BobKKKindle$
8th April 2007, 07:47
Recently I have become very interested in the theory of the Permanent Arms economy. This theory is basically an analysis of why the Capitalist bloc was able to undergo high levels of economic growth and employment following the second world war and how high levels of government defence expenditure functions as a countervailing factor to the tendency of the rate of profit to fall over time - the way in which such expenditure achieves this is through reducing resources avaliable for investement in other sectors of the economy (and thereby deaccelerating the rate of change of the ratio of Constant to Variable Capital)
However, there are some questions I have.
Firstly - why does the theory only account for arms expenditure? I can understand that in the historical and political context in which the theory was formulated, this was the most visible and important form of government expenditure, but is it not the case that government expenditure in other areas (such as health and education) would have the same effect in the private sector (limiting resources for private investement) and would also sustain growth and employment?
Secondly - Why is it that this model no longer operates effectively as a countervailing factor? I can understand that managing the economy in this way for a long period of time could limit improvements in efficiency and international competitivness (in contrast to countries that did not exercise military expenditure) but why was there such a sudden collapse of this system in the 1970s?
Your thoughts on the merits of Permanent arms economy as a theory and analysis would also be appreciated.
However, there are some questions I have.
Firstly - why does the theory only account for arms expenditure? I can understand that in the historical and political context in which the theory was formulated, this was the most visible and important form of government expenditure, but is it not the case that government expenditure in other areas (such as health and education) would have the same effect in the private sector (limiting resources for private investement) and would also sustain growth and employment?
Secondly - Why is it that this model no longer operates effectively as a countervailing factor? I can understand that managing the economy in this way for a long period of time could limit improvements in efficiency and international competitivness (in contrast to countries that did not exercise military expenditure) but why was there such a sudden collapse of this system in the 1970s?
Your thoughts on the merits of Permanent arms economy as a theory and analysis would also be appreciated.