How Trade Tensions Can Lead to Hot Wars: Dale Copeland on Dynamic Realism

The Link Between Trade and Conflict

• 🌍 Professor Dale Copeland argues that at least 75% of major conflicts between great powers over the last 250 years have been directly related to trade and commerce.
• 💡 His theory, dynamic realism, suggests that trade can lead to peace if states have positive expectations about future trade environments, but can lead to conflict if these expectations turn negative.
• 📈 Historically, states that become pessimistic about future trade access may resort to war to secure necessary raw materials and markets, as seen with Japan in 1941.

Dynamic Realism vs. Traditional Schools

• ⚖️ Unlike liberal views (trade leads to peace) and traditional realist views (trade leads to dependency and conflict), dynamic realism posits that trade's impact is contingent on expectations.
• 🚀 Smart great powers balance the desire to constrain rising states with the willingness to allow them to grow through trade, accepting relative losses for overall system stability.
• 🇨🇳 China's growth since 1990, fueled by trade, is an example of a state wanting peace to maintain economic expansion.

Historical Case Studies: American Revolution and Japan

• 📜 The American Revolution, in Copeland's view, was rooted in British trade restrictions that prevented American economic growth, necessitating war to break free.
• 🇯🇵 Japan's oscillation between peace and conflict in the late 19th and early 20th centuries is attributed to its changing expectations about future trade, particularly after the Smoot-Hawley tariffs devastated its economy.
• 📉 The US imposing high tariffs in 1930 led to Japan's invasion of Manchuria and ultimately its conflict with the US in 1941.

US-China Relations and Avoiding Conflict

• ⚠️ Copeland believes the US-China trade relationship can avoid a hot war if positive trade expectations are maintained, drawing parallels to the 1750-1776 period where Britain's trade restrictions on rising North America led to conflict.
• 🤝 Diplomacy and avoiding a tariff spiral or economic decoupling are crucial to maintaining peace.
• 💡 China understands the severe economic consequences of invading Taiwan, which would disrupt global supply chains and lead to a significant decline in its own economy.

The Role of Specific Products and Expectations

• 💎 The qualitative nature of specific products, like rare earths, matters significantly; a cutoff can cripple a nation's technological advancement.
• ⚙️ China's strategic control over rare earths and its processing capabilities serve as leverage in trade negotiations.
• 📉 Volatile US trade policy, like unexpected tariffs, creates uncertainty for other countries, forcing them to hedge their bets and diversify their economic relationships.

China's Ambitions and Strategic Restraint

• 🌏 While rising powers like China naturally seek to expand their economic spheres, historical constraints suggest China's leaders are reluctant to engage in overseas military expansion due to the risk of domestic instability.
• 🌐 China's Belt and Road Initiative, though recalibrated, remains a strategy to secure economic connections and growth, essential for domestic stability.
• ⚖️ Copeland suggests that Xi Jinping, despite a more assertive public image, is ultimately acting rationally to maintain China's long-term economic growth and avoid the catastrophic economic consequences of conflict, particularly regarding Taiwan.