Robert Fulford's series about Niall Ferguson, Part 3

(The National Post, March 16, 2001)

OXFORD, England - For most people fortunate enough to live in the Western democracies during the last half-century, war has been a horrible but mainly distant phenomenon. When a Western country is in the thick of it, as the United States was in Vietnam, our impulse is to condemn this event as a perversion of foreign policy or a tactical mistake, and we expect those responsible to spend the rest of their days atoning. When war sets Yugoslavia on fire, we grope for ways to explain what seems to us a dreadful aberration.

But most of our ancestors knew war as a routine presence. From 1495 to 1975, the great powers were involved in wars about three-quarters of the time. That's a point made by Niall Ferguson, professor of political and financial history at Oxford, in The Cash Nexus: Money and Power in the Modern World 1700-2000, published this week. War was not only routine, it was also the reason for creating the bureaucratic, economic and educational structures of the world we live in now. Over-simplified a little, the Ferguson thesis goes this way: Governments do not make war, wars make governments.

Herodotus, great chronicler of the Persian Wars, wrote that "War is the father of all things." This is also Niall Ferguson's position, though when I interviewed him recently he admitted that no one has ever figured out who the grandfather is. War makes everything happen but no one knows what makes wars happen.

Much of Mr. Ferguson's work circles around this question. In his view there is one issue that everyone studying modern history must never stop asking: "What went wrong in Germany?" His interest in war began with that question. "Where does hatred come from? Where do these millennial movements come from? Why did Germany go down the route it did?" He thinks the widespread belief that "people hate the Other" is wrong; in pre-Hitler Germany, as in pre-catastrophe Yugoslavia, the people were living together more or less comfortably.

As an economic historian, he has concluded that a reasonable hope of financial gain is not, in most cases, the cause of war. As a historian of political events, he has decided that perhaps history suggests ways the ultimate madness of war can be contained or limited. This turns out to be among the purposes of The Cash Nexus.

War, Mr. Ferguson argues, has been the motor of financial change, from the earliest recorded history until the very recent past. The main impetus for the development of national fiscal institutions has come from war. Tax-collecting bureaucracies, central banks, bond markets, stock exchanges: all these exist because rulers blundered or plotted their way into wars.

"You create institutions to wage war," he says, "and the unintentional result is that they give rise to the rule of law." Political crises (including those created by religion, race and culture) lead to wars, which in turn create banks and brokers. These vast financial networks need regulating if they are to work, and eventually also require educated citizens, so education becomes necessary. The national debt starts off as a way to finance war and ends up as the basis of the money market. Much of humanity sees this process working in the opposite direction, but much of humanity -- Mr. Ferguson persuasively claims -- has it all wrong. "To say financial markets rule the world is to say the plankton rule the sea."

Everyone understands at least a small part of this process. In Canada the generation of the Great Depression suddenly grew comparatively rich when war shook the economy to life. We considered this event (our economic lives being controlled by war) an exception to the rule. To read Mr. Ferguson is to understand that it is much more like the historic norm.

But if war imposes rational instruments and institutions on the chaos of human life, war itself is not rational, and we cannot expect reason to prevent it. Nations do not start wars for sensible reasons, and Mr. Ferguson doubts the value of good sense in preventing war. He has little time for the now popular view that war will be prevented by globalization and its accompanying international trade and investment. After all, early in the 20th century Germany and Britain were closely linked by trade, and that did not stop them from doing their best to destroy each other in 1914-18.

Wars seldom pay in the long term, and even in the short term voters in the democracies may punish their governments for getting involved in wars. But autocratic regimes do not necessarily think in the long term, and do not think about voters at all. "The costs of annexing Kuwait turned out to be very high; but that did not stop Saddam Hussein from trying. Like the dictators of the 1930s and 1940s, the Iraqi leader has no qualms about passing the costs of his failed adventures on to his people, so long as he and his cronies are not materially worse off. And indeed they are not; since, unlike Hitler and Mussolini, Saddam Hussein has not been toppled from power."

War is never far from Mr. Ferguson's thinking. A Scot who was born and grew up in Glasgow, he was recently asked his views of devolution and the creation of a separate parliament in Scotland. In replying, he made a point that rarely appears these days in British discussion, north or south of the border. It could break up the Union, he said, and in the extreme case could produce civil war. "I don't think we should forget how hard it was to get the Scots and the English to stop killing each other, which they did for centuries." But that is precisely the sort of fact that most of us do our best to forget or repress.

Paul Kennedy of Yale, who has not been much talked about in recent years, shows up as a substantial secondary character in the Ferguson drama. His 1988 best-seller, The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000, was the most discussed book about public affairs in the year it appeared. It was one of those scholarly tomes that are more quoted than read, and it figured in commentaries on the 1988 U.S. election. Mr. Kennedy sees economics as the key to the history of international relations, more or less the reverse of the argument in The Cash Nexus. Empires, he contended, typically destroy themselves by over-extension; they spend so much of their wealth on asserting power in the world that their home base rots from neglect. It happened to Spain around 1600 and Britain around 1900, he claims; as for the Roman empire, do not ask.

