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The War Economy: Of Bits and Bobs

The War Economy: Of Bits and Bobs With your shield or on it?!

There are some key assertions which are axiomatic for the pureblood moralists and demonstrable for utilitarians, such as – “war means defeat even for the victors”, “war is the health of the state”, “peace between nations is inconceivable without limiting the power of states over their own nations”, “a durable order cannot be maintained by the sword”, “in a world of free trade and democracy, there are fewer temptations for war and conquest”. These do not exclude the need for an answer to the following question: “if we are to inevitably have war, how can it be waged rationally from an economic standpoint?”. War is the supreme immorality, - indisputable when it is a war of aggression, but also when it constitutes a hasty rejoinder -, but isn’t it also an immorality, of a lower degree, when it is waged with means that delay or hinder winning it in the most efficient/efficacious way for society?

The mobilization of economic resources to maintain the war effort can be ensured in various ways. Only some of them maximize efficiency (maybe also accompanied by the minimization of intrusions into the freedom and property rights of citizens/civilians). But just as you cannot make an omelet without breaking the eggs, a preoccupation for efficiency over any other concerns recommends certain approaches to the exclusion of others. The problem is partly to move production factors from peacetime industries and consumption towards war industries. The faster and more efficient this is, the better for the war effort of the nation. How do we do this? Before anything else, we must utilize as much as possible the instruments of the free market, letting profitability orient the (re)allocations over state-enforced prioritizations and prohibitions, and bureaucratic rationing and requisitioning. And then translate the resulting purchasing power into what we need.

The “optimal” translation of purchasing power presupposes that the public funds required for military acquisition must come from restrictions placed on civilian and private consumption of goods, not from private savings. The latter are not in “competition” or in “conflict” with military needs, but fuel investment in arms industries and connected ones, since they become profitable during wartime. Otherwise, we would take with one hand what we give with another, when the stakes are just for private consumption, while keeping investment appetite alive through the ascending wartime industries. Voluntary contributions from the patriotic public, the reallocation of public spending and finally taxes on consumption (VAT, excises) – this is the “ideal” order. We must be careful that our repression of private consumption should lead to the freeing up of resources for war making, not for other activities, or else the adjustments will be delayed.

A discussion such as this one attracts attention to the fact that, whether we like it or not, a war against foreign enemies is also a silent or tacit conflict with our own economy which, through its specific management (as little bureaucratized as possible) and marketing (the required propaganda), must be as well-hidden as possible. Wars run on expropriations, on draconic profit taxation, on indebtedness and inflations, through the quasi-total “marshalling” of the socio-economic climate produce terrible fractures and later bills, resulting in pyrrhic victories sometimes indistinguishable from defeat. The history of civilization, of capitalism, illustrate what economic theory keeps repeating despite its internal conflicts: the market is a superior means of attaining individual or collective goals, regardless of morality. If state inefficiency during peace is so expected as to promote fatalism, it may definitely result in fatalities during wartime, moving nations from under their shield to pride of place on it, as the Spartans would say.

 
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