Re: / Andrew T on Marx, Luxemburg and Grossman/Permanent Arms Economy

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Wed Nov 03 2004 - 08:31:11 EST

As for military expenditures their main positive effect is not
through the increase in effective demand per se but in the
consumption of higher cost or morally depreciated capital equipment
that military spending and even more war cause. High cost capacity
used up, opportunities for investment in lower cost capital goods are
thereby widened and anticipated profitability improved: war thus
allows for the destruction of capital that depression would otherwise


It is probably the case that the destruction of capital equipment
produced by the 2nd world war increased profitability in Japan
and Germany, but can you think of any other cases?

In the US, UK, and France there was much less destruction of
productive capital. In the US there has been no significant
military damage since the Civil War. Since the US accounts for
the greater part of world Military expenditure, the main effect
of this has to be seen in terms of the boost to economic
activity that it has produced in the USA for the last 60 years.

What would the economic history of the US have been like if
during that period military budgets had been at 1920's levels?

I would have expected several recessions at least as severe
as those of the 30s.

This archive was generated by hypermail 2.1.5 : Thu Nov 04 2004 - 00:00:01 EST