March 19, 2013

The Origins of the Permanent War Economy

A Consequence of Government, Not Capitalism
  • Christopher Coyne

    Associate Director, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
  • Thomas Duncan

    Assistant Professor of Economics, Radford University
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Read the full paper at SSRN.com 

This paper explains the origins of the permanent war economy in the United States. We emphasize the combined efforts of three key interest groups (military, labor unions, and industry) that arose in the context of the dual crises of the Great Depression and World War II. During the depression and the war that followed, there arose a partnership between industry, the military, and politicians. These crises, combined with the State’s monopoly over the military, created the opportunity for these interests to influence the trajectory of economic activity in a self-serving, and lasting, manner.