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History of Political Economy, annual supplement to vol.23, Economics and National Security.

Wearing his editorial hat, Craufurd Goodwin has done those of us who are both historians of economic thought and students of international conflict half - no - two-thirds of a favor by his complaint that national security economics has not been accorded the same status in academe as health or education economics. Economists themselves are partly to blame. The more parochial practitioners of the discipline cannot escape from marginal concepts that seem inapplicable to the discontinuity of war. They are unwilling to collaborate with behavioral disciplines like political science, which have less difficulty with a world in which all that is real may not be rational. As a result the surveys of classical (Goodwin) and neoclassical (Whitaker, Barber, Tarascio) literature from antiquity (Lowry) through World War I in this volume come up empty. To the mainstream, it seemed that general war was a negative sum enterprise which could not occur among rational actors. War could be understood only by the dissenting underworld of evolutionary and revolutionary economics-Veblen (Biddle and Samuels), Marx and Lenin (Davis) and Rostow (Lodewijks). Barber's account of "British and American Attempts to Comprehend the Nature of War 1910-20" is the most interesting of this genre. It recounts economists' efforts to understand how war was possible, as well as describing their service in World War I and the subsequent peace negotiations. It turns out that economists always have done defense economics, when the subject is defined within the small compass of allocation of resources and wartime finance. Leonard's account of the history of RAND continues the history of this sort of applied economic analysis through the Cold War.

An important omission in this roughly chronological account is a comprehensive treatment of Keynes. He, more than most, bridged the gap between the economic causes of war and the economics of its conduct. In its place we read a detailed account of the research efforts of the League of Nations in the thirties (de Marchi). To be sure Keynes's denunciation of the Versailles treaty is mentioned, but surely he deserves a more thorough treatment. It was he who realized that the mercantilist zero sum game of the Depression years had a certain myopic fiscal and monetary rationality that could only result in war. Keynes's thought dominated the post World War 11 world, through its contention that the beggar my neighbor economic drive to war could be replaced with international cooperation based on coordinated monetary and fiscal policy.

The one-third lapse is Goodwin's mistaken belief, reflected in the choice of participants, that despite the paucity of departmental chairs and courses the "economics profession has not created a subdiscipline of defense or national security economics" [p. 1]. He might have taken a different view had he solicited the views of leaders of the profession who have been engaged in this work. The list including several Presidents of the American Economics Association and Nobel Laureates in Economics. The discipline exists, but it is grossly under appreciated by those economists who have not paid attention. As a result many - but not all - peace and defense economists make contributions and then turn their attention elsewhere. The best review of this rapidly expanding literature is to be found in Isard (1988) and especially in the chapter co-authored with Charles Anderton.

In this collection, the current state of the discipline is identified solely with game theory and turned over to the tender mercies of Philip Mirowski. Predictably, Mirowski displays the same ad hominem, nihilistic, approach to game theory as he has exhibited toward other economic analysis. This destructive piece sets up a straw man of claims to absolute rationality, and proceeds to destroy it. It records the fact that a great deal of the original stimulus to game theory arose out of military interest. That the military should be interested in rational approaches to conflict seems to me both predictable and praiseworthy. Would it be better to have an irrational military? Would he say the same of linear programming or penicillin? Whatever the bureaucratic pressures to follow certain lines of inquiry-and they exist as the RAND story testifies - the consequent condemnation of the logical content of game theory as a flawed theory of apologetics for war is simply a non sequitur.

Mirowski mistakes origin for essence, the knower from the known, the economic incentives that motivate research and the research into the nature of economic incentives. Although the contributors to this volume are unaware of the literature, game theory has served peace scientists as well as military scientists. Anyone remotely aware of current trends in economic analysis could not possibly miss the increasingly important role that game theory plays in general analysis.

It is true, as Goodwin observes, peace and defense economics have suffered from the political polarization of the McCarthy years, the Vietnam debacle and the Cold War. He does not help the matter at all by mistakenly labelling peace economics "left" and defense economics with the "right." It has been hard enough to remain objective and to report all results whether or not we like what the computer tells us. Yes, I can testify that not every journal editor has been immune to the political winds. Mirowski is right about that. Despite all the difficulties, we have been doing peace and defense economics for almost forty years up to scientific standard, publishing in both general and specialized journals.

We have learned more about the causes of war and policies to prevent it than the contributors to this volume suspect. Some of that understanding comes from game theory as expounded by Steven Brems and Jack Hirsheifer. We know something about the dynamics of arms races as a result of the pioneering work of the meteorologist, Lewis Richardson, that was taken up by Anatol Rappoport and Kenneth Boulding. Michael Intriligator and I have debated the economic and military interaction of the Cold War arms race. My own work in this area has recently been republished (Wolfson 1992). Mancur Olson and Martin McGuire have treated defense as a public good and mooted the costs of alliances to its participants. My students and I have applied and revised some of that theory with respect to the Gulf War and the future of US policy.

The interaction between economics and politics as a cause of war has been the subject of ongoing research. The Correlates of War project by political scientist David Singer, and his associates at the University of Michigan, pioneered a comprehensive data base. It inspired other political scientists such as Russett, Bremer, Zinnes, Organski and Kugler to analyze the historical record in quantitative terms. Economic analysis has influenced them directly and through other leading political scientists such as Bueno de Mesquita. This work in economics and politics is published regularly in such interdisciplinary journals as the Journal of Conflict Resolution and Conflict Management and Peace Science as well as occasionally in the Journal of Political Economy, and Public Choice.

Lawrence Birken's review of "The Political Economy of Adolf Hitler" requires one last bit of comment. An objective study of the ideas and economy of Nazi Germany is long overdue. Birken shows that Hitler's economic doctrine was consistent with his theory of "race values." Physical production on the territorial land was the source of all true value. That output had to be maximized without bound by an ever expanding group with "race value" by the territorial displacement of inferior and parasitical races from the land as well as from the face of the earth. Surely Birken must be overstating his case when he describes this grisly consistency as "brilliance." Undoubtedly he is in error in identifying the German romantic Sturm and Drang overweening Hero, with the wimpy but lovable individual of classical economics, pushed and pulled by the impersonal market in his search of increments of pleasure. Hitler may have been consistent in drawing the consequences of his premises, but they are absurdly inconsistent with scientific economics.

Birken is not to be accused of apologizing for Hitlerism. He is as horrified by its outcome as anyone. Yet, in failing to say that the economic theory is blatantly wrong, he is not led to ask further questions: Was the theory a propaganda fig leaf to cover other motives? How was it possible that normally intelligent people were led to espouse such a ridiculous doctrine? In the end, the true value of the theory became evident. Hitler got the territory of Europe. But he only achieved death and destruction for his precious Aryan people instead of the welfare that Birken says was his stated goal. The computer hacker's verdict on consistency applies: Junk in - junk out. Unscientific racism and stupid economics in - genocide and self-immolation out.

References

[1.] Isard, W. Arms Races, Arms Control and Conflict Analysis. Contributions from Peace Science and Peace Economics. New York: Cambridge University Press, 1988. [2.] Wolfson, M. Essays on the Cold War. London: Macmillan, 1992.
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Author:Wolfson, Murray
Publication:Southern Economic Journal
Article Type:Book Review
Date:Jul 1, 1993
Words:1479
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