Nobel laureate economist Paul Krugman has some powerful insights into the economic motivation for war in his recent New York Times op-ed. He worries that some modern wars may be deliberately conceived as a distraction from bad economic conditions; he is referring to Russia, and wondering what China might do one day if its economy falters.
Krugman's angle is an economist's twist on an ancient question: why do we fight?
'Rationalist' theories of war – nations fight when benefits exceed costs – overlook the simple reality that miscalculation is inevitable in warfare. In fact, miscalculation has been said to be the very cause of war. As Krugman observes, wars frequently ruin one, both or even all sides: 'starting a war is a very bad idea. But it keeps happening anyway.'
The economic argument against war was made by the liberal Manchester School in the 1860s, then made again by Norman Angell in The Great Illusion (1909). He has, unfairly, been ridiculed for his poor prediction. Angell wasn't arguing for the impossibility of war but for the stupidity of war. World War I proved him right, not wrong.
A century on, we still ponder Angell's puzzle: surely we are trading too much to contemplate conflict? This is the recurring myth of economic interdependence as a restraint on war. It was proven wrong in 1914, when Britain and Germany were highly entwined, and again today as Vladimir Putin risks Russia's economy for his Novorossia project. Some feel reassured by the massive 'Chimerica' financial condominium binding the US and China together. A US Marine Corp general voiced this confidence at a recent seminar: a conflict in the Pacific is unlikely, because 'we owe so much money.'
But money is seldom at the root of either war or peace among nations (although as Krugman notes resource booty often drives civil conflicts). The causes of inter-state war are famously complicated. It is often joked that more ink has been spilled over war than blood. Of the thousands of books on the subject I will cite a recent one because of its clarity. In Why Nations Fight, Richard Lebow comes to a resounding conclusion about the 94 major international conflicts since 1648. Of our three major motives – appetite (wealth), spirit (honour) and fear (security) – it is the human 'spirit' which incites most wars. A whopping 58% of wars were over standing or prestige. Revenge accounted for 10%. Material aggrandizement, or what Marx called imperialism, accounted for just 7%.
That fact is worth repeating: more than half of major conflicts were over 'who's the boss.' [fold]
Lebow's analysis is not simplistic. He doesn't mean that nations don't tussle over territory; they do. But their reason is often tied to historical sovereignty or security or influence, rather than material value. Curiously, he deliberates long over the US entry into World War II: was it caused by Japan's fear or America's revenge? Lebow's analysis challenges the widely held view that rising powers cause war. In fact it is the incumbent great powers who fight wars with the highest frequency (mostly insurgencies), and the declining great powers who act the most aggressively (often against weaker states) and irrationally (they usually lose). In other words, angry nations often miscalculate. He further shows that 'balance of power' arrangements aren't particularly good at preventing wars, tough they do work militarily (small comfort).
It can be said that a balance of power is emerging in Asia, one that partly rests on a 'financial balance of terror'. But the American general reassured by his nation's debt to China may overstate the effect of its deterrence. The trillion dollars or so Washington owes Beijing is a lot of money, but it's worth only one or two months of output of either country. There is a danger that economic interdependence actually heightens the risk of conflict by making nations over-confident in their ability to inflict financial pain.
Great powers usually only act as such 30 years or more after achieving that status. In China's case, Lebow calculates this may have happened as early as 1990. China now is a true superpower. Perhaps what America should worry about most is when 'Chimerica' is no longer so consequential to China, when Beijing becomes so mighty that it has no heed for American opinion. Then its actions may be driven purely by domestic spirits. By Krugman's bleak logic, that is when it may face economic problems at home, and distractions abroad will beckon.