Editing Military Keynesianism

{{Short description|Economic policy in which governments raise military spending to boost economic growth}}
'''Military Keynesianism''' is an [[economic policy]] based on the position that government should raise [[military spending]] to boost [[economic growth]]. It is a [[Stimulus (economics)|fiscal stimulus]] policy as advocated by [[John Maynard Keynes]]. But where Keynes advocated increasing [[Government spending|public spending]] on socially useful items (infrastructure in particular), additional public spending is allocated to the [[arms industry]], the area of defense being that over which the executive exercises greater discretionary power. This type of economy is linked to the interdependence between [[Welfare state|welfare]] and [[Warfare state|warfare]] states, in which the latter feeds the former, in a potentially unlimited spiral. The term is often used pejoratively to refer to politicians who apparently reject [[Keynesian economics]], but use Keynesian arguments in support of excessive military spending.<ref name=Custers>{{cite journal|last=Custers|first=Peter|title=Military Keynesianism today: an innovative discourse|journal=Race & Class|year=2010|volume=51|issue=4|pages=79–94|doi=10.1177/0306396810363049|publisher=[[Institute of Race Relations (United Kingdom)|Institute of Race Relations]]|s2cid=154824097 }}</ref><ref>{{cite journal|title=Military Keynesians|url=http://reason.com/archives/2012/11/20/military-keynesians|journal=Reason Magazine|publisher=Reason Foundation|accessdate=2 February 2013|author=Veronique de Rugy|date=December 2012}}</ref><ref name="krugman09">{{cite news|last1=Krugman|first1=Paul|title=Weaponized Keynesianism|url=https://krugman.blogs.nytimes.com/2009/06/24/weaponized-keynesianism/|accessdate=26 January 2015|work=New York Times|date=2009-06-24}}</ref>

==Keynesian economics and application==

The most direct economic criticism of military Keynesianism maintains that government expenditures on non-military public goods such as health care, education, mass transit, and infrastructure repair create more jobs than equivalent military expenditures.<ref>{{cite web|url=http://www.ips-dc.org/reports/071001-jobcreation.pdf|title=The Risk of Military Keynesianism|date= February 9, 2009|first=John|last=Feffer|work=Institute for Policy Studies (originally in Foreign Policy In Focus) }}</ref>

[[Noam Chomsky]], a critic of military Keynesianism, contends that ''military'' Keynesianism offers the state advantages over ''non-military'' Keynesianism. Specifically, military Keynesianism can be implemented with less public interest and participation. "Social spending may well arouse public interest and participation, thus enhancing the threat of democracy; the public cares about hospitals, roads, neighborhoods, and so on, but has no opinion about the choice of missiles and high-tech fighter planes." Essentially, when the public is less interested in the details of state spending, it affords the state increased discretion in how it spends money.<ref>{{cite journal|title=The Pentagon System|journal=Z Magazine|publisher=Reason |author=Noam Chomsky|date=February 1993}}</ref>

=== United States ===
In the [[United States]] this theory was applied during the [[Second World War]], during the presidencies of [[Franklin D. Roosevelt|Franklin Delano Roosevelt]] and [[Harry S. Truman|Harry Truman]], the latter with the document [[NSC 68|NSC-68]]. The influence of Military Keynesianism on US economic policy choices lasted until the [[Vietnam War]]. Keynesians maintain that government spending should first be used for useful purposes such as infrastructure investment, but that even non-useful spending may be helpful during recessions. [[John Maynard Keynes]] advocated that government spending could be used "in the interests of peace and prosperity" instead of "war and destruction".<ref name="keynes_letter">{{cite web | first=John Maynard | last=Keynes |authorlink= John Maynard Keynes | title=An Open Letter to President Roosevelt  | year=1933 | url = http://newdeal.feri.org/misc/keynes2.htm | accessdate = 2011-08-01 }}</ref> An example of such policies are the [[Public Works Administration]] in the 1930s in the [[United States]].

===Keynes' 1933 letter to Roosevelt===
In 1933, John Maynard Keynes wrote an open letter to President Franklin Roosevelt urging the new president to borrow money to be spent on public works programs.<ref name="keynes_letter"/>

{{quote|Thus as the prime mover in the first stage of the technique of recovery I lay overwhelming emphasis on the increase of national purchasing power resulting from governmental expenditure which is financed by Loans and not by taxing present incomes. Nothing else counts in comparison with this. In a boom inflation can be caused by allowing unlimited credit to support the excited enthusiasm of business speculators. But in a slump governmental Loan expenditure is the only sure means of securing quickly a rising output at rising prices. That is why a war has always caused intense industrial activity. In the past orthodox finance has regarded a war as the only legitimate excuse for creating employment by governmental expenditure. You, Mr President, having cast off such fetters, are free to engage in the interests of peace and prosperity the technique which hitherto has only been allowed to serve the purposes of war and destruction.|author=|title=|source=}}

