translated into public policy that support either war or peace.”Footnote ¹²

In the past few years, three important new books—by Kirshner, McDonald, and Narizny—have moved toward filling this void in IR scholarship. Each of these three books, respectively published by three of the top university presses in IR, argues forcefully that the lobbying activities of economic actors have an important influence on the prospects for war and peace. Collectively, they present a powerful argument in this regard.

Kirshner meticulously examines the foreign policy preferences and behavior of a particular economic actor—finance—that had been lumped together with other business groups. Through a series of detailed case studies, he concludes that whether finance is politically dominant relative to other economic actors is critical since only “the financial community has a strong and general interest in the preservation of peace” and will thus consistently push against war.Footnote ¹³ As for McDonald and Narizny, they both undertake the kind of analysis of security behavior that Mansfield and Pollins argued a decade ago was desperately needed: “addressing which groups in society benefit from international markets, which groups are harmed by commercial openness, and the political influence of these respective segments of society.”Footnote ¹⁴ McDonald stresses that “because international trade redistributes income within society, it simultaneously creates conflicting pressures for and against more open commercial policies. This domestic conflict implies that gains from trade accruing to an economy as a whole will not necessarily translate into uniform lobbying pressures from society for the promotion of trade and peace.”Footnote ¹⁵ Through an examination of a wealth of statistical evidence across a wide historical period as well as a series of detailed case studies, he concludes that the capacity of globalization to promote peace does ultimately depend on whether “the beneficiaries of open, global markets possess disproportionate political influence.”Footnote ¹⁶ In Narizny's case, he specifically highlights the particular geographic destination of exports and foreign direct investment (FDI) to explain foreign policy variation. The key issue for Narizny is the balance of power between “domestic interests” (economic groups that do not depend on the global economy), “core interests” (economic groups that export to the great powers or have investments there), and “peripheral interests” (economic groups that export to peripheral states or have investments there). Through an examination of the United States' and Britain's experience in the pre–World War II era, he argues that domestic interests push for isolationism, core interests advocate for internationalism, and peripheral interests push for either imperialism or interventionism.

Thus, although the particulars differ, all three books have the same overall conceptual argument regarding economic actors' influence on the prospects for war and peace: what ultimately matters is the domestic political balance between economic actors who have a strong vested interest in pushing for peace versus those that do not. At first blush, it might seem entirely reasonable to accept the overall conclusion from these three books that lobbying by economic actors does matter in security affairs. Yet the literature on lobbying in American politics provides some basis for being skeptical: a number of recent analyses cast doubt on the notion that lobbying consistently has a significant influence on U.S. domestic policymaking.Footnote ¹⁷ Indeed, in the eyes of some scholars, the evidence is now sufficient to conclude that lobbying really does not have much influence in American politics.Footnote ¹⁸ For the IR field, the relevant takeaway from this literature in American politics is that it is wise to cast a skeptical eye toward the notion that lobbying by economic actors is influential in security affairs.

I advance two arguments regarding security lobbying by economic actors. At least among the advanced states, I posit that there are no longer any economic actors who will be favorable toward war and who will lobby the government with this preference. All of the identified mechanisms that previously contributed to such lobbying in these states have been swept away because of the end of colonialism and the rise of economic globalization. My second argument concerns those economic actors in advanced states with a preference for peace. I posit that it has become unnecessary for them to directly lobby the government to avoid war on economic grounds because economic globalization—the accumulation of decisions by economic actors throughout the globe—now has sufficiently clear economic incentives for leaders. In sum, my overall assessment is that these authors were once right that the security-lobbying activities of economic actors in advanced states had a significant, direct influence on the likelihood of war, but this is no longer the case. Perhaps the fundamental limitation of these three analyses is that they are static and do not sufficiently grapple with whether, or how, changes over time may influence their conclusions regarding the significance of security lobbying by economic actors.

