It has often been said that world trade and investment between nations makes war between nations an irrational act. If your trading partner is hurt, it hurts your own wallet as well because you lose the profit from trade.

I have been reminded several times that world trade will prevent world war. Today, the world is enjoying globalisation and prosperity from global trade.

The globalisation before World War I look similar to today's situation.


Characteristic of the pre-1914 decades was what we would now call globalization. Trade may have risen from one thirtieth to one third of world production between 1800 and 1913; between 1855 and 1914 investment flows grew 20 times. Europe accounted for nearly two thirds of global trade and even more of global investment, and from the 1890s Europe’s major currencies were fixed in value in relation to each other under the international gold standard. Hundreds of thousands of foreign-born labourers worked in the heavy industries of French Lorraine and Germany’s Ruhr. The British writer Norman Angell in his 1909 best-seller, Europe’s Optical Illusion, maintained that war between advanced modern economies was now irrational.

Why didn't global trade prevent World War I?

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    Downvote for uncited sources. – Mark C. Wallace Sep 15 '17 at 17:11
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    I do not understand the assumption that global trade and investment are war prevention tools. History does not support that assumption. @JohnDee Rubbish assertion in your comment, and unsupported. – KorvinStarmast Sep 15 '17 at 22:19
  • @JohnDee Your perception of the magnitude within a given economy of armaments is overblown. Not even a nice try. Suggest you offer an answer, as this is not a forum. – KorvinStarmast Sep 15 '17 at 23:56
  • @KorvinStarmast I deleted my comments because it was a discussion. If you delete your accusation then I will remove this one, too. There was a small, wealthy elite invested in arming the European nations. – John Dee Sep 16 '17 at 0:14
  • Every time I see a question about the causes od World War I , I want to post Frederick W. Rose's Angling in Troubled Waters – Spencer Sep 16 '17 at 23:06

People can do irrational things sometimes. When a country isn't very democratic, that can mean it only takes one irrational person at the top for the entire country to engage in irrational actions*.

The chief instigator in this case was German Emperor Kaiser Wilhelm II, and the coterie he built up around himself.

German foreign policy under Wilhelm II was faced with a number of significant problems. Perhaps the most apparent was that Wilhelm was an impatient man, subjective in his reactions and affected strongly by sentiment and impulse. He was personally ill-equipped to steer German foreign policy along a rational course.

The result was a hyper-bellicose German foreign policy, driven by visions of personal status and affronts rather than any pragmatic concerns about the well-being of the country. Germany's Austro-Hungarian ally was encouraged to behave equally aggressively, with the implicit (and sometimes explicit) backing of the German state.

* - Not saying that Democracy fixes it. It however does allow brakes to be applied, if the people are so inclined.

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    France was a democracy, but there was a strong anti-German sentiment. Also Kaiser Wilhelm 2 is not the man who started the war, his only wrong was to give up power to the generals too quickly at the start of the war. – Bregalad Sep 15 '17 at 14:55
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    @Bregalad - He didn't directly start it, but his fingerprints were all over it. AH would not have been as aggressive with Serbia as they were without his enthusiastic support. Serbia was a Russian client, at a time the Russians were considered a tougher opponent than France. Wilhelm's antics were fundamental in creating the international relations environment in which the war happened. One other example I didn't even get into, England before the buildup to WWI had been a traditional ally of Prussia. Turning them into an enemy was a personal accomplishment of Wilhelm II. – T.E.D. Sep 15 '17 at 15:33
  • @Bregalad: Not sure how you arrived at that conclusion. Germany declared on France and Russia in anticipation for the coming war. It didn't declare on Great Britain, but the latter joined in to back Belgium who had been declared on by Germany. And the US declared on Germany because it grew tired of its unrestricted submarine warfare. Austria-Hungary certainly lit the fuse by being belligerent towards Serbia, but it was Germany that went "f%$k that" and showered the barrel with a flame thrower. – Denis de Bernardy Sep 15 '17 at 17:44
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    It is not I who arrived at that conclusion, but other people I merely relay their words. – Bregalad Sep 16 '17 at 8:33

Why didn't global trade prevent World War I?

It did, with careful diplomacy, for 40 years. Then it fell apart.