=== Barney Frank ===
While the idea dates back to Keynes, a similar term is often attributed to [[Barney Frank]], and seems to have been first used around funding the [[F-22]] fighter:<ref name="krugman09" /><ref>{{cite web | url = https://thinkprogress.org/barney-frank-gop-thinks-2-billion-f-22-project-is-funded-by-monopoly-money-a364c9c9320c/ | date = 2009-06-23 | first = Ali | last = Frick | title = Barney Frank: GOP Thinks $2 Billion F-22 Project Is Funded By Monopoly Money | work = Think Progress}}</ref>

{{Quote|These arguments will come from the very people who denied that the economic recovery plan created any jobs. We have a very odd economic philosophy in Washington: It’s called weaponized Keynesianism. It is the view that the government does not create jobs when it funds the building of bridges or important research or retrains workers, but when it builds airplanes that are never going to be used in combat, that is of course economic salvation.}}

== Forms ==
The following forms of military Keynesianism may be differentiated:
* First, there is the differentiation between the use of military spending as 'pump primer', and efforts to achieve long term multiplier effects by the given spending. A government may opt to approve the purchases of fighter planes, warships or other military commodities so as to weather a recession. Alternatively, it may opt to approve the purchase of fighter planes, warships or other military commodities throughout all the years of a given business cycle. Since the construction of large armament systems requires extensive planning and research, capitalist states generally prefer to rely on arms' purchases or other military allocations for longer-term macro-economic policymaking and regulation.{{citation needed|date=February 2013}}
* A second differentiation that needs to be made is between primary and secondary forms of military Keynesianism. In both cases, the state uses the multiplier mechanism in order to stimulate aggregate demand in society. But the primary form of military Keynesianism refers to a situation where the state uses its military allocations as the principal means to drive the business cycle. In case of a secondary form of military Keynesianism, the given allocations contribute towards generating additional demand, but not to the extent that the economy is fully, or primarily, driven by the military allocations.{{citation needed|date=February 2013}}
* The third differentiation starts from the observation that modern capitalist economies do not function as closed systems but rely on foreign trade and exports as outlets for the sale of a part of their surplus. This general observation applies to the surplus generated in the military sector as well. As the vast amount of data regarding state promotion of arms' exports do confirm, capitalist states actively try to ensure that their armament corporations gain access to import orders from foreign states, and they do so amongst others in order to generate multiplier effects. Hence, there is a need to also differentiate between the two forms of domestic and 'externalized' military Keynesianism.<ref name=Custers/>

==Permanent war economy==
The concept of '''permanent war economy''' originated in 1945 with an article by [[Trotskyist]]<ref>{{cite journal |last1=van der Linden |first1=Marcel |title=Edward L. Sard (1913–99), Theorist of the Permanent War Economy |journal=Critique |date=2 January 2018 |volume=46 |issue=1 |pages=117–130 |doi=10.1080/03017605.2017.1412629 |url=https://www.tandfonline.com/doi/pdf/10.1080/03017605.2017.1412629 |language=en |issn=0301-7605|url-access=subscription }}</ref> [[Ed Sard]] (alias Frank Demby, Walter S. Oakes and T.N. Vance), a [[Theoretician (Marxism)|theoretician]] who predicted a post-war [[arms race]]. He argued at the time that the United States would retain the character of a [[war economy]]; even in peacetime, [[US military expenditure]] would remain large, reducing the percentage of unemployed compared to the 1930s. He extended this analysis in 1950 and 1951.<ref>See Peter Drucker, ''Max Schachtman and his Left. A Socialist Odyssey through the 'American Century','' Humanities Press 1994, p. xv, 218; Paul Hampton, "Trotskyism after Trotsky? C'est moi!", in ''Workers Liberty'', vol 55, April 1999, p. 38</ref>

== Empirical estimates ==
Many economists have attempted to estimate the multiplier effect of military expenditures with mixed results. A [[meta-analysis]] of 42 primary studies with 243 [[effect size]], which are aggregated results from multiple studies, found that military expenditures tend to have positive effects on economic growth in developed countries but generally negative effects on growth in less developed countries. The study attributes the negative effects to the diversion of resources from productive sectors such as education and infrastructure.<ref>{{Citation
| last1 = Awaworyi
| first1 = Sefa
| last2 = Yew
| first2 = Siew Ling
| year = 2014
| title = The Effect of Military Expenditure on Growth: An Empirical Synthesis
| work = Discussion paper 25/14
| volume = 14
| issue = 15
| publisher = Department of Economics, Monash U.
| url = https://business.monash.edu/__data/assets/pdf_file/0004/339475/the_effect_of_military_expenditure_on_growth_an_empirical_synthesis.pdf
| accessdate = 2017-03-15
| archive-date = 2016-03-29
| archive-url = https://web.archive.org/web/20160329153801/http://business.monash.edu/__data/assets/pdf_file/0004/339475/the_effect_of_military_expenditure_on_growth_an_empirical_synthesis.pdf
| url-status = dead
}}</ref>

