The economics of war

Abstract

Economics is a very unsatisfactory science. But it would have to be much more unsatisfactory than it is if such an event as a war, however extensive and destructive, sufficed to upset its teaching. Schumpeter 1954, 1146 Before beginning the discussion of individual wars, it will be helpful, at least for some readers, to review the ways in which the basic principles of economics can be applied to war economies. As the quote above by the distinguished Austrian and American economist Joseph Schumpeter indicates, there is a tendency to assume that economic ideas don't apply in wartime, perhaps because non-pecuniary motives for human action, such as patriotism, take precedence over mere maximization of income. But as I will try to show here, and in more detail in subsequent chapters, the principles of economics can be extremely helpful in understanding the important economic and financial questions posed by America's decisions to go to war. The economic causes of America's wars Untangling the complex forces that have propelled Americans into war has perplexed political scientists, historians, and economists. Nevertheless, it is frequently argued that wars were the result of economic forces.