The Great Illusion
Recent events are not yet at the point they were in Sarajevo in 1914 when the Austian Archduke was killed by a Serbian nationalist and the First World War ignited. That said, people did not think then, that that one event would lead to the catastrophe that followed, much less the complete immolation of Europe that followed within another generation. History continues to be made, it will not die.
Krugman refers to Norman Angell's "Great Illusion" book in this piece. Here is the Wikipedia reference:
"The Great Illusion is a book by Norman Angell, first published in Britain in 1909 under the title Europe's Optical Illusion and republished in 1910 and subsequently in various enlarged and revised editions under the title The Great Illusion.
According to John Keegan "Europe in the summer of 1914 enjoyed a peaceful productivity so dependent on international exchange and co-operation that a belief in the impossibility of a general war seemed the most conventional of wisdoms. In 1910 an analysis of prevailing economic interdependence, The Great Illusion, had become a best-seller; its author Norman Angell had demonstrated, to the satisfaction of almost all informed opinion, that the disruption of international credit inevitably to be caused by war would either deter its outbreak or bring it speedily to an end."
The "Great Illusion" of the title was the belief that there would soon be another major and destructive European war. At the time it was published, there was a naval arms race between Germany and Great Britain, and there had been a vogue in Britain for novels imagining a future German invasion (for example, Erskine Childer's The Riddle of the Sands (1903) or William LeQueux's The Invasion of 1910 (1906). After Angell's book appeared, the flood of "invasion stories" stopped (one of the last was P. G. Wodehouse's 1909 parody The Swoop! or, How Clarence Saved England).
In 1914, Angell's theory was proved wrong by the outbreak of the Great War, which lasted for four years."
Globalization may be retrenching and old, powerful nationalisms are reawakening. These feelings trump economic rationality, as man is far less rational than we would like to believe.
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