Economic Interdependence


The preliminary notion of the European Union was the European Coal and Steel Community. The union was between the nations of France, Belgium, Italy, Netherlands, Luxembourg, and West Germany. Striving for the concept of European peace the nations sought to bind the nations through economic interdependence. Coming about as a reaction to World War II, the ECSC created an economic tie for previously independent nations. It provided the European peace the nations sought, and would evolve into the European Union seen today. It was not a new concept as trade has historically been viewed as a catalyst for peace between nations. Creating multi-level governance is shown to create the necessary ties for fostering economic interdependence to a greater degree than mere trade between nations. The linking of nations through a sharing of capital creates an adhesiveness that deters the escalation of political conflict from reaching a state of war. On the international stage, political conflict leads to war as a result of perception of potential gains being larger than the opportunity costs. Interdependence created by multi-level governance is shown to greatly reduce the probability of war by increasing the opportunity costs. The increase in opportunity cost to war can be viewed from even the economic ties perspective. It is seen by noting that economic ties between participatory nations makes the cost of disruption to the system through the escalation of the political sphere towards war illogical.