What is 'political economy'?

I've seen the term crop up in various places with divergent meanings.

Originally, the term defined what we now call economics. More recently, political economy seems to encompass a broader, institutional perspective on economic behavior than allowed by mainstream economics with its greater emphasis on technical relationships. I've seen also political economy used to name a course on the history of economic thought or to denote heterodox approaches. Still further, I've seen the term applied to public choice economics.

So can anyone relieve my confusion? How should the term be used, and why do economists not agree on its correct usage?

 

For me the problem is that, when using the term economics, most folk really mean neoclassical theory. Political economy becomes the means to recognise the various (and often conflicting) schools of thought. See, for example, trade theory. An 'economic' approach will focus on the standard notions of partial equilibrium, exaggerating the role of technical relationships such as the isoquant. Indeed, it goes further in its pursuit of simple relationships, by assuming stuff like a community indifference curve (breaking basic requirements such as transitivity in preferences). International political economy then enables us to shift the analysis to more complete analysis (such as the different approaches used to explain the effect of multinational organisations)

 

It's the term to describe when politicians interfere with the economy.

 

I am probably going to add more to the confusion than clear it up but I will take a stab at it.

Economic empires arose, in the past, from technological innovations leading to military superiority.

A superior military allowed for conquest of other lands gaining control over their resources in both people, land, minerals, production .. and so forth.

The Romans for example excelled more because of the "threat" of military superiority rather than the actual execution of military superiority. They would essentially show up and give a town two choices.

1) Become part of the Roman empire which had numerous benefits to trade and partial Roman citizenship .. but in return they would have to submit to taxes and conscription.

2) be destroyed, killed, forced into slavery .. and so forth.

Most often the choice was (1). Roman coffers were then expanded with little monitary expenditure.

As the empire expands, protection of those resources becomes the primary mandate and this is much in the realm of politics. Making policy that keeps folks relatively happy while maintaining the income stream.

One of the signs of the decline of an economic empire is an increase in the ability of the empire to maintain economic hedgemony.

Expropriation of US assets abroad, such as in the Middle east resulting in the formation of OPEC, or in Venesuala by Chavez is a more recent example.

It is not because of lack of Military ability that those assets were let go, but because of the Political climate.

 

You lost me here!

In terms of economic hegemony, it is interesting that it typically leads to trade liberalisation. Scraps are giving out in order to keep worldwide stability such that the hegemonic state isn't threatened. However, you might think otherwise

 

Trade liberalisation is great if you have stuff to trade. Typically when the economic empire is losing its hedgemoney competition is fierce and the business cycle is on the downswing.

Example: Country creates widget .. everyone wants widget .. huge demand low supply. As the cycle progresses it makes more economic sense to produce widget in other nations rather than the home country.

As the cycle progresses further .. supply starts to meet demand .. also other countries have learned to make the widget and competition is rearing its ugly head.

Supply starts to outstrip demand and competition is fierce. Prices decline and overall margins in the home country are low due to high wages.

Normally the business cycle is hitting a bottom at the same time debt is skyrocketing.

The rise and fall of the last 3 economic empires (Dutch, Spanish and British) unfolded in roughly the same way.

The British had the Gattling gun and could take over an entire african nation (fighting with sticks and stones) with one gunship. Historically the gattling gun has proved a better defensive than offensive weapon. At some point the African nation gets the Gattling gun.

Now to accomplish the same goal you have to send in an entire armada. This is expensive and you are going to take many casualties. Return on investment is much less.

Historically the cost of projecting power (to protect economic hegemony) increases with time. It is no different today. We can not really threaten a nuclear power and attacking a tiny state (that did not fight back) such as Iraq has nearly bankrupted the country.

In the Early 1900's the economy of Britain and the US were equal .. 50 years later the US economy was 50 times that of Britain.

After WW2 the US was the largest provider of manufactured goods. 60 year later most of the stuff we buy has a made in China sticker, Germany and a few other European countries lead in high tech machines and electronics are done in Japan and other Asian countries.

