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National Security Policy as a Field for Economics Research*

Published online by Cambridge University Press:  18 July 2011

Charles J. Hitch
Charles J. Hitch
Affiliation:
The RAND Corporation
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Extract

Problems of national security are in no sense novel for the application of economic analysis. Adam Smith, in a well-known passage in The Wealth of Nations, was concerned with the allocation of resources between “defense” and “opulence”—what we would call the problem of the size of the national security budget. There has been great interest among economists, especially during and following the First and Second World Wars, in problems of industrial mobilization during war, including the associated problems of economic stablization. In fact, to many economists during the past generation this set of mobilization problems constituted the economics of defense. Books were published with titles like Economics of Defense that dealt with little else.

Type
Research Note
Information
World Politics , Volume 12 , Issue 3 , April 1960 , pp. 434 - 452
Copyright
Copyright © Trustees of Princeton University 1960

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References

1 This has been done by many writers in open sources. See, for example, Kissinger, Henry A., Nuclear Weapons and Foreign Policy, New York, Harper and Brothers, 1957Google Scholar; and The RAND Corporation, Report on a Study of Non-Military Defense, Report R-322-RC, July 1, 1958.Google Scholar

2 Neither, on the other hand, do I believe in what Walter Millis calls the “hypertrophy of general war.” There has been an alarming amount of wishful thinking that all-out wars won't happen because they constitute “mutual suicide.” The best demonstration of the fallacy of the mutual-suicide theory is an article by Wohlstetter, Albert, “The Delicate Balance of Terror,” Foreign Affairs, XXXVII, No. 2 (January 1959), pp. 211–34.CrossRefGoogle Scholar

3 To the extent that we may be confronted with faits accomplis, forces in being may be more important than potential in limited wars.

4 Although apparently not a much higher proportion of its national product measured in rubles. The USSR has a comparative advantage in the production of military goods and services.

5 See especially Milton Gilbert and Irving B. Kravis, An International Comparison of National Products and the Purchasing Power of Currencies, Paris, Organization for European Economic Co-operation, n.d.

6 On this and several other topics mentioned here, see Committee for Economic Development, The Problem of National Security, A Statement on National Policy by the Research and Policy Committee, New York, July 1958.Google Scholar

7 For discussions and references, see Federal Tax Policy for Economic Growth and Stability, Subcommittee on Tax Policy, Joint Committee on the Economic Report, 84th Congress, 1st Session, Washington, D.C., U.S. Government Printing Office, 1956; and Cooper, Gershon, “Taxation and Incentive in Mobilization,” Quarterly Journal of Eco nomics, LXVI, No. 1 (February 1952), pp. 43–66.CrossRefGoogle Scholar

8 See Scitovsky, Tibor, Shaw, Edward S., and Tarshis, Lorie, Mobilizing Resources for War, New York, McGraw-Hill Book Co., 1951Google Scholar; Colm, Gerhard and Helzner, Manuel, “General Economic Feasibility of National Security Programs,” National Planning Association, March 20, 1957Google Scholar, published in Federal Expenditure Policy for Economic Growth and Stability, Hearings before the Subcommittee on Fiscal Policy of the Joint Economic Committee, 85th Congress, 1st Session, Washington, D.C., U.S. Govt. Printing Office, 1958; Director, Aaron, ed., Defense, Controls, and Inflation, Chicago, University of Chicago Press, 1952.Google Scholar

9 See especially Colm and Helzner, op.cit.

10 For a responsible and useful attempt to assess net gains in security from larger expenditures, see Rockefeller Brothers Fund, Inc., International Security—The Military Aspect (Special Studies Report 11), New York, Doubleday Headline Publications, 1958.Google Scholar

11 See Smithies, Arthur, The Budgetary Process in the United States, New York, McGraw-Hill Book Co., 1955Google Scholar, ch. 11.

12 For a general discussion, see McKean, Roland N., Efficiency in Government Through Systems Analysis, New York, John Wiley and Sons, 1958.Google Scholar For more on the role of economists and economics, see my article, “Economics and Military Operations Research,” Review of Economics and Statistics, XL, No. 3 (August 1958), pp. 199–209.

13 See, for example, Schelling, Thomas C., “The Strategy of Conflict: Prospectus for a Reorientation of Game Theory,” Journal of Conflict Resolution, 11, No. 3 (September 1958), pp. 203–64.CrossRefGoogle Scholar

14 On the last point, see Lindblom, Charles E., Bargaining: The Hidden Hand in Government, The RAND Corporation, Research Memorandum RM-1434-RC, 1955Google Scholar; and Enthoven, Alain and Rowen, Henry, “Defense Planning and Organization,” a paper presented at the Universities/National Bureau Conference on Public Finance, April 1959Google Scholar, to be published in the Proceedings of that conference in 1960.

15 A number of papers on economic aspects of research and development will be presented at the conference on inventive activity to be held at the University of Minne sota in May 1960 under the joint sponsorship of the Universities/National Bureau Committee and the Committee on Economic Growth of the Social Science Research Council.

16 See Klein, Burton H. and Meckling, William H., “Application of Operations Research to Development Decisions,” Operations Research, VI, No. 3 (May-June 1958), pp. 352–63CrossRefGoogle Scholar; and Klein, Burton H., “A Radical Proposal for R. and D.,” Fortune, May 1958, pp. 112–13, 218, 222, 224, 226.Google Scholar

17 See Enke, Stephen, “An Economist Looks at Air Force Logistics,” Review of Economics and Statistics, XL, NO. 3 (August 1958), pp. 230–39CrossRefGoogle Scholar; and Mender-shausen, Horst, “Economic Problems in Air Force Logistics,” American Economic Review, XLVIII, No. 4 (September 1958), pp. 632–48.Google Scholar A great many books and articles have been written on specific logistics problems like transportation, procurement, inventory policy, etc. See, for example, Whitin, Thomson M., The Theory of Inventory Management, Princeton, N.J., Princeton University Press, 1953.Google Scholar

18 As a general reference, see Hoag, Malcolm W., “Economic Problems of Alliance,” Journal of Political Economy, LXV, No. 6 (December 1957), pp. 522–34.CrossRefGoogle Scholar

19 For research suggestions on economic foreign policy, many of which have national security implications, see Kindleberger, Charles P., “United States Economic Foreign Policy: Research Requirements for 1965,” World Politics, XI, No. 4 (July 1959), pp. 588–613.CrossRefGoogle Scholar

20 I am not denying that they have adversely affected the industrialization of China. The Chinese economy is not yet large, and in its industrializing stage is far from self-sufficient.

21 The relation is by no means a simple one, as some economists have been prone to assume. For one attempt at a partial answer, see Wolf, Charles Jr, Foreign Aid: Theory and Practice in Southern Asia, Princeton, N.J., Princeton University Press, 1960.CrossRefGoogle Scholar

22 See Hirschman, Albert O., National Power and the Structure of Foreign Trade, Berkeley, Calif., University of California Press, 1945.Google Scholar

23 For a general discussion, see Report on a Study of Non-Military Defense, op.cit.