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Source link: http://archive.mises.org/6045/the-neglected-costs-of-the-warfare-state-an-austrian-tribute-to-seymour-melman-working-paper/

The Neglected Costs of the Warfare State: An Austrian Tribute to Seymour Melman (Working Paper)

December 20, 2006 by

The Neglected Costs of the Warfare State: An Austrian Tribute to Seymour Melman, by Thomas Woods (Mises Institute)

Perhaps no scholar has applied Bastiat’s insights to military expenditures with more persistence and rigor than Seymour Melman (1917-2004). Melman was a professor of industrial engineering and operations research at Columbia University. In a scholarly career that yielded a great many books and articles, he focused much of his energy on the economics of the warfare and military-oriented state. In large part, Melman’s work amounted to an extended analysis, in light of Bastiat’s insight, of the costs not only of modern American wars but also of the defense establishment itself.


Tom Woods December 20, 2006 at 9:48 am

I really welcome comments on this paper, either here or via email (woods -at- mises dot org). If you have sources/info that corroborates (or, indeed, contradicts) what I’m saying, I’d like to know about it. This is part of a larger project on war and the warfare state I’m working on between other projects. Thanks!

Sag December 21, 2006 at 2:03 pm


I’m sure you’re looking for scholarly feedback. But as a reader I can tell you this paper is truly excellent. If this is part of a larger project you’re working on about the warfare state, I can not wait until you’re done. I especially like the conclusion. Hilarious and apt:

“Melmans’s normative conclusions, therefore, were altogether conventional and uninteresting, and far removed from libertarianism. But his positive analysis was antistatist to the core, and provides us with an array of important and typically neglected costs of large military establishments.”

Tom Woods December 21, 2006 at 2:20 pm

Thanks a lot; it’s nice to know I may be on to something. Incidentally, I also wanted to add that the paper quotes Melman heavily in order to whet people’s appetites, and also so my defense of him won’t just seem like special pleading — he really is as good as I say.

Sag December 21, 2006 at 4:21 pm

Tom, you definitely accomplished that. I plan on reading Melman based on this paper. You’re definitely on to something in this era of unrestrained militarism.

I really like this idea of the analysis of opportunity costs and the unseen effects of government spending on market activity. No where near enough of this sort of work has been done.

Sam December 23, 2006 at 10:33 pm

Trying to presume opportunity cost is akin to saying, ‘Gee, if I could have my time over again I would have done things differently’. When faced with a choice with A or B and suppose we choose A, and it’s a flop, how do we automatically know that B would have been better?

Interestingly, what if spending money on national defense was well worth it if we later find out that an invading army DIDN’T invade because of the size of the armed forces? And (morality being sidelined) what if an imperialist army seized the resources of a defenceless nation and sent those resources and more than paid for itself?

Tom Woods December 23, 2006 at 11:37 pm

I’m not sure if you read the paper or just the summary paragraph, but whether a given supply of military equipment was necessary to win a war is beside the point of the paper, whose purpose is to consider the neglected costs of gigantic military establishments. You are free to say that such costs are worth it. My point is simply to inquire into what some of those costs are, and to observe that many if not most of them are completely overlooked by just about everybody.

Also, the article makes explicit reference to what Melman calls “overkill,” in which your military capacity is obviously many times greater than is conceivably necessary. Surely even a critic of opportunity cost such as yourself could not have a serious objection to considering opportunity costs in a case like this.

adi December 24, 2006 at 1:20 am

Sam, in Broken Window Fallacy the best decision what merchant can make after his window is broken by little rascal is to repair window. That is his option after the accident/prank is done. Alternative cost theory just states that when one makes decision he has demonstrated that he prefers this decision to another which is next best option.

It’s altogether another thing to say that promotion of breaking windows is somewhat justifiable action on economic grounds since it promotes employment. Commentors in the fable were doing this and fallacy comes from this.

Of course after all relevant facts are known it’s often the case that one may regret something. One might have done differently if one would have known all things, but this is immaterial to decisions at the point of time.

Suppose that I research all info concerning economic development of my surrounding environment and decide to buy a real estate since I believe that its value will increase. After that I hear that proposed road will not be build and some of the expected value is not going to be realized.

Sam December 24, 2006 at 1:24 am

Why in the ‘Broken Window’ fallacy the lil rascal couldn’t be caught and he or his parents pay for the damage?

adi December 24, 2006 at 1:53 am

Perhaps Bastiat didnt want to make this story too long… :)

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