Debt is massive and we can no longer protect our assets abroad

The US will not disappear .. Britain is still around, but we will not dominate the world of the next 50 years like we did over the last 50.

 

Sorry, but this is nonsense. It only shows a contempt for comparative advantage. If you want to utilise economic hegemony you're going to have to come up with something decidedly more high powered.

This is just an appreciation that comparative advantage is dynamic. It isn't very interesting and certainly can't be used to explain the end of previous empire. You've constructed opinion on unsupportable economic comment

Hegemonic states invest heavily in military innovation. Its only interesting, in terms of economic outcome, when the burden becomes too heavy. We may have that with the current US economy, but the jury is still out on that one. All we know is that there is economic decoupling (i.e. a reduction in the importance of the US economy for world affairs)

Actually its very different. The economies of scale associated with modern weaponry is unprecedented.

This is on a par with standard whinge. Want to increase US exports? Reduce economic inequality and truly celebrate the natural entrepreneurial behaviour of the individual

Indeed! But that isn't something to find disagreeable.

 

Dont be sorry .. but do explain what on earth you are talking about.

How does my position show attempt for compative advantage.

and what high powered thing do you suggest to utilize economic hegemony ?

The business cycle is part of the economy is one factore in the decline of an economic empire. It is certainly not the only factor but it is one of them.

Your choice of terms "compative advantage" is simplistic and frankly.. uneducated use of Jargon. (Folks that actually know what they are talking about do not need to use jargon and if they do describe what is meant and in what context)

I do not mean that "you" are uneducated, but the way in which you used the term "comparative advangate" .. both times by not qualifying your claims.



Another factors that leads to weakening of an economic empire is the natural tendency for Technology to spead which impacts "comparative advangate".
Countries with a lower cost of labor (lower opportunity cost) have an advantage which affects the business cycle.

The cost of projecting power is increasing and the relative value of military power has decreased.

The ability to produce more gattling guns on for cheaper (economies of scale) did not mean that the cost of projecting power decreased. It increased in spite of economies of scale then .. as it has now.

The cost of projecting power has increased.

Another factor leading to the decline of economic empire is debt and deficit.

In order to pay for the increased cost of projecting power debt and deficit become the norm. This was true in Rome, and in the Dutch, Spanish, and British Empires ... and it is true now.

Total military expenditures (when stuff like homeland security, vetrans benefits and other military items are added in) exceed 1 Trillion dollars.

Considering our 2010 income was 2.15 Trillion .. this is almost half.

The standard what ? (whinge)

I agree that we need to increase exports. This has nothing to do with the statement of fact above the lack of current export capacity being a factors related to the decline of an economic empire.

I find it very disagreeable. We need to stop repeating the mistakes of these past economic empires ... and soon.

 

Your error is in the “Trade liberalisation is great if you have stuff to trade” comment. Comparative advantage informs us that there will always be ‘stuff to trade’, even if a country lags behind in the productivity stakes.

The issue of economic hegemony has been considered, in some depth, in international political economy. It seems awkward that you’d refer to hegemony whilst ignoring that analysis in a thread about political economy.

All you’ve come out with is a poorly written issue covered in New Trade Theory. With dynamic comparative advantage we get an appreciation of how one aspect of intra-industry trade develops. It isn’t, however, at all interesting for issues of economic hegemony. You’re simply making rather basic erroneous remark

This amused me. In any discussion on trade comparative advantage is going to be a core consideration. The important point of course is that international political economy will inform us of issues that aren’t covered by the Ricardian-based orthodoxy. The problem you have is that, without knowing it as you don’t understand that orthodoxy, you’re making absurd comments. This illustrates the importance of my previous comment: in political economy there must be comparison of schools of thought. You’d then be able to appreciate how hegemonic state theory can be integrated within neoclassical trade theory.

