The Great Illusion

Angell argued in 1909 that military conquest had become economically self-defeating for advanced industrial nations, because their prosperity depended on trade, credit and financial interdependence rather than on territory. A victor could not seize wealth from a defeated country without destroying the commercial system that produced it, and the disruption of credit would harm the victor as much as the vanquished.

His evidence was the structure of international finance and trade at the time: the integration of capital markets, the dependence of industrial economies on imported inputs and export markets, and the observation that small states such as Switzerland, Belgium and the Netherlands were prosperous without military power while large empires bore enormous defence costs without proportionate benefit. He argued that the confusion arose from treating nations as if they were individuals who could be enriched by taking property.

He was careful to say that war remained possible because leaders and populations held mistaken beliefs, and he was frequently misread as predicting that war would not occur. The 1914 war is generally treated as refuting him, and Angell spent decades arguing that it confirmed his thesis, since the war was economically ruinous for the victors.

The book is worth reading now because the same argument recurs in every debate about economic interdependence preventing conflict, most recently regarding China and Taiwan, and because Angell's actual claim, that war is unprofitable but not therefore improbable, is more careful than either its supporters or its critics usually allow.