The Modern Business of War
Sen and Durano, The Remaking of Social Contracts, Zedbooks, London, 2014, Chapter 3
14 Pages Posted: 26 Aug 2015
Date Written: May 30, 2010
Abstract
Historically, it has been argued that war has been a solution to economic problems. In the Keynesian guns or butter curve, guns reactivated failing economies while consolidating their political power. This logic is the opposite of Bastiat’s (1850) broken window fallacy that argues that money spent on wars is not spent on something else so there is no greater economic good from war but only profit for those related directly to the business of war. We want to argue that from the turn of the XXIst century there is evidence that what is good for the military industrial complex seems not to be so for the US economy given that the greater the military expenditure, the greater both fiscal and external deficits become while GDP growth does not respond necessarily. The question is why not. The logic developed beneath can be taken to other leading economies in Europe that are following the same path although the analysis is centred in the US. In the end we want to demonstrate the militarisation of the economy and of social control as the result of mainstream economic policy and confirm Bastiat’s fallacy.
Keywords: Structure, Scope, and Performance of Government, National Security and War, International Public Goods, Portfolio Choice, Investment Decisions
JEL Classification: H11, H56, H87, G11
Suggested Citation: Suggested Citation