Reflecting upon the centenary of Armistice Day last Sunday, an article in the Business Standard (India) explores the relationship between economic conflict and the “War to end all wars,” featuring Prof. Biswajit Dhar (Jawaharlal Nehru University) and myself. Such reflections become even more timely in light of the growing speculation just this past month from former US Treasury Secretary Henry Paulson, Bloomberg’s Shawn Donnan and Kevin Hamlin, and the Wall Street Journal’s James Mackintosh that the US trade war with China could turn into a new cold war, what Paulson calls an “Economic Iron Curtain.” From the Business Standard:
A hundred years ago from today, the ‘War to end all wars’ came to a close, leaving in its wake 19 million dead and 23 million wounded. There were many culprits, including economic nationalism, but only one victim — humanity, which was exposed to the horror of industrial warfare in those grim, meat-grinding trenches, only to face the same calamity again, magnified manifold, between 1939 and 1945 (Over 60 million people were killed in World War II). Are we seeing the economic drivers of that first great war re-emerge in today’s world of growing protectionism and trade wars?
In a 2016 report, Deutsche Asset Management Chief Global Economist Josh Feinman writes that “we’ve seen this movie before”, while referring to the rise of economic nationalism, reflected in Donald Trump’s election to the White House, the political and popular backlash against globalisation, exemplified today by the US-China trade war, and the hardening of borders against immigrants, which is a driving force behind Brexit. “The first great globalisation wave, in the half-century or so before WWI, sparked a populist backlash too, and ultimately came crashing down in the cataclysms of 1914 to 1945,” writes Feinman. He goes on to describe “protectionism and economic nationalism” as “culprits” that played a part in causing the two World Wars.
Of course, they were not the only, or perhaps even the most important, causes of the First World War. “While there is a pretty clear causation between protectionism and the era’s trade wars, it is more difficult to prove that trade wars led to the First World War. There is certainly a correlation, but causation is much more difficult to measure,” says Marc-William Palen, senior lecturer of imperial history at the University of Exeter.