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  • Print publication year: 2005
  • Online publication date: July 2009

1 - The economics of World War I: an overview

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Summary

Introduction

Globalisation has been under way for centuries. The modern wave of globalisation that dates from the early nineteenth century gave a significant boost to world trade, world capital flows, and worldwide migration, with great powers competing for colonial empires on a global scale. The Great War of 1914 to 1918 then interrupted and, for a time, set into reverse the process of globalisation.

How did globalisation lead to war? At first sight it was the competition for colonies that ran out of control. Britain and France, the established powers of ‘old’ Europe, had established a condominium over most of Africa and much of Asia; Germany, the rising power of ‘new’ Europe, had no colonies to speak of, wanted some, and expected to get them at the expense of the French and the British. Behind this lay a perception that world power was a zero-sum game. Since Adam Smith, the Anglo-Saxon liberals had argued that trade was a game from which all could benefit at once. But in the late nineteenth century liberalism was being challenged by a new nationalism that gave more weight to the control of territory and settlement than to trade and competition. When it came to territory, the supply was fixed and there was only so much to go round. Therefore, the new nationalists reasoned, it was worth Germany's while to break up world trade for a while in order to grab territory from the older powers.

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The Economics of World War I
  • Online ISBN: 9780511497339
  • Book DOI: https://doi.org/10.1017/CBO9780511497339
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