The Worldly Philosophers and the War Economy

James K. Galbraith The Worldly Philosophers and the War Economy* D O ES WAR P R E SE N T D IS T IN C T IV E PRO BLEM S FOR TH E W ORLDLY philosophy? Does empire? Do economists have any particular insight into these topics? Do we have any professional obligations when faced with the threats and circumstances of wartime or the rise of imperial pretension? The topic receives little enough attention, yet the philosophi­ cal tradition of our discipline is broadly antiwar. This is not, as some suppose, because commerce is inherently a pursuit of the peace loving. Quite to the contrary. As Kunibert Raffer (1987) has shown, trade between the strong and the weak was through history generally forced by the former on the latter—typically when the option of pillage was not available. Mercantilism was a doctrine of trade as war by other means. To the mercantilist, the accumulation of surplus served the same purposes as the privateer. But opposition to mercantilism was the hallmark of the first modem economists. Seen in this light, Adam Smith’s Wealth ofNations (1776) is a pro-peace tract. Smith identified the fund o f labor as the source of wealth, and he did so in order to undermine the rationale for the pursuit of trade surpluses. Further, by making the distinction between productive and unproductive employments (with soldiery counted among the latter), Smith placed expenditure on the military firmly among those types of spending to be kept as small as possible; he "I would like to thank Tom Ferguson and Tom Palley for very useful comments on an earlier ver­ sion of this paper. social research Vol 71 : No 2 : Summer 2 0 0 4 293 would have been a comfortable member of Economists Allied for Arms Reduction. In the early twentieth century, Thorstein Veblen (1899) presented an anthropological view of warlike activity. By a quite different route, he reached a taxonomy similar to Smith’s. War—alongside sports, reli­ gion, and government—was to Veblen the competitive preoccupation of the nonindustrial classes. War was a form of conspicuous leisure, its social purposes defined by the status seeking that defines the “higher stages of the barbarian culture.” Veblen, an early feminist, gave us a gender analysis of conflict—as a game for men, from which the produc­ tive classes, predominantly women, were excluded. Veblen’s analysis, however, dealt with the social structures surrounding warfare rather than with war’s economic consequences. And the character of war changed as the century “progressed.” John Maynard Keynes was operationally involved with war— perhaps the first major economist to earn that distinction, discount­ ing David Ricardo’s freelance service as the crown’s financier against Napoleon. In 1919, Keynes blamed the Great War for destroying the unstable psychological fabric of nineteenth-century accumulation: The war has disclosed the possibility o f consumption to all and the vanity of abstinence to many. Thus the bluff is discovered: the laboring classes may be no longer willing to forego so largely, and the capitalist classes, no longer confi­ dent of the future, may seek to enjoy more fully their liber­ ties of consumption so long as they last, and thus precipitate the hour of their confiscation (Keynes, 1920: 22). Keynes was not antimercantilist; he saw the national advantages of such policies even in the modern world, and at one point in the Treatise (1930) he calculates that the net foreign assets o f the British empire in 1914 could be traced to Drake and the work of compound interest since the return of the Golden Hind. Keynes instead had growththeoretic reasons for being against war. In simplest terms, the large 294 social research economic goal was for accumulation to outstrip population, and war was the “consumer of all such hopes.” As Robert Skidelsky writes in the third volume of his Keynes biography, Keynes was therefore “90 percent pacifist” (Skidelsky, 2001). Even in 1939 he was persuaded that war was necessary only when British public opinion shifted decisively toward it as the Polish crisis unfolded. War posed for Keynes a management problem: that of macroeconomic balance. As an economic liberal, he believed in 1940 that...