Before proceeding to the analysis, a few brief clarifications are in order. Although both of my arguments can conceivably be applied generally to all states, I focus only on the kind of economically advanced states that these three books concentrate on; I do so to keep my analysis comparable with these analyses and because these states have the greatest capacity to project military power overseas. Regarding the dependent variable, I focus on the occurrence of war and peace and not the overall nature of security policy. The independent variable is lobbying by economic actors. By lobbying, I mean the situation in which domestic actors have preferences they seek to actively make known to policymakers to influence their decisions. If economic actors have preferences regarding war and peace (or anything else) but do not make them directly known to policymakers in some fashion, then no lobbying has occurred. I focus on the political behavior of firms, owners of firms, financiers, banks, and other private financial institutions that specifically undertake “economic” activities in the marketplace. This excludes elements of the government that deal with economic issues (which is prominent in portions of Kirshner's analysis but is not a focus of the other two books). This also excludes the “military-industrial complex” (which Narizny deals with to only a slight degree and neither of the other two books analyzes). Since the military-industrial complex actually contains members of the government within it (it includes legislators, defense officials, and defense firms) it would be a conceptual stretch to consider it as engaging in lobbying.Footnote ¹⁹ Moreover, even the nongovernmental portion of the military-industrial complex—defense firms—is focused on selling weapons and other military-related goods and services directly to the government, and thus has different motivations and faces different incentives compared to economic actors who are squarely focused on serving the private marketplace.

A final point to clarify is that it might seem from this discussion that my analysis completely undermines the three books in question. That is hardly the case. With respect to Kirshner's book, my examination is really not damaging at all: as will become clear, I see his fundamental argument—that the actions of finance are a positive force for peace—as still being valid but just for different theoretical reasons than he posits. McDonald's book has the widest scope of the three examined in this article; indeed, it is one of the most sweeping empirical books that has appeared in the IR field in the past ten years. My analysis focuses on only one of the two core theoretical mechanisms he delineates for how economic factors can influence the likelihood of conflict (I do not analyze his argument about how levels of public property ownership in a society can influence the prospects for war and peace). Moreover, McDonald advances a weighty critique of the democratic peace (perhaps the most important critique of this theory advanced in the literature so far) that my analysis also does not bear upon. As for Narizny, his book is historically focused: his cases are all from before World War II and his theoretical framework is very much geared toward the particular features of that era. There are strong reasons to doubt that Narizny's theoretical framework and findings have applicability for the present day; yet this is an issue that bears on only the last portion of his concluding chapter, not the heart of his analysis. In sum, the analysis does not undermine my assessment that these are important books and my recommendation that anyone interested in understanding how economic factors influence security affairs must grapple with them.

The analysis has five sections. The first three sections bear on my first claim (that no economic actors in advanced states will lobby for war) while the fourth section bears on my second claim (that it has become unnecessary for economic actors who favor peace to lobby the government to avoid war because of economic globalization). The first section will critically examine the empirical case that these three books present for the presence of economic actors acting as a lobby for war. The second section will then delineate the five theoretical mechanisms they collectively forward for why some economic actors sometimes see using military force as being advantageous and analyze their potential relevance for the present era. As I will discuss, most of these mechanisms are applicable to the “colonial era” only (that is, the period in which formal colonial control was prevalent throughout much of the developing world) but two of them could potentially be relevant today. In the third section, I then argue that these two remaining potentially relevant mechanisms do not, in fact, apply today because of recent changes in global economy. In so doing, I develop a general theory for why the current structure of the global economy now makes it feasible for FDI to serve as an effective substitute for conquest in a way that was not possible in previous eras and then delineate the empirical evidence that bears on this theory. The fourth section then argues that the incentives created by globalization have altered the significance of lobbying efforts by economic actors who favor peace. The concluding section delineates the implications of the analysis and outlines the specific circumstances in which security lobbying by economic actors in advanced states could potentially become significant again.

Assessing the Empirical Baseline: Do Economic Actors in Advanced States Still Lobby for War?

