War economy

The american civil war is an interesting case study for war socialism
Google is my friend. Here is a link and a comment.

But first a comment about the cause of the war. How could the country of freedom be engulfed in a civil war? I give the word to Bastiat ( who died in 1850 11 years before the war):

Perverted Law Causes Conflict

As long as it is admitted that the law may be diverted from its true purpose — that it may violate property instead of protecting it — then everyone will want to participate in making the law, either to protect himself against plunder or to use it for plunder. Political questions will always be prejudicial, dominant, and all-absorbing. There will be fighting at the door of the Legislative Palace, and the struggle within will be no less furious. To know this, it is hardly necessary to examine what transpires in the French and English legislatures; merely to understand the issue is to know the answer.

Is there any need to offer proof that this odious perversion of the law is a perpetual source of hatred and discord; that it tends to destroy society itself? If such proof is needed, look at the United States [in 1850]. There is no country in the world where the law is kept more within its proper domain: the protection of every person’s liberty and property. As a consequence of this, there appears to be no country in the world where the social order rests on a firmer foundation. But even in the United States, there are two issues — and only two — that have always endangered the public peace.

Slavery and Tariffs Are Plunder

What are these two issues? They are slavery and tariffs. These are the only two issues where, contrary to the general spirit of the republic of the United States, law has assumed the character of a plunderer.

Slavery is a violation, by law, of liberty. The protective tariff is a violation, by law, of property.

It is a most remarkable fact that this double legal crime — a sorrowful inheritance from the Old World — should be the only issue which can, and perhaps will, lead to the ruin of the Union. It is indeed impossible to imagine, at the very heart of a society, a more astounding fact than this: The law has come to be an instrument of injustice. And if this fact brings terrible consequences to the United States — where the proper purpose of the law has been perverted only in the instances of slavery and tariffs —

Typical economic pattern of modern war

Back to the financing. The war starts happily. People at entusiastic and are willing to buy government bonds to finance the war the expect a short victorious war. Then some three months later when the government issues more bonds and the coffins with conscripts returns in increasing numbers people are less enthusiastic.

The wonder if they will get their money back, they gets tired of the war and refuses lend more money or they simply have no more money to spend.

So how to continue the war against the will of the people? An easy way to finance the war is to simply print the money and pay the bills. But this leads to quicly rising prices and serious economic distortiouns so the governemnts tries to issue more bonds. To make people able to buy the bonds they insert cheap credit via the banking system

And so the killings goes merily on for some two years then finally the credit money results in rising prices anyway. People starts complaining and the government start with price controls wich leads to shortages to be met with rationing and production control spreading to the whole economy.
The war in continually financed by new bonds and new credit from the banking system until at least one of the economies and populations are completely exchausted.

Summary

To prevent people wanting to fight each others; Make just laws!

To stop the wars. Get credit control. Abandon the central bank.

Tips oss hvis dette innlegget er upassende

Filed under: on September 9, 2010 at 11:02 pm Comments Off

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