Economic Warfare between the Superpowers
Open-ended arms races subject to the constraints of production possibility frontiers become an instrument of economic warfare in which one country can force reduced consumption and investment on its opponent by requiring them to keep in step. In the presence of differing factor endowments both nations may wage economic war against each other.War must be understood as the projection of national power through means that are economic and political as well as military. The danger to peace is thaower losing the economic war might undertake a preventive military war while it still has a chance.
KeywordsFactor Endowment Military Expenditure Military Power Military Spending Production Possibility Frontier
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Notes and References
- 1.Wolfson, M., ‘Notes on Economic Warfare’, Working Paper 84–9, Department of Economics, University of Adelaide, Australia, and Conflict Management and Peace Science Vol 8, no. 2, Spring 1985, pp. 1–19.Google Scholar
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- 5.Elsewhere we have studied the impact of changing attitudes toward casualties and its relation to the size of existence of zones of initiation (Wolfson, see Note 1). We have also shown that the proliferation of missiles among more nations contradicts the existence of positive regions of mutual deterrence and enlarges the region of war initiation under plausible assumptions. Wolfson, M., ‘A Theorem on the Existence of Zones of Initiation and Deterrence in Intriligator-Brito Arms Race Models’, Working Paper 84–10, Department of Economics, University of Adelaide. Cf. Intriligator, M. and Brito, D., ‘Nuclear Proliferation and the Probability of Nuclear War’, Public Choice, XXVII, 2, 1982, pp. 247–60.Google Scholar
- 6.In discussing this point before the Joint Economic Committee, General Schuyler Bissell, Deputy Director of the Defense Intelligence Agency, agreed with the assessment of the situation of the USSR by some of his Soviet counterparts: Soviet leaders have acknowledged the negative effects of the high military spending on the economy and on the USSR’s standard of living but to date have been consistently willing to pay the price. Some also realise that the Soviet military in the long run is only as strong as the rest of the economy. ‘The sharpening of the international situation compels the socialist state to increase military production and consumption. Easing of the tension permits a decrease, a full utilization of economic might for raising the standard of living of the workers and the development of the national economy. It is impossible to allow, on the one hand, a reduction of military-economic might, for in this case the defense capability of the country would be threatened; on the other hand, an excessive increase in military-economic might cannot be allowed because in the final analysis this could slow the development of the very foundation of military power — the economy — and do irreparable harm to defense capacity (emphasis added). Pozharov, A. I. The Economic Foundations of the Defense Might of the Socialist State, Moscow 1981, p. 116’. Hearings Before the Subcommittee in International Trade, Finance and Security Economics of the Joint Economic Committe Congress of the United States. Ninety-Eighth Congress, First Session, Executive Session, 28 June and 20 September 1983, pp. 95–7.Google Scholar