Author’s Response: The Economic Weapon (Nicholas Mulder)

14 March 2022

** This is the author’s response to a series of four reviews of Nicholas Mulder’s new book The Economic Weapon: The Rise of Sanction as a Tool of Modern War.

1. “Sanctions: What are They Good For?” by Ben Coates

2. “The Paradoxes of Liberal Peacekeeping” by Liane Hewitt

3. “Economic Sanctions and the Backlash to Liberal Internationalism” by Jamie Martin

4. “New Histories of the International Order and Why They Matter” by Glenda Sluga

The entire forum is also in PDF format. **

 

I would like to express my profound gratitude to Benjamin Coates, Liane Hewitt, Jamie Martin, and Glenda Sluga for their incisive commentaries on my book. This forum has been tremendously enriching, and I am glad to be able to offer a response to the questions raised by my colleagues. I will focus on the most important points that they raise.

 

The first of these is the political character of interwar supporters of sanctions as a new tool of international politics. Benjamin Coates rightly notes that “the mutual constitution of sanctions and liberal internationalism” is a core theme of the book. Indeed, this link appeared so strong to contemporary political observers such as Helena Swanwick, Karl Polanyi, and C. L. R. James, that they spoke of “sanctionism” as a distinctive approach to world affairs. Proponents of economic pressure as an instrument for the defense of the international order were clearly recognizable to them as “sanctionists.” This category expanded over time. Not all of the individuals and groups that it covered were liberals. There were also conservative, socialist, and communist sanctionists, especially during the widespread pro-sanctions public mobilization in European countries during the 1935-1936 Italo-Ethiopian War.

 

While the internationalists who made the most direct use of sanctions in discourse and practice tended to be economic and political liberals, others with different political leanings also embraced these policy preferences on numerous occasions. This is an important point insofar as it emphasizes that the divide between advocates and critics of sanctions did not divide liberalism from its various opponents—for liberals could be found on both sides of the sanctions question—but rather constituted a chasm between varied political and ideological coalitions that coalesced around key international issues of the 1919-1939 period: Bolshevism in Russia and Hungary, the Ruhr and Corfu crises, Manchuria, the Chaco War, Abyssinia, the Sino-Japanese War, and Hitlerism.

 

Liane Hewitt’s very sharp contribution cuts right to the core of the book’s argument that the creation of sanctions “reinvented liberalism for the 20th century’s age of total war and national state sovereignty over the economy.” She also puts her finger on two important elements that do not receive full treatment in the book: the influence of older German autarkic visions, and the relative absence of business actors. As she points out, Henry Cord Meyer’s classic Mitteleuropa in German Thought and Action, 1815-1945 was the first study to argue that the 1914-1918 blockade stimulated German desires to develop a self-sufficient continental bloc in Central Europe. Meyer traced this turn in particular to the publication of the German liberal writer Friedrich Naumann’s Mitteleuropa in 1916, which galvanized public interest in Germany in turning away from an excessive dependence on global markets and stimulated interest in schemes for German-led European federative structures. Hewitt’s characterization of my book as a move to globalize the Meyer thesis is very acute—particularly since Meyer drew a direct connection between League sanctions and later autarkic programs—and puts it in the appropriate historiographical vein.

 

The acceleration of German autarkic thought in the early twentieth century is a fascinating phenomenon. In my interpretation, however, there is a significant gap between the politico-economic and strategic visions formulated by German elites documented by Meyer, and the practical decisions by Wilhelmine, Weimar, and Nazi era actors that culminated in the campaigns for Rohstoff-Freiheit and Blockadefestigkeit in the 1930s. The influence of Naumann on interwar thinkers was noticeable, but in reality the outcomes of German policy were imperfect hybrids, with various government agencies and different segments of the corporate elite pursuing both Central Europe-focused Mitteleuropa and more globally-oriented Weltwirtschaft strategies. The diffusion of power across institutions and the vagaries of the interwar global economy caused German autarkists to pick and choose elements from both approaches. Both Naumann’s vision and the dramatic Nazi designs for a pan-European Großraumwirtschaft shared a desire for self-sufficiency wrought by economic war. But the actual configuration of Nazi empire in the 1940s was more expansive than the Great War fusion of Wilhelmine and Habsburg economic zones plus their vassal states and dependencies that characterized the agenda of the Mitteleuropa enthusiasts. While important, Meyer’s tradition is thus merely one strand among the twentieth century’s panoply of ‘varieties of autarky’ that deserve greater historical study.[1]

