Political Economy and War (Part 1)

Insofar as any of the social sciences deserves to be considered on a par with the natural sciences, economics comes the closest to being a discipline in which hypotheses may be formulated and tested (“falsified”) in the quest for general applications, significantly known as “laws”. The Moses of economics was Adam Smith, whose Inquiry into the Nature and Causes of the Wealth of Nations (1776) aimed to set out “the general principles of law and government” and was a work in which economics, as defined today, merged seamlessly with history, philosophy and legal theory.

In the same year, Jefferson managed to substitute the concept of “happiness” for what everyone else thought was the more self-evidently natural pursuit of property in the Declaration of Independence, a sentiment echoed in Jeremy Bentham’s Defence of Usury (1787). Rent-seeking, not happiness, featured in Thomas Malthus’s Essay on the Principle of Population as it Affects the Future Improvement of Mankind (1798), while the similarly bleak-minded David Ricardo put a name to the emerging philosophy in Principles of Political Economy and Taxation (1817). Karl Marx and Friedrich Engels considered themselves to be political economists, their philosophy expressed in Capital consisting of an (unattributed) marriage of Malthus’s theory of population with Smith’s concept of surplus value. Their contemporary John Stuart Mill set out what events have proved the more valid historical interpretation in Principles of Political Economy (1848).

All of the above studied history in a diagnostic, not a prescriptive mode. Thus although they were not averse to hurrying the process along, Marx and Engels saw the triumph of socialism as evolutionary and inevitable. That changed with The General Theory of Employment, Interest and Money (1936), written by John Maynard Keynes, which gained an enormous following among those anxious to preserve and extend the role of government after World War II. It has not been difficult for rulers to choose between a doctrine that concentrates ever-greater power in their hands and another that regards government as at best a light-handed arbiter in the interplay of natural forces. If one considers this to have been the central dynamic of modern history, then the importance of war becomes apparent.

It is a big “if”, but as a form of philosophical inquiry it provides an interpretative tool that permits a review of the actions of rulers through the ages from a new perspective. It also helps to explain the apparent contradiction of popularly based regimes being some of the most bellicose, because it simply is not true that democracy and war are antithetical, as many fondly believe. Even elected leaders tend to find the role of war leader both personally irresistible and politically rewarding.

Thus far the mis en scène, and a bridge to Clausewitz’s generally misquoted dictum that “war is nothing but the continuation of politics with the admixture of other means”. It is indeed, and nothing shows it more clearly than the manner in which war has been persistently used to expand the share of the economy that governments control and reapportion, to the point that a number of thinkers who might once have been considered of the “left” and of the “right” agree that this was the real purpose of, for example, the Cold War. From earliest times, this argument runs, the only thing all wars have had in common has been to increase governments’ powers of convocation and coercion. There is obvious merit in this point of view: as we have seen most dramatically in the last 70 years, war both centralises power and facilitates the process whereby those exercising power can conflate their ambition with the national interest.

Alexis de Tocqueville feared that freedom could not survive once the majority discovered it could vote itself money from the public purse; but even he did not foresee the manner by which the process could be extended almost indefinitely. Milton Friedman’s analogy is taking a cent from each of a hundred people, giving a dollar to one and repeating the process as many times as necessary. The loss of each cent is barely felt, the “gift” of a dollar much appreciated. Even if none of the money were kept, to increase the amount collected is to increase the transactional power of the collector/distributor, hence it is to be assumed that rulers and the bureaucrats who serve them, regardless of ideology, will strive constantly to do precisely that.

And so they have, particularly during wars. Until comparatively recently, expenditure on what we now prefer to call “defence” was virtually the sole justification for taxation, wonderfully illustrated by the French aristocracy’s self-exemption from taxation on the grounds that they paid an impôt de sang in war, a delicate consideration not extended to the politically powerless peasantry, who were obliged to pay by far the greater part of both forms of tax. A study of war finance shows that once the cost of war exceeded any likely financial gain from conquest, proto-Keynesian considerations about the stimulus that war gave to a nation’s economy began to emerge, along with a bureaucracy dedicated to harvesting some (at times most) of the surplus thus generated for “affairs of state”.

However, the slow emergence of what we now call liberal democracy was based on a very early illustration of the principle that it is more difficult to turn power into money than vice-versa. The introduction of scutage in place of feudal service amounted to a tax, one that King John of England, following the profligate Richard the Lionheart, could use to hire mercenaries and thus recover some of the power lost to the nobles. The nobles were having none of that – hence the Magna Carta, the foundation of stone of a parliamentary tradition that would have appalled all at Runnymede had they foreseen where it would lead.

The process is symbiotic; while it is easy to see that a civil war is about who rules, it is perhaps less easy to perceive that when Caesar and Pompey created the Roman Empire, their primary intention was to increase their own power. The Roman republic recognised and institutionalised the process in the office of Dictator; Caesar was, in fact, the last person to be so designated. His successors had no need of it because between an army that was no longer an expression of citizenship and the vastly increased power of patronage they controlled, it was relatively easy to brush aside the corrupt remnants of republicanism and rule as emperors.