Defense Economics

real-world economics review, issue no. 46

Economics, conflict and war

Fanny Coulomb and J. Paul Dunne

[Uni. Pierre Mendes, France; Uni. of the West of England, UK]

Copyright: Fanny Coulomb and J. Paul Dunne, 2008

Introduction With the end of the Cold War the international security environment changed fundamentally. The removal of the superpower conflict saw an initial wave of hope and cuts in military spending, but it quickly became clear that the world was still a dangerous place, and war and conflict remained endemic in many parts of the world. Conflicts had changed; in general they were intra rather than interstate, and there was a resurgence of interest in the role of economic forces in civil wars. In fact the discipline of economics has always included the study of conflict and war. At first its theories were global, focusing upon the role of interstate war in economic development and then later became more focussed, offering partial analyses of conflicts. This partly reflected the changing nature of international relations over time, as modern nations were formed in an environment of international conflict. But it also reflected a change in the nature of the dominant paradigm, a move from political economy to neoclassical economics. Early mercantilist theories explained war as predation, allowing enrichment and ensuring the supply of raw materials by conquest and imperialism. Later, in the 19th century after the Napoleonic Wars, the development of trade was characterized by relatively peaceful international relations; and a liberal perspective, which saw war as a fetter on the development of trade, had more influence. The growth of industrialisation created social conflicts that became the focus of economists’ research, particularly Marx who gave little time to the study of international issues. But when the survival of capitalism was threatened by competing systems (notably Communism), the volume of economic studies focussing on issues of militarism...