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Sunday, September 23, 2018

Dead on arrival

PM points out that the popular free trade argument that trade prevents war is based on an early 20th century Nobel prize-winner's idea that proved itself to be an epic falsehood within seven years of its first articulation:
Norman Angell is most widely remembered for his 1909 pamphlet, Europe's Optical Illusion, which was published the following year (and many years thereafter) as the book, The Great Illusion. (The anti-war film La Grande Illusion took its title from his pamphlet.) The thesis of the book was that the integration of the economies of European countries had grown to such a degree that war between them would be entirely futile, making militarism obsolete. This quotation from the "Synopsis" to the popular 1913 edition summarizes his basic argument.

He establishes this apparent paradox, in so far as the economic problem is concerned, by showing that wealth in the economically civilized world is founded upon credit and commercial contract (these being the outgrowth of an economic interdependence due to the increasing division of labour and greatly developed communication). If credit and commercial contract are tampered with in an attempt at confiscation, the credit-dependent wealth is undermined, and its collapse involves that of the conqueror; so that if conquest is not to be self-injurious it must respect the enemy’s property, in which case it becomes economically futile. Thus the wealth of conquered territory remains in the hands of the population of such territory. When Germany annexed Alsace, no individual German secured a single mark’s worth of Alsatian property as the spoils of war. Conquest in the modern world is a process of multiplying by x, and then obtaining the original figure by dividing by x. For a modern nation to add to its territory no more adds to the wealth of the people of such nation than it would add to the wealth of Londoners if the City of London were to annex the county of Hertford.
Whenever you dig into the logic of free trade or the arguments presented on its behalf, you inevitably discover that they are based on foundations that were conclusively proven to be rotten decades, or even centuries, ago. One of the most remarkable things about free traders I have observed is their relentlessly stubborn ignorance of the roots of their own economic philosophy.

Of course they don't know anything about Norman Angell's case for trade. One can hardly criticize them for that, as it was justly obscured by the course of historical events. But free trade advocates don't even understand the specifics, let alone the intrinsic flaws, of David Ricardo's comparative advantage argument.

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40 Comments:

Blogger Brett baker September 23, 2018 11:21 AM  

Thinking is HARD, SDL!

Blogger Brett baker September 23, 2018 11:21 AM  

This comment has been removed by the author.

Blogger Peaceful Poster September 23, 2018 11:23 AM  

1) Free trade leads to migration, as per VD.

2) Migration leads to war, as per the esteemed military historian, Martin van Creveld.

Ergo, free trade leads to war.

Blogger Jew613 September 23, 2018 11:25 AM  

My experience with free traders is they throw out an enormous word salad to overwhelm their opponents. As a whole it sounds great, but if you look closely their arguments fall apart.

Blogger Hammerli280 September 23, 2018 11:26 AM  

It occurs to me that some of these economists would benefit from playing a game like Risk. It's about resources and access to them. It's true that no ordinary German citizen benefited from taking Alsace...but it provided wealth the Kaiser could put to use building battleships.

I'm a supporter of free trade among peer states, but I won't pretend it makes peace. Countries fight for bigger things.

Pity the GOP Establishment can't figure this out...that there are things more important than a damned dollar bill.

Blogger Michael Maier September 23, 2018 11:27 AM  

Man... it just dawned on me.... this is another Dead Horse that Won't Admit It's Dead.

And what does Vox do with those?

NOT compaining, just noticing.

Blogger pyrrhus September 23, 2018 11:29 AM  

The free traders are painfully ignorant of history, and intend to remain so...For example, Britain's free trade policies in the 19th century devastated British agriculture, and the incomes of the countryside in general. As Bill Bryson has pointed out, the amateur scientist clerics and country gentlemen like Darwin who were so crucial to British science simply disappeared in the 20th century...And weak agriculture certainly harmed Britain's war efforts.

Blogger pyrrhus September 23, 2018 11:32 AM  

"Pity the GOP Establishment can't figure this out...that there are things more important than a damned dollar bill."

Not in the minds of the (((globalists))) and their henchmen.

Blogger Francis Parker Yockey September 23, 2018 11:39 AM  

For a modern nation to add to its territory no more adds to the wealth of the people of such nation than it would add to the wealth of Londoners if the City of London were to annex the county of Hertford.

Disregarding the events of a few years later, and simply looking at this argument on its own terms, there appear to be a couple of obvious issues:
1. Assuming that the only possible motivations for war are financial ones.
https://infogalactic.com/info/Economism

2. Assuming that, because a particular polity does not benefit as a whole from war, or because its average citizen does not benefit, that there is no financial reason for that country to go to war.