What do these three books tell us about the existence of lobbying for war by economic actors in advanced states? At first blush, Kirshner's argument seems to imply that finance will always oppose war. However, his specific claim is actually more nuanced: he notes that it is “a relative argument—the claim is not that finance will always oppose war, but rather that, as a general rule, finance will be among the most cautious and reluctant to risk and initiate war.”Footnote ²⁰ Although Kirshner does not explore this point, his argument leaves open the possibility that finance may actually be in favor of certain wars. Of critical importance here is the median view of a prospective war. If the vast majority of a state's population and interest groups are extremely favorable toward war, then it is possible that finance could have a positive attitude toward war and yet nevertheless still be relatively more cautious: if others are, say, at a nine out of ten on a scale of war favorability, then finance could still count being relatively more cautious if it stood at an eight. One wonders, for example, about the attitude of U.S. financiers toward initiating the war in Afghanistan in 2001 in the aftermath of 9/11: Were they really against the war, or just not as much in favor of it as others?

This line of argument notwithstanding, Kirshner's empirical findings reveal that although finance might actually approve of some wars, this support is likely to remain tacit and it is extraordinarily unlikely that it would ever lobby in favor of war: again and again across different contexts, he shows compellingly that finance does not have anything to gain from war (and instead invariably has much to lose). Thus, although finance may not always act to put the brakes on war—when the current strongly pushes toward war, finance may well be swept up in it and go along for the ride—his analysis is convincing that finance will never hit the accelerator and actively lobby for war to advance its interests. Based on Kirshner's analysis, it thus seems reasonable to conclude that finance will either stand on the sidelines or act against war, but will never lobby for it.

Narizny's book presents little in the way of direct evidence that some economic actors actually lobbied for war (or for peace, for that matter). He focuses on specifying the foreign policy preferences of economic actors on the basis of their export and FDI profile and on tracing whether the variation in these preferences corresponds with shifts in foreign policy behavior; yet whether these economic actors actually entered the political realm and act on the basis of these preferences—and in turn, whether this influenced policy—is something that he seeks to demonstrate only indirectly.Footnote ²¹ Whether one can use his methodology to establish that consequential business lobbying for war ever existed depends crucially on the strength of the alternative explanations that he considers. In this regard, Narizny's analysis has three notable limitations.

First, he frequently argues that if foreign policy cannot be explained by realism, this means that pressure from economic actors must have existed and decisively shaped policy.Footnote ²² Yet one would have reason to conclude that this is the case only if realism provided a sufficient, or at least the best, alternative explanation to his thesis. Second, he sometimes notes that economic actors' foreign policy attitudes regarding war shifted in response to changes in the circumstances surrounding the potential war in question—notably, whether the war seemed more likely to occur or more likely to be one that could be won quickly.Footnote ²³ Because Narizny does not consider this dynamic systematically, one is left unsure about whether it occurs only sometimes or whether it is always, or predominantly, the case that economic actors' preferences are endongenous, at least in part, to the likelihood of war and/or its expected ease. Third and finally, Narizny sometimes notes that foreign policy leaders acted in ways that proved helpful to economic interests without considering whether such action would have occurred regardless of how it influenced the fortunes of economic actors.Footnote ²⁴

McDonald's book does present a significant amount of direct historical evidence that certain economic actors sometimes lobbied for war. However, there are three reasons the nature of this evidence leads one to question the notion that any economic actors in advanced states are likely to lobby for war in the present day. First, in the historical cases he identifies in which some economic actors called for war, the examples he points to are invariably not generalizable and/or concern dynamics that have no relevance for today. For example, he notes that some U.S. commercial interests called for war as a mechanism for pushing the United States off the gold standard,Footnote ²⁵ preserving the specific structure of tariffs on industrial goods that existed at the time,Footnote ²⁶ preventing an African-style colonial competition in Latin America that excluded the United States,Footnote ²⁷ ensuring that Britain did not control key commercial waterways in Latin America,Footnote ²⁸ and blocking British access to Latin American markets.Footnote ²⁹

