Title: Effects of war on economy | Economics | Welfare
Headings: Effects of war on economy
Effects of war on economy
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EFFECTS OF WAR ON ECONOMY
Case study: History of combat by the United States of America.
A stronger administration and an improved economy enabled the United States
Other writers have emphasized the continuity of industrial development prior to
Sharp limits on defence spending during the administration of President Dwight
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Content: Charles and Mary Beard in The Rise
of American Civilization (1927) and Louis Hacker in The Triumph of American
Capitalism (1940) argued that the Civil War destroyed not only slavery but also
the Southern “slaveocracy”, thus allowing the balance of political power to shift
to Northern industrialists and hence spurring American economic growth. Prior to
these accounts, the classical economists (Adam Smith, David Ricardo, and
Thomas Malthus) were concerned with the effects of war on aggregate demand. The eighteenth and early nineteenth centuries saw very high levels of military
expenditures in Britain, for example, which these economists believed had a
negative impact on industrial growth. The national debts resulting from war,
Smith believed, “enfeebled every state ….. enriching in most cases the idle and
profuse debtor at the expense of the most industrious and frugal creditor.” Critics of the capitalist system in more recent years have argued that capitalist
societies are prone to periodic stagnation, and that only wars of the magnitude
of World War II are capable of curing massive unemployment. Alternatively,
liberal economists argue that war, and particularly World War II, was the
strongest influence establishing Keynesian economics as a guideline and a
justification for U.S. government fiscal policies for the post-war era—policies that
led to widespread employment, high earnings, and a modest measure of income
redistribution. Even some strong opponents of the Vietnam War began to argue
in the mid‐1990s that full employment was only possible in the late 1960s
because of that war. If the effect of military spending during the war years is the most obvious point
of impact on the economy, the most lasting one has to do with veterans' benefits
paid after the war to veterans and their dependents. Veterans' benefits have
been paid for every war since the American Revolution. They amounted to about
two‐thirds of the total dollar cost of the Revolutionary War;