The Origins of the Permanent War Economy

Abstract

This paper explains the origins of the permanent war economy in the United States. We emphasize the combined efforts of three key interest groups (military, labor unions, and industry) that arose in the context of the dual crises of the Great Depression and World War II. During the depression and the war that followed, there arose a partnership between industry, the military, and politicians. These crises, combined with the State’s monopoly over the military, created the opportunity for these interests to influence the trajectory of economic activity in a self-serving, and lasting, manner.

Keywords: War Economy, National Defense, Military Keynesianism, Interventionism

JEL Classification: B53, H00, H56, P50