The first aspect is merely a reference to economies of scale. Note, however, we still cannot make unambiguous conclusion given we’d also have to consider macroeconomic effect (e.g. how the waste from the military sector may increase in importance because of the instabilities created through greater inequalities and more acute market concentration.

You’re going to have to try and defend the latter. We again have ambiguity. We’d have to factor in, for example, how the generation of military might impacts on the technological innovation process. The US, for example, has managed to utilize her military burden to support the civilian

Wrong again! Economies of scale have become more important as innovation has continued. In terms of liberal political economy one could suggest that it maintains the military industrial complex (i.e. in order to spread the high fixed R&D costs, high military expenditure is required and profiteering economic agents will find means to ensure that is maintained)

Afraid there is more ambiguity. Consider, for example, the impact of dramatically reducing the military burden. In terms of macroeconomic stability, the economy will require an increase in alternative expenditures. Whilst social expenditures, as shown elsewhere, may be deemed to be more desirable, we certainly cannot make a general remark over debt concerns

The US trade imbalance can be understood quite independently of reductions in relative power. One just has to refer to savings rates.

The US needs to only do the following: accept that economic decoupling will continue and assess, given spin-off technologies are on the decline in its military sector, how to gradually shift its expenditures to other means to support technical progress.

 

Political economy = Do something that is unpopular and don't lose too many votes.

 

Your error is in the “Trade liberalisation is great if you have stuff to trade” comment. Comparative advantage informs us that there will always be ‘stuff to trade’, even if a country lags behind in the productivity stakes.

Economic hegemony is more than "trade liberilisation" .. it is more than comparitive advangate.

Hegemony entails ability to control and dominate. The US does not dominate trade at the moment.

?

The issue of economic hegemony has been considered, in some depth, in international political economy. It seems awkward that you’d refer to hegemony whilst ignoring that analysis in a thread about political economy

What details about that analysis do you refer to.

All you’ve come out with is a poorly written issue covered in New Trade Theory. With dynamic comparative advantage we get an appreciation of how one aspect of intra-industry trade develops. It isn’t, however, at all interesting for issues of economic hegemony. You’re simply making rather basic erroneous remark

There are cycles in economic history that have led to the rise and fall of economic empires. The business cycle is part of it as related to the spread of technology and operation in markets abroad.

It is quite a simple concept.

You seem to have a love for economic theories which is fine, but you need to be able to convey the information in those theories without saying "its against such and such theory"

If you have a point to make relating to something that is part of a theory .. make it by commenting on how a certain part of that theory relates to the topic at hand not by referring to an entire theory.

This is what I meant previously by "uneducated presentation".

If you are going to claim something is "erroneous" explain why. Not by saying... "that is against such and such theory"

Broad economic theory is not like the laws of physics where you could say ..
"that is a violation of conservation of mass"

Refer to above comments.

If you can not state your points without refering to broad economic theories then you do not have a good understanding of the subject matter.

No one claimed comparative advantage was not a core consideration. In fact I described the mechanism of comparative advantage as it unfolds due to the spread of technology over time.

Obviously you do not understand the concept well.

The first aspect is merely a reference to economies of scale. Note, however, we still cannot make unambiguous conclusion given we’d also have to consider macroeconomic effect (e.g. how the waste from the military sector may increase in importance because of the instabilities created through greater inequalities and more acute market concentration.


The cost of projecting power is not related soley to "economies of scale"
Economies of scale has relatively little to do with it in fact.

That you would suggest it is "merely" a reference to economies of scale represents a complete lack of understanding on your part.

To defeat a well equiped army (equipped with gattling guns as in the previous example) is far more expensive than to defeat a poorly equiped (sticks and stones) band of tribal folks.

Economies of scale is only one factor in terms of the total cost.

Wrong again! Economies of scale have become more important as innovation has continued. In terms of liberal political economy one could suggest that it maintains the military industrial complex (i.e. in order to spread the high fixed R&D costs, high military expenditure is required and profiteering economic agents will find means to ensure that is maintained)

You are wrong and have not addressed the historical fact that the cost of projecting power against a well equiped enemy is greater than projecting power against a poorly equiped enemy.

