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Financial Crisis and War

PRINCETON – The approach of the hundredth anniversary of the outbreak of World War I in 1914 has jolted politicians and commentators worried by the fragility of current global political and economic arrangements. Indeed, Luxembourg’s prime minister, Jean-Claude Juncker, recently argued that Europe’s growing north-south polarization has set the continent back by a century.

The lessons of 1914 are about more than simply the dangers of national animosities. The origins of the Great War include a fascinating precedent concerning how financial globalization can become the equivalent of a national arms race, thereby increasing the vulnerability of the international order.