This line of argument ignores the possibility that certain individuals (or groups) within the country may benefit greatly from said war, regardless of what happens to the country try as a whole. Given this, it's interesting to note the potential belligerents that Angell chose for his hypothetical local war. One was the City of London. Not London in its entirety -- just the City.
https://infogalactic.com/info/City_of_London

We can say with a fair degree of certainty that some individuals residing (or at least working) within the City benefited greatly from WW1.

Blogger Emmett Fitz-Hume September 23, 2018 11:48 AM  

Or throw out pithy soundbites that sound nice:

"No two countries that both had a McDonalds had fought a war against each other since each got its McDonalds."

Midwits need to beware the soundbite.

Blogger Captain Atom September 23, 2018 11:50 AM  

Britain's free trade policies also led to World War 1 in another way, the Unionist Leader Chamberlain wanted tariff reform and protections for the working class, as well as an alliance with Germany. His Liberal opposition wanted "Free Trade" and entente with France to go along with it. The free-traders won, and Britain's alliance with France set the wheels in motion for Germany's perception of "Perfidious Albion".

The Robert K. Massie book Dreadnought is a good read on the arms race that lead to the war, kicked off by the Free Traders.

Blogger Lance E September 23, 2018 11:50 AM  

So in order to prevent war, you need to sell your nation into debt slavery?

Hey guys, I thought of a great way to prevent testicular cancer...

Blogger dienw September 23, 2018 11:55 AM  

Norman Angell was thinking abstractly not experiencially; or, you might say, exoterically, not knowing the esoteric purpose of Free Trade; nor did he recognize the hostility of those who were behind it: those who would ultimately profit from the wars no matter who won or lost or the level of destruction to either party: Angell incorrectly trusted the financial class

Blogger pyrrhus September 23, 2018 12:03 PM  

@11 Yes, 'Dreadnought' was a very interesting book. There are also some incisive episodes in Riley, Ace of Spies regarding this period.

Blogger pyrrhus September 23, 2018 12:13 PM  

Overthinking the issue is not really necessary...As somewhat leftist thinker, John Michael Greer, summarized it, the populations of countries that adopt free trade always become poorer..And that is what we have seen in the west. Of course, the .01% of international financiers become enormously wealthier.

Blogger seeingsights September 23, 2018 12:23 PM  

As stated by others, events subsequent to the publishing of The Grand Illusion showed the falsity of the thesis that economic interdependence would make War obsolete. For example, most of the countries of the world were involved in some way with World War II. Yet these countries were part of the same global economic system.
Before the publishing of Angell's book, I would give these examples as countering his thesis:
Great Britain and the 13 American colonies traded with each other, yet the colonies fought a war for independence
Various examples of one state paying tribute to another state. The Persian Archaemenid Empire was a tribute Empire. For other examples see
https://infogalactic.com/info/Tributary_state

Blogger Ken Prescott September 23, 2018 12:26 PM  

It occurs to me that some of these economists would benefit from playing a game like Risk. It's about resources and access to them. It's true that no ordinary German citizen benefited from taking Alsace...but it provided wealth the Kaiser could put to use building battleships.

And thus manage to convince the British that he was intent on becoming a mortal threat to them. Overall, a dumb move. I am convinced that Wilhelm II was a Gamma's Gamma.

Blogger Lurker September 23, 2018 12:29 PM  

Some antics from the globalists in drag aka "free" traders.

Blogger seeingsights September 23, 2018 12:32 PM  

Let me flesh out my reasoning about tribute empires. To the question "Can war pay?" my answer is: it's possible.
Empire X attacks and defeats State Y. Empire X extracts tribute, say a special tax, on State Y. The revenues from the tribute pay for the costs of Empire X's war and then some.

Blogger Mr.MantraMan September 23, 2018 12:44 PM  

War paid for Islam.

Blogger bob kek mando - ( it is the burden of Women to need to improve the Men around them. it is the burden of Men to need to ignore the Silly Bints ) September 23, 2018 1:07 PM  

VD
Whenever you dig into the logic of free trade or the arguments presented on its behalf, you inevitably discover that they are based on foundations that were conclusively proven to be rotten decades, or even centuries, ago.


multiple millennia ago.

now, WHO would have a vested interest in maleducating entire societies that Credit ( ie - Debt + Interest ) is Wealth?



