Military Keynesianism is a government economic policy in which the government devotes large amounts of spending to the military in an effort to increase economic growth. This is a specific variation on Keynesian economics, developed by English economist John Maynard Keynes. Instances commonly supplied as examples of such policies are Germany in the 1930s and the United States in the 1980s, although whether these assessments are accurate is the subject of vigorous debate. Economics (deriving from the Greek words οίκω [okos], house, and νέμω [nemo], rules hence household management) is the social science that studies the allocation of scarce resources to satisfy unlimited wants. ... Accumulated GDP growth for various countries. ... Keynesian economics (pronounced ), also called Keynesianism, or Keynesian Theory, is an economic theory based on the ideas of 20th century British economist John Keynes. ... John Maynard Keynes (right) and Harry Dexter White at the Bretton Woods Conference John Maynard Keynes, 1st Baron Keynes, CB (pronounced canes, IPA ) (5 June 1883 – 21 April 1946) was a British economist whose ideas, called Keynesian economics, had a major impact on modern economic and political theory as well... This article or section does not cite its references or sources. ... The examples and perspective in this article or section may not represent a worldwide view. ...

Economic Effects

The economic effects advanced by supporters of Military Keynesianism can be broken down into four areas, two on the demand side and two on the supply side.

On the demand side, increased military demand for goods and services is generated directly by government spending. Secondly, this direct spending induces a multiplier effect of general consumer spending. These two effects are directly in line with general Keynesian economic doctrine. In economics, a multiplier effect – or, more completely, the spending/income multiplier effect – occurs when a change in spending causes a disproportionate change in aggregate demand. ...

On the supply side, the maintenance of a standing army removes many workers, usually young males with less skills and education, from the civilian workforce. This demographic group ordinarily faces an especially high level of unemployment; some argue that drawing them into military service helps prevent crime or gang activity. In the United States, enlistment is touted as offering direct opportunities for education or skill acquisition, possibly to target this demographic. Army (From Latin armata (act of arming) via Old French armée) can, in some countries, refer to any armed force. ... The workforce is the labour pool in employment. ... A demographic or demographic profile is a term used in marketing and broadcasting, to describe a demographic grouping or a market segment. ... An 1837 political cartoon about unemployment in the United States. ... A gang is a group of individuals who share a common identity and, in current usage, engage in illegal activities. ...

In this sense, the military might act as an employer of last resort – it is an employment opportunity which tends to hire from the bottom (least qualified) part of the workforce, provides a decent standard of living, serves a useful social purpose, and offers jobs regardless of the state of the general economy. Employers of last resort are employers in an economy which workers go to for jobs when no other jobs are available. ... The Standard of living refers to the quality and quantity of goods and services available to people and the way these services and goods are distributed within a population. ...

Also on the supply side, it is often argued that military spending on research and development (R&D) increases the productivity of the civilian sector by generating new infrastructure and advanced technology. Frequently cited examples of technology developed partly or wholly through military funding but later applied in civilian settings include radar, nuclear power, and the internet. The phrase research and development (also R and D or R&D) has a special commercial significance apart from its conventional coupling of scientific research and technological development. ... By the mid 20th century humans had achieved a level of technological mastery sufficient to leave the surface of the planet for the first time and explore space. ... This long range RADAR antenna, known as ALTAIR, is used to detect and track space objects in conjunction with ABM testing at the Ronald Reagan Test Site on the Kwajalein atoll[1]. RADAR is a system that uses radio waves to detect, determine the direction and distance and/or speed... A nuclear power station. ...

Criticisms

The primary criticism of Military Keynesianism faults not its economic intuitions but adverse social effects. Many assert that the maintenance of large peacetime armies and growth of military spending will lead a nation into war, while also encouraging militarism and nationalism. These critics often attack the argument that the military prevents young men from sinking into crime by claiming that many soldiers who return from war are worse off physically or mentally than they would have been as an unemployed worker at home. The United States detonated an atomic bomb over Nagasaki on August 9, 1945. ... Militarism or militarist ideology is the doctrinal view of a society as being best served (or more efficient) when it is governed or guided by concepts embodied in the culture, doctrine, system, or people of the military. ... Liberty Leading the People by Eugène Delacroix Nationalism is an ideology [1] that holds that a nation is the fundamental unit for human social life, and takes precedence over any other social and political principles. ...

