While reading about the recent crisis in South Ossetia, Paul Krugman wondered if the second wave of globalization will share the fate of the first: world war.  A world in which the US isn't the only military force, argues Krugman, is a dangerous one.  Russia has proven itself willing to use gas as a political weapon, and China, emboldened by Russia's example, might invade Taiwan.  These nationalism-powered conflicts threaten the stability of our globalized world. 

I'm skeptical. 

Sure, China will always have an interest in Taiwan.  But it's much smarter than taking dramatic steps that could trigger a series of undesireable consequences.  Primarily, it would be dealing with a question of image (goodbye to all its public relations efforts of a “peacefully rising” China) and global credibility -would a rising power want to be ostracized from the world stage before it reaches its goal? No.  Would it want to be seen as the country that destabilized the region?  No again.   Is it in China's interest to damage relations with the United States?  A third no.     

Krugman’s viewpoint on Russia’s threat to Europe is also simplistic.  Considering policymakers in Europe aren’t that concerned, I’m not sure Krugman needs to worry for them.   European heavyweights are not only comfortable with Russia as an energy supplier, but also as a strategic partner.  In fact, many in Europe doubt whether Russia really has an energy weapon at all.  The real question is what a well-managed interdependent relationship looks like and how European states can achieve this, either individually or collectively.  

But let me address Krugman’s substantive point that economic integration isn’t sufficient interest to prevent war as evidenced by the previous level of globalization and the large-scale wars thereafter.  The logic of "back then they had globalization followed by war; today we have globalization and international flashpoints - ergo, war is inevitable" doesn't quite follow for the following reasons: 

*Today we simply have more autonomous countries than in the first half of the 20th century due to the downfall of colonialism.  The liklihood that a critical mass of countries with the desire or military capacity to sustain a large scale, multiple-front war is highly unlikely. 

*Economies today look different than back then.  Bernard Avishai hashes out why economies today are different, and how the fundamental nature of "globalization" has changed. 

*Our concept of 'threat' has been constantly evolving over the past 100 years, and outright military action isn't what we should be afraid of anymore.  Threats today (public health, terrorism) are more transnational - meaning that something like economic integration actually has very little to do with how governments handle security.  Economics, by the way of development, can only play an indirect role. 

*Unlike pre-WWI Europe, today's international system (I hope) isn't based on a set of secret agreements that obligate signatories into military action should an ally be provoked.  Without these treaties that would have superceded economic interest, I think economic interest is indeed a powerful argument to avoid war.

*Our financial system is much larger and more sophisticated than back then.  Does having several large stock exchanges in the world market make a difference? How would this influence political risk? Does FDI look different today than back then?  I'd be interested in your thoughts. 

Sure, the US and China are competing for geopolitical influence in East and Southeast Asia.  No, economic interest isn't enough to keep tensions from escalating.  But will Japan be willing to stick its neck out for the US against China?  I'm not sure.  Will there be conflict in the 21st century?  Yes.  But does side-by-side economic integration and global conflict suddenly mean that we're on the brink of a third world war?  No.