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Handbook of Defense Economics, Vol. 1
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Despite ubiquitous references to the so-called defense industrial base DIB , no one can define the term conclusively. Although many policymakers and scholars like to talk about the national DIB as a monolithic or homogenous entity, it is nothing of the sort. The difficulties do not end there:. There are further problems in defining defense industries. The definition needs to embrace research and development activities, in-service support, mid-life updates and disposal e.
The challenges in defining DIB are even greater today because the defense sector is increasingly buying off-the-shelf civilian components and outsourcing many of its functions to the civilian sector. For example, civilian aircraft and merchant shipping industries provide crucial re-supply capabilities for the armed forces. And the list of industries relevant to national security could be expanded even further. To exclude the civilian sector from the definition would severely underestimate the defense industrial capability of a country. A more encompassing definition of the goods and services relevant to national security would have to include not only the weapons themselves, but also the clothing, food, and countless other resources needed to maintain a viable defense force and the civilian population that feeds it.
Many civilian factories and their products were repurposed for military needs. In essence, the entire U. Billions and billions of bullets. Detroit, with 2 percent of the population, made 10 percent of the tools for war. Judging by the industrial production and manufacturing figures, the U. After a severe economic downturn during the recent Great Recession, the level of industrial and manufacturing activity has fully rebounded and now the U.
Figure 1. The U. According to recent data compiled by the Federal Reserve, U. While U. These broad trends of simultaneously rising manufacturing output and declining manufacturing employment point to improvements in industrial productivity. This is good news for the U. While there might be short-term costs in finding productive employment for the displaced workers, the long-term gains in economic performance are well worth it. The economic gains could be used to help the displaced workers acquire new skills and education in order to make them more productive and employable in other industries.
Figure 2. Bureau of Labor Statistics. Fears of rising unemployment in the U. With the exception of recessions that historically do have a disproportionately negative effect on unemployment, the manufacturing sector typically enjoys lower unemployment than the rest of the economy. Of course, more work needs to be done to ensure that the unemployed in all sectors of the U.
One of the key solutions to the unemployment problem is a free and flexible labor market that can easily absorb any surplus labor. This technology-driven improvement in manufacturing productivity can be clearly observed in Figure 4. Higher productivity in the industrial sector not only improves the average material well-being or income in the nation but also makes the United States a leader in several manufacturing industries, including weapons systems.
Figure 4 also shows that U. Figure 3. Not coincidently, the United States is the leading and largest net exporter of advanced weapons systems in the world.
A largely free, productive, and massive industrial base in the United States attracts some of the best technologies and brightest minds from all over the world, resulting in some of the best products in general and in defense sector in particular. A critical part of this success story hinges on free trade: the ability of U. Economist Ann Markusen argues that nowadays it is people, ideas, and technologies rather than weapons that move across national borders.
In the modern integrated world, there is no longer a purely American-made car, and we are generally better off for that. Car parts outsourced to other countries where they can be built cheaper, better, or faster allow American workers to concentrate on the other tasks that they do best. For the same reasons, trade in arms-related components is replacing trade in complete weapons systems. Instead, the rule is that self-produced weapons are complemented by weapons imported from elsewhere.
Figure 4. Since the end of the Cold War, completely indigenous development and production of major weapons systems has become unaffordable to virtually every country except the U. Take the American F fighter jet, for example. It is the most popular fighter jet in the world. Built using a mixture of high-tech components from Germany, Israel, Japan, and Russia as well as less-costly, commercially available components from Brazil, Poland, South Africa, and Spain, this plane is a great value for the money thanks to free trade.
Free arms trade between members of a military alliance, like NATO, could lead to gains from specialization and trade based on comparative advantage, necessitating the abolition of tariffs, subsidies, and preferential purchases by member states. The cost savings from competitive free markets could range from 10 to 25 percent, while scale and learning economies could contribute between 15 and 25 percent in additional cost savings over the status quo situation.
Such an offer is hard to refuse. As can be seen in Figure 5, a very strong positive correlation exists between U. This positive and statistically significant correlation implies that not only does the overall U. This fact is especially noteworthy considering that the United States runs a persistent trade deficit with other nations i. Figure 5. Louis , March 10, Trade data source: World Bank.
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Attempts to restrict international trade through policies like tariffs on aluminum and steel will only make the U. In turn, a less productive and prosperous nation is less able to feed and defend itself. Since the publication of The Wealth of Nations in by the Scottish economist and philosopher Adam Smith, economists have confirmed repeatedly, both theoretically and empirically, his treatise that free trade makes nations more prosperous.