Second, in some of the cases where he posits a link between economic issues and war, it does not seem the economic factors in question actually have much to do with decisions about conflict. For example, he notes that high protectionist tariffs on Russian grain were one factor among many that contributed to poor relations between Germany and Russia, but does not indicate that these protectionist barriers themselves, or firms' reactions to them, were a key direct contributor to the outbreak of hostilities between them.Footnote ³⁰

Third, in his only post–World War II case (which concerns the relationship between China and Taiwan) the variation between economic actors appears to be not between those who favor war versus those who favor peace; rather, some groups favor peace while others are essentially neutral—in other words, they are best seen as “not pushing for peace.”Footnote ³¹ In turn, these neutral groups do not seem to have this preference because of their economic characteristics, but rather because of other reasons.Footnote ³²

Preferences: Analyzing Why Economic Actors May Sometimes Lobby for War

My overall assessment is that these three books provide no basis for concluding that lobbying for war has occurred anytime recently in advanced states or is likely to occur in the future. Beyond the empirical baseline the books present, another question concerns the theoretical case they forward for why some economic actors can sometimes have incentives to lobby for war in order to advance their economic interests—something they all argue is the case not just in the past but in the present as well. The next two sections analyze the relevant general mechanisms these books identify, revealing that none of them appear relevant for the contemporary era.

Because Kirshner's book focuses on finance's lobbying activities regarding war, he does not explore why other economic actors can sometimes have an interest in favor of war but instead merely posits that this is the case.Footnote ³³ McDonald and Narizny do focus significantly on this question; between the two of them, they identify five potential mechanisms that can lead some economic actors to sometimes have an incentive to lobby for war:

1. 1. Uncompetitive industries will favor using military force in some circumstances to annex territory to create “colonial monopolies.”Footnote ³⁴

2. 2. Internationally competitive industries will favor the use or threat of military force in some circumstances to prevent other countries from setting up exclusive economic zones in foreign markets that are potential export markets for these firms.Footnote ³⁵

3. 3. Uncompetitive industries will sometimes support military conflict to slow imports; as McDonald notes, “by slowing imports, military conflict raises the domestic price of traded goods and enables import-competing firms to expand their domestic market share.”Footnote ³⁶

4. 4. Raw materials industries will sometimes favor the use of military force in order to allow them to secure supplies of minerals and raw materials.Footnote ³⁷

5. 5. Industries with foreign direct investment overseas will sometimes favor the use of military force in the peripheral world to protect their business interests from instability (coups, civil wars, and ethnic unrest) that threaten to disrupt in their commercial activity.Footnote ³⁸

It does not seem that any of the first three mechanisms are now pertinent. The first two mechanisms would seem applicable only during the period in which formal colonial control was prevalent throughout much of the developing world (that is, the period prior to the mid-1960s). As Rosecrance underscores in his path-breaking work, we no longer live in a world where seeking to augment the amount of territory that a country controls is a compelling strategy for wealth creation. He notes that once states moved beyond the era of formal colonial control, they no longer had reason to fear that their economic access to certain markets would be blocked by others who use political control to establish an effective economic monopoly.Footnote ³⁹

The third mechanism does not seem plausible under any circumstances, especially today. For one thing, war may not slow imports, especially for large states and/or states that fight limited wars. There are also many other mechanisms for limiting imports that are less costly, more likely to be effective, and face fewer political barriers to enact.

As for the fourth mechanism, it seems less plausible today for some of the same underlying reasons that Rosecrance emphasizes in his analysis: in a world in which trade is “relatively free and open, [states] do not need to conquer new territory” but can instead use “trade to acquire raw materials.”Footnote ⁴⁰ Although the relatively open nature of the global economy does make it easier to use trade as a substitute for conquest, trade is no longer the most important integrating force in the global economy: “Trade flows are still very important; today, however, international production by the massive number of MNCs (65,000 with 850,000 affiliates) is now a much more significant driver of commerce… All estimates reveal that the globalization of production now significantly outstrips trade as an organizing feature of the global economy.”Footnote ⁴¹ In today's world FDI, not trade, is frequently the preferred means for firms to serve foreign markets and access foreign supplies, including raw materials. Given that key importance of FDI for securing raw materials, does this mean that the fourth mechanism may still have some validity today?

