In recent years the assumption that democracy automatically generates peace has been critiqued. It has instead been suggested that the promotion of economic liberalism provides a much stronger basis for peace. In this paper, we examine and contest the normative claims of the ‘capitalist peace’. While there is a close association between extreme poverty and the onset of civil war, it is unclear whether economic liberalism will ameliorate conflict. A major reason for this ambiguity is because the emphasis of the ‘capitalist peace’ literature has largely been on interstate relations rather than intrastate ethnonational conflict. A closer look reveals that neoliberal policies in divided societies can also, in some contexts, exacerbate conflict in violently divided societies.