** This is the second in a series of four reviews of Nicholas Mulder’s new book The Economic Weapon: The Rise of Sanction as a Tool of Modern War. The first review (“Sanctions: What are They Good For?” by Ben Coates) was published yesterday. **
Nicholas Mulder’s The Economic Weapon is a terrific tour-de-force. Without a doubt, this book will establish itself as the definitive account of the origins of economic sanctions forged in the 20th century’s era of total war. It recounts how a coterie of Franco-British statesmen implemented the lesson of blockading Germany in World War I. They attempted to develop a new “economic weapon” within the framework of the League of Nations that would make war so costly, it would effectively be abolished. Far from achieving this end, however, they helped make incipient forms of war and violence a permanent fixture of the liberal international order.
The aim of weakening the enemy not only through direct combat, but also through the material deprivation of its entire population, long predates the 20th century. Armies lay siege to cities to force surrender, driving inhabitants to mass-starvation, even to the point of eating their own excrement. This tactic had defeated visionary projects in Europe’s history, from the Anabaptist Commune of Munster (1534-5) to the Paris Commune (1870-71). But the economic weapon of sanctions could only be wielded within a globalized world economy. Economic historians have long-established how a single integrated world market in capital and goods only developed from the late 1860s onwards. Economic sanctions weaponized this interdependence.
Mulder mounts two major arguments anchored in his claim that the “blockade myth”—namely, the conviction that the Allied blockade was decisive in the defeat of the Central Powers in WW1—transformed the 20th century’s liberal international order. In so doing, Mulder significantly revises established narratives on the interwar crisis of liberalism, the rise of the sovereign nation-state, the failure of the League of Nations’ collective security regime, the nature of total war, and even the origins of World War II itself. It is an ambitious book that takes the reader across a sweeping geographical tour. Scholars across many disciplines—from modern European, American, Soviet and Japanese history, to historians of international order, international law, political economy and warfare—will all want to reckon with its provocative claims.
After Germany’s surrender in 1918, “sanctionists” who had administered the Allied wartime blockade, including Lord Robert Cecil and Léon Bourgeois, sought to transform the economic weapon into a peacetime institution. The weapon was to be managed by the League of Nations with the aim of enforcing the new territorial settlement and inter-state peace hammered out at the 1919 Paris Peace Conference. This was much more complicated than it sounds. It required transforming international law to blur the distinction between war and peace. Officially, the British government could not use coercive measures without declaring war. Thus, the authors of the League hoped to devise an automatic mechanism that could trigger the deployment of sanctions without requiring any formal declaration of war. Mulder shows that this effort to pacify the economic weapon failed. As its feminist and humanitarian critics lamented, sanctions illicitly perpetuated the violence of total war in peacetime: ruthlessly visiting suffering upon civilians by starving mothers and children. The Franco-British journalist Edmund D. Morel coined the apt term “Peacewar” in 1919 to capture this contradiction.
Mulder illuminates how the politics of the peacetime economic weapon revealed a growing paradox within the heart of interwar liberalism. It sought to maintain peace by means of war. This pitted liberal “Neutralists” against “Sanctionists.” The two camps disagreed over the appropriate limits and scope of the state’s politicizing reach over the economy. The imperatives of total war, and of keeping the peace thereafter, threatened to dissolve the sanctified distinction of 19th century liberalism between the private market—including private globalized trade and finance—and public inter-state warfare. Mulder shows how the deployment of sanctions—including foreign asset freezes, sequestering enemy property, suspending patents, prohibiting exports and imports, embargoing arms sales—all demanded unprecedented increases in state intervention in the economy. The state’s administrative capacity, especially surveillance over private trade and banking, had to be scaled up significantly. It is therefore not surprising that sanctionists, despite being more aggressive, tended to align with the political left: they were New Liberals in Britain, Progressive New Dealers in the U.S., and Radical-Socialists, Republicans or solidaristes in France. Neutralists, on the other hand, had more in common with neoliberals. They maintained that the use of the economic weapon violated the traditional laws of war, including the sacrosanct freedom of the seas and private property rights.
Mulder reads the permanent consolidation of economic sanctions within the United Nations Charter in 1945 as the ultimate triumph of sanctionists over neutralists. This means their vision of liberalism won out, along with a politicized and even militarized view of the economy. It was a legitimate theatre for war and state imperatives. Total war buried classical 19th century liberalism, and with it, it’s ideology of neutrality. Distinct boundaries between the public and the private sphere, civilians and combatants, war and peace, all dissolved. This boils down to the book’s first core thesis: the economic weapon reinvented liberalism for the 20th century’s age of total war and national state sovereignty over the economy. Mulder’s interpretation also reframes the interwar crisis of liberalism, not only as an assault by Communists and Fascists against the liberal order, but also as an internecine conflict between liberals. The center could not hold even its own.