"by showing that wealth in the economically civilized world is founded upon credit"

Credit is no more Wealth than a surfeit of Currency is. people can starve to death in the streets while pushing wheelbarrows full of cash or be reduced to pauperdom while the Bank lends them hundreds of multiples of their annual income.



Blogger Azimus September 23, 2018 1:13 PM  

The market doesn't go to war - the same forces of finance and trade that erect economic relationships don't start wars. Who cares if the imperial Germans did not seize tax-revenue generating assets fr the Alsatians? They sure as hell began taxing them! Who cares if the average Bavarian received nothing directly for the conquest of Lorraine? The Imperial government received additional revenues for their expansionist designs that the Bavarians would've had to pay if Lorraine didn't... could an economist be so blind as this?

Blogger bob kek mando - ( it is the burden of Women to need to improve the Men around them. it is the burden of Men to need to ignore the Silly Bints ) September 23, 2018 1:21 PM  

16. seeingsights September 23, 2018 12:23 PM
For example, most of the countries of the world were involved in some way with World War II.


read The Communist Manifesto; that's one of Marx's primary philosophical points, that GLOBAL TRADE IN THE 1840s would generate the rise of the Proletariat.

all of the European powers weren't just "trading partners" at the outbreak of the Great War, they had been for well over a century by that time.

so the hypothesis "Trade Prevents War" has been known to be categorically false since AT LEAST Napoleon.

Blogger DonReynolds September 23, 2018 1:35 PM  

"The thesis of the book was that the integration of the economies of European countries had grown to such a degree that war between them would be entirely futile, making militarism obsolete."

The European experiment, that still continues since WWII, is not free trade but common trade. When the war industries (in particular) are UNABLE to produce unless they are integrated with all the other countries around them, then a prolonged war is impractical and for some impossible because the critical components are denied them by other countries....who may be unhappy about the war.

The present European Union is a direct result of the European Common Market, which was itself a direct result of the European Coal and Steel Community ....started in 1951 at the urging of the French to prevent future wars. It was (and is) still believed that deep economic integration make it impossible for any one nation to conduct a long-term military campaign without steel. Trade considerations and economic development/investment were only secondary.

The theory itself is very flawed and rests on assumptions that are no longer true, even if they were ever valid in the past. Modern wars are never expected to be prolonged campaigns, but once they start they may become prolonged. (Napoleon invented the modern blitzkrieg, not Hitler or the Kaiser.)

War-time economies during prolonged wars are capable of producing an unexpected quantity and quality of goods, and if the raw materials are unavailable, modern technology can create substitutes and complements. We have seen this many times, but the forlorn hope remains that wars can be prevented through input dependency during peacetime.

Blogger DonReynolds September 23, 2018 1:57 PM  

The new word for the the day is "autarky", which seems to apply to this discussion.

Those who are von Mises scholars will recognize that according to his thick tome, Human Action, autarky is the cause of all wars, which echoes the sentiments of the day, as reflected in the persistence of this theory for the last century. Both the Left and the Right have embraced autarky (self-sufficiency) as a positive policy at different times and with different intentions, but somehow the lack of autarky is supposed to prevent future wars. It is really just an emotional appeal. No rational person actually wants a future war so they are generally open to anything that might prevent it....including unilateral disarmament, Open Borders, free trade, industrial integration, common currency, stronger labor unions, universal franchise. All of these have failed in practice, but the theory remains.

Remember, there was a time in Europe when the shared blood and family ties of the royal monarchs was supposed to make war unlikely. WWI destroyed this notion and practically every monarchy of Europe in the process, starting with the most powerful.

Blogger Zwiebel September 23, 2018 3:31 PM  

I always found the main problem of economics as a "science" is that it is incredibly simplistic. Country A and country B, add line here, welfare increase, yay!

Blogger Brett baker September 23, 2018 4:39 PM  

A brief study of the history of Prussia should end that idea, but it probably won't. Muh ideology.

Blogger Brett baker September 23, 2018 4:39 PM  

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Blogger Lovekraft September 23, 2018 5:00 PM  

Two tribes. One lives on fertile land. The other on the rugged nearby mountains.

Guess what happens next.

Blogger bob kek mando - ( it is the burden of Women to need to improve the Men around them. it is the burden of Men to need to ignore the Silly Bints ) September 23, 2018 5:08 PM  

the tribe on the mountains trades crushed ice for fruits and vegetables?

Blogger tz September 23, 2018 8:24 PM  

"Free Trade" never is, and don't even bother me until we return to a gold and/or silver standard for exchange.

