No idea is more enticing to policymakers and academics alike than the proposition that economic interdependence encourages peaceful international relations. Policymakers are gratified that trade is a policy lever that governments can influence. Academics are encouraged by the (relative) ease of constructing long time series of bilateral cross–border transactions in goods for most countries. On top of this, economists tell us trade is economically efficient. Policymakers, scholars, and consumers should all be thrilled that trade and peace are robustly correlated.
This is why it is essential to submit the pax mercatoria hypothesis to severe scrutiny, both methodologically and theoretically. This chapter does the latter and focuses on one particular theoretical issue to which few scholars have given serious attention: what is the theory of the state that provides a plausible mechanism linking private trade to public conflict behavior? The first section argues that this question deserves attention. The second section outlines three general approaches to state–society relations and discusses the implications of these for empirical research. The third section concludes and calls for research that includes more meaningful tests, informed by more explicit theories of state–society relations.