Political Military Competition, Economic Performance and Size and Composition of Government

Abstract

This paper uses a formal model to analyze the effects of political economic competition between states on economic performance and the size and composition of the public sector. Great economies of scale in warfare and even distributions of military capability among the contestants generate intense interstate rivalry, strong concern for relative economic and military capability and better economic performance and, the growth of government (as measured by the size of public intermediate input in the economy) and the civilianization of the public sector (as measured by the size of public intermediate input relative to that of military expenditures). The paper then uses the model to understand instances of economic progress, stagnation and decline in world history and the associated changes in the size and composition of the public sector. The case studies are about how waves of military technological shocks (the use of bronze weaponry, the introduction of horse drawn war chariots, the military use of iron, the battlefield dominance of heavy infantry combined arms legions, the rise of heavy cavalry and, the gunpowder military revolution) caused various well known stylized facts in world history: the ancient Near Eastern leadership in civilization, the simultaneous burgeoning of civilizations in China, Greece and India during the axial age, the late classical Indian Gupta Golden Age, the medieval Islamic Abbasid Golden Age and Sung puzzle of China and, the modern European miracle and the associated growth and the civilianization of the government in the above cases.