If we look at the pace of war in Europe, major wars between major powers, you see constant warfare up until the Franco-Prussian War of 1870. And then it, for the most part, stops. There's a period of 40 years without a major European war, an entire generation. Pretty successful. The desire to end to ruinous wars brought about successful diplomatic achievements such as the Congress of Berlin to "stabilize" the Balkans (meaning to carving them up to the satisfaction of the major powers), and the League of the Three Emperors; an on-again/off-again alliance between Germany, Russia, and Austria-Hungary to secure Germany's eastern flank and try to control conflicts of Russian and Austro-Hungarian ambitions in the Balkans.

But it wouldn't last.

The start of WWI is almost a comedy of errors goaded on by leaders whose ambitions far outstripped their competence. Like the mutually assured destruction of the Cold War, Europe was a bomb deliberately and carefully set up to go off should anyone go to war. With better leaders, this urged caution and diplomacy in international affairs. But those better leaders were gone, replaced with men whose ambitions outstripped their competence as @T.E.D. discusses in their answer. Once the fuse was lit, without everyone trying to quench it, a general European war was going to happen.

While the bankers and merchants did not want war, they were not consulted. In the opening phases, the democracies of France and UK were only indirectly involved. This was to be a war started by the hereditary dictators of Germany, Austria-Hungary, and Russia: Kaiser Wilhelm II, Czar Nicholas II, and Emperor Franz Joseph I. Unlike in the fields of commerce or democratic governments where leadership is, in part, tied to success; these men were leaders simply because of how they were born. They were not up to the task. And they could, and did, ignore or fire anyone who told them otherwise.

The Napoleonic Wars greatly expanded warfare by demonstrating the value of a large national army of armed citizens, like we have today. Unlike the small, professional cadres before, these citizen soldiers were at their jobs, not the barracks. In the event of war they needed to be recalled, get to their barracks, armed, and sent to the front. This process of mobilization could take days or weeks in the case of a nation like Russia. The rapid French defeat in the Franco-Prussian War of 1870 lead many to think that wars were won by who could mobilize the mostest the fastest. The result being nations would be quick to mobilize at the sign of trouble, which made their neighbors nervous of an attack and they mobilized. There was an almost a Cold War tension in slow motion, that as soon as one nation mobilized, everyone would.

Europe before WWI was a careful balancing act of defensive alliances between the major powers of the UK, France, Germany, Austria-Hungary, and Russia. Prior to Kaiser Wilhelm II, Germany sought to keep France and Russia from aligning to avoid being surrounded. After the Kaiser fired its primary architect, Otto von Bismark, this careful system of alliances unraveled. France and Russia aligned, and Germany aligned with its neighbor Austria-Hungary. Germany was now surrounded.

Add to this a series of treaties by the major powers guaranteeing the neutrality of various minor countries. Russia was the protector of Serbia. The UK protected Belgium.

The dominoes were all set up. After Archduke Franz Ferdinand was assassinated by Serbians, these dominoes teetered. War was not inevitable, and careful negotiation had saved the day before, but Austria-Hungary had ambitions in the Balkans. They gave the dominoes a knock by demanding humiliating terms of Serbia that Serbia could not possibly accept. Germany goaded Austria-Hungary on, eager to deal with an unprepared Russia, and promised their full support.

In his (Kaiser Wilhelm’s) opinion, though, there was no need to wait patiently before taking action. The Kaiser said that Russia’s stance would always be a hostile one, but he had been prepared for this for many years, and even if war broke out between Austria-Hungary and Russia, we could rest assured that Germany would take our side, in line with its customary loyalty. According to the Kaiser, as things stood now, Russia was not at all ready for war. It would certainly have to think hard before making a call to arms. Nevertheless, it would attempt to turn the other powers of the Triple Entente against us and to fan the flames in the Balkans. The Kaiser said he understood full well that it would be difficult for His Imperial and Royal Apostolic Majesty to march into Serbia, given his well-known love of peace; however, if we really deemed a military operation against Serbia necessary, he (Kaiser Wilhelm) would find it regrettable if we did not seize the present moment, which was so favorable for us.

Austro-Hungarian Ambassador László Szőgyény's report from Germany.

Russia and France, not prepared for war, did not make a strong stand for Serbia. Their opportunity to prevent war with a firm stance was squandered. Serbia refused the deal anyway. Germany, sensing weakness in Serbia's protectors, urged Austria-Hungary to attack immediately and swiftly. Invade and crush Serbia before Russia can mobilize, deliver them a fait accompli. So on July 28th, 1914 Austria-Hungary declared war on Serbia, sent some ships up river to bombard Belgrade, and then informed the aghast Germans they would not be ready to invade for two more weeks. And Russia was already mobilizing.