A similar critique is that military Keynesianism accelerates the growth of a military-industrial complex – industrial sectors largely dependent on military spending. Because the military-industrial complex is a large employer and constitutes a significant fraction of aggregate demand, it is politically difficult for the government to reduce deficit spending. The end result of this, it is feared, is a cycle of constant war and continually high military spending. President Dwight Eisenhower coined the term military-industrial complex The term military-industrial complex (MIC) refers to a close and symbiotic relationship between a nations armed forces, its arms industry, and associated political and commercial interests. ... In economics, aggregate demand is the total demand for goods and services in the economy (Y) during a specific time period. ...

Other critics point out that while military R&D can sometimes find later application in civilian industries, it is less efficient than simply researching civilian applications directly. Many point to the recent examples of Japan and Germany, economies which have had great success in developing new technology despite low military spending compared to nations like the United States.

One of the central economic critiques of Military Keynesianism is known as the broken window fallacy. Based on a parable by the 19th century French economist Fredric Bastiat it points out that if a person broke a window in a bakery then some people could argue that it was a benefit to the town, as it would provide a job for a glass maker, who would then buy more from the clothes maker and so on. Bastiat pointed out that this is deceptive and illogical reasoning, as it ignores what the baker would have bought had he not been forced to buy a new window - it ignores, in modern economic terminology - opportunity cost. Military Keynesianism fails to take into account opportunity cost - ie. what those soldiers would have been doing in the absence of being a soldier and also ignores what arms companies could have been making instead of materiel. The parable of the broken window was created by Frederic Bastiat in his 1850 essay That Which is Seen and That Which is Not Seen to illuminate the notion of hidden costs ( opportunity costs). ... Opportunity cost is a term used in economics to mean the cost of something in terms of an opportunity forgone (and the benefits that could be received from that opportunity), or the most valuable forgone alternative. ... Opportunity cost is a term used in economics to mean the cost of something in terms of an opportunity forgone (and the benefits that could be received from that opportunity), or the most valuable forgone alternative. ...

Another (unrelated) economic critique of Military Keynesianism is based on a rather obvious observation - military spending comes from general taxation. It requires high levels of taxation to fund military spending, and that taxation must come from the productive sectors in the economy, thus being a long term drag on economic growth (this is one of the central criticisms of Keynesianism in general). Keynesian economics, or Keynesianism, is an economic theory based on the ideas of John Maynard Keynes, as put forward in his book The General Theory of Employment, Interest and Money, published in 1936 in response to the Great Depression of the 1930s. ...

Finally, some critics, and even some supporters, contend that in the modern world, these policies are no longer viable for developed countries because military strength is now built on high-technology professional armies, and the military is thus no longer viable as a source of employment of last resort for uneducated young people.

Examples of Military Keynesianism

While the term was not in use at the time, the clearest historical example of military Keynesianism in action is usually acknowledged to be 1930s Germany, which rebuilt a crippled economy with enormous military production under a National Socialist government. This example illustrates both the potential positives of such policies in generating rapid growth, and also the negative social effects presented by critics. The Nazi party used a right-facing swastika as their symbol and the red and black colors were said to represent Blut und Boden (blood and soil). ...

In today’s discourse, the term is most frequently discussed in relation to the United States, particularly the administration of President Ronald Reagan in the 1980s. Reagan’s administration pushed for significant tax cuts, while increasing military spending to combat the Soviet Union. While this was in practice a policy suggestive of military Keynesianism, Reagan’s reasoning for the policy was not that it would spur economic growth, but that military spending was necessary to combat the threat of Communism. Ronald Wilson Reagan (February 6, 1911 – June 5, 2004) was the 40th President of the United States (1981–1989), and the 33rd Governor of the state of California (1967–1975). ... A tax cut is a reduction in the rate of tax charged by a government, for example on personal or corporate income. ... This article is about communism as a form of society and as a political movement. ...

For many in the United States worried about the adoption of these economic policies, fears of this were somewhat averted by reduced military spending in the 1990s in what was commonly described as a peace dividend for the end of the Cold War. However, the War on Terrorism and War in Iraq have brought such concerns to prominence once more. The peace dividend is a political slogan purporting to describe the economic benefit of a decrease in defense spending. ... For other uses, please see Cold War (disambiguation). ... Combatants Participants in Operations: United States United Kingdom Pakistan Canada Israel Spain South Korea Australia Italy Denmark France Germany Norway Philippines Poland Jordan Saudi Arabia NATO New Iraqi Army and others Targets of Operations: Taliban Baathist Iraq Baath Loyalists Hezbollah al-Qaeda Waziristan tribesmen Iraqi insurgency Jemaah Islamiyah... There have been three conflicts in the late 20th century and early 21st century called Gulf War, all of which refer to conflicts in the Persian Gulf region: Iran-Iraq War (1980-1988) (aka First Gulf War). ...

See also

• Permanent war economy