The second general class or type of opinions to which I have referred is distinguished, not by a special emphasis upon some particular view of the nature and purposes of the aggressive activities of states, but by a very definite thesis with respect to the wisdom and the consequences of such activities. If wars are waged for economic advantage, it is held, they defeat their own purposes. So too, in general, with all national policies designed to advance the economic interests of one state at the expense of other states. The truth is, it is alleged, that a nation gains by the prosperity of other nations, not by their poverty.

This general thesis, if stated with some necessary qualifications, would be subscribed to, I think, by most economists. It was brilliantly expounded in Mr. Norman Angell’s book, The Great Illusion. If, in the days of its first vogue, that book seemed to be given little attention by the economists, it was not, I imagine, because they disagreed with it conclusions, but rather because most of those conclusions seemed to them to be fairly commonplace economic doctrines. Doubtless Mr. Angell weakened a good case by pushing it a little too far. He gave too little weight to the special interests (not necessarily or even generally class interests) that may be served by a belligerent or imperialistic policy, even when other interests, larger but more diffused, are injured. He did not adequately distinguish between immediate and ultimate gains and losses. But taking his argument in the large, and leaving details aside, it would command, I believe, the general assent of economists. Some of the policies he finds unwise are, in fact, policies we are accustomed to disparage by lumping them together and calling them neo-mercantilism.

This is from Allyn Young, “Economics and War: A Presidential Address,” American Economic Review, Volume 16, No. 1, March 1926. It’s Harvard professor Allyn Young’s presidential address to the American Economics Association.

Normal Angell’s book, The Great Illusion, which Young refers to, makes the case that trade between countries makes war less likely. I think Young’s critique is apt. The Great Illusion was published in 1909. The war between England and France on the one hand and Germany on the other was a war in which both sides had substantial trade with each other.

But don’t overstate Angell’s naivete. As Wikipedia puts it:

Angell said that arms build-up, for example the naval race between England and Germany that was happening as he wrote the book in the 1900s, was not going to secure peace. Instead, it would lead to increased insecurity and thus ratchet up the likelihood of war. The only viable route to peace would be respect for international law, implemented in a world court, in which issues would be dealt with rationally and peacefully.

Postscript: I don’t think I would have heard of Allyn Young if not for some of the reading I did, very early in my career, of George Stigler‘s work on the the history of economic thought. Incidentally, the great Frank Knight was one of Young’s students.