Afraid there is more ambiguity. Consider, for example, the impact of dramatically reducing the military burden. In terms of macroeconomic stability, the economy will require an increase in alternative expenditures. Whilst social expenditures, as shown elsewhere, may be deemed to be more desirable, we certainly cannot make a general remark over debt concerns

There is nothing ambiguous about the massive expenditure on military.

What is ambiguous, as you are trying to point out and I agree, is how we can reduce spending without tanking the economy.

General remarks about the size of the debt can made in relation to the amount of interest as a ratio of income.

Historically .. and this is the rough number the IMF uses.. when interest payments as a ratio of income exceeds 30%, the ship starts to take on water faster than it can be bailed out.

You either need to increase income or reduce deficit spending or the ship will soon be in big trouble.

Currently we are at roughly 20% so the ship is not really in that much trouble at the moment.

The problem is that if we can not finance new debt, and recycle old debt, at low interest rates the ratio can rapidly get to 30%

Losing world reserve currency status would not help us maintain low rates.

Nonsense and you have not supported this claim.

The US needs to only do the following: accept that economic decoupling will continue and assess, given spin-off technologies are on the decline in its military sector, how to gradually shift its expenditures to other means to support technical progress.

I agree that technical progress needs to be supported but the main thing needed is shift in perspective.

The US can no longer afford to police the world, and the cost of maintaining this status is only going to increase with time.

 

Hegemonic state theory informs us that they are inherently linked: hegemony leads to trade liberalization, with the gains from specialisation, used to maintain the social order. Of course that doesn’t provide any support for your erroneous comment: “Trade liberalisation is great if you have stuff to trade” continues to show a disregard of comparative advantage

Already said! See above

No, it is an unsupportable concept.

I need to refer to political economy in a thread about political economy. You’ve expressed opinion that isn’t consistent with either orthodox or heterodox trade theory.

I’m happy to give more detail in anything I type. Unlike you, I’ve made sure that I can utilize political economy in support. As I mentioned, a lovely aspect of the political economic approach is how- through the comparison of schools of thought- we can note supporting analysis. Ricardian analysis, for example, only provides us with a technical explanation for the gains available through specialization according to comparative advantage. Understanding bouts of liberalization and protectionism across the decades needs a more general analysis capable of explaining why protectionism isn’t more widespread (given the Ricardian approach, updated by the Heckscher-Ohlin model, informs us that trade will create redistribution effects and therefore encourage corrupt politicians to follow a protectionist path that is inconsistent with maximizing social welfare)

Your comment only confirmed to me that you’re making remark over economic hegemony and trade without knowing any of the political economy involved.

It’s not possible to refer to political economy without referring to economic theory. The important point is that we avoid thinking economic theory somehow translates into a one-dimensional neoclassical approach.

You did give a bland explanation of how comparative advantage can change. However, you combined it with basic error as you used it to generate erroneous conclusion over economic hegemony and your mythical business cycle.

The massive increase in the costs of arms production reflects R&D costs. Standard reference to economies of scale! To suggest otherwise is particularly uncunning.

Nope, it is basic sense. It’s of course easily understood with the use of defence economics, from the analysis into price inflation to the impact of power asymmetries on the nature of warfare (with the arms sector developments ultimately encouraging non-traditional conflict; as demonstrated with the use of game theory approaches)

I have no need to address erroneous comment. I’ve referred directly to the US’s position. That innovation has led to significant aspects of economies of scale is a matter of fact. That arms production is now dominated by high fixed costs is a matter of fact. The only debate is the extent that positive spillover effects exist, such as the continued existence of spin-off technologies that can increase civilian sector opportunities.

