NO COLDWAR
Did the U.K. break off trade with Germany as the rivalry hurtled toward a war? The answer is a definitive no. The trade and investment flows between the U.K. and Germany rose steadily right up until the outbreak of World War I. TRADINGWITH THE ENEMY Could this historical curiosity be written off due to the U.K.’s ideological commitment to laissez-faire economics? Or perhaps London feared a move against its lightly defended colonies in case it became protectionist? These are fair arguments. However, they do not explain why Russia and France both saw ever-rising total trade with the German Empire during the same period. Either all three states were led by incompetent policymakers who somehow did not see the war coming – unlikely given the empirical
record – or they simply could not afford to lose out on the gains of trade with Germany to each other. A similar dynamic was afoot ahead of World War II. Relations between the U.S. and Japan soured in the 1930s, with the Japanese invasion of Manchuria in 1931. In 1935, Japan withdrew from the 1922 Washington Naval Treaty – the bedrock of the Pacific balance of power – and began a massive naval buildup. In 1937, Japan invaded China. Despite a clear and present danger, the U.S. continued to trade with Japan right up until July 26, 1941, a few days after Japan invaded southern Indochina. On December 7 that same year, Japan attacked the U.S. A skeptic may argue that precisely because policymakers sleepwalked into war in the First and Second World Wars, they will not (or should not) make the same mistake this time around. I would be highly skeptical of the view that policymakers in the early and mid-20th century were somehow defective (as opposed to today’s enlightened leaders). A far more systemic explanation is needed. Political science provides a clear theoretical explanation for why London and Washington continued to trade with the enemy despite the clarity of the threat. The answer lies in the systemic nature of the constraint policymakers faced: a collective action dilemma thanks to changing alliances and the difficulty of disciplining allies’ behavior. The U.S. will find few allies in its combative approach to containing China. There are Hegemony supports a high degree of global economic integration by providing the global public goods of coordi- nation A Bipolar geopolit- ical system leads to a bifurcated global conomy as the two global powers enforce loyalty Unipolarity = Globalization Bipolarity = Bifurcation
2,200
Multipolarity = Regionalization
Germany: Total Trade
1,800
1,400
U.K.
1,000
Russia (including Finland until 1897)
A Multipolar system prevents bifurcation as no state is strong enough to enfource compli- ance, but also encourages regionization as economies of scale become critical
600
France (including Algeria and Tunisia until 1897)
1880 1885 1890 1895 1900 1905 1910 200 Source: B.R. Mitchell, Internaional Historical Statistics, Europe, 1750-1988.
Degree of Anarchy (Lowest = Unipolarity, Highest = Perfectly Balanced Multipolarity)
68
February 2021
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