17. 17.1 Defence, disarmament and conﬂict INTRODUCTION: THE SCOPE OF DEFENCE ECONOMICS Defence economics is relatively new. One of the ﬁrst specialist contributions in the ﬁeld was by Hitch and McKean, The Economics of Defense in the Nuclear Age (1960). This book applied basic economic principles of scarcity and choice to national security. It focused on the resources available for defence and the eﬃciency with which such resources were used by the military. Like all economic problems, choices cannot be avoided. Scarce resources allocated to defence means that these resources are not available for alternative uses such as social welfare spending (for example, missiles versus education and health trade-oﬀs). But further choices are needed. Within a limited defence budget, resources have to be allocated between equipment and personnel, between nuclear and conventional forces and between air, land and sea forces. Military commanders have to use their limited resources eﬃciently, combining their inputs of arms, personnel and bases to ‘produce’ security and protection. Within such a military production function, there are opportunities for substitution. For example, capital (weapons) have replaced military personnel, and nuclear forces have replaced large standing armies. Defence economics is about the application of economic theory to defence-related issues. Of course, the standard trade-oﬀ analysis and the need for choices assumes that an economy’s resources are fully and eﬃciently employed. Where there is involuntary unemployment (for example, the Depression years of the 1930s) there may be no or little immediate economic trade-oﬀ. Hitler’s...
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