Why does the assassination of Archduke Franz Ferdinand — the event that lit the fuse of World War One 100 years ago Saturday — still resonate so powerfully? Virtually nobody believes World War Three will be triggered by recent the military conflicts in Ukraine, Iraq or the China seas, yet many factors today mirror those that led to the catastrophe in Sarajevo on June 28, 1914.

The pace of globalization was almost as dramatic and confusing in 1914 as it is today. Fear of random terrorism was also widespread — the black-hatted anarchist clutching a fizzing bomb was a cartoon cliché then just as the Islamic jihadist is today. Yet the crucial parallel may be the complacent certainty that economic interdependence and prosperity had made war inconceivable — at least in Europe.

A 1910 best-selling book, The Great Illusion, used economic arguments to demonstrate that territorial conquest had become unprofitable, and therefore global capitalism had removed the risk of major wars. This view, broadly analogous to the modern factoid that there has never been a war between two countries with a MacDonald’s outlet, became so well established that, less than a year before the Great War broke out, the Economist reassured its readers with an editorial titled “War Becomes Impossible in Civilized World.”

“The powerful bonds of commercial interest between ourselves and Germany,” the Economistinsisted, “have been immensely strengthened in recent years … removing Germany from the list of our possible foes.”

The real “Great Illusion,” of course, turned out to be the idea that economic self-interest made wars obsolete. Yet a variant of this naïve materialism has returned. It underlies, for example, the Western foreign policy that presents economic sanctions on Russia or Iran as a substitute for political compromise or military intervention.

The truth, as the world discovered in 1914 and is re-discovering today in Ukraine, the Middle East and the China seas, is that economic interests are swept aside once the genie of nationalist or religious militarism is released. As I pointed out in this column, Russia has in past conflicts withstood economic losses unimaginable to politicians and diplomats in the Western world — and the same is true of Iran and China. Thus the U.S. strategy of “escalating economic costs” cannot be expected to achieve major geopolitical objectives, such as preserving Ukraine’s borders or Japan’s uninhabited islands. Either territory must be open to renegotiation or the West must be prepared to fight to protect the “sanctity” of borders, which shows the really unsettling parallels with the world of 1914....