Trading on Preconceptions: Why World War I Was Not a Failure of Economic Interdependence

Abstract

The First World War is generally viewed by both advocates and critics of commercial liberal theory as the quintessential example of a failure of economic integration to maintain peace. Yet this consensus relies both on methodologically flawed inference and an incomplete accounting of the antecedents to the war. Crucially, the war began in a weakly integrated portion of Europe with which highly integrated powers were entangled through the alliance system. Crises among the highly interdependent European powers in the decades leading up to World War I were generally resolved without bloodshed. Among the less interdependent powers in Eastern Europe, however, crises regularly escalated to militarized violence. Moreover, the crises leading to the war created increased incentives for the integrated powers to strengthen commitments to their less-interdependent partners. In attempting to make these alliances more credible, western powers shifted foreign policy discretion to the very states that lacked strong economic disincentives to fight. Had globalization pervaded Eastern Europe, or the rest of Europe been less locked into events in the East, Europe might have avoided a “Great War.”

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