THE ECONOMICS AND THE NONECONOMICS OF THE WORLD WAR INDUSTRY

Kenneth E. Boulding

Contemporary Economic Policy, 1986, vol. 4, issue 4, 12-21

Abstract: The world war industry is defined as the part of human income‐earning activity devoted to producing, maintaining, and sometimes utilizing means of destruction. Most of the industry consists of what is purchased with national states' military budgets, which are spent by unilateral national defense organizations. These organizations are basically noneconomical, in the sense that they do not have a balance sheet, do not show a “bottom line” or net worth, and therefore there is no way to estimate their profitability. They have economic aspects in terms of decisions that balance marginal benefits against marginal costs. The benefits, however, are mainly psychological in the minds of the decision makers. Wars of conquest, especially those resulting in empires, have not paid off very well for the conquering power. Military defeat often leads to cultural and economic development. Nuclear weapons and long‐range missiles have made national defense essentially obsolete and the greatest enemy of national security. Military leaders may respond to this development as they recognize their traditional culture of courage, heroism, and fighting has been replaced by child roasting and perhaps universal destruction. There seem to be few economies of scale in the national state, and perhaps we should look forward to a world of 500 national states in stable peace with a very limited, functional world government.

Date: 1986
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