In May of , more than 1, economists — including fifteen winners of the Nobel Prize in Economics and chairs of the Council of Economic Advisors for the past three presidential administrations — signed an open letter organized by the nonpartisan National Taxpayers Union to President Trump and the U. Congress reaffirming the dangers of protectionist policies, just as 1, economists did decades before in opposition to the notorious Smoot-Hawley Tariff Act.
One of the reasons economists overwhelmingly support free trade is because it has a positive effect on both economic development and technological progress. One can outsource a task to either a machine or another person who can do it better, cheaper, or faster. The result is an increase in overall prosperity, regardless if it comes from a job being done more efficiently by a machine or by a worker in another country. The evidence that trade promotes prosperity is overwhelming.
As can be seen in Figure 6, there is a striking positive and statistically significant correlation between U. This should not be surprising to anyone who has taken even a basic economics course. Trade and technological progress are similar in their effects on prosperity: both move labor from less productive to more productive jobs, increasing average incomes across the board. The reasons that are normally put forward for claiming that new wars are post-Clausewitzean have to do with the Trinitarian conception of war, the primacy of politics and the role of reason.
Both John Keegan and Martin Van Creveld have suggested that the Trinitarian concept of war, with its tripartite distinction of the state, the army and the people, is no longer relevant. Along with these arguments, critics have also questioned the rationality of war. These arguments are rather trivial and, depending on how Clausewitz is interpreted, they can all be refuted. Clausewitz argues that war is what unites the trinity. Obviously, the distinction between the state, the military, and the people is blurred in most new wars. New wars are fought by networks of state and non-state actors and often it is difficult to distinguish between combatants and civilians.
So, if we think of the trinity in terms of the institutions of the state, the army and the people, then it cannot apply. But if we think of the trinity as a concept for explaining how disparate social and ethical tendencies are united in war, then it is clearly very relevant. A second issue is the primacy of politics. Among translators of Clausewitz, there is a debate about whether the German word politik should be translated as policy or politics. It can be argued that it applies to both if we roughly define policy as external, in terms of relations with other states, and politics as the domestic process of mediating different interests and views.
New Wars are also fought for political ends and, indeed, war itself can be viewed as a form of politics. It is what provides a license for these varying tendencies. Moreover, these political narratives are often constructed through war. Just as Clausewitz described how patriotism is kindled through war, so these identities are forged through fear and hatred, through the polarisation of us and them. In other words, war itself is a form of political mobilisation, a way of bringing together, of fusing the disparate elements that are organised for war.
Understood in this way, war is an instrument of politics rather than policy. It is about domestic politics even if it is a politics that crosses borders rather than the external policy of states. If, for Clausewitz, the aim of war is external policy and political mobilisation, this means, in new wars, it is the other way round. So if new wars are an instrument of politics, what is the role of reason? But is rationality the same as reason? The enlightenment version of reason was different from instrumental rationality.
As used by Hegel, who was a contemporary in Berlin of Clausewitz, it had something to do with the way the state was identified with universal values, the agency that was responsible for the public as opposed to the private interest. The state brought together diverse groups and classes for the purpose of progress — democracy and economic development. Clausewitz puts considerable emphasis on the role of the cabinet in formulating policy and argues that the Commander-in-Chief should be a member of the cabinet.
Of course, members of the cabinet had their own private motivations, as do generals glory, enrichment, jealousy, etc , but it is incumbent on them to come to some agreement, to provide the public face of the war and to direct the war, and this has to be based on arguments that are universally acceptable universal, here, referring to those who are citizens of the state. The political narratives of new wars are based on particularist interests; they are exclusive rather than universalist. They deliberately violate the rules and norms of war.
They are rational in the sense of being instrumental. But they are not reasonable. Reason has something to do with universally accepted norms that underpin national and international law. However there is another argument about why new wars are post-Clausewitzean. This has to do with the fundamental tenets of Clausewitzean thought — his notion of ideal war. This is derived from his definition of war. If we would conceive as a unit the countless number of duels which make up a war, we shall do so best by supposing to ourselves two wrestlers.
Each strives by physical force to compel the other to submit to his will: each endeavours to throw his adversary, and thus render him incapable of further resistance. Violence, he says, is the means. He then goes on to explain why this must lead to the extreme use of violence. However plausible this may appear, still it is an error, which must be extirpated; for in such dangerous things as war, the errors which proceed from a spirit of benevolence are the worst.