This question relates directly to the fifth and final mechanism. Narizny is certainly correct that threats to FDI holdings can potentially lead to conflict: in his systematic 1935 book, Staley recounts numerous instances in which threats to FDI holdings led to lobbying by firms for protection, thereby contributing to the use of military force by powerful states against developing states in the nineteenth and early twentieth centuries.Footnote ⁴² But does this dynamic still exist today, or has it become possible for FDI to now serve as an effective substitute for conquest? Analyzing this question is the purpose of the next section.

Is It Now Structurally Easier for FDI to Serve as a Substitute for Conquest?

The takeaway of the previous section is that three of the five identified general mechanisms for why economic actors might lobby for war do not appear valid today because of the end of colonialism, while the potential applicability of the remaining two mechanisms hinges on whether FDI can now serve as an effective substitute for conquest in the same manner that many scholars argue is the case for trade.Footnote ⁴³ Some of my earlier work briefly addresses this question and posits that this is indeed the case:

But what causes a state to sometimes be more able to rely on FDI to secure what it needs from abroad? More specifically, does the current structure of the global economy now make it feasible for FDI to serve as an effective substitute for conquest in a way that was not possible in previous eras? I previously suggested the answer is yes, but did not present the underlying theoretical logic in a systematic manner. Below I delineate a fully developed theory—termed the “FDI conquest substitution theory”—for why this is the case. The essence of the theory is captured by the figure, which I will now explain in more detail.

On the far left-hand side of Figure 1, the increased ease and greatly lowered cost of both transportation and communications in today's era are well known: for example, the cost of a telephone call from New York to London has decreased since 1930 by a factor of 1,500.Footnote ⁴⁵ In turn, the increased opportunity cost of closure to FDI is also a well-established fact. To put it simply, states that close themselves off to multinational corporations (MNCs) will have greater difficulty remaining technologically competitive and securing adequate access to capital.Footnote ⁴⁶

FIGURE 1. FDI conquest substitution theory

Moving rightward to the next set of boxes in the chart, the general response of states to these powerful new incentives is also well established. First, states have generally rushed to change their policies to make themselves more attractive investment sites for MNCs: the vast majority of regulatory changes states have made in recent decades regarding their FDI policies have been designed to create a more favorable investment climate, which has caused the overall level of openness to FDI throughout the system to greatly increase.Footnote ⁴⁷ Relatedly, governments have generally sought to ensure that no internal threats will emerge that might threaten the interests of MNCs. Two points are critical here. The first is that there has been a widespread move by states to put in place a positive legal and institutional environment for MNCs that would be difficult for any future government to overturn.Footnote ⁴⁸ In turn, governments who are host to FDI have generally shown a great willingness to act against threats to MNC assets that emerge from nonstate actors within their territory; this is much different than in previous eras, in which it was the powerful states where MNCs were based that often were the ones who had to intervene to protect MNC assets from nonstate actors.Footnote ⁴⁹

Moving rightward across the figure again, MNCs have responded to this new investment climate in a clear way: they have greatly increased the geographic dispersion of their FDI holdings compared to previous eras. MNCs have always faced strong incentives to geographically diversify their holdings to reduce risk. However, pursuing extensive geographic dispersion in previous eras was structurally difficult not simply because many states were relatively closed to FDI but also because of the difficulty of monitoring and coordinating far-flung assets. As a result, in previous eras, MNCs often clustered their FDI holdings in a relatively limited number of states that were close to the home state.Footnote ⁵⁰ For example, in the early 1930s, more than 80 percent of Japan's FDI was based in China.Footnote ⁵¹ The combined effect of much greater openness to FDI and advances in communications and transportation during the past several decades have made it possible for MNCs to greatly increase the geographical dispersion of their production activities. Recent advances in communications technology have “dramatically reduced the costs of coordinating complex supply, production, and distribution networks that are geographically decentralized” compared to earlier eras, while “declining transportation costs have also made multinational production more efficient because they lower the costs of moving goods among locations in diversified and complex production regimes.”Footnote ⁵²

