The Political Economy of Rearmament

Prioritising the military again will lead to both economic and social changes most policy makers never even considered.

One of the great changes in European politics during the past forty years is disarmament. Since the end of the Cold War, military budgets gave way to the so-called peace dividend, and some European states ended compulsory military service. The unintended effect of these changes was to neuter the power of the military and officers as a class vis-à-vis other classes. That is not an inherently good nor an inherently bad thing, but it is a real change to how power has been distributed on the old continent, and one which is currently swinging back in the officers’ favour. This has profound under discussed consequences in the realms of politics and economics.

Class-based political analysis has gone out of favour since communism and socialism have stopped being major ideologies in European politics, but if we broaden our view to include more classes than the proletariat and the bourgeoisie then it has some insights to offer. Class-based analysis is premised on the idea that social classes have common interests even as individuals from the same class have different views, opinions, and ideologies. That is self-evidently true in the case of soldiers and officers; no matter what your personal views on war and peace or the power of the market, everyone in the military is likely to agree that they deserve better food and more comfortable barracks.

This is not to insinuate that an increase in military budgets will give rise to a militaristic class which want war, the effects are likely to be more nuanced than that. For example, we might see that the social status of being in the military or having been in the military increases, or we might see more public fanfare surrounding the awarding of medals or promotions to high ranks such as general or admiral.

Since the market revolution the social class with the most clout has been corporate executives, but in a world where the German military is the strongest in Europe, and where even smaller countries like the Nordics aim to have forces significant enough to deter Russian aggression there is a real possibility that the culture shifts to place higher value in not just military status but martial ideals like loyalty and courage.

My guess is that this is a very positive development for people in the countryside as military bases tend not to be in the central business district of a state’s capital but rather out in the countryside where there is more space for training. Rearmament means more soldiers and more expensive equipment which needs specialist technicians both of which brings in more money to the local economy. Furthermore, if generals and officers more generally become highly regarded they will need restaurants which befit their station, and other amenities which have previously mostly been located in major cities.

Conversely, this will be a detrimental development for the corporate executives, especially at multinational companies. Partly just as a relative decline in status, but more importantly in the way a powerful officer class changes economic policy preferences at the national level. The military never wants to rely on imports, a logic which has contributed to ill-fated adventurism in military dictatorships like Imperial Japan, whereas corporate executives tend to believe in market forces and Ricardian trade. If your company relies on outsourcing then the military could seriously mess up your business model if the generals are powerful enough to mandate that strategic goods must be manufactured in the country.

This may be a banal example, but the point is to illustrate the ways in which rearmament is more complex and interesting than stock narratives framing it as inspirational or as warmongering. Plans today to increase military budgets and capacities will have profound impacts on European societies, and highly non-intuitive ones. Both big picture political questions like whether or not to renationalise the railways, and small scale unimportant things like the geographical distribution of Michelin star restaurants are shaped by the ripple effects of the decision to prioritise the military again.

If you liked this post you can read a previous post about the war in Ukraine here or the rest of my writings here. I also have a section for longer reads I call essays here, I particularly recommend my series called The Bird & The Technoking exploring Elon Musk's takeover of Twitter, and its political and cultural implications. It'd mean a lot to me if you recommended the blog to a friend or coworker. Come back next Monday for a new post!

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I've always been interested in politics, economics, and the interplay between. The blog is a place for me to explore different ideas and concepts relating to economics or politics, be that national or international. The goal for the blog is to make you think; to provide new perspectives.

Written by Karl Johansson

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Cover photo by Hòa Lê Đình from Pexels, edited by Karl Johansson