Make Trade, Not War

Culture - December 28, 2023

European Diary: Sarajevo, May 2022

Sarajevo! The name reminds us all of the First World War (originally called the Great War) which broke out after the heir to the Habsburg throne, Archduke Franz Ferdinand, was assassinated in the city on 28 June 1914, with his wife, Duchess Sophie von Hohenburg. The perpetrator was a Bosnian Serb, Gavrilo Princip, a young, fanatical nationalist with close ties to the Serbian secret service (which supplied the weapons to him and his accomplices). Serbian nationalists were hostile to Franz Ferdinand because he wanted to turn the Danubian Monarchy into a federal union which probably would have greatly reduced discontent among the many Slavic peoples under Habsburg rule, such as Poles, Czechs, Slovaks, Slovenes, Croatians, Bosnian Serbs, and Bosnian Croats. Serbian ultra-nationalists had in 1903 stormed the Royal Palace in Serbia’s capital, Belgrad, shot the pro-Austrian king, Alexander I Obrenović, and his wife, Draga, stripped their bodies and mutilated them, before throwing them out of a second-floor window into a pile of garden manure. A long-time enemy of the Obrenović family, Peter Karađorđević, was proclaimed king of Serbia as Peter I. He was hostile to the Austrians, and pro-Russian. After this macabre event, Serbia pursued aggressive nationalist policies, aimed at creating a Greater Serbia by extending her rule to all Slavic peoples in the Western Balkans, then under Habsburg rule. Since Serbian participation in the assassination of the Archduke and his wife was considered almost certain, after the assassination Austria-Hungary issued an ultimatum to Serbia which was not met, whereupon Austria-Hungary declared war on Serbia, followed by her ally, Imperial Germany. France and Russia subsequently declared war on Austria-Hungary and Germany.

A World Lost

The French were not really concerned about Serbia: they wanted to take revenge on the Germans for their humiliation in the 1870 Franco-German war and to regain the territories then lost. Nevertheless, this would have remained mostly a Balkan affair, if the United Kingdom had not made the fateful decision to join France and Russia in supporting Serbia, with the United States entering the war on their side in 1917. This turned an almost certain swift victory of Austria-Hungary and Germany over Serbia and Russia into a prolonged, vicious, sanguinary world war, leading to the collapse of four empires, and the Bolshevik Revolution and the disintegration of the liberal international order. In retrospect, it is amazing not only how catastrophic the assassination of Franz Ferdinand and his wife turned out to be, but also how entirely evitable it was. The Archduke was supposed to be opening the state museum in Sarajevo which had as the capital of Bosnia flourished under Austrian rule since 1878. On his way from the Train Station to the Town Hall a bomb was thrown at his car, bouncing off its back hood and exploding under the next car in the motorcade, wounding the people in it. The Archduke and his wife escaped unharmed. After a reception at the Town Hall (depicted above), the Archduke wanted to visit the victims of the bombing. On the way to the hospital, his driver made a wrong turn, and when he realised this, he applied the brakes, stopping the car on a side street just where one of the would-be assassins, Princip, happened to be. Princip could therefore shoot the couple at short range.

The collapses of the Russian and Ottoman Empires were certainly not to be lamented, as many oppressed nations now were able to establish their own states. (For better or worse, a nation may require a state. What is the difference between a language and a dialect? That the language is supported by a navy.) The collapse of the Danubian Empire meant however the disintegration of a large area of free trade and common currency in Europe’s midst, under a relatively liberal regime. One of Princip’s co-conspirators, the Bosnian Serb Vaso Čubrilović, only seventeen at the time, was released from prison at the end of the war and became a historian and in Communist Yugoslavia a government minister. Looking back after fifty years, he expressed regret about the conspiracy. ‘We destroyed a beautiful world that was lost forever due to the war that followed.’ This was a world eloquently described in Stefan Zweig’s The World of Yesterday. On the 100th anniversary of the assassination, a prominent journalist, the Bosnian Croat Fedzad Forto, denounced it in an interview with the BBC, British Broadcasting Corporation. The Bosnians had been much better off under the Habsburgs than under the Yugoslavian (Serbian) kings and the communists, he said. ‘You can look at the historical records and see how Austria-Hungary cared about issues like the rule of law. We lost so much in 1918.’