Moving rightward in the figure yet again, two underlying points emerge. First, in today's world, the likelihood that a significant threat will emerge to FDI holdings from governments or nonstate actors is much lower than in previous eras. Second, the significance of threats to FDI holdings in any one particular state is also greatly reduced compared to previous eras. When FDI holdings are more geographically concentrated, threats to MNC assets are more of a concern. But, with more geographically dispersed holdings, a threat to MNC assets in a particular state is much less threatening because another state where the MNC has investments can likely make up the difference.Footnote ⁵³

The bottom line is that for the reasons just discussed, it has now become structurally easier for MNCs and their associated host governments to gain access to needed inputs and supplies via FDI than in previous eras. This is significant not only because FDI has replaced trade as the key driver of commerce, but also because FDI is a more secure means of securing resources and supplies compared to purchasing them in international markets—in times of scarcity, the owners of resources and supplies are likely to have first priority in their allocation.Footnote ⁵⁴

How can one empirically evaluate this FDI conquest substitution theory? One of the theory's observable implications is that one should not expect to find recent examples of states intervening militarily to protect MNCs whose assets are threatened. I am not aware of any cases since at least 1975 of military intervention in which threats to FDI holdings acted as a trigger for the use of military force. This dovetails with Brecher and Wilkenfeld's comprehensive analysis of international crises. They examine 412 crises from 1918 to 1995 and code for numerous triggers, including the presence of an “economic threat.”Footnote ⁵⁵ After 1965, they identify no cases in which threats to FDI holdings triggered the use of military force. Of course, their analysis ends at 1995 and some might point to the 2003 Iraq War as a case in which a powerful state intervened to protect MNC assets that were threatened. Yet this is not correct: U.S. MNCs did not have a presence in Iraq prior to the conflict.Footnote ⁵⁶

Even more illuminating is a recent analysis by Lee and Mitchell, which sought to test the hypothesis that FDI can act as “a mechanism for states to peacefully extract wealth from other countries, as opposed to extraction of resources through military conquest.”Footnote ⁵⁷ They more specifically posit that “increases in global FDI flows reduce the chances for new border disputes because states can gain more from a peaceful, economic exchange of goods and services.”Footnote ⁵⁸ Their statistical analysis finds strong support for the underlying hypothesis. As Lee and Mitchell note:

Also revealing is the analysis by Rosecrance and Thompson that specifically examines data on U.S. FDI and conflict with other states during the 1950–92 period. They find that “the greater the FDI exposure of the United States (inflows plus outflows of FDI toward the particular country divided by GDP), the less the conflict with that country.”Footnote ⁶⁰

Of course, not all states are in a position to rely on MNCs to effectively secure the external resources and supplies that they need: those states lacking a significant number of MNCs that are capable of engaging in extensive FDI are not in this position. Because managing global operations is complex, it is generally only the advanced states that contain a wealth of MNCs that extensively undertake FDI throughout the world. Significantly, the advanced states in the greatest position to rely on MNCs to effectively secure needed external resources and supplies are also the ones that have the greatest material potential to undertake overseas military operations: the states with the greatest capacity in this regard (by virtue of the size, nature, and mobility of their military forces) are the United States, the United Kingdom, and France and these three states have long been the three largest sources of FDI in the world (in 2010, they respectively ranked as the first-, second-, and third-largest sources of FDI in the world).

Do Economic Actors in Advanced States Who Favor Peace Still Need to Lobby?

