You do realize that prior to the outbreak of WWI Germany and England were each others largest trade partners don't you?  High levels of trade do not equal interdependence.

Stats I just found stated that Russia was Germany's largest trading partner, but your point remains.  As I mentioned before, it does not mean war is impossible; rather, it makes it less likely.  I think that by definition, high levels of trade do equal interdependence; that is what it's all about; one side depends on the other for supply/demand.  Germany did have more to lose by going to war, and went anyway.  I don't think trade is a magical means of pacification, but it does change the equation. I don't think it's a surprise that the nations who are currently most hostile to the U.S. are also those nations who are some of the most isolated from the U.S.  This is why I go back to the issue of China – China's economic interdependence with the U.S. seems to be on a crash course with Chinese political opposition to the U.S.

I'm talking about all the wars and skirmishes between GB, the Dutch, France, Spain, and Germany over their colonies and ports. Smith's theory is as flawed as Kant's theory that democracies do not go to war with each other.

I don't know the specific examples of the skirmishes you mention, and I'm not sure they apply; did these develop into large-scale wars, or remain skirmishes?  Were these major trading partners at the time of these outbreaks?  Did these outbreaks affect trade between the nations?  I don't know, so I'm unclear about those examples.  As for the idea of democracies and war, that seems like a false equivalency.  A democracy in one nation does not imply an interdependence upon another nation.  What would a democracy have to lose by going to war with another nation?  I'm not sure.  What would a nation have to lose by going to war with a trading partner?  Financially, it would lose plenty.

In what way are they similar?  I would argue that the “Democratic Peace Theory” is separate from what I was referring to for the reason I gave – trading partners have something financial to lose by going to war.  I don't think the same applies to democracies going to war (at least, not in the same way).As for the wars – again, were the British and Dutch major trading partners leading up to the Boer Wars?  The Anglo-Dutch wars? The bottom line is that of course, wars happen, and wars have happened.  I'm not saying they do not.  All I'm saying is that the more nations trade with one another, the less likely they will be to go to war.  We could go back in time even to the ancient world and find nations that have traded with one another that have still gone to war with the other.  As globalization increases, however, we find an increasing level of interconnectedness – particularly in economics – which makes going to war more difficult, ergo less likely.  Of course, there will always be exceptions to this, or situations where you have some less-than-rational leader of a nation.  That's just the nature of the world.