Capitalism & the “new wars”: free markets and societal insecurity before and after the cold war, 1970–2013

Critics of globalisation suggest that growing free-market conditions generate anomie, leading ultimately to what some term ‘new wars’ and new insecurities. Others argue that liberal economies dissuade violence since people gain from peace. This study argues for a micro perspective that views predatory economic policies driving higher investment in rebellion-specific capital, such as shadow economic activity that easily translates into insurgency in weak-state settings. Investment in the shadows determines survivability against superior state forces, and survivability determines rebellion, by definition. Using civil war onset data from 1970 to 2013, as well as the Global Peace Index (GPI) and several of its individual components, which capture societal insecurity above and beyond the absence of armed violence, this study finds that countries that are more capitalistic have a lower risk of civil war and societal insecurity. The results are robust to alternative models, testing methods, and uphold when examining several relevant subcomponents of the index, such as internal conflict, violent crime, homicides, ease of access to small arms, and political instability. Surprisingly, democracy tends not to be associated with peace but associates with increased criminality whereas strong autocracy reduces it, suggesting that capitalism, more than democracy, associates with conditions favourable to societal security, independently of a country’s level of development.