 

In part the distorted continentalist path followed by Germany in the era of peacetime blockade fears and League sanctions reflected the greater resource requirements of the Nazi state and military apparatus. But it was also the result of a clash between cultural-strategic vision (uniting German speakers in a single economic zone) on the one hand and material realities (the need to earn foreign exchange through exports on world markets, and great reliance on grain, oil, and ores from Slav-dominated states such as Yugoslavia, Romania, and the Soviet Union) on the other. In this regard, the effects of economic war on German autarkic visions could move rapidly as the world situation changed and the diplomatic alignment of its likely opponents shifted. This polycentric and interactive dynamic between Western and Eastern sanctions-wielding states, German blockade-phobia, and pan-European self-reliance strategies is best captured by a work to which my book bears an even greater debt than Meyer’s: Georges-Henri Soutou’s monumental study L’or et le sang: les buts de guerre économiques de la Première Guerre Mondiale (1989), which remains the best history of political-economic strategy in the war that we possess.

 

The limited role played by businesspeople in The Economic Weapon reflects, in part, a documentary challenge in gathering materials located across hundreds if not thousands of private and corporate archives. Centralized organizations and lobbies representing business interests sometimes made their voices heard on the issue of sanctions, as in the case of the International Chamber of Commerce (ICC), founded in 1920. But these moments were infrequent, although they can be glimpsed through close study of the interwar press and the publications put out by various producers’ interest groups. Business decisions could certainly be significant. In the spring and summer of 1935, for example, a lack of private sector confidence in Italian creditworthiness had already created an effective corporate-financial boycott of the Fascist regime months before League sanctions went into effect.[2]

 

The stories of how firms, businesspeople, and banks went about evading and skirting sanctions is equally important. Other than a brief foray into the mechanics of the Great War financial blockade in Chapter One, I did not find the occasion to document this dimension to the degree that I would have liked. A fully-fledged business history of economic sanctions would certainly be very rewarding to pursue.[3] There is also a rich international judiciary history of sanctions in the interwar period involving the jurisprudence of the Permanent Court of International Justice (1922-1946) that is ripe for further investigation.[4]

 

Jamie Martin identifies key contributions that the book makes to the political and economic history of the First World War, to the history of sovereignty, and to the history of liberal internationalism and its tendency to overreach. Like Coates, he notes the importance of situating sanctions materially in the economic history of the early twentieth century. One of my aims in making this methodological move in the book was to go beyond the portrayal in the dominant literature on sanctions from political science and international relations, which tends to view them first and foremost as a security instrument. Then as now, the world-economic conjuncture vitally conditions every single episode of sanctions use.

 

More critically, Martin is entirely right to question whether the contrast drawn in the book, between a pre-1945 period in which sanctions focused on preserving inter-state peace and a post-1945 period in which their use shifted more to changing the internal goals and policies of states, is fully warranted by the evidence. Indeed, the immediate aftermath of the Great War witnessed the explicit counter-revolutionary use of economic pressure against Soviet Russia and Hungary. The internal and external goals of the economic weapon emerged with particular clarity in Allied war aims discussions in the summer of 1918. At that crucial juncture, Wilson’s fervor for democratization in Germany and Russia made him formulate conditions for the lifting of economic pressure that effectively demanded regime change in Berlin and Petrograd.

 

The difficulty that I encountered in devising the narrative structure of the book was that this anti-authoritarian and anti-communist use of sanctions, while noticeably present in the 1918-1921 period, thereafter subsided. American absence from the League and European predominance in Geneva gave sanctions a formalistic and diplomatically conservative character. It is striking that when British and French planners considered sanctions against the regimes of Hitler and Mussolini in the years between 1933 and 1938, they often explicitly ruled out embargoes on the import of raw materials used in labor-intensive industries like textiles and tobacco. Such anti-industrial sanctions would endanger fascist regimes politically by causing widespread unemployment; but precisely for this reason, they were rejected in Paris and London because such political instability was deemed to cause class war and risk a communist takeover.[5]

 

As a regime-change tool, then, sanctions did not really come into their own until the United States fully committed to international institutions in the 1940s. The “missing” interwar history of sanctions as tools for political transformation that Martin rightfully identifies is thus in part a reflection of the relatively late American adoption of the economic weapon in the twentieth century. Once the Cold War started, communist governments in China and North Korea were the first to experience the force of sanctions under US hegemony. Ironically, whereas anticommunism had made interwar European appeasers more moderate in considering sanctions against fascist states which they considered a lesser evil, to US sanctionists changing the ideological constitution of rival states was a prime goal of Cold War-era sanctions. In both cases, economic pressure was pursued more ruthlessly in non-European settings.

