In macroeconomics, the guns versus butter model is an example of a simple production possibility frontier. It demonstrates the relationship between a nation's investment in defense and civilian goods. In this example, a nation has to choose between two options when spending its finite resources. It can buy either guns (invest in defense/military) or butter (invest in production of goods), or a combination of both. This can be seen as an analogy for choices between defense and civilian spending in more complex economies.
The "guns or butter" model is generally used as a simplification of national spending as a part of GDP. The nation will have to decide which balance of guns versus butter best fulfill its needs, with its choice being partly influenced by the military spending and military stance of potential opponents. Researchers in political economy have viewed the trade-off between military and consumer spending as a useful predictor of election success.
This model does not typically correlate well with free market economies.
Read more about Guns Versus Butter Model: Origins of The Term, Quoted Usage of Term, Great Society Example
Famous quotes containing the words guns, butter and/or model:
“At the ramparts on the cliff near the old Parliament House I counted twenty-four thirty-two-pounders in a row, pointed over the harbor, with their balls piled pyramid-wise between them,—there are said to be in all about one hundred and eighty guns mounted at Quebec,—all which were faithfully kept dusted by officials, in accordance with the motto, “In time of peace prepare for war”; but I saw no preparations for peace: she was plainly an uninvited guest.”
—Henry David Thoreau (1817–1862)
“Strange goings on! Jones did it slowly, deliberately, in the bathroom, with a knife, at midnight. What he did was butter a piece of toast. We are too familiar with the language of action to notice at first an anomaly: the ‘it’ of ‘Jones did it slowly, deliberately,...’ seems to refer to some entity, presumably an action, that is then characterized in a number of ways.”
—Donald Davidson (b. 1917)
“... if we look around us in social life and note down who are the faithful wives, the most patient and careful mothers, the most exemplary housekeepers, the model sisters, the wisest philanthropists, and the women of the most social influence, we will have to admit that most frequently they are women of cultivated minds, without which even warm hearts and good intentions are but partial influences.”
—Mrs. H. O. Ward (1824–1899)