== See also ==
{{portal|politics|business}}
{{cols|colwidth=21em}}
*[[Arms industry]]
*[[Bernard Baruch]]
*[[Cold War]]
*[[Countercyclical]]
*[[Employer of last resort]]
*[[Iron triangle (US politics)]]
*[[Keynesian economics]]
*[[Lemon socialism]]
*[[List of countries by military expenditures]]
*[[Military budget of the United States]]
*[[Military–industrial complex]]
*[[Parable of the broken window]]
*[[Perpetual war]]
*[[Ultra-imperialism]]
*[[War economy]]
{{colend}}

== Notes ==
{{reflist}}

== References ==
*Walter S. Oakes, 1944, "Towards a Permanent Arms Economy?", ''Politics'', February.
*T. N. Vance, 1950, [http://www.marxists.org/history/etol/writers/vance/1950/11/afterkorea.htm "After Korea What? An Economic Interpretation of U.S. Perspectives"], ''New International'', November–December.
*T. N. Vance, 1951, [http://www.marxists.org/history/etol/writers/vance/1951/permwar/index.htm "The Permanent Arms Economy"], ''New International''. [series of articles]
*Charles Edward Wilson, "Army Ordnance (Vol. XXVI, No. 143, March–April 1944)".
*[[Tony Cliff]], [http://www.marxists.org/archive/cliff/works/1957/05/permwar.htm ''Perspectives for the permanent war economy.''] Socialist Review March 1957. Reprint Tony Cliff, ''Marxist Theory after Trotsky. Selected Writings. Volume 3.'' Bookmarks London 2003. {{ISBN|1-898876-93-2}}
*[[Chris Harman]], ''Explaining the Crisis&nbsp;– A Marxist Re-Appraisal.'' Bookmarks London 1999. {{ISBN|0-906224-11-X}}
* Chris Harman, [http://www.marxists.org/archive/harman/2003/xx/imperialism.htm''Analysing Imperialism''] International Socialism 99. Summer 2003.
*[[Michael Kidron]], ''Western Capitalism Since the War.'' Penguin Books Harmondsworth 1970.
*[[Alfred Sohn-Rethel]], ''Industrie und Nationalsozialismus. Aufzeichnungen aus dem “Mitteleuropäischen Wirtschaftstag”.'' Wagenbach-Verlag Berlin 1992. {{ISBN|3-8031-2204-X}}
* Alfred Sohn-Rethel, ''Economy and class structure of German fascism'' London, CSE Books 1978.
*[[Ernest Mandel]], ''Late Capitalism''. London: Verso, 1975.

== External links ==
* [http://bnarchives.yorku.ca/205/02/20060809nb_cheap_wars.pdf Cheap Wars] by [[Jonathan Nitzan]], Ph.D. Associate Professor of Political Economy, and [[Shimshon Bichler]], Lecturer of Political Economy
* [http://www.cato.org/pub_display.php?pub_id=9914 Defense Doesn't Need Stimulus] by Christopher Preble, Ph.D. History
* [http://www.dollarsandsense.org/archives/2008/0308drdollar.html Doesn't all the war spending stimulate the economy? And shouldn't the Bush tax cuts do the same? So why are we falling into recession?] [[Dollars & Sense]] magazine
* [http://www.independent.org/newsroom/article.asp?id=2399 Military Keynesianism to the Rescue?] by [[Robert Higgs]], Ph.D. Professor Emeritus of Economics
* [https://books.google.com/books?id=L8v4ijVw10YC&q=military+keynesianism Rich Nation, Strong Army: National Security and the Technological Transformation of Japan] by [[Richard J. Samuels]], Ph.D. Professor of Political Science
* [http://mondediplo.com/2008/02/05military The economic disaster that is military Keynesianism: Why the US has really gone broke] by Dr.[[Chalmers Johnson]] in the English edition of [[Le Monde Diplomatique]]
* [https://www.nytimes.com/1985/05/29/opinion/high-tech-a-subsidiary-of-pentagon-inc.html High Tech, A Subsidiary Of Pentagon Inc. by Robert B. Reich]
* [https://www.emerald.com/insight/content/doi/10.1108/S0743-41542019000037A004/full/html?skipTracking=true Macroeconomic Consequences of Peace: American Radical Economists and the Problem of Military Keynesianism, 1938–1975]

[[Category:Keynesian economics]]
[[Category:Military–industrial complex]]
[[Category:Macroeconomics]]
[[Category:Military economics|Keynesianism]]
[[Category:Lobbying]]
[[Category:Militarism|Keynesianism]]
[[Category:History of economic thought]]
[[Category:Economic ideologies]]
[[Category:Barney Frank]]


{{Macroeconomic schools}}
{{History of economic thought}}