You continue with this tedious habit of ignoring the political economy needed to understand the impact of specific sectors of the economy. With regards the military sector, the majority of the analysis highlights that there are significant economic effects from both arms production and military expenditure. We’re left with very specific approaches, such as neoclassical analysis into public goods (which, except for crowding-out effects, has to assume indirect economic effects are neutral)

“The end is nigh” crowing which you haven’t bothered to support with any valid political economy.

Its basic macroeconomics:

[Y-T-C] (i.e. private saving) + [T-G] (i.e. public saving) + [M-X] (i.e. foreign saving) = I

That's all you need to refer to how the US trade imbalance reflects low private saving (i.e. X - M = S - I)

Typically the ‘police the world’ arguments are a nonsense. Take NATO. Previous empirical evidence, via the US economist Sandler, finds that burdens were appropriately shared. That has changed over time, but that reflects the economies of scale issues that you ignore.

 

The massive increase in the costs of arms production reflects R&D costs. Standard reference to economies of scale! To suggest otherwise is particularly uncunning.


What is particularly uncunning is thinking that economies of scale is the only relevent factor in the cost of projecting power.

Nope, it is basic sense. It’s of course easily understood with the use of defence economics, from the analysis into price inflation to the impact of power asymmetries on the nature of warfare (with the arms sector developments ultimately encouraging non-traditional conflict; as demonstrated with the use of game theory approaches)

Not according to economic historians.

There is no doubt that economies of scale lowers the cost of projecting power... this is common sense.

The decreaes in cost of equipment pales in comparision to the increase in the overall cost of projecting power as ones enemies become technologically advanced.

 

The price inflation reflects massive rises in fixed costs. A clear case of economies of scale becoming the dominant feature. You’re merely ignoring the reality of how the arms industry has developed.

Provide me with one economic historian that disputes the available defence economic analysis: from the analysis into price inflation to the impact of power asymmetries on the nature of warfare. You’re again making unsupportable comment.

 

I do not ignore it at all. The reality you are ignoring is that the costs of projecting power increase as ones enemy becomes more technologically advanced.

LOL .. there ya go .. the impact of "power asymmetries" is exactly what I have been talking about.

Obviously there is more to the cost of projecting power than "economies of scale" as you have been claiming.

Glad you have learned something about defense economic analysis because this analysis does not support your claims in relation to the cost of projecting power.

The spread of technology leads to a change in the power asymmetry which increases the cost of projecting power.

Economies of scale may have reduced the cost of producing a piece of equipment, but as technology spread and you need many more pieces of equipment to project that power than was previously needed.

In the equipment that you have invested heavily in, developing more efficient means of production and so on, becomes obsolete.

A book I have read lately was Niall Ferguson (Assent of Money) is an Economic historian from Harvard.

 

I’m referring directly to the arms industry, acknowledging the consequences of technical innovation. In terms of basic political analysis we can refer to aspects such as the blurring of the boundaries between the private and public sector. For example, we can refer back to 1993 and what has become known as the ‘last supper’ where the government effectively told defence industry executives that they must merge. A case of economies of scale dictating industrial policy.

The difference is that I’ve referred to power asymmetries correctly (appropriately summarizing the consequences of economies of scale in arms production) and you’ve made opinionated remarks actually based on ignoring political economy

That economies of scale have dominated the arms industry (as illustrated, for example, by imposing market concentration) is unquestionable.

You continue to make absurd remark. I’ve successfully used defence economics to refer to the developments in the arms industry whilst also advertising the importance of political economy. The real debate is over the different schools of thought that are available. The liberal approach (as summarized by the military industrial complex), for example, shows inconsistency in conclusion compared to the variety of Marxist approaches (such as the permanent arms economy approach)

Nonsense. I’ve already referred to the ambiguity into the effects of the military sector: from the issue of spin-off technologies (which can increase given the high R&D expenditures) to the importance of military expenditure as a stabilizing influence for an economy characterized by high inequality and civilian sector market concentration.

Fascinating. Apologies for the sarcasm.

