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MaginotLine

Political Economy of Military Power

How do money and markets influence the acquisition and application of military power? This is the fundamental question asked by scholars who explore the political economy of security. My earliest research delved into this subject, specifically the acquisition of arms and the funding of war. I then explored the economic aspects of alliance relations. My research in this area will culminate with a piece I was invited to write for the Annual Review of Political Science. This piece will situate the political economy of security within the broader field of international relations (a version more appropriate for undergraduates and the general public will be available here).

I have explored this subject from a variety of angles. Overall, my research has made two contributions to our understanding of how economic power translates into military power.

First, I helped bring clarity to the means and consequences of debt financing a war. As the means of war became increasingly expensive, especially after 1500, governments have increasingly relied on borrowing to pay for the acquisition of military equipment and labor. A series of papers explore states' need to debt finance military expenditures. Compared to taxation, borrowing grants governments access to a substantially larger pool of funds. This is important, as acquiring the instruments of military power is expensive. I made initial inquiries into this topic when I wrote about the means that states can finance a war and how the use of these means can influence an economy. This writing appeared in a textbook I published with McGraw Hill-Irwin. Though the ideas expressed in this textbook allowed me to offer insights on the war-economy nexus to the general public (see, for example, here and here), this book, as is the case with most textbooks, was more about organizing ideas than producing original research itself.

But organizing these ideas positioned me well to begin making original contributions a few years later. In a paper I co-authored with a former student (Patrick Shea) and was published recently in the Journal of Conflict Resolution, we discuss how only states with particular financial and economic attributes -- what we call ``financial wherewithal'' -- are able to debt finance military expenditures. Hence, only these states will be able to enter war (an early probe into the politics of default served as the foundation for this paper). Our argument and findings challenged a prominent assumption in the literature that losing a war necessarily led a nation to default on its debt obligations.

One component of ``financial wherewithal'' is the existence of a central bank. In a paper published in International Organization, I detail how central banks enable governments to credibly commit to repay the massive quantities of debt accumulated during war. Specifically, prior to 1914, the existence of a central bank was viewed by private lenders as a signal of a government's willingness to create institutions necessary to finance debt payments. This encouraged lenders to provide governments with funds, even during times of war when governments could acquire a massive amount debt in a short period of time. Time series analysis on sovereign debt data show that states at war are charged lower interest rates if they created a central bank.

Second, in a joint project with David Carter, I am looking into the economic causes and consequences of states pursuing security through alternatives to arms (and to allies), namely the construction of border walls. We argue that cross-border economic inequality, not the need to guard against a territorial rival, is the critical factor leading states to construct border walls. In other words, the prominent example of the Maginot Line, constructed largely out of fear of attack, is an exception, not the exemplar, of the reasons states construct border walls. We test this argument by introducing new data on the construction of border walls from 1800 to 2013. Hence, our analysis suggests that the need to prevent illegal immigration is a primary motivation for states building border walls.

An exciting aspect of our research is that we are not the only team of researchers who collected data on border walls. As Ron Hassner and I discussed at a 2016 ISA panel, our teams worked independently and yet came across similar findings regarding the construction of walls. Our research on this topic continues, as we are presently considering how border fortifications are a way to achieve security ``on the cheap'' and exploring the consequences of border walls on economic exchanges between countries (this work will be presented in a workshop at Perry World House). The broader policy implications of our research are discussed here.

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