Military spending and economic development: A theoretical note

Abstract

Eisenhower once highlighted the growing undemocratic influence of the ‘military-industrial-complex’ (1961) and the enormous opportunity cost associated with it (1953). Since the late-1990s, military spending around the world has been growing but, despite its overall significance, research on it has not followed suit. There remains no consensus on the economic effects of military spending, both in the sense of economic dynamism and whether it ‘crowds-out’ other forms of state spending, like welfare spending. Understanding such primarily depends on how the relationship between the economy and the state is theoretically understood. The present paper outlines in brief three theoretical schools on the state-economy nexus, ultimately arguing that state-backed military spending should be situated as a countertendency to the ‘law of the tendency of the rate of profit to fall’.