Is the Hidden Hand an Iron Fist? Capitalism & Civil Peace, 1970–2005

The research investigates the relationship between capitalism and domestic peace, arguing that economies favorable to free enterprise reduce the risk of civil war by increasing the opportunity costs of rebellion. Using the Index of Economic Freedom and UCDP/PRIO conflict data from 1970–2005, the authors find that higher economic freedom is associated with a lower risk of conflict onset, a result that remains significant even when controlling for per capita income, institutional quality, and state repression. The study concludes that market-friendly policies do not undermine state autonomy to maintain peace, contrary to some globalization skeptics.

• There is a statistically significant negative relationship between economic freedom and the risk of civil war onset; countries with higher levels of economic freedom are less likely to experience the start of a civil conflict.
• The impact of economic freedom on reducing conflict risk is substantively large and comparable to the effect of per capita income. For example, a country at the 75th percentile of economic freedom has a 43% lower risk of conflict onset than one at the 25th percentile.
• Economic freedom is a more robust predictor of peace than per capita income; once economic freedom is controlled for in the models, the estimated effect of income per capita is no longer significant.
• The peace-promoting effect of economic freedom persists regardless of the quality of government institutions or the level of state repression, suggesting that the result is not merely a byproduct of 'clean' institutions or the forced suppression of dissent.
• The findings support an opportunity-cost model where closed economies are more prone to civil war because they encourage 'rebellion specific capital' and illegal economic activity in the shadows, whereas open economies reward productive investment over rent-seeking.
• The results are robust across different samples and methods, including a sub-sample of non-Western countries and a fixed-effect regression, indicating that changes in economic freedom within countries influence conflict risk.

APA

de Soysa, I., & Fjelde, H. (n.d.). Is the Hidden Hand an Iron Fist? Capitalism & Civil Peace, 1970–2005. Peace Research Institute Oslo. https://cdn.cloud.prio.org/files/2704ec24-c851-4d1e-95a2-824e3cb39939/Is the Hidden Hand an Iron Fist Capitalism and Civil Peace 1970-2005.pdf?inline=true

Chicago

de Soysa, Indra, and Hanne Fjelde. Is the Hidden Hand an Iron Fist? Capitalism & Civil Peace, 1970–2005. Peace Research Institute Oslo, n.d. https://cdn.cloud.prio.org/files/2704ec24-c851-4d1e-95a2-824e3cb39939/Is the Hidden Hand an Iron Fist Capitalism and Civil Peace 1970-2005.pdf?inline=true.

Wikipedia

{{cite report |last1=de Soysa |first1=Indra |last2=Fjelde |first2=Hanne |title=Is the Hidden Hand an Iron Fist? Capitalism & Civil Peace, 1970–2005 |publisher=Peace Research Institute Oslo |url=https://cdn.cloud.prio.org/files/2704ec24-c851-4d1e-95a2-824e3cb39939/Is the Hidden Hand an Iron Fist Capitalism and Civil Peace 1970-2005.pdf?inline=true |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{desoysandhidden, author = {de Soysa, Indra and Fjelde, Hanne}, title = {{Is the Hidden Hand an Iron Fist? Capitalism \& Civil Peace, 1970–2005}}, institution = {Peace Research Institute Oslo}, url = {https://cdn.cloud.prio.org/files/2704ec24-c851-4d1e-95a2-824e3cb39939/Is the Hidden Hand an Iron Fist Capitalism and Civil Peace 1970-2005.pdf?inline=true}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }