It is true that, in the decades before World War I, there was a popular perception in Britain that economic interdependence and the spread of free trade would make the world more prosperous and wars less likely (known as the "liberal theory of peace"). In the mid 19th century, the British politician and economist Richard Cobden argued that free trade would ensure international peace. He said that "there is no human event that had happened in the world more calculated to promote the enduring interest of humanity than the establishment of the principle of free trade" and that "the more any nation traffics abroad upon free and honest principles, the less it will be in danger of wars." Similar sentiments were expressed by John Stuart Mill, a contemporary of Cobden's. He said that "it may be said without great exaggeration that the great and rapid increase of international trade, in being the principal guarantee of peace in the world, is the great permanent security for the uninterrupted progress... of the human race."
In 1910, four years before the first World War, Norman Angell, in the vein of Cobden and Mills, published The Great Illusion. He argued that globalization and increasing economic interdependence had made war too costly for modern nations. Nations would not risk fighting military conflicts at the expense of economic productivity. The importance of trade made economic growth the source of nation's greatness, not military conquest or territorial expansion. The title of La Grande Illusion, a famous French anti-war film set in World War II, is possibly a reference to the alleged naivete of Angell's book.
The advent of World War I made liberal theories of peace seem farcical in retrospect. But in all fairness to Cobden, Mills, and Angell, they believed that war would be less probable, not impossible. Furthermore, the liberal theory of peace survived World War I. "Democratic peace" is its modern incarnation.
Source: Dortright, David. Peace: A History of Movements and Ideas Cambridge University Press, 2008.
As a generalization, it's pretty good. In 1914, there had been no GENERAL war of the Great Powers since 1815: almost a century. There had been no war of clear Great Powers IN EUROPE since 1871: almost 50 years.
The wars that had taken place had been between marginal powers or outside of Europe: Spanish-American War (1898), the Boer War (1899-1902), the Russo-Japanese War (1904-5), the Italo-Turkish War (1911-12), the two Balkan Wars (1912-1913).
In addition, they'd been quite limited in time and scope. The war that really showed how wars involving modern industrial societies could incredibly draining and costly was the American Civil War (1861-1865), which was from the point-of-view of Europe in 1914 long ago and far away. In addition, there was a perception in Europe (and indeed a partly accurate perception) that the Civil War was fought by amateurs, and wasn't necessarily relevant to European armies run by professional officers.