War, defence, conflict, military, security, or peace economics - which is it?

Jurgen Brauer on the history of economic analysis of peace and conflict.

The terms war, defense, conflict, military, security, and peace economics each have had their own “season” of usage. Even though defence and conflict economics are the most prominent terms used today, all of them are often used synonymously, yet they should not be conflated, as each has a distinct history which gave rise to its use in the first place.

War economics was the commonly used term prior to 1945. As an academic and public policy topic, it addressed the economic causes and consequences of states at war. In historical analysis, it dealt specifically with the actual or potential violent contest among states over issues related to international trade and finance, especially among European powers. The analyses conducted at the time should not be called war economics per se, but should be considered part of the historical debates over the relative merits or demerits of the economics of international trade and finance. Interestingly, if sadly, the recent trade-related dispute between China and the United States has again raised the spectre of war due to trade issues.

Defence economics came into common use from the 1960s. In the United States, the former Department of War had been renamed Department of Defense and defence economics began to address practical economic aspects of managing a state’s armed forces and the overall defense function of a country. It addressed itself primarily to the defence establishment within states and dealt with manpower, procurement, and defence logistics issues for instance.

Conflict economics also arose in the 1960s as well, but became more prominently and widely used term as from the 1990s. Rather than studying voluntary exchange, as traditional economics does, conflict economics studies possibilities of involuntary appropriation (coercion) at the intra and international levels, and today, overwhelmingly within the context of developing countries. As an academic enterprise, studies in conflict economics are often, but not exclusively, grounded on neoclassical microeconomic precepts and cover diverse topics such as civil war, rebellion, terrorism, and mass atrocities and often are only implicitly concerned with peace.

Military economics might be linked to the 1970s, but was used more prominently from the 1980s. It might be said to have “piggy-backed” onto defence economics, in the sense that it treated topics which, while related to the defence function of states, nonetheless transcended that function and affected other segments of society. Thus, studies in military economics explore the ramifications of defence, and war. For example, on manpower absorption away from civilian economic pursuits or budgetary tradeoffs when military expenditure crowds out education or health spending, and culminating in possibly adverse effects on nationwide economic growth at large. Thus, military economics frequently takes a system-analytic, macro-modelling view of the society-wide effects of defence and war.

Security economics dates from the early 2000s. The security economy, and hence security economics, comprises of economic activities affected by, preventing, dealing with, and mitigating insecurity. The purview is very broad, including organised crime, terrorism, cybercrime and cyberwar, biometric security, perimeter security at utility installations, or even gated residential communities and school campuses. In this, security economics carries strong resemblance to the economics of risk management and insurance.

Peace economics was used in the 1960s, but more so from the 2000s and 2010s. Its definition is unsettled, but in one rendition, it concerns the economic study and design of political, economic, and cultural institutions, their interrelations, and their policies to prevent, mitigate, or resolve any type of latent or actual violence or other destructive conflict within and between societies. It is normative and forward-looking, focusing on discovering and fostering conditions that make for stable and irreversible peace and could be deemed a branch of the economics of mechanism design. More than the other approaches, it begins to include behavioral and social network economics to think about the pressure and pressure release valves of the world system as a whole.

The continued study of the military and security sectors, of national defense, conflict, and war is certainly important, but on the whole, economists might do better to more deliberately than in the past, steer findings from these sorts of studies in the direction of extracting lessons for effective prevention of violent conflict, and hence, for stable, long-term peace.