Niall Ferguson is a professor of history and business administration at Harvard University.  He is a contributing editor to the Financial Times and is the author of a number of books, including “The War of the World: History's Age of Hatred.”

Washington Profile: Despite thousands of years of historical experience, the past century saw some of the bloodiest conflicts of all time. Do you think that there is such a thing as human progress? Have we learned anything from our own past?

Ferguson: There has clearly been enormous progress in economic, scientific and political fields of human endeavor. Our problem remains that we have a tendency to settle disputes between states or political groupings by violence all too often. The 20th century makes this point very clear, because it was a time of unprecedented economic and scientific progress. It was a time when democracy made great strides. But it was also a time of astonishing violence with somewhere in the neighborhood of 200 million people losing their lives in war. How far we’ve really improved on that remains to be seen this century. But I don’t think anybody could confidently say that war has been abolished or that it is likely to be abolished in the near future.

Washington Profile: Do you think we are seeing a failure of the nation-state system?   

Ferguson: Well, I’ve been a little weary of the idea that the world was ordered purely into nation-states, because in the 19th century, the 20th century and indeed in our own time, empires, whether you call them empires or not, have really been the decisive players in a world of big and small states. Empires are the ones that are very often responsible for the really big conflicts. It was true in the 20th century and I think it could prove to be true today.  When I say “empires,” I’m talking here about the very large states with imperial histories. Russia is certainly one of those. China is certainly one; Iran is one.  Although Americans hate to admit it, the United States is also one. So for me the idea that the world has since the Treaty of Westphalia been divided up into nice, neat nation-states is a false one. That’s not really the world that I as an historian know. The world that I know as an historian is a world of great empires and smaller states that very often find their fate decided by those empires.

Washington Profile: What kind of an empire is needed in today’s day and age?  

Ferguson: Some would say that the European Union is the kind of empire we need.  That’s to say an empire that’s based on consent on economics and not on force, not on military power. The trouble is that it’s very difficult to imagine a world entirely ordered like the European Union. There are just too many zones of conflict, whether in the Middle East, Central Africa or East Asia, where it’s hard to imagine European-style institutions succeeding. What we clearly need, and this is the critical point, is for the great empires as far as possible to resolve their disputes through international institutions, whether the United Nations or the G8, rather than through conflict. If there has been progress in the past 50 or 60 years, it has been in the field of international institutions, because there has been a wider range of ways in which disputes can be settled peacefully. That is a source for some modest optimism.

Washington Profile: The saying goes that money is the root of all evil.  But you don’t see economic concerns as the main drivers of international affairs?

Ferguson: The saying is that the love of money is the root of all evil, not the money itself. Economics plays a very important part in the international system, obviously. The Middle East would matter much less to the rest of the world if it didn’t have a large portion of the world’s fossil fuel reserves located there. The power of China is growing in large measure because China’s economy is growing. When you take the long-term view, it’s difficult to see conflict as being economically determined. World War I wasn’t the result of capitalist rivalries, as Lenin claimed. It was something more like an accident in the relations between the empires of Europe. World War II had its economic dimension--certainly Japan was motivated to attack Pearl Harbor by American sanctions. But of course Adolph Hitler’s vision when he launched his war in Europe was far more a racial vision, a vision of living space and racial transformation, than an economic vision. I think we need to understand the limits of economic explanations in international affairs. Without economic power it is very hard to have any kind of power, but it’s not the only thing you need. Japan was the second largest economy in the world from most of the period after 1960, but in international terms it was a relatively weak power with insignificant military capabilities.

Washington Profile: However, it is often argued that economic integration will lead to a more peaceful world…  

Ferguson: Economic integration has been tried before and was taken a long way between around 1880 and 1914 in what might be called “the first age of globalization.” But it didn’t prevent a world war from breaking out in 1914. Even though, for example, Britain and Germany were closely linked in economic terms and were in fact one another’s biggest trading partners, they were still capable of going to war on such a technical question as the neutrality of Belgium. So I think it is extremely important not to put too much faith in economic integration. It will not inoculate the world against war.  I can remember the journalist Tom Friedman making the claim that there was a Golden Arches theory of peace, that two countries which both have branches of McDonald’s would never go to war with one another. But that argument came forward almost in the same month that U.S. fighters were launching attacks on Belgrade, which does indeed have a branch of McDonald’s. So economics won’t abolish conflicts; you need much more than that. What you need in particular are institutions that are capable of resolving disputes, whether disputes about territory or disputes about human rights, without resort to violence. We have institutions, but they are not in any way perfect.  The obvious example is the United Nations Security Council. 

Washington Profile: You have written that individuals have historically had a great impact on the course of world affairs.  Which do you think has been the bigger factor throughout human history, wisdom or folly?