It bears mentioning that the economic weapon ushered in another major rupture with classical 19th century free trade liberalism. Starting with Montesquieu’s theory of le doux commerce up through Norman Angell’s ill-fated predictions of world peace on the eve of WW1, liberals of most stripes believed that the fabulous expansion of international commerce would banish war. John Stuart Mill, the paragon of Victorian liberalism, confidently set out this axiom in his Principles of Political Economy, the authoritative mid-19th century textbook in the subject: “It is commerce which is rapidly rendering war obsolete, […] it may be said without exaggeration that the great extent and rapid increase of international trade, in being the principal guarantee of the peace of the world.” (Book II, Chapter 17). Sanctionists turned this logic on its head. They held that exclusion, rather than entrapment, within the world economy could deter war. If World War I should have proven them right, many within the League of Nations, continued to hold to the old liberal faith. The International Chamber of Commerce’s founded in 1919 adopted the motto “World Peace through World Trade.” Many participants at the League’s World Economic Conferences parties called for “economic disarmament,” belying the steadfast belief that dismantling trade barriers would promote peace by attenuating inter-state trade rivalries. In these contradictory theories of “economic peace,” we find another division between liberals.
The book’s second thesis is more explosive. Mulder contends that sanctions back-fired catastrophically. This is a story of unintended, if “not wholly unforeseen”, consequences. Mulder suggests that if the League’s deployment of sanctions against smaller Balkan states like Yugoslavia and Greece in the 1920s helped stabilize the post-1918 territorial settlement, the threat of sanctions had a destabilizing function in the 1930s. The threat of sanctions, and economic pressure, drove the more powerful revisionist states—fascist Italy, Nazi Germany and militarist imperial Japan—to escalate their programs. They embarked on what Mulder refers to as “bids for resource-autonomy” via violent territorial conquest and outright war. Mulder shows that the search for Blockadefestigkeit (“blockade resilience”) was a central driver of Nazi policy. Shut out from the world market, these states essentially had no other alternative.
Mulder provides several persuasive examples for how economic pressure prompted military aggression. We are shown how autarky was developed first by Mussolini’s Italy in 1935 as a direct anti-sanctionist measures. Mulder’s account invites historians to view the Italo-Ethiopian war of 1935-6 as the decisive episode in the collapse of the interwar liberal order, rather than say the appeasers’ Munich Agreement of 1938. We then see how Nazi Germany, and Hitler himself, consciously learned a lesson from the League’s sanctions against Mussolini. Indeed, Mulder suggests this is precisely why Germany launched its own massive war economy plan in 1936. The timing is no coincidence. The Goering Four Year Plan for rearmament and resource self-sufficiency can be seen as a pre-emptive anti-sanctionist program for “defensive autarky.”
Mulder provides an extremely refreshing take on the tired debates surrounding the supposed failure of the League of Nations’ collective security regime and the origins of WW2. In the last fifteen years, a cohort of historians of interwar internationalism have worked to rehabilitate the League from the condescension. Mulder joins them by arguing that the League did not fail for lack of an enforcement mechanism. Contra the classic realist condemnations of E. H. Carr, Mulder points out that the League did not naively rely only upon the moral force of public opinion. It, in fact, had real teeth. The authors of the League intended for economic sanctions, encoded in Article 16 of the Covenant, to enforce the collective security agreement. This is a crucial intervention. Mulder further revises the historiography which has judged the sanctions regime as ineffective, by arguing that far from being too weak, they were too strong. If sanctions were rarely used, this is because they remained within the domain of threat.
We are reminded that WWII was never inevitable. It was not predetermined by the Treaty of Versailles, or Nazi ideology. Rather, real material constraints baked into the sanctionist rules of the liberal international order radicalized Nazi Germany’s foreign policy, and that of Italy and Japan. Adam Tooze’s incomparable Wages of Destruction (2008) has already illuminated how the Reichsbank’s critical shortage of foreign currency reserves accelerated Hitler’s decision to go to war by 1938. So too did the fear of blockade and a resource shortage.