Two Ways of Keeping Peace

It was therefore appropriate that I discussed trade, war and peace at a seminar on 12 May 2022 in Sarajevo, organised by the Sarajevo School of Science and Technology, SSST, and the Austrian Economics Center in Vienna. I repeated my argument, made elsewhere, that small states may be feasible and, in many cases, more efficient and desirable than larger political units, but that they are vulnerable, as the recent Russian attack on Ukraine showed. The events that unfolded in Sarajevo more than a century ago demonstrated this, as Czech writer Milan Kundera once commented:

The Austrian empire had the great opportunity of making Central Europe into a strong, unified state. But the Austrians, alas, were divided between an arrogant Pan-German nationalism and their own Central European mission. They did not succeed in building a federation of equal nations, and their failure has been the misfortune of the whole of Europe. Dissatisfied, the other nations of Central Europe blew apart their empire in 1918, without realising that, in spite of its inadequacies, it was irreplaceable. After the First World War, Central Europe was therefore transformed into a region of small, weak states, whose vulnerability ensured first Hitler’s conquest and ultimately Stalin’s triumph.

Being vulnerable, small states must form alliances with one another and with stronger states.

There are essentially two pillars of peace, I observed in Sarajevo. One is free trade. Your propensity to shoot at your neighbour diminishes, if you see in him a potential customer. And, when goods are not allowed to cross borders, soldiers will. There is truth in this observation, but it is not the whole truth. The other indispensable pillar of peace is preparedness, as the Romans knew: Si vis pacem, para bellum. If you want peace, prepare for war. (Or as the Anglo-Irish army officer and writer William Blacker exclaimed: ‘Put your trust in God, my boys, and keep your powder dry!’) The free countries of the world, under the leadership of the United States, must be powerful enough that nobody dares attack them. This was the main idea behind NATO, the North Atlantic Treaty Organisation, the defence alliance of the West. If we do not all hang together, we shall all hang separately. What we are faced with now, I said in Sarajevo, is that China and Russia seem to reject democratic capitalism, with its tolerance, decentralisation, diversity, and respect for human rights and with the peaceful means of replacing bad rulers with better ones. The very existence of individual freedom and democracy is seen by oriental despots as external threats.

What We are Defending

I concluded my talk in Sarajevo by stressing that the West has to know what it wants to defend. I have myself recently published a book about Twenty-Four Conservative-Liberal Thinkers who had since the Middle Ages articulated the political tradition of limited government, private property, and free trade. It was a tradition which included philosophers and economists as different as St. Thomas Aquinas and Ayn Rand, Ludwig von Mises and Robert Nozick, Herbert Spencer and Karl Popper, not to mention its two best-known modern proponents, Friedrich von Hayek and Milton Friedman. It was, and is, a tradition which has encouraged economic growth, innovation and entrepreneurship, but also the development of individual skills, abilities and talents, enabling individuals to live meaningful lives and flourish. It was a tradition which recognised the many intermediate institutions, habits, manners, conventions and customs which had developed spontaneously in the moral space between individuals and the state, and the several ties, commitments and attachments they inherited and formed, outside the realm of contract.

Other speakers at the Sarajevo seminar were Austrian economist Dr. Barbara Kolm on globalisation, American businessman Terry Anker on business regulations, and American Professor Christopher Lingle on entrepreneurship. Professor Vjekoslav Domljan, Dean of the Economics Faculty of the SSST, chaired the meeting. Sarajevo, the capital of a Bosnian kingdom in the Middle Ages, under the Ottomans between 1461 and 1878 and  the Habsburgs between 1878 and 1918, now seems peaceful. But a visitor can sense how strongly many Bosnians want to be a part of the West.