 

I’m referring directly to the arms industry, acknowledging the consequences of technical innovation. In terms of basic political analysis we can refer to aspects such as the blurring of the boundaries between the private and public sector. For example, we can refer back to 1993 and what has become known as the ‘last supper’ where the government effectively told defence industry executives that they must merge. A case of economies of scale dictating industrial policy.

Absolutely economies of scale sometimes dictate industrial policy .. this does not change the economic reality that the cost of projecting power has increased due to the spread of technology and that the return on investment has decreased due to political factors.

The difference is that I’ve referred to power asymmetries correctly (appropriately summarizing the consequences of economies of scale in arms production) and you’ve made opinionated remarks actually based on ignoring political economy

Nonsense. Your claim that economies of scale is the only factor affecting power asymmetry is laughable.

That economies of scale have dominated the arms industry (as illustrated, for example, by imposing market concentration) is unquestionable.

Agreed economies of scale are one factor affecting the cost of projecting power .. but not the only factor nor the dominant one.

The arms industry is just one factor ..

You clearly do not have a good grasp on the factors underlie the cost of projecting power on a historic basis.

Nonsense. I’ve already referred to the ambiguity into the effects of the military sector: from the issue of spin-off technologies (which can increase given the high R&D expenditures) to the importance of military expenditure as a stabilizing influence for an economy characterized by high inequality and civilian sector market concentration.

Im not sure what else to say really .. you have a myopic viewpoint.

What part of "when the enemy gets better technology, it costs more to attack them" do you not understand?

Fascinating. Apologies for the sarcasm.

I have read numerous other books about the factors that lead to rise and fall of economic empires.

A common theme is that Historically, the cost of projecting power increases due as the enemy develops more sophisticated technology.

If you have a book to suggest dealing with the factors that relate to the rise and fall of empires .. I am all ears.

 

First, the spread of technology is a red herring. It is the various fixed costs that have ensured significant price inflation. Second, your ‘due to political factors’ is deliberate vagueness to hide from the political economy being used: be it the standard liberal approach into the military-industrial complex to potentially more insightful analysis from heterodox schools. Even neoclassical theory can be used to demonstrate how your opinion lacks sophistication (e.g. market failure analysis into technical progress and the positive externalities generated through the military sector)

I’ve referred to game theoretical analysis that can be used to understand the consequences of technical innovation. That innovation has increasingly ensured the irrationality of traditional conflict, given the costs involved makes it impossible to compete with weapon effectiveness. Non-traditional conflict then results. Unlike you, I’ve bothered with the required economic analysis.

To understand the costs for the US (and also the potential spillover benefits), the arms industry is key. That has been observed in the political economy available. The liberal approach, for example, would refer to competing self-interested groups that- given a lack of accountability in the illiberal industry- leads to ‘accidental’ conflict. In contrast, we’ve already referred to possible positive economic effects from assorted more macroeconomic approaches and also appreciated how the schools can be used together (e.g. Keynesianism to understand the need for a high military burden, but more institutionalist approaches to understand the stabilization effects from the problems created through inefficient severe income inequalities)

That’s a rather feeble response. Try and respond to my comment this time:

I’ve successfully used defence economics to refer to the developments in the arms industry whilst also advertising the importance of political economy. The real debate is over the different schools of thought that are available. The liberal approach (as summarized by the military industrial complex), for example, shows inconsistency in conclusion compared to the variety of Marxist approaches (such as the permanent arms economy approach)

Again, without understanding the arms sector you’re going to come out with unsupportable opinion and nothing more.

I have an understanding of the need to utilize political economy, ensuring then that I’m not making unsupportable opinion.

Again you show a complete disregard of the technical progress process. There are numerous costs and benefits generated from R&D investments in arms production. In terms of benefits, the US has clearly benefited from spin-off spillover effects into the civilian sector. This has been arguably more important than elsewhere because of the structural flaws in the US economy (with an over-reliance on low wage labour). In terms of costs, we’ve yet to fully understand the consequences of the rise in non-traditional conflict. That’s made even more difficult as, by changing the demands on the US military, it may generate further spin-off technology gains).