War will happen even if things are integrated (watch the EU over the next few years).

Blogger buscaraons September 23, 2018 8:54 PM  

Vox,

Is Anglell's monograph available of has it been memoryholed?
I've come across it in various works on the origins of WW I and I was struck at how quickly, the historians then cast it aside. Either because they're not economists or realize the abusurdity of Angell's thesis and don't know how to intergrate it in their studies.

Blogger Unknown September 23, 2018 9:53 PM  

buscaraons: A quick search shows either a paperback for purchase at https://www.amazon.com/Great-Illusion-Norman-Angell/dp/1507644302 or a free version at http://www.gutenberg.org/ebooks/38535

Blogger buscaraons September 23, 2018 10:16 PM  

Many thanks!
I'll head over to gutenburg.

Blogger tublecane September 23, 2018 11:43 PM  

I read Great Illusion so long ago that I can't really remember its argument, but the main thesis of war between European powers being impossible because of economic interests was obviously a colossal error.

It was a popular book I imagine because of the vaguer, more implied sense you get from it that War Doesn't Pay. At least, not for nations as a whole. "War pigs" may profit, but in the 17 years since 9/11 what has Joe Flatscreen got out of the Mid-East? We haven't exactly won, but we haven't lost either. It's difficult to see where the gain is.

The movie Grand Illusion is entertaining, not at all about economics but as I recall about class and national boundaries. You get the sense, for instance, that the Prussian aristocrat holding a French officer captive has more in common with the Frenchman than his own men because they're both of the nobility.

Blogger Iron Spartan September 24, 2018 9:54 AM  

The McDonald's Golden arches doctrine for a new era

Blogger KPKinSunnyPhiladelpia September 24, 2018 10:48 AM  

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Blogger KPKinSunnyPhiladelpia September 24, 2018 10:50 AM  

It's a faith based argument, the contention that economic "free" trading partners won't go to war. On the surface, it sounds logical -- why would two nations that exchange economic bodily fluids fight each other? It's not in their self-interest, is it?

Well the flaw in the argument is this -- yes, Amazon and Alibaba won't go to war, but America and China might. Decisions about war are made by political actors (often thinking about economic factors) not economic actors (who may or may not be thinking politically).

It's the same sort of faith based argument you hear from the "anti-nationalists." Only nation states go to war in this modern era, they claim, therefore we need to curb nationalism.

Well aside from the fact that non-state actors can be pretty effective combatants from time to time, that fact is that war often arises when one nation state simply doesn't respect, or wishes to negate, another nation state's sovereignty.

War is more unlikely the more one state respects and doesn't intervene in the sovereignty of another nation. Economics is a second or lower order effect.

At times, specific disputes make respecting sovereignty problematic, of course, but the principle is fundamental

Blogger Sam September 24, 2018 3:38 PM  

seeingsights wrote:Let me flesh out my reasoning about tribute empires. To the question "Can war pay?" my answer is: it's possible.

Empire X attacks and defeats State Y. Empire X extracts tribute, say a special tax, on State Y. The revenues from the tribute pay for the costs of Empire X's war and then some.



The best part is that Imperial Germany did this in 1871- they forced the French to pay a massive indemnity for declaring war on them and used it to finance an industrial boom in the Ruhr.

You can also
-loot through inflation in occupied territories
-seize factories and other capital goods
-kill people and take their valuables
-evict people and take their homes

All of these were practiced in the second world war and its aftermath. And these weren't 'unthinkable'- the British had shown they were willing to starve millions of Irish to death in order to secure enough food for themselves in 1848. Colonialism was predicated on taking land to either extract funds from taxes or to use it more profitably from the natives.

Blogger Станислав Бартошевич September 26, 2018 2:57 AM  

(1)If only wars started out of the pragmatic calculation of probable material gains versus probable losses, there would have been a lot less wars in the world. Indeed, since late sixteenth century at the latest most wars in Europe were economically devastating for all participants, but that did not prevent people from starting new ones.

(2)Apparently the entirety of German industrialists did not read that book when they lobbied relentlessly against concluding WWI with any sort of peace that did not involve annexation of the Longwy-Briey area and its iron mines. Indeed, this demand is only noticeable on the background of economic magnates on both sides demanding war indemnities and annexations, regardless of fancy theories, because it was on every, even the most minimal, list of German war aims until it became crystal clear that the war is irretrievably lost, and because France would have never agreed to ceding its most important iron deposits in any circumstances short of total defeat, therefore the German demand for Longwy-Briey excluded a compromise peace all by itself.

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