Does Prosperity Beget Peace?

Krugman and Sullivan

Does Prosperity Beget Peace?

Krugman and Sullivan

Does Prosperity Beget Peace?
An email conversation about the news of the day.
March 31 1999 4:27 PM

Krugman and Sullivan

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Paul,

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Your thoughtful post about the weakness the Kosovo morass might reveal in European unity prompts a larger question: Which comes first, democracy or markets? On the one hand, it might seem that a stable political regime with rules of property and contract, judicial review, and other checks on centralized power might be a necessary precondition for the flourishing of entrepreneurship, capital exchanges, foreign investment, and rising standards of living. On the other hand, it might be that the motivations and rewards provided by markets are preconditions for the political commitment to democratic constitutionalism. Does it matter which comes first? Did Russia get markets too soon, before it had a democratic political infrastructure? Does the sequence matter to the future of China?

More to the point of this week's events, would the situation in Yugoslavia have developed as it has if Yugoslavia were as prosperous as the new Hungary or Poland? Would the peace talks in Northern Ireland be wrapped up by now if the North were as prosperous as the Irish Republic? It's difficult to imagine that young Irishmen or Serbs would be quite so eager to join and commit arms to nationalist movements if they could be getting rich on software startups. And young male unemployment is no doubt a factor in other nationalist or tribal violence, from the Middle East to the African continent.

Along these lines, it's striking, as you note, that Europe is finding it easier to ally over markets than over collective political self-interest. Strikingly, in this morning's papers Tony Blair is reported as rallying the British to stronger popular support for the NATO bombing than is present in the United States or the rest of Europe. His secret? Analogies between Milosevic and Nazism seem to do the trick very neatly for the British, thank you very much. Is the problem with European unity here that that analogy is more troublesome for Germany and Italy, and even France?

Paul Krugman is a professor of economics at MIT whose books include The Accidental Theorist: And Other Dispatches From the Dismal Science (click here to buy the book) and The Age of Diminished Expectations: U.S. Economic Policy in the 1990s (click here to buy the book). Kathleen M. Sullivan is Stanley Morrison Professor at Stanford Law School, where she teaches constitutional law. In September she will become the dean of Stanford Law School.