The Great Illusion Debunked Again

In Monday's Washington Post, Robert Samuelson noted how the Ukraine crisis "confounds and contradicts one of the hopeful axioms of conventional wisdom. The presumption -- rarely stated openly but widely believed -- has been that the growing economic interdependence of nations reduces traditional geopolitical conflicts." He claims this is "largely an American view" but he is only partially correct. It is very prominent in Western Europe where the notion originated in 19th century classical liberal philosophy, particularly in the works of Immanuel Kant, Richard Cobden, John Bright, J. B. Say, and Frederic Bastiat. It was thought that after a quarter century of global war following the French Revolution and the campaigns of Napoleon, the world would find a new way to relate as the industrial revolution solved the "economic problem" of zero-sum politics.

History has not been kind to this notion over the least two centuries. The end of the Cold War gave hope that this time, liberalism would prevail and there would be an "end to history." Samuelson credits liberalism for the creation of the EU, but that was also influenced heavily by the need to ally against a common Soviet threat.

In 2002, then U.S. Trade Representative Robert Zoellick (who went on to become president of the World Bank) cited Norman Angell’s 1910 book The Great Illusion as inspiration for the 21st century. Writing in opposition to a plan to expand the Royal Navy in the face of a rising Imperial Germany, Angell argued that financial and commercial interdependence made war impossible in the modern era, and thus a larger fleet was unnecessary. He was proven dreadfully wrong four years later. Yet, there was an attempt to revive Angell’s thought after World War I when he was awarded the Nobel Peace Prize in 1933. Unfortunately, that was the same year Adolf Hitler became Chancellor of what became known as Nazi Germany.

Commerce played a major role in the thinking of those who wanted to appease Hitler to avoid another war. If Hitler felt secure, they argued, Germany would shift from armaments to consumer goods for export; mellow in outlook; and become a “normal” country. Similar thinking has been behind the various incentive packages offered Iran since 2003 in the attempt to persuade Tehran to give up its nuclear program.  It has also been the foundation for post-Cold War relations with China and Russia, most notably in the admission of both to the World Trade Organization.

A typical advocate in the 1930s was Frank Ashton-Gwatkin, head of the Economic Section of the British Foreign Office, who said, “I myself believe, however, that this nearly mortal complaint [Nazism] will yield to the radioactive treatment of increased world trade instead of cutting out Hitlerism with a knife.” Neville Chamberlain supported the desire for an Anglo-German economic bloc beginning with a “reduction of customs barriers” which would provide “the key to European peace.” This scheme was popular among British businessmen who formed an Anglo-German Society in 1935.

Yet, the two major constraints on Germany’s rearmament program were foreign exchange and raw materials. Dominance of Eastern Europe would help solve both of these problems. Germany entered into a series of trade agreements with Yugoslavia, Hungary, and Rumania which made these countries dependent on the Reich economy for their exports of raw materials and agricultural products. These trade agreements also played a role in pulling Hungary and Rumania into the Axis alliance.

Russia has followed a similar strategy of using trade to advance national objectives, using energy exports to Ukraine to pressure the government in Kiev to align with Moscow while intimidating the rest of Europe not to resist Russian revanchist policies. President Vladimir Putin also closed Russia's borders to Ukraine's agricultural exports, using trade to advance ambitions other than peace.

Even in the wake of the Crimean invasion, major American corporations acting through the National Foreign Trade Council have opposed any disruption of economic ties with Moscow. As a NFTC statement March 21 argued, "potential sanctions contemplated in the most recent Executive Order would do real damage to U.S. companies with no predictable result regarding Russian responses. At least, however, the President’s orders remove any warrant for Congress to legislate sanctions, which would ipso facto foreclose diplomatic adaptability." The real meaning of "adaptability" is "appeasement."

Some people could see where appeasement was heading in the 1930s. Winston Churchill saw the rising economic strength of Germany being converted into military power and diplomatic influence. He warned of Germany’s growing economic capabilities “with her factories equipped to the very latest point of science by British and American money” and that “Germany only awaits trade revival to gain an immense mercantile ascendancy throughout the world.” Churchill understood that it was folly to increase the resources available to a regime whose foreign policies were at odds with those of his own country. American leaders should have considered this before allowing such a large expansion of trade and investment with Communist China over the last two decades.

Churchill and Chamberlain were both members of the Conservative Party, but represented very different intellectual traditions. Chamberlain was, in the words of Kenneth W. Thompson (Winston Churchill’s World View: Statesmanship and Power, 1983), “the archetype of bourgeois conservatism.... derived from a decaying liberalism under whose colors the businessman in the nineteenth century achieved his now precarious eminence.” In contrast, Churchill was a classical conservative, heir to a long aristocratic tradition of state-centered power politics and unending rivalry among nations and empires. Thompson’s conclusion was this, “Tory tradition...  having suffered less disillusionment and dismay over the abrupt and violent reappearance of barbarism and violence, was better able to meet the threat by organizing resources of power against predatory foes." As today's conservative movement attempts to find itself, it must make the same choice as to which tradition it needs to follow to forge a successful party of national government.