 

Glenda Sluga places the book in the wider wave of new studies of internationalism in the twentieth century. She also teases out some illuminating contrasts among the internationalists who constitute the book’s protagonists. The broad contrast that she introduces within this group between “traders” and “blockers”—positions that were held simultaneously by different individuals as well as sequentially by the same people—is especially perceptive and useful to my mind. However, she also points out that the meaning of “internationalism” as I use the term in the book is unstable. On the one hand, it captures the leading segment of policymakers and experts who steadfastly advocated for sanctions, and who worked to reorganize the international system so that they could function optimally. On the other, the book features an important cast of critics and outsiders to this male Genevan elite, most of whom are equally well described as “internationalists,” just of a different variety, often but not always non- or anti-sanctionist.

 

Sluga’s suggestion that this double and shifting use of the term is a narrative tension throughout the book is absolutely correct. More precision could have helped render this complex and variegated universe in more detail. One of the things that my equivocation over the real locus of “internationalism” reflects, however, is the clear disagreement observable in the 1920s and 1930s about the place of sanctions within the internationalist world. Was the cause of peace between peoples and orderly trans-national progress and emancipation served by instruments derived from wartime blockade, as long as they were placed under international oversight? Could the tensions of sanctions be reduced by more fully developing international redistributive arrangements, as Swanwick and Schumpeter so presciently suggested? Or would any coercive structure, no matter how well intentioned, cause as many problems as it solved?

 

This last question leads me to a final remark on the overarching plot of the book. One of the things that I sought to convey is that sanctions began as a great new experiment in international policy-making and institution-building. This venture has been totally transformative for the world. But it has also created new fault lines and quagmires that seem truly intractable. Their advent widened the available tools of international politics, yet at the same time it has left us in the early twenty-first century with a noticeably narrower set of political outcomes. Sanctions are the foreign policy key that fits the lock of every crisis, but they do not open doors to anywhere new. Such a trajectory in which vaulting hopes are followed by a sense of resignation about reality is not historically novel, as the insight shared by Napoleon with Goethe which forms the book’s epigraph shows. This is a tragic story about how moments of great inventiveness can enshrine practices with unintended consequences, the full knowledge of which nonetheless leaves us unable to do otherwise. La politique est la fatalité. The genuine challenge is to get to somewhere as yet unseen.

 

[1] A wide-ranging and valuable contribution to mapping this great variety is Eric Helleiner’s The Mercantilists: An Intellectual History (Ithaca: Cornell University Press, 2021).

[2] A condition uncovered in the excellent doctoral dissertation by Mario May, ‘Fuelling Fascism: British and Italian Economic Relations in the 1930s, League Sanctions and the Abyssinian Crisis,’ (PhD thesis, London School of Economics, 2000).

[3] A good starting place are the studies of wartime business strategies amidst economic warfare such as Philip Dehne, On the Far Western Front: Britain’s First World War in South America (New York: Manchester University Press, 2009) and Ghassan Moazzin, Foreign Banks and Global Finance: Banking on the Chinese Frontier, 1870-1919 (Cambridge: Cambridge University Press, 2022).

[4] The doctoral research of Aden Knaap about internationalism and world courts in the early twentieth century will provide an overdue exploration of this domain.

[5] A pervasive international and ideological orientation that is comprehensively examined and put forth as a key structural condition in the decision-making that led to World War II by Jonathan Haslam, The Spectre of War: International Communism and the Origins of World War II (Princeton: Princeton University Press, 2021).

 


 

Nicholas Mulder is assistant professor of modern European history at Cornell University. He is the author of The Economic Weapon: The Rise of Sanctions as a Tool of Modern War (Yale, 2022) and is currently working on a political and economic history of property confiscation in the 19th and 20th centuries.

 


 

Download the entire book forum on Nicholas Mulder’s The Economic Weapon” as a PDF.

 

Reviews in this Book Forum

1. “Sanctions: What are They Good For?” by Ben Coates

2. “The Paradoxes of Liberal Peacekeeping” by Liane Hewitt

3. “Economic Sanctions and the Backlash to Liberal Internationalism” by Jamie Martin

4. “New Histories of the International Order and Why They Matter” by Glenda Sluga

 

 

 

 

 

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