Strange then that you have been incapable of embedding the author’s arguments within your opinion on here. Indeed, the only time that you have used economic analysis with some validity, you’ve misapplied it.

You might have a case with, say, Britain (where the costs of empire on the domestic population have been easily documented). You won’t be able to apply it to the US as we’re talking about a technical progression that has led to the ‘enemy’ being out-priced.

Seems like for general text on empires you’ve got it covered. You’re just incapable of applying it to the analysis I’ve summarized.

Here’s a simple task: Just try and apply these random books of yours to the US. Just stating “don’t repeat the errors from others” really won’t wash as it ignores the political economy that determines the importance of the military sector for the US’s version of Anglo-Saxon capitalism.

 

The spread of technology is not a "red herring", if you think this logical fallacy has been committed then state why. Your claim that price inflation is the only factor is wrong.

The costs of projecting power are related to the spread of technology and I have stated why numerous times.

You throw out broad concepts but reality say nothing.

e.g.: Market failure analysis into technical progress

You have not made a point here (lacks sophisication) .. you have not stated what market failure analysis says about technical progress and how this relates to the costs of projecting power in relation to the increasing technological advancement of the enemy.


Positive externalities generated through the military sector

You have not stated what positive externalities you are referring to and how these externalities generated through the military sector relate to the cost of projecting power in relation to the increasing technological advancement of the enemy.


Then you have the nerve to call me vauge ?

You do not back up your claims .. how does game theory help to understand the consequences of technical innovation - show that innovation has ensured irrationality of traditional conflict?

Let me help you (Nukes lead to Mutually assured destruction) is a good example. Helps the reader understand what is meant. The fact that you do not present things such that the reader can understand .. is what I mean by an "uneducated presentation".

Your next statement "given the costs involved makes it impossible to compete with weapon effectiveness"

Again .. what do you mean by this? .. Let me help:

The costs of nuclear war .. "make it impossible to compete with weapons effectivness"

The statement in bold is awkward not technically correct. You can compete with nuclear weapon effectiveness (the other side having nukes) by building one yourself (spead of technology).

What you can not do is hope to be able to win a nuclear war without incurring unacceptable costs.

This is what Game theory tells us.

Rather than just state (bold) you state something unintelligible and leave the reader guessing as to what you mean.

This is an uneducaged presentation of an idea. An educated presentation makes clear the ideas being presented.

Either you do not understand the subject matter or just delight in confusing anyone reading your posts.

The confusion is not the readers lack of ability to understand but the confusion within your presentation of ideas.

Of course you can apply historical cycles to the US population. The cycle of debt and default for example.

The economies of last 3 world economic empires .. Dutch, Spanish, British all
went into major decline 20-25 years after going off Gold.

The US went off Gold completely around 1973. The Dow peaked (in constant dollars) in 2000. The US beat the average by only a couple of years.

The events that unfolded differed but the results were the same in each empire .. "in a nutshell" the desire for continued and increasing economic and military expansion, and no need for anything of intrinsic value backing the paper to restrict the growth of either, led to increased debt and deficits. (Reagan did not invent Reaganomics)

The cycle of debt and defalt, the end result, is the same.

I have many texts on empires .. "Blood in the Streets" or "The Great Reckoning" James Dale Davidson and Lord Moog for example devote a couple of chapters on the ideas surrounding the megapolitical factors involved in projecting power and the rising cost over time due to technological expansion.

This is not red herring to these fellows.

I also have a number of texts on History .. Greek, Roman, Middle ages, and so forth.

The same claim is made.

You have yet to give one text that supports your claim that the costs of projecting power are related only to "economies of scale"

Here is a not so simple task for you .. figure out how to write in such a way as to make your ideas clear.

 

It’s based on the reality of the arms sector, something which you’re not prepared to consider. Equipment costs have been estimated to double every 7.25 years. This reflects, as already mentioned the significant increase in fixed costs.

