Permanent War Economy - A Different View

A Different View

The case made by some Marxists, that military spending is necessary and useful for capitalism, has been contested. The central arguments against this position have been made by economists like Seymour Melman, Lloyd J. Dumas and John Ullmann. It should be noted that, without giving a specific reference, Melman states, in the 1974 edition of Permanent War Economy published by Simon and Scuster (p. 16), that "The concept of a "permanent war economy" formulated in 1944 was soon made a reality." The reference is almost certainly to Sard's article in February of that year in Politics. The critique centers on whether or not military spending has a "use value," i.e. a productive use within the economy. On the one hand, the macroeconomic stimulus of arms spending may be positive in the short run, when comparing such spending to the absence of any form of procurement. On the other hand, military spending represents serious opportunity costs. First, the economic benefits of spending in non-military areas may be greater, i.e. have greater multiplier effects. For example, an investment in a tank or plane is rapidly depleted and after the tank or plane is invented, leads to no further economic use value. Moreover, when the state fails to invest in key resources, this creates opportunity costs with respect to "socially necessary" or world competitive infrastructure investments. These costs are evident in depleted infrastructure, reduced spending on education, failure to develop massive investments in alternative energy and transit systems, and outbreaks of violence (such as riots) caused by uneven development.

The counter-argument is that military advances provide spin-off benefits for civilian technologies. Additionally, military spending may represent an overhead charge for an economy, allowing a nation to function without fear of invasion. Essentially, military spending ensures the property rights of a nation's citizens: an essential element of a capitalist system.