Ferguson: Folly, unquestionably. It exceeds wisdom in the great span of human history. Whenever historians try to explain great events, they are desperately eager to find great causes for them. But sometimes great events have quite small causes.  A good example of this was the events that produced World War II, which were contingent on the events of the summer of 1938, when a different prime minister might very well have acted more aggressively towards Hitler than Neville Chamberlain did.  If you compare Chamberlain and Churchill, who in effect were the two contenders for the premiership, perhaps also Lord Halifax, you realize how much depended on the character of the man in 10 Downing Street at that critical moment. If Britain had stood up to Germany over Czechoslovakia in 1938, the outcome would have been far better than waiting another 12 months and letting Hitler get into a much stronger position on Poland.

So I do think the role of individuals is something that historians can never leave out of the count. Individual leadership can make an enormous difference in the direction that the country goes. And I could only wish that the wise leaders outnumbered the foolish leaders in the sweep of history, but at the moment, I think it’s the foolish leaders who are somewhere ahead.       

Washington Profile: You have done a lot of work in counterfactual history.  Now, if we were to talk about the future, could you give a best-case scenario and a worst-case scenario for the state of the world in let’s say 20 years time?

Ferguson: That’s good that you’ve given me two scenarios because there is no such thing as “the future” singular, there are only multiple futures that we somehow have to choose between. It’s good to imagine the worst-case scenario because that way we have a chance of avoiding it. My worst case scenario would be an escalation of conflict in the Middle East beyond the borders of Iraq and across the region: a conflict that would involve not just the United States and Iran, but also Israel, Saudi Arabia, Syria, conceivably Egypt and conceivably Turkey. That would be as much a conflict between sects of Islam, Shiites and Sunnis, as between Islam and the West. There is potential for an enormous conflict there; all the ingredients are in place. It would be catastrophic if such a conflict were to spiral out of control.  If you had to pick a place where the next world war would begin, you would have to pick the Middle East.

A best-case scenario involves allying with what I would call “Dubai” to dominate Baghdad. That is to say to ally the economic forces at work in the global economy to create incentive for young Middle Eastern men to make money rather than war. The old slogan in the 1960s was “Make love, not war.” I think “Make money, not war” is the more plausible slogan. When economic incentives are present, when opportunities are there for gainful work and profit, people are less likely to resort to violence. In that sense, you could be cautiously optimistic, at least until the recent financial crisis hit the world economy. I am rather gloomy about the prospects for globalization at a time of soaring commodity prices and growing friction over trade and currencies. For that reason I am not attaching too high a probability to my rosy scenario, a scenario in which economic globalization reduces the conflicts in the Middle East.

Washington Profile: How do you view the future of the countries of the former Soviet Union?

Ferguson: In many ways we should be glad that so much economic success has followed the great crisis of the 1990s, a time when people in Russia and the former Soviet Union endured more hardship than many people in the West understand. I would say that there was a great depression in the 1990s; it just happened in the former Soviet Union. Things have massively improved, in large part because of the upward surge in commodity prices and particularly in fossil fuel prices. But all these countries still have a long way to go. Russia’s wealth is not very evenly distributed.  There are parts of Russia which are still stuck in a kind of Rust Belt poverty, which has in large measure disappeared in the West. The critical issue is what the relations will be between Russia and former Soviet republics. There is an anxiety in the West that some people feel nostalgia for the Soviet Union and would like to see it restored. I think there is legitimate anxiety in Russia that the western extension of NATO has created an unnecessary degree of pressure on Russia. Countries like Ukraine and Georgia are at the moment being squeezed between Russia’s desire to reassert itself in its traditional sphere of influence and an American desire to reap all the benefits of victory in the Cold War. The important thing is that neither the United States nor Russia should interfere with the political independence of these countries.

Russia is the last empire of the 20th century to decline in full and it happened very fast. But the lesson of western European history is that once your empire is gone, there is no point trying to win it back. Ask Britain, ask France, ask the Netherlands, ask any of the European powers that once had empires. The important thing for Russia is to recognize that there is actually an attractive future as a traditional nation-state, not as an empire.

Washington Profile: And what about the United States and the “American empire”?

Ferguson: The United States is the world’s most successful political system and the world’s most successful economy, but its record as an empire has been distinctly mixed. Many of its interventions in foreign countries have been unsuccessful. Only a minority have been as successful as, say, occupation of West Germany and Japan. The United States is teetering on the brink of a retreat from empire. If Barack Obama is elected president, it seems likely that the American presence in Iraq will be wound down. There is a great risk here which is that by prematurely abandoning the Iraq project, an Obama presidency could let all hell break loose in Iraq. Things have only barely been brought under control by the surge. There are signs that the country is beginning to stabilize. This is extremely encouraging, but it could all completely collapse if by November it’s clear that the next administration has no real commitment to stabilizing Iraq. So my feeling is that although the United States is not a very successful imperial power, it needs to finish what it started in Iraq for the sake of not just the United Sates, but everyone, because failure in Iraq and the return of Iraq to the kind of civil war we saw in 2006 would have enormous cost for the world economy as a whole.