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War economy

A war economy or wartime economy is the set of contingencies undertaken by a modern state to mobilize its economy for war production. Philippe Le Billon describes a war economy as a "system of producing, mobilizing and allocating resources to sustain the violence." Some measures taken include the increasing of Taylor rates as well as the introduction of resource allocation programs. Approaches to the reconfiguration of the economy differ from country to country.[1]

Many states increase the degree of planning in their economies during wars; in many cases this extends to rationing, and in some cases to conscription for civil defenses, such as the Women's Land Army and Bevin Boys in the United Kingdom during World War II. During total war situations, certain buildings and positions are often seen as important targets by combatants. The Union blockade, Union General William Tecumseh Sherman's March to the Sea during the American Civil War, and the strategic bombing of enemy cities and factories during World War II are all examples of total war.[2]


Concerning the side of aggregate demand, the concept of a war economy has been linked to the concept of "military Keynesianism", in which the government's military budget stabilizes business cycles and fluctuations and/or is used to fight recessions. On the supply side, it has been observed that wars sometimes have the effect of accelerating technological progress to such an extent that an economy is greatly strengthened after the war, especially if it has avoided the war-related destruction. This was the case, for example, with the United States in World War I and World War II. Some economists (such as Seymour Melman) argue, however, that the wasteful nature of much of military spending eventually can hurt technological progress.


War is often used as a last ditch effort to prevent deteriorating economic conditions or currency crises, particularly by expanding services and employment in the military, and by simultaneously depopulating segments of the population to free up resources and restore the economic and social order. A temporary war economy can also be seen as a means to avoid the need for more permanent militarization. During World War II, U.S. President Franklin D. Roosevelt stated that if the Axis powers won, then "we would have to convert ourselves permanently into a militaristic power on the basis of war economy."[3]

Germany[edit]

World War I[edit]

Germany has experienced economic devastation following both World Wars. While this was not a result of faulty economic planning, it is important to understand the ways that Germany approached reconstruction. In World War I, the German agricultural sector was hit hard by the demands of the war effort. Not only were many of the workers conscripted, but much of the food itself was allocated for the troops leading to a shortage.[8] "German authorities were not able to solve the food scarcity [problem], but implemented a food rationing system and several price ceilings to prevent speculation and profiteering. Unfortunately, these measures did not have the desired success."[8]

Other examples[edit]

Armenia is another example that followed war economy principles, especially during the 2020 Nagorno-Karabakh war. Armenia is a small country in a blockade in the Caucasus region but still increased its military budget after 2018 reaching $640 million. In 2019 it was 18.8% of the total Armenian budget.[11] Except mobilizing financial resources, Armenia also declared mobilization and concentrated human capital (volunteers, doctors, soldiers).[12]

Companies by arms sales

Defense Economics

Diversionary war

Economic nationalism

Economic warfare

Industrial warfare

Military–industrial complex

Mass production

Permanent war economy

Resistance economy

: calls for a WWII–scale economic transformation to combat climate change

The Climate Mobilization

Total war

War communism

War effort

World War Zero

Wartime propaganda

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Gagliano Giuseppe, Economic War, Modern Diplomacy, 2017,

[1]

Gill, David James. The Long Shadow of Default: Britain's Unpaid War Debts to the United States, 1917-2020 (Yale University Press, 2022) .

[2]

Goldstein, Joshua S. (2001). War and gender: How gender shapes the war system and vice versa. Cambridge: Cambridge University Press.

Hall, George J., and Thomas J. Sargent. "Debt and taxes in eight US wars and two insurrections." in The Handbook of Historical Economics (Academic Press, 2021(. 825-880.

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Moeller, Susan. (1999). "Compassion Fatigue", Compassion Fatigue: How the Media Sells Disease, Famine, War and Death. New York & London: Routledge. 6 - 53.

Poast, Paul. "Beyond the 'sinew of war': The political economy of security as a subfield." Annual Review of Political Science 22 (2019): 223-239.

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Poast, Paul. "Economics and War." in Understanding War and Peace (2023): 175+ .

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https://doi.org/10.1017/ssh.2020.3

Wilson, Peter H., and Marianne Klerk. "The business of war untangled: Cities as fiscal-military hubs in Europe (1530s–1860s)." War in History 29.1 (2022): 80-103.

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Zielinski, Rosella Cappella. How states pay for wars (Cornell University Press, 2016) .

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