One of the great myths of economics is the idea that war is good for the economy. Robert Higgs has shown pretty convincingly that this isn’t the case in a series of papers that culminated in his book Depression, War, and Cold War.
As I’m preparing for my Classical & Marxian Political Economy class this morning, I’m inspired by Book 2, Chapter 3 of Adam Smith’s The Wealth of Nations. Here in particular is what Smith has to say about what was given up in order to fight wars:
More houses would have been built, more lands would have been improved, and those which had been improved before would have been better cultivated, more manufactures would have been established, and those which had been established before would have been more extended; and to what height the real wealth and revenue of the country might, by this time, have been raised, it is not perhaps very easy even to imagine.
A couple of years ago (and drawing largely from Robert Higgs), I wrote about how World War II didn’t end the Great Depression. Here’s Higgs on the importance of private investment. And on the subject of war, here’s an excellent interview in which David Henderson explains that free markets don’t cause war.