International Politics and the role of “Law Merchant”

The “Law Merchant” system is one that was derived from the Middle Ages relating to how merchants and traders went about transactions with those from outside parties. The interactions that this concept is based around can be tied back to the definition of rationality that we’ve discussed in class; assuming that each independent party, or state, is out to better themselves in an anarchic world. We also used Game Theory and Prisoner’s Dilemma to see just how complicated interrelated trade, and international politics as a whole, can be, especially when dealing with multiple parties.

In earlier discussions with regards to medieval trading, it was established that hazards such as pirates or bandits and geographic makeup or distances threatened trade procedures. With further discussion it was accepted that it was difficult, if not impossible, to ensure that a trader or merchant would receive their goods or pay, thus getting exploited, comparable to the infant stages of eBay. We threw around solutions such as increasing penalties, establishing repeat sales, and trading only within the community. I endorse the latter for principles that are evident in the first two; if you keep trade within a community, you will naturally be executing repeat sales where you do not want to tarnish your reputation, and the community can agree on a governing body that enforces higher penalties. In addition, a community will make it easier to identify those who neglect the communal merchant system and attempt to cheat it.

Also discussed in class were ideas to incentivize cooperation by rewarding favorable actions that coordinate with international mandates. One relatable example is the founding of NAFTA. It’s no surprise that Canada and Mexico are two of America’s top trading partners. This can be attributed to this free trade agreement, which was set up to protect each of their individual interests, given that fact that they realized that honest trade and repeat sales is mutually favorable in the long run. In fact, not only has NAFTA allowed the United States to slow its forever-increasing national deficit, it has done so while increasing employment throughout North America by nearly 40 million jobs! (23% increase since 1993).

Although not relating directly to the “Law Merchant”, the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) is a suitable example that conveys realistic accounts of how difficult international political cooperation can be. In the article Continuing Nuclear Proliferation, we can see similar themes of “Law Merchant” and Game Theory evident when dealing with collaboration in a community. While the incentive here is simply global peace, even if a nation adopts this article publicly, it is difficult to gage if they will follow regulations behind closed doors. This ultimately prompts others to assume that they won’t oblige, and out of fear, it psychologically forces them to not cooperate as well.

It seems as though Game Theory has a role at every level of politics, especially when dealing with international affairs such as trade. From the Medieval Era to present day, the implications of Merchant Law seem to govern interactions of nearly every independent state in the world. It’s interesting to think how much help, if any, IO’s have been in establishing peaceful relations, and how effective they can be in years to come.