Austria-Hungary, not wishing to fight Russia alone, urged Germany to mobilize and declare war on Russia in response to Russian mobilization. Despite Czar Nicholas of Russia and Kaiser Wilhelm of Germany being cousins (as was King George V of Britain), and sending letters back and forth each urging the other not to mobilize, neither could stand down. Cousin Nicky could not abandon the Serbs. Cousin Willy could not abandon Austria-Hungary. War was on.

Germany, knowing if they attacked Russia that France would attack Germany, decided a knockout blow against France was necessary. The Schlieffen Plan was their answer to a two-front war. Knock out France in weeks before Russia can fully mobilize. To do so and outflank the French, they needed to go through Belgium whose neutrality was guaranteed by the British. Germany gambled that the British wouldn't seriously intervene, and they gambled wrong.

Despite the looming threat of a ruinous general European war, each leader acted according to what seemed to make sense in their own immediate situation. The ambitions of the Central Powers (Germany and Austria-Hungary) and the reluctance and apparent weakness of the Entente (France, Russian, UK) allowed the Central Powers to think a general war was not actually going to happen; that it would remain another quick, local Balkan war.

Further Reading

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  • I'm unconvinced a "firm stance" would have bought Russia and France anything (except perhaps a larger share of the blame for the war when it happened). Later events showed the idea of a war between Germany and those two was no great deterrent for Germany, as they declared it themselves. – T.E.D. Sep 15 '17 at 19:27
  • ...perhaps I'll feel differently after I listen to Dan's podcast though. Its been on my queue for a while, but I want to listen to his Celtic Holocaust first. :-) – T.E.D. Sep 15 '17 at 19:33
  • @T.E.D. Dan Carlin is just chock full of good news. :-) – Schwern Sep 15 '17 at 19:36
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    Having "bombarded Belgrade from the sea" would have been a very remarcable event before the cruisse missile was invented. – Pere Mar 23 '19 at 16:54
  • @Pere Rivers are like very long seas? :) Good catch, thanks. – Schwern Mar 23 '19 at 17:21

Trade with whom?

I think the reason was that the huge international trade was mostly between colonial powers and their colonies, not between the colonial powers themselves.

Long-term/Economic causes of the War

The war was for access to the colonial markets.

Old colonial powers already had huge empires (Britain & France - overseas, Russia - along its borders). They were happy with the status quo and held a relatively conciliatory stance (except that they wanted to cannibalize the dying Ottoman Empire).

New arrivals (Germany, Austria and Italy - although the latter was later bought by the Entente) had little colonial possessions where they could export industrial goods and from where they could import raw materials. They wanted to upset the apple cart to get colonies, especially Germany, the strongest upstart which was engaged in the early 20th century version of the Space race with Britain.

Please see Scramble for Africa for more details.

Game theory

The biggest problem was the huge underestimation of the cost of war by all parties which resulted in the actual game (Prisoner's dilemma) being different from the game the player thought they were playing (Hawk-Dove).

The contested resource V (access to colonial markets) turned out to be much smaller that the cost C of war (the end of the European domination of the World over the 20th century).

PS. See Live and let live for another example of how iterated Prisoner's dilemma played out during the WW1.

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  • "The war was for access to the colonial markets, at least that was the goal of the German policy in the decades before the war and the reason they provoked the war." While I agree colonial markets drove low level conflicts and tensions, I'm gonna need a citation on that second bit about it being the reason they provoked the war. – Schwern Sep 15 '17 at 19:48
  • @Schwern: Lenin, "State and Revolution" ;-) – sds Sep 15 '17 at 19:56
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    Hmm. Lenin is not a great source for unbiased historical information. The game theory observations are good. It seems you're arguing a long-term social-economic view of what brought the nations into conflict and lead them to mass arms, rather than a diplomatic one. Maybe flesh that out? For example, domination of the seas to protect global colonies leading to Germany challenging British naval power leading to a non-traditional naval power sparking a naval arms race? The rise of Prussia as a new major power and their ambitions to get a slice of the colonial pie? – Schwern Sep 15 '17 at 20:07
  • @Schwern: Lenin is not a source on anything except Leninism. See the smiley? At any rate, I "fleshed it out" a little bit, but I don't want to copy and paste the 3 relevant wikipedia articles. ;-) – sds Sep 15 '17 at 20:50
  • Might want to fold in Jan Bloch's assessment of why war would not or could not happen ... I think it relates to your answer. – KorvinStarmast Sep 15 '17 at 22:22

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