The first three sections of this article indicate there is little basis for concluding that any economic actors in advanced states will lobby for war in the contemporary era. But what about those economic actors in these states that have an interest in peace? I posit that economic globalization makes it unnecessary for them to lobby the government to advance this preference.

The most probative economic actor to examine in this regard is finance in light of Kirshner's compelling argument that it has always had the relatively strongest stake in the preservation of peace. Although he does not explicitly recognize it, Kirshner himself develops the underlying foundation for a strong argument for why economic globalization likely renders it unnecessary for finance to lobby the governments of advanced states for peace on economic grounds. Two key elements of his analysis are relevant in this regard—that he does not link together. First, Kirshner's historical analysis indicates that leaders were sometimes sufficiently sensitive about the need to pursue the kinds of policies that finance preferred that it was essentially unnecessary for finance to lobby them, either regarding foreign policy or domestic policy.Footnote ⁶¹ It was only in those situations in which leaders were not sensitive about economic incentives and the need to prioritize policies that finance favored that it became necessary for finance to, as Kirshner puts it, “get into the game”Footnote ⁶²—that is, to intervene in the political process by lobbying leaders about the economic rationale for pursuing policies it preferred.

Second, Kirshner argues that financial globalization creates strong economic disincentives regarding war:

Combining these two points together, a straightforward proposition emerges: ever higher levels of financial globalization lead the economic costs of conflict to be ever more significant and salient, thus diminishing finance's need to directly lobby leaders to inform them war should be avoided because of its economic costs. Stated another way, finance no longer needs to ever make an active choice to “get into the game” to inform leaders that war has economic costs and should therefore be avoided; instead, finance is essentially always in the game by default without having to do anything because of the extensive nature of financial globalization in today's world. Thus, Kirshner's underlying finding (finance creates pressure for peace) seems sound today, but the theoretical mechanism supporting it is different than the one he emphasizes: it is no longer political pressure from finance that seems to be doing the work, but rather systemic incentives from financial globalization.

This underlying argument that economic globalization appears to have rendered it unnecessary for economic groups who favor peace to pressure governments also has implications for how one understands McDonald's core statistical finding that states with low protectionist barriers are more prone to be peaceful. To explain this finding, McDonald posits that states with low protectionism are those that are politically dominated by economic groups who favor international economic integration. He reasons that since these actors have an interest in peace, they must be pressuring their governments accordingly and that this dynamic is what causes these states to be more peaceful. However, the particular measures of low protectionism that he uses actually appear to be capturing those states that are run by governments that prioritize economic growth and the need to be integrated into the global economy. And as Solingen convincingly shows, regions in which states generally prioritize economic performance and integration in the global economy are likely to be peaceful, whereas regions in which states generally focus on inward-looking self-sufficiency and place less of an emphasis on overall economic performance are likely to suffer from instability.Footnote ⁶⁴ As with Kirshner's core finding, this empirical finding from McDonald's analysis (that low protectionist states are more likely to be peaceful) seems valid but, at least in the present day, it may well be explained by a different theoretical mechanism than the one he posits: not the nature of political pressure from economic actors within these states, but rather the fact that states are run by governments that are relatively more integrated into economic globalization and are more attuned to the economic incentives pointing against the initiation of conflict that emanate from globalization.

If it has become largely unnecessary for economic actors in advanced states to pressure the government to avoid war because economic globalization now has sufficiently clear economic incentives for leaders, then it is also likely that they will not engage in any such lobbying at all. Of course, if lobbying was a costless activity, then there might be reasons to think that these economic actors who favor peace might nevertheless still undertake it even if they knew that policymakers were cognizant of the economic incentives flowing from globalization. But lobbying is costly, both directly (it takes time, personnel, and money) and indirectly (economic actors are busy and have many pressing responsibilities occupying their time). As such, economic actors in advanced states are likely to devote their energies to other activities than lobbying their governments to avoid war because of its economic costs.