No, you’ve given unsophisticated bluster numerous times. At no time have you referred to the defence analysis required to understand how the industry has evolved.

No, given your position is based on a couple of random books (which you can’t apply to the conversation at all), you’ve simply not understood the comment. Consider, for example, the difference between EU and US R&D expenditures. A significant element of the European shortfall reflects a greater reliance on the market (where, particularly in terms of high risk investments in the face of imperfect capital markets, the private sector is unwilling to suitably support R&D). Not surprisingly the Europeans have considered a common armaments policy capable of narrowing the shortfall.

Wrong again. I summed it up with the well-known concept of military spin-off technologies. In terms of neoclassical theory at least, we get a double whammy: support of the public good from national security, with also increased economic opportunities for the civilian sector.

Now we can of course question the logic of the neoclassical approach. The military, for example, can be used against the domestic population (such as strike breaking) and therefore breaks the standard public good assumption of non-excludability. There is also analysis into the speed of technical progress, with an increased likelihood of ‘spin-in’ technologies (as those high fixed costs increasingly become about finding military use for civilian technologies). However, to debate such topics you’d have to refer to political economy. You’re not even close!

Wrong even in my evaluation of your approach. I’ve suggested that you’ve been deliberately vague as you cannot apply any of the pertinent political economy required to understand these issues.

In terms of game theory, it is illogical for an economic agent to participate if the pay-offs are negative (as they become when technical innovation leads to such severe power asymmetries)

Actually it isn’t a good example. MAD refers the potential positive ‘deterrence’ consequences possibly created through a notable arms race. To understand power asymmetries we’d have to refer to how that equilibrium is in fact unstable. Thus, once a ‘first strike capability’ is secured it becomes rational for the other player to leave the game. That's then on a par with my previous comment: i.e. once power asymmetries develop because of innovations in arms production, traditional warfare becomes inconsistent with rationality. Non-traditional conflict then becomes optimal.

See above! You’ve made a basic error over MAD. Hopefully you’ll appreciate that.

That’s very naïve. You’ve basically said ‘game theory is MAD’. It’s much more than that: it provides a means to understand interaction between rational players. More typically used in aspects such as oligopoly pricing policy, its origins are more firmly based on understanding conflict (such as its use in adapting bombing strategy)

As already remarked, the difference between us is that I’ve employed political economy and you hide from it.

I’ve already dismissed that. The US situation cannot be compared with the likes of Britain. Debt, within the context of multiple political economic schools of thought, can be a vital aspect of maintaining capitalist stability. You continue to ignore economic analysis in order to make unsophisticated remark.

Just a shame that you haven’t been able to apply it to the analysis being summarized, nor provide any pertinent remark over political economy.

A low powered attempt at dodge. I’ll ask again (but will assume another dodge attempt):

Just try and apply these random books of yours to the US. Just stating “don’t repeat the errors from others” really won’t wash as it ignores the political economy that determines the importance of the military sector for the US’s version of Anglo-Saxon capitalism.

 

To me, the non-economist layman. Political economy is simply standard economics that takes into consideration the political and social environment along with the norms and customs of the entity that is being examined.

So while it's pretty standard that free trade is a good thing, if a country is able to obtain a comparative advantage at the expense of the environment or by enslaving it's workforce, then that must be taken into consideration.

I may be wrong, but it seems to me that the attempt to divorce political economy from standard economics is an attempt to validate economics as the physics of social sciences, where we can ignore the whims of humans and understand the organism that is the economy through the lens of mathematics.

 

It's just the study of politics and economics and how they become intertwined. Good or bad.

 

Neatly summarised! Maths should only be a tool; economics shouldn't just become the playground of the technician

 

What evidence is there for this?

How do you suggest supporting technical progress, given a smaller role for the military?

 

See, for example, this report article.

A very difficult question. Some suggest space exploration (although, given the commercial speed in innovation, it would have to go for an impressive target)