In Monday's Washington Post, Robert Samuelson noted how the Ukraine crisis "confounds and contradicts one of the hopeful axioms of conventional wisdom. The presumption -- rarely stated openly but widely believed -- has been that the growing economic interdependence of nations reduces traditional geopolitical conflicts." He claims this is "largely an American view" but he is only partially correct. It is very prominent in Western Europe where the notion originated in 19th century classical liberal philosophy, particularly in the works of Immanuel Kant, Richard Cobden, John Bright, J. B. Say, and Frederic Bastiat. It was thought that after a quarter century of global war following the French Revolution and the campaigns of Napoleon, the world would find a new way to relate as the industrial revolution solved the "economic problem" of zero-sum politics.

History has not been kind to this notion over the least two centuries. The end of the Cold War gave hope that this time, liberalism would prevail and there would be an "end to history." Samuelson credits liberalism for the creation of the EU, but that was also influenced heavily by the need to ally against a common Soviet threat.

In 2002, then U.S. Trade Representative Robert Zoellick (who went on to become president of the World Bank) cited Norman Angell’s 1910 book The Great Illusion as inspiration for the 21st century. Writing in opposition to a plan to expand the Royal Navy in the face of a rising Imperial Germany, Angell argued that financial and commercial interdependence made war impossible in the modern era, and thus a larger fleet was unnecessary. He was proven dreadfully wrong four years later. Yet, there was an attempt to revive Angell’s thought after World War I when he was awarded the Nobel Peace Prize in 1933. Unfortunately, that was the same year Adolf Hitler became Chancellor of what became known as Nazi Germany.

Commerce played a major role in the thinking of those who wanted to appease Hitler to avoid another war. If Hitler felt secure, they argued, Germany would shift from armaments to consumer goods for export; mellow in outlook; and become a “normal” country. Similar thinking has been behind the various incentive packages offered Iran since 2003 in the attempt to persuade Tehran to give up its nuclear program.  It has also been the foundation for post-Cold War relations with China and Russia, most notably in the admission of both to the World Trade Organization.

A typical advocate in the 1930s was Frank Ashton-Gwatkin, head of the Economic Section of the British Foreign Office, who said, “I myself believe, however, that this nearly mortal complaint [Nazism] will yield to the radioactive treatment of increased world trade instead of cutting out Hitlerism with a knife.” Neville Chamberlain supported the desire for an Anglo-German economic bloc beginning with a “reduction of customs barriers” which would provide “the key to European peace.” This scheme was popular among British businessmen who formed an Anglo-German Society in 1935.

Yet, the two major constraints on Germany’s rearmament program were foreign exchange and raw materials. Dominance of Eastern Europe would help solve both of these problems. Germany entered into a series of trade agreements with Yugoslavia, Hungary, and Rumania which made these countries dependent on the Reich economy for their exports of raw materials and agricultural products. These trade agreements also played a role in pulling Hungary and Rumania into the Axis alliance.

Russia has followed a similar strategy of using trade to advance national objectives, using energy exports to Ukraine to pressure the government in Kiev to align with Moscow while intimidating the rest of Europe not to resist Russian revanchist policies. President Vladimir Putin also closed Russia's borders to Ukraine's agricultural exports, using trade to advance ambitions other than peace.

Even in the wake of the Crimean invasion, major American corporations acting through the National Foreign Trade Council have opposed any disruption of economic ties with Moscow. As a NFTC statement March 21 argued, "potential sanctions contemplated in the most recent Executive Order would do real damage to U.S. companies with no predictable result regarding Russian responses. At least, however, the President’s orders remove any warrant for Congress to legislate sanctions, which would ipso facto foreclose diplomatic adaptability." The real meaning of "adaptability" is "appeasement."

Some people could see where appeasement was heading in the 1930s. Winston Churchill saw the rising economic strength of Germany being converted into military power and diplomatic influence. He warned of Germany’s growing economic capabilities “with her factories equipped to the very latest point of science by British and American money” and that “Germany only awaits trade revival to gain an immense mercantile ascendancy throughout the world.” Churchill understood that it was folly to increase the resources available to a regime whose foreign policies were at odds with those of his own country. American leaders should have considered this before allowing such a large expansion of trade and investment with Communist China over the last two decades.

Churchill and Chamberlain were both members of the Conservative Party, but represented very different intellectual traditions. Chamberlain was, in the words of Kenneth W. Thompson (Winston Churchill’s World View: Statesmanship and Power, 1983), “the archetype of bourgeois conservatism.... derived from a decaying liberalism under whose colors the businessman in the nineteenth century achieved his now precarious eminence.” In contrast, Churchill was a classical conservative, heir to a long aristocratic tradition of state-centered power politics and unending rivalry among nations and empires. Thompson’s conclusion was this, “Tory tradition...  having suffered less disillusionment and dismay over the abrupt and violent reappearance of barbarism and violence, was better able to meet the threat by organizing resources of power against predatory foes." As today's conservative movement attempts to find itself, it must make the same choice as to which tradition it needs to follow to forge a successful party of national government.

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