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Defense, Economics of - International Encyclopedia of the Social & Behavioral Sciences

Economics can be defined as the science of allocating scarce resources, while political economy can be defined as the relationship between economics and institutions. War has been an applied branch of political economy since warfare ceased to be a form of disorganized conflict between tribes, and became an instrument of policy. At the level of microeconomics, military strategy is the art of allocating scarce resources in an optimal fashion. This article first discusses the role of the state in providing the resources to wage war. Second, it presents the Richardson arms race model that has been used to study the stability of arms races and whether they lead to war. Third, it considers the influence of nuclear proliferation on the probability of nuclear war. Fourth, it treats the economics of guerrilla warfare. Finally, it reflects on the changing nature of war in the twenty-first century.

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