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Notes for PEIS 101 Guest Lecture: August 15, 2008

The Second Coming of Norman Angell

China's government attempts to reassure its citizens of its power and worth by hosting the Olympic Games. Russia's government attempts to reassure its citizens of its power and worth by picking up a small country and throwing it against the wall--as recommended by AEI scholar Michael Ledeen. Paul Krugman meditates on the Great Illusion identified by Norman Angell, and the Great Illusion of Norman Angell:

The Great Illusion: I found myself wondering whether this war is an omen — a sign that the second great age of globalization may share the fate of the first.... [O]ur grandfathers lived in a world of largely self-sufficient, inward-looking national economies — but our great-great grandfathers lived, as we do, in a world of large-scale international trade and investment, a world destroyed by nationalism.

Writing in 1919, the great British economist John Maynard Keynes described the world economy as it was on the eve of World War I. “The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth ... he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world.” And Keynes’s Londoner “regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement ... The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion ... appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice.”

But then came three decades of war, revolution, political instability, depression and more war. By the end of World War II, the world was fragmented economically as well as politically. And it took a couple of generations to put it back together....

Europe’s dependence on Russian energy, especially natural gas, now looks very dangerous — more dangerous, arguably, than its dependence on Middle Eastern oil. After all, Russia has already used gas as a weapon: in 2006, it cut off supplies to Ukraine amid a dispute over prices. And if Russia is willing and able to use force to assert control over its self-declared sphere of influence, won’t others do the same?... Some analysts tell us not to worry: global economic integration itself protects us against war... because successful trading economies won’t risk their prosperity by engaging in military adventurism. But this, too, raises unpleasant historical memories.

Shortly before World War I another British author, Norman Angell, published a famous book titled “The Great Illusion,” in which he argued that war had become obsolete, that in the modern industrial era even military victors lose far more than they gain. He was right — but wars kept happening anyway.... [W]ar among the nations of Western Europe really does seem inconceivable now, not so much because of economic ties as because of shared democratic values. Much of the world, however, including nations that play a key role in the global economy, doesn’t share those values....

Angell was right to describe the belief that conquest pays as a great illusion. But the belief that economic rationality always prevents war is an equally great illusion...

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