Monday, October 26, 2015

The Great Illusion

Whereas for most of human history, conquest has led to material gains for the victor, this is no longer the case, says Norman Angell in his book The Great Illusion, a Peter Thiel recommendation.

Most wealth in developed countries is derived from how they do things, not stores of food/gold etc. As such, the ordinary citizens of a conquering nation have nothing to gain from war. The conquerors may try to tax the conquered to gain wealth, but that's a near-impossible thing to pull off, as the failure of states to maintain unfair trading systems with their colonies has shown.

This doesn't mean nations should not defend themselves, Angell is quick to point out. Because an attacker may not be rational (or more likely, I would say, the leaders of an attacking nation have different incentives than its citizens), war may still occur and nations should be ready for it. However, Angell argues that we should do a better job of educating ourselves and our opponents about how there is little to gain (and much to be lost) from even winning a war.

I intuitively already agreed with Angell's point of view. I saw analogous parallels between a conqueror and an acquiring company. Management may gain from the prestige and larger compensation possible from the combined company, but the shareholder of the acquirer will usually not.

Of course, even though the world has continued to move in the direction Angell foresaw in this more-than-100-year-old book, he still got some rather large predictions wrong. Here is one laughable quote:

"British colonial history demonstrates that in this field physical force is no longer of avail. And Germans are beginning to realize it...The immense majority of adult Germans...have never seen a battle, and in all human probability never will."

I think this shows how hard predictions are. You can be right about a lot of things, but all it takes is one small assumption to go wrong and the whole result can be way off.

Still, I think the world has a lot to gain by spreading Angell's ideas. If they become adopted and accepted by most people (as trade has come to be, over time), it may reduce the chances of a future war by making clear to either side that any potential gains are only illusions.

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