As the use of physical power to the utmost extent by no means excludes the co-operation of intelligence, it follows that he who uses forces unsparingly, without reference to the bloodshed involved, must obtain a superiority if his adversary uses less vigour in its application.
For Clausewitz, combat is the decisive moment of war. I have therefore reformulated the definition of war. A contest of wills implies that the enemy must be crushed and therefore war tends to extremes. A mutual enterprise implies that both sides need the other in order to carry on the enterprise of war and therefore war tends to be long and inconclusive. The warring parties are interested in the enterprise of war rather than winning or losing, for both political and economic reasons.
The inner tendency of such wars is not war without limits, but war without end. Wars, defined in this way, create shared self-perpetuating interest in war to reproduce political identity and to further economic interests. As in the Clausewitzean schema, real wars are likely to be different from the ideal description of war. The hostility that is kindled by war among the population may provoke disorganised violence or there may be real policy aims that can be achieved. There may be outside intervention aimed at suppressing the mutual enterprise or the wars may produce unexpectedly an animosity to violence among the population, undermining the premise of political mobilisation on which such wars are based.
This redefinition of war constitutes a different interpretation of war, a theory of war, whose test is how well it offers a guide to practice. Since it is an ideal type, examples can be used to support the theory, but it is, in principle, unprovable. The question is whether it is useful. Understood in this way, each act of terrorism calls forth a military response, which, in turns, produces a more extreme counterreaction.
The problem is that there can be no decisive blow. The terrorists cannot be destroyed by military means because they cannot be distinguished from the population. Nor can the terrorists destroy the military forces of the United States. Understood in Clausewitzean terms, the proposed course of action is total defeat of the terrorists by military means. Understood in post-Clausewitzean terms, the proposed course of action is very different; it has to do with both with the application of law and the mobilisation of public opinion not on one side or the other, but against the mutual enterprise.
The contrast between new and old wars, put forward here, is thus a contrast between ideal types of war rather than a contrast between actual historical experiences. Of course, the wars of the twentieth century, at least in Europe, were close to the old war ideal and the wars of the twenty first century are closer to my depiction of new wars.
Contemporary wars may not actually conform to this description any more than earlier wars conformed to the old war description. Perhaps another way to describe the difference is between realist interpretations of war as conflicts between groups, usually states, that act on behalf of the group as a whole and interpretations of war in which the behaviour of political leaders is viewed as the expression of a complex set of political and perhaps bureaucratic struggles pursuing their particular interest or the interests of their faction or factions, rather than those of the whole.
It can be argued that in the Westphalian era of sovereign nation-states, a realist interpretation had more relevance than it does today. But it is not inconsistent with that earlier description; it merely involves a higher level of abstraction. The debate about new wars has helped to refine and reformulate the argument. The debate about Clausewitz has facilitated a more conceptual interpretation of new wars, while the debate about data has led to the identification of new sources of evidence that have helped to substantiate the main proposition.
The one thing the critics tend to agree is that the new war thesis has been important in opening up new scholarly analysis and new policy perspectives, which, as I have stressed, was the point of the argument Newman ; Henderson and Singer The debate has taken this further. It has contributed to the burgeoning field of conflict studies.
And it has had an influence on the intensive policy debates that are taking place especially within the military, ministries of defence and international organisations — the debates about counter-insurgency in the Pentagon, for example, or about human security in the European Union and indeed about non-traditional approaches to security in general.
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What is still lacking in the debate is the demand for a cosmopolitan political response. In the end, policing, the rule of law, justice mechanisms and institution-building depend on the spread of norms at local, national and global levels. And norms are constructed both through scholarship and public debate. I have not addressed this argument in this essay, but it is a concern in much of my work on human security. Angstrom, J Introduction. Global economic change and the study of civil war.
Global Governance : — Oxford: Oxford University Press. Chojnacki, S Anything new or more of the same? Wars and military intervention in the international system — Global Society 20,1: 25— Correlates of War Project. Duffield, M Global governance and the new wars: The merging of development and security. London: Zed Books. Echevarria, A Clausewitz and contemporary war. Frankfurt: Suhrkmamp. Naval War College Review Summer Hables Gray, C Post-modern war: The new politics of conflict. London: Routledge. International Interactions 28, 2: — Hoffman, F Conflict in the 21 st century; The rise of hybrid wars.
Arlington: Potomac Institute for Policy Studies. Holsti, K J The state, war and the state of war. Cambridge: Cambridge University Press. Human Security Report. Available at www. Iraq Body Count. Iraq Coalition Casualty Count.