The core insight of Mulder’s thesis, however, is not entirely original—at least as concerns the German case. An all but forgotten German-American historian, Henry Cord Meyer who worked for the Office of Strategic Services during World War II, already grasped the pivotal importance of the First World War’s blockade on the radicalization of German expansionist aims. His 1955 book, Mitteleuropa: In German Thought and Action, 1815-1945—awarded the George L. Beer Prize by the American Historical Association—demonstrated how fears of the blockade’s material privation shifted German foreign policy ambitions from its pre-1914 Weltpolitik (“world policy” with a special focus on overseas empire and naval expansion) to building an autarkic Mitteleuropa, or Central European block. Meyer situates this pivot in 1916 with the publication of Friedrich Naumann’s Mitteleuropa (1915). An immediate best-seller, the book stimulated massive popular interest in the blockade and projects for continental autarky. Meyer shows how this fed new movements and ideological momentum that led directly into the Nazi program. He ultimately concludes his study by presaging Mulder’s own thesis: “The conception of economic sanctions that subsequently became a cornerstone of the League of Nations was an invitation to autarchy and international economic anarchy” (339). It is a little baffling that Mulder should have entirely ignored Meyer’s work: not citing it even once, nor even Naumann for that matter.
Mulder expands Meyer’s thesis beyond the German case to the entire global order. This is its genuinely original, and massive contribution to the literature. His historical study investigates the impact of the blockade and the League’s sanctions regime on all the revisionist states—Fascist Italy and Japan–not just Nazi Germany. This is accomplished through an inspiring historical sweep, anchored in impressive archival research undertaken in six countries and five different languages. Mulder also extends the narrative in time. He shows how sanctions—despite massively backfiring in the late 1930s—became a permanent fixture of the post-1945 U.S.-led liberal international system. Mulder innovatively suggests that the Lend-Lease program constituted the first successful deployment of a “positive economic weapon.” In contrast to World War I, the Allied World War II effort prioritized mutual assistance to all victims of Axis aggression rather than material deprivation of the enemy. Combining both the positive and negative economic weapon had always been the idea of the French, notably Bourgeois. Once both were wielded in concert in WWII, then the economic weapon was truly an invincible force.
It is a true testament of The Economic Weapon’s significant contributions that the book raises as many questions as it provides answers. One lingering question relates to how exactly economic sanctions remained distinctly liberal. Could there be illiberal economic weapons? What would fascist or communist economic warfare look like? In September 1944, U.S. President F. D. Roosevelt denounced cartels as the Nazi “weapon of economic warfare.” Or is this better interpreted as a secondary response to sanctions, which remain the true Ur-economic weapon?
Another question concerns Nicholas Lambert’s discovery, presented in his ground-breaking book, Planning Armageddon (2012), that the British Admiralty had been forced to downgrade its initial 1911 proposal for full-blown economic warfare against Germany, in the event of a war, to a mere blockade. The Treasury and the Board of Trade warned the Admiralty that shutting down all financial and commercial transactions between the City of London and German markets would surely trigger a banking crisis in Britain itself. Business and financial interests had expressed great concern. This invites an important question of Mulder’s account: how did business circles respond to the development of the economic weapon in the interwar era? We might expect private trading and financial interests to have been virulently opposed to the possibility of their property rights being abrogated, even outright confiscated, to serve the imperatives of total war. Such opposition may have played a role in the specific form economic sanctions ended up taking. Mulder’s archives, however, for all their impressive breadth, predominantly give voice to the plans and perspectives of high-office politicians, statesmen, technocrats and intellectuals. Feminists and humanitarians are briefly given the stage, but business and banking actors are largely elided. This is a little surprising.
Finally, if sanctions really are as ineffective at preventing war as Mulder convincingly shows, why have they remained so engrained within the international system? The answer must partly lie in the British blockader William Arnold-Foster’s remark that : “[p]ens are so much cleaner instruments than bayonets” (cited p. 5). The most important legacy of economic sanctions may lie in their bureaucratization and sanitization of killing. They provided a way for states to transfer the act of killing from soldiers, directly deployed on the field, to technocrats writing government orders. The killer is removed by one step from the violence of his war-making. It might even be possible to hide the violence of war entirely from view, thus dispensing with any guilt. The cost of war is also reduced: fewer soldiers’ lives need to be sacrificed. Ironically, this liberal way of war makes war cheaper, cleaner, and politically more acceptable. Drone strikes piloted by robots perform the same function, and arguably so does nuclear deterrence. Even if sanctions are not necessarily effective, they do retain a great many political attractions over conventional warfare. This means that, far from paving the way to the liberal, Enlightenment dream of perpetual peace, sanctions might incentivize a descent into perpetual “peacewars” or “forever wars.”
Liane Hewitt is a fifth-year PhD Candidate in Modern European, Economic and International History at Princeton University. Her dissertation examines how international cartels went from being a central mechanism for governing global, and particularly European capitalism in the 1920s and 1930s, to being widely delegitimized and formally prohibited after 1945 because of a reckoning with the shocks of the Great Depression and World War II.
Other Reviews in this Book Forum
1. Sanctions: What are They Good For? – Ben Coates
3. Economic Sanctions and the Backlash to Liberal Internationalism – Jamie Martin
4. New Histories of the International Order and Why They Matter – Glenda Sluga
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