War with China?

Illusions about the pacifying effects of trade go back more than a century.

Jim Lacey
Wednesday, October 19, 2011

‘The two economies [the United States and China] are linked with each other and with the rest of the world in a manner unparalleled in history. This mutual dependence can be an immensely powerful deterrent, in effect a form of mutually assured economic destruction.” So concluded the RAND Corporation in a study released last week.

A hundred years ago Norman Angell came to precisely the same conclusion. In his 1910 book The Great Illusion: A Study of the Relation of Military Power in Nations to Their Economic and Social Advantage, Angell outlined a world where the profitable pursuit of war is impossible because of the interdependence of national economies and the means of modern quick communications. Therefore, war had become “economically and socially futile.” Angell’s book was a tremendous bestseller and fed a widespread turn-of-the-century belief that growing world trade — it was the first era of globalization — would clearly lead to a hundred-year extension of the Pax Britannica.

Angell’s utopian dream of universal peace through greater economic integration took hold in both Britain and the United States, despite the obvious evidence that the world was becoming progressively more dangerous. Growing global tensions were a result of the diplomatic failure of the established powers to make room at the table for two burgeoning new powers — Germany and Japan — that were pushing themselves onto the global stage. Japan, for instance, announced its arrival as a world power by annihilating the Russian navy. In fact it did so a few years before Mr. Angell published The Great Illusion. Germany, in an eerie similarity to what we are witnessing with the rapid growth of the Chinese navy, challenged the continuance of the general peace at the beginning of the 20th century by driving forward with a naval program aimed at contesting Britain’s command of the seas, something Britain naturally viewed as a mortal threat.

In the end, Angell’s theory of “peace through economic integration” was exploded by Europe’s first suicide attempt in 1914. Still, utopian hopes and myths die hard. The dramatic evidence provided by the millions killed in World War I that Angell’s theory was a complete and utter failure did not stop him from releasing a new version of The Great Illusion in 1933, just in time for Hitler’s rise. Another version was published in 1938, on the very eve of World War II. Despite Angell’s unbelievably bad timing and the vacuity of his theories on political economy, he was still awarded the Nobel Peace Prize in 1933, primarily because of The Great Illusion.

RAND’s study concludes: “We do not believe a China–U.S. military conflict to be probable.” Possibly cognizant of how economic integration has disastrously failed to stop previous conflicts, RAND qualifies its belief in a lasting peace built on overlapping economic interests by stating that its view is based on the judgment that the “United States will retain the capacity to deter behavior that could lead to a clash.” In other words, shared economic interests will guarantee the peace just as long as they are backed up by America’s overwhelming military might.

Granted, a war with China does not appear on the immediate horizon. Unfortunately, there are too many possible flashpoints for the United States to become complacent. A nuclear-armed North Korea could collapse, or it could lash out so as to create a regional apocalypse before its final demise. Either event would draw both the United States and China into an unpredictable dynamic in which having a powerful American military force on hand remains the best guarantee of keeping or rebuilding the peace. Moreover, despite decades of walking a diplomatic tightrope, the Taiwan situation remains unstable and dangerous, as do increasing Sino-Japanese tensions over resource rights, increased military activity in the South China Sea, and a growing strategic rivalry with India.

The rise of new powers always leads to a dangerous time in international politics. It does not necessarily have to lead to violence. For instance, the dominant power of the 19th century, Britain, was able to make room for America’s post–Civil War expansion without a major shooting war between the two. Still, throughout this time Britain maintained an unrivaled military supremacy.

With a little luck and a lot of skill, Chinese and American diplomats will peacefully navigate the predictably treacherous waters ahead. In doing so, however, we must avoid putting too much faith in the chimera of an enduring peace built solely on ever greater economic integration. Economic contacts will, in time, help build the common bonds of trust that will allow disputes to be handled peacefully. In the meantime, it is worth remembering that the Pax Americana was not kept for five decades through our economic integration with the Soviets. It was kept by maintaining a powerful military that forced the Soviets to take a long contemplative pause before engaging in any military action.