Defense Economics: 1776 to 1983

Abstract

Economists and political leaders alike have discussed defense economics for more than two centuries. Issues have included the economic causes and consequences of war; the financing of armies and navies; and the acquisition of manpower, arms, supply, and transport. One can trace these issues from the early years of the Republic through the wars (and industrialization) of the nineteenth century to the two world wars. Since the 1950s two new aspects of defense economics have emerged: first, peacetime defense spending levels have exerted a major and permanent impact on the economy; and, second, economists have contributed to a full range of defense decisions. During the 1960s economists achieved a major influence over such decisions, if only by their rising to senior levels in the Defense establishment. That influence, however, has declined since the 1960s. Nevertheless, defense economics has taken on an added significance as the country has-since the mid-1970s-increased defense spending by substantial amounts and signaled an intent to pursue a number of defense initiatives that are meant to influence the way major sectors of the economy will conduct business in the future.