The Economics of War

Economics and History are one.

How important is it that one nation dominate? Economists don't care; politicians do.

   The history of a nation is the story of how its people struggled to use what they had or to acquire what they wanted. Sometimes, it's a story of how they earned or built it themselves, or took from others, adding to what they already had.
   Mercantilist thinking specifies that there is a fixed amount of wealth in the world, and the way for one person, group or nation to increase wealth is to take from another. Put another way, mercantilism means that whoever has the most gold at the end, wins.
   The problem with that, however, is this: When is the end? Is it when one side has all the wealth and the other players have none? In that case, what does the victor eat? Owning all the gold is useless if there are no farmers. One can't eat gold.

   Several hundred years ago, the mighty nation of Spain set out to gather all the gold it could as the conquistadors roamed the New World. And so they did. Result: The excess supply of gold only caused inflation, raising the price of food even as fewer people under its dominion were producing food.

   War, then, has an economic component. The given excuse may be political, moral or religious, but the real cause is economic. And to persuade citizens to support a war, politicians appeal to emotions such as patriotism or religion and try to ignite a fear of domination by "the other."

   The power of nations, their rise and fall, depends in large part on the strength of their economies and the ability to support a military strong enough to establish and enforce the nation's political dominance as a supplement to its economic power.
   It's all of a piece, an inter-related combination to powers, strength and abilities. Luck also plays a role, of course, as well as mistakes by others in the game of world dominance.
   Politicians obsessed with competition and a need to win may care about such a thing as world dominance, but economists would not. It's also true, however, that politicians will use economic strategies in their quest to win. Business executives also, while they praise the worthiness of competition in the marketplace, actually don't want competition. Rather, they want to dominate a market, to monopolize the trade so they can maximize profits. Barring that, however, they will form a cartel, the better to control supply and fix prices, the better to enhance profits.