America and its Past war economy

A detailed Summary of America and its Past war economy

There is very little doubt that a 'true' war is one of the most economically sound events in which a government could participate. War is good for business. Excluding the enormous cost of life and other social and political ramifications, war is one of the best things that can happen to a society. Both Malthaus and Marx argue that capitalist societies require war to survive and expand. Throughout history there are many examples of how wars have stimulated economies and created new avenues of development for industry. In fact much of the development of countries such as the United States, happened during and directly after wars. Erik Janeway insists that "War had been the direct and immediate cause of America's cycles of expansion.

War has become an increasingly good opportunity for businesses and government. This was particularly so after the employment of Keynes' economic theories in World War Two. Keynes suggested that in order to stimulate an economy, there must be an increase in deficits. After this increase in deficits, more and more employment will be created, spending will increase and the wealth and more importantly industry of the country will increase. This is actually the basic model of a wartime economy. As soo

n as a government becomes aware of a conflict or a threat to national security, it begins to allocate large amounts of money to weapons and other defence measurements. Demand for weaponry and defence machinery is usually greater than 'peacetime' arms industry can cope with, and expansion of industry occurs, and naturally the rate of unemployment drops. There is also room for technological development, as the government is evidently eager to create newer, more technologically advanced weaponry that will destroy the enemy. With so much extra spending, 'wartime' economies begin to boom. More people are in employment, not only through industry expansion but also through the evident need to recruit armed forces and the society as a whole begins to spend more.

Furthermore, for lower positioned nations wars are considered disastrous. Even though they increase spending they are usually spending money on arms that need to be imported from elsewhere. This helps to sustain defence industry in places such as the United States. If first world countries are directly involved in modern wars their economy can prosper. As they can usually monopolise funds, business opportunities and cannot be exploited by higher placed and richer nations.

Wars have also become less profitable because of the mainstream (and usually Western) desire to avoid wars if possible. The expenses involved in peacekeeping and interventionary forces are usually far greater than any benefits received from the war. This is particula

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Approximate Word count = 1012
Approximate Pages = 4 (250 words per page double spaced)

Category: History