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The Evolution of Trading and Military Strategies

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The Evolution of Trading and Military Strategies

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategiesr predecessors) have employed one of three general strategies to increase national wealth: war. trade, or isolation. While the trading state model has

become the norm at the dawn of the 21" century. was this outcome inevitable? This paper explores the evolution of economic-military strategies using The Evolution of Trading and Military Strategies

an agent-based computer simulation. The model is structured as a two stage prisoner’s dilemma game with an exit option. While trading systems rarely e

The Evolution of Trading and Military Strategies

merge in the simulation, they tend to be relatively stable once established. Several factors encourage the emergence of trading systems, including 1)

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategiesination with the preceding three factors. The simulation also supports the realist expectation that states will be reluctant to trade with immediate n

eighbors and undermines the dependency theory prediction that relative payoffs in trade will increase inequality and poverty.David L. Rousseau Assista The Evolution of Trading and Military Strategies

nt Professor Department of Political Science 235 Stiteler Hall University of Pennsylvania Philadelphia. PA 19104 E-mail: rousseau@sas.upenn.edu Phone:

The Evolution of Trading and Military Strategies

(215)898-6187 Fax: (215) 573-2073andMax Cantor Department of Political Science and the School of Engineering and Applied Science University of Pennsy

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategiest 28-31. 2003. Philadelphia. PA. Please send comments to the first author.1INTRODUCTIONOver the last several centuries the sovereign state has emerged

as the dominant organizational unit in the international system (Spruyt 1994). During this evolutionary period, sovereign states and their competitor The Evolution of Trading and Military Strategies

s have struggled to identify an optimal strategy for maximizing economic growth and prosperity. In general, states have pursued some combination of th

The Evolution of Trading and Military Strategies

ree general strategies: (1) war, (2) trade, or (3) isolation. For example, realists such as Machiavelli argue that milltaty force is an effective inst

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategiesoptimal strategy for maximizing economic efficiency and national wealth. Finally, dependency theorists such as Guilder Frank (1966) reject this libera

l argument and argue that isolation from the leading trading states rather than integration with them would enhance economic development. Many scholar The Evolution of Trading and Military Strategies

s argue that history has passed judgment on these three alternative approaches to wealth maximization. For example, Rosecrance (1986) argues tliat the

The Evolution of Trading and Military Strategies

trading state has supplanted the military-territorial Slate. Similarly, Velasco (2002) argues that dependency theory, which favored isolation and imp

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategiesich democratic-capitalist-trading states have emerged victorious.While one might disagree with Fukuyama’s causal logic and/or the permanency of the cu

rrent liberal equilibrium, it is clear that trading states have become much more prevalent among states in general and great powers in particular/ If The Evolution of Trading and Military Strategies

you were alive in the year 1346 or 1648 or 1795, you would probably have not predicted such an outcome.2 Tills raises a number of interesting question

The Evolution of Trading and Military Strategies

s. Was the emergence of a liberal international order inevitable? If not, what factors encouraged (or discouraged) the rise of this particular order?

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategies. The results indicated that the emergence of liberal order is a relatively rare event because it is difficult to establish. However, the norm of cond

itional2cooperation (e.g., tit-for-tat) that is embedded in most liberal orders increases (he stability ol the system once it reac hes a critical mass The Evolution of Trading and Military Strategies

. Our simulations indicate that several factors encourage the emergence of trading systems, inc luding I) raising the gains from trade, 2) inc reasing

The Evolution of Trading and Military Strategies

delense dominance in war, .3) increasing the rale ol learning, and 4) allowing relative payoils in combination with the preceding three fac tors. The

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategiesy predic lion that relative payoffs in trade will increase inequality and poverty.THE RECIPROCAL RELATION BETWEEN WEALTH AND POWERHistorically, there

has been a reciprocal relationship between the capacity to wage war and acquisition of wealth. The greater the military power of a political organizat The Evolution of Trading and Military Strategies

ion, the easier it was for it to capture slaves, seize territory, and pillage the vanquished/ Conversely, the more wealth a political unit possessed,

The Evolution of Trading and Military Strategies

the greater the military capacity it could procure either directly (e.g.. mercenaries) or indirectly (e.g.. side payments to allies). The system was a

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategieselationship has shifted over time. In the preindustrial era. agricultural production dominated the economies of most political units. In order to incr

ease revenue, rulers had either to increase the rate of taxation, improve productivity, or expand land under cultivation. Given that taxation was limi The Evolution of Trading and Military Strategies

ted by the subsistence level of tax paying peasants and drat productivity increased very slowly in the agricultural era. the primary mechanism for inc

The Evolution of Trading and Military Strategies

reasing wealth was expanding land under the plow. While this could be done domestically by draining swamps and cutting back woodlands, the largest inc

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategiessite for wealth acquisition.The advent of the industrial revolution in the mid-1700s has profoundly. and in all likelihood permanently, shifted the re

lationship between wealth and military power. The industrial revolution trigged increased specialization in labor and capital. The specialization3http The Evolution of Trading and Military Strategies

s://khothuvien.cori!drastically reduced the cost of producing goods and increased the efficiency of the overall economy. States with access to abundan

The Evolution of Trading and Military Strategies

t labor and raw materials were able to grow at annual rates that were simply unimaginable in the agricultural era. In the industrial era, a large indu

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategieses that the Japanese political and military leadership comprehended the nature of the shift and the need to alter national strategies to deal with it

(Barnhart 1987,22). Since the middle of the nineteenth century, all great powers have been large industrializing or industrialized states.REALISM, LIB The Evolution of Trading and Military Strategies

ERALISM, AND DEPENDCY THEORYGiven the reciprocal relationship between wealth and power, what strategies should a state adopt to maximize these means a

The Evolution of Trading and Military Strategies

nd/or ends? This question has been at the center of policy debates for at least five hundred years. Over lime, three schools of thought emerged with s

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategiesally, dependency theorists recommended isolation fonn the exploitive international system.RealismRealism is a broad school of thought that includes a

wide variety of models of state behavior (Wayman and Diehl 1994; Rousseau 2002). In general, realists assume that states reside in an anarchical syste The Evolution of Trading and Military Strategies

m in which the threat of violence is ever present. These states, which at a minimum seek to survive and at a maximum seek universal domination, have c

The Evolution of Trading and Military Strategies

onflicting preferences because gains by one state inherently threaten other states (Waltz 1979, 91, 105). In order to defend themselves, states employ

The Evolution of Trading and Military Strategies: An Agent-Based Simulation37834.Abstract:Over the last several centuries, sovereign states (and their

The Evolution of Trading and Military Strategies for maintaining state security, the school of thought is divided on several issues, including the division between defensive realists and offensive r

ealists. Defensive realists argue that military power is primarily used to deter others4https://khothuvien.cori!from attacking. In contrast, offensive The Evolution of Trading and Military Strategies

realists argue that military power is a useful tool for attacking others in the hopes of increasing wealth and power. Mearshehner, an offensive reali

The Evolution of Trading and Military Strategies

st who assumes states maximize power, argues that “a great power that has a marked power advantage over its rivals is likely to behave more aggressive

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