Is this the end of peace through trade?

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In the early 20th century, British author Norman Angell published a famous book titled “The Great Illusion,” which declared that economic progress and growing world trade had made war obsolete.

Nations, he argued, could no longer enrich themselves through conquest: Industrial workers couldn’t be exploited like peasants, and even small nations could prosper by importing raw materials and selling their wares on world markets. Furthermore, war between economically interdependent nations would be immensely costly even to the victors.

The idea of peace through trade has been a cornerstone of Western statecraft. But things are changing. Credit: Supplied

Angell wasn’t predicting the immediate end of war, which was good for his credibility, since the carnage of World War I was just around the corner. He was, however, hoping to persuade politicians to abandon their dreams of military glory. And an implication of his logic was that closer economic links among nations might promote peace.

Indeed, the idea of peace through trade was to become a cornerstone of Western statecraft in the aftermath of World War II.

In a recent column, I talked about the General Agreement on Tariffs and Trade, which has governed world trade since 1948. This trading system owes its origins in large part to Cordell Hull, Franklin Roosevelt’s secretary of state, who saw world trade as a force for peace as well as prosperity. The road to the European Union began with the creation of the Coal and Steel Community, one of the goals of which was to create so much interdependence between France and Germany that a future European war would be impossible.

We live in a world of very open markets, but that didn’t have to happen, and it doesn’t have to persist.

But now, as I wrote in the column, the United States, which largely created the world trading system, is imposing new restrictions on trade in the name of national security and bluntly asserting that it has the right to do so whenever it chooses. When the Trump administration did this, it could be dismissed as an aberration: Donald Trump and those around him were crude mercantilists with no sense of the historical reasons behind existing trade rules. But you can’t say that about Biden officials, who understand both the economics and the history.

So is this the end of peace through trade? Not exactly — but it’s a doctrine that has lost a lot of force lately, for several reasons.

First, the idea that trade fosters peace may be true only for democracies. The United States briefly invaded Mexico in 1916 in an unsuccessful attempt to capture Pancho Villa; such a thing would be hard to conceive nowadays, with Mexican factories such integral parts of the North American manufacturing system. But are we equally sure that the similarly deep integration of Taiwan into China’s manufacturing system rules out any possibility of invasion?

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