Mr. Kennedy mentioned the possibility of this happening to both the Soviets and the Americans, but in 1988 American reviewers and political writers ignored what he said about Russia and discussed his book mainly as a warning to the United States and a condemnation of American military spending in the Reagan years. After all, it said Washington decision-makers had to "face the awkward and enduring fact that the sum total of the United States' global interests and obligations is nowadays far larger than the country's power to defend them simultaneously." His book came out at a time when Americans were worried about their pre-eminence and feared they were slipping economically. Was their problem a costly and over-ambitious foreign policy?

Unfortunately for the book's reputation, it was the Soviet empire that began falling apart, just a year after The Rise and Fall of the Great Powers appeared. When the United States declared itself the winner in the Cold War, Mr. Kennedy's main point began to seem irrelevant. But now Niall Ferguson plucks The Rise and Fall of the Great Powers from the remainder table and treats it as a work that stimulates argument. He admires its energy and audacity; a reader of both books may notice that it resembles The Cash Nexus in its knitting together of diplomatic and economic history. The conclusions, however, are sharply different, and that is why Mr. Ferguson wants to examine it with care. He wants to counter its lingering effect on the thinking about empires in general, the American empire in particular.

Overstretched: in the Kennedy view, that is the condition empires must avoid. But in the Ferguson view it is at least as dangerous for an empire to be understretched. That, too, can lead to disaster, and probably led to the main disasters of the 20th century, the two world wars. As Mr. Ferguson sees it, British foreign policy was crippled by grave failures of deterrence. "Neither in the 1900s nor in the 1930s did Britain succeed in convincing Germany and her allies that the risks of a war against Britain were excessive." In each case, that made it necessary to fight a far more tragic and expensive full-scale war just a few years later.

The lesson remains unlearned. At the beginning of the 21st century, Mr. Ferguson suggests, Americans suffer from "a deep-rooted insularity which is the very reverse of what the world needs from its wealthiest power." He sees the planned anti-missile shield as a kind of electronic shell beneath which the Americans, snail-like, will shelter. Instead, he believes, they should be devoting a larger percentage of their resources to making the world safe for capitalism and democracy. All his studies leave him convinced that there is a proper role for empire: to help establish the institutions of law and freedom where they are lacking, "if necessary -- as in Germany and Japan in 1945 -- by military force."

But the United States suffers from what he calls "an ideological embarrassment about seeming to wield imperial power" as well as an exaggerated notion of how other nations (such as China) might respond. The United States has also decided, more or less, that it will not tolerate military casualties, which draws a snort of derision from Mr. Ferguson: "The greatest disappointment facing the world in the 21st century is that the state with the economic resources to make the world a better place lacks the guts to do it." He seems not to understand that U.S. citizens (and the politicians charged with serving them) were traumatized by what they saw as pointless deaths in their pointless war in Vietnam. The experience shaped a generation, and that generation in turn taught the generation that followed. Mr. Ferguson sees the Americans failing to understand that a relatively small number of casualties in the present could prevent far greater casualties later.

How convincing this argument could be to Americans remains a serious question. After all, just to fight the Gulf War (with its minimum casualties on the American side), Washington resorted to rhetorical overkill, making Saddam Hussein into a replica of Hitler. How much rhetoric would it take to justify a more or less permanent army in, say, sub-Saharan Africa?

For the most part Mr. Ferguson grounds his opinions in facts, exhaustively gathered and impeccably set down. On the other hand, he does not avoid speculation, often on subjects intrinsically unknowable. The man who edited an impressive book of speculation, Virtual History: Alternatives and Counterfactuals, is still willing to make some fascinating guesses. What would have happened, for instance, if the Cold War had turned hot? In his view, the Soviet Union would have won. The Soviets could have taken almost limitless casualties, as they proved in the Second World War; the Americans could not. Instead, the war moved on to the economic front, where the Soviets lost because their system failed at providing consumer goods.

After a long afternoon of conversation at Oxford, Mr. Ferguson turned from the causes of the Soviet Empire's failure to a more professional subject: the recreation of that event in a work of history. "The history of the end of communism awaits writing," he said. His eyes sparkled. "It will be the subject matter for a book by a great historian in about 10 years." For a moment that idea hung in the air above us. Someone who has not specialized in the subject would have a great deal to learn, but as he enters his 38th year Niall Ferguson can assume he has plenty of time. It occurred to me as I left Jesus College that I might have been chatting with that great historian.

Robert Fulford's series about Niall Ferguson, Part 1
Robert Fulford's series about Niall Ferguson, Part 2

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