The Economics Of Warfare Have Changed

Economists measure economic variables. That’s a problem.

They are but one piece of an incredibly complex puzzle:

  • Behavioural psychology isn’t considered. Different realm… not their business.
  • Warfare and the economics of it are measured poorly, if at all.

Consider for a moment the impact of technology on every aspect of life.

Now, consider its impact on warfare. Warfare, of course, impacts economics. Something worth remembering.

In medieval times, wealth was largely acquired by conquest. You rounded up a number of your kinsmen, grabbed the clubs, swords, and spears out of the cupboard, saddled up Smokey, kissed the wife goodbye, and rode into town, killing whoever got in your way and seizing the assets.

Brute force won. In fact, Smokey provided a lot of advantage. Certainly a man on a horse was worth more than one without. Gunpowder changed this. Manpower quickly became less important. A man with a gun was worth at least 10 swordsmen on horseback.

The first World War presented yet another technology, two actually: the tank and the plane.

Trench warfare was a mess. Generals being what they are – grounded in the past and thick – took a while to figure out that when the enemy is dug in and has machine guns, sending your men over the top into a blizzard of lead would mean they’d all die. Someone must have thought to themselves: what if, instead of charging at them with nothing more than sturdy boots and a metal potty on your head, we did the same thing in an armour plated type of car with a huge gun sticking out the front?

Enter the tank.

As for the plane. Dropping bombs on cities was far more effective than a man with a gun. Probably 100 times more effective and thus quite economical.

World War 2 saw the bombs grow ever more powerful, the planes faster and more agile.

And, of course, let’s not forget battleships, which came to dominate due to the need to control supply lines. And because they’d figured out that if you build them large enough, you can take off and land fighter planes on them, which literally meant that they were moving ocean-based refuelling stations.

You’d be forgiven for thinking that everything was going to keep getting bigger, more grandiose, more centralised, and more expensive because there was a technology developed in World War II, which was the seed stock for how it is that I can write to you from the other side of the world, and you in turn can receive it in minutes and at a cost approaching zero.

The Turing machine otherwise known as the Bombe was arguably the most significant element in the eventual success of allied troops in WWII. It allowed the gents at Bletchley Park to decipher far more rapidly Nazi messages and thus react in hours rather than weeks. Cracking Enigma, the Nazi’s encoding machine, was certainly one of the keys to the Allied success.

At its peak, Alan Turing’s machine was able to help crack 3,000 Nazi messages per day and by the end of the war, this totalled 2.5 million messages, many of which provided the Allies vital information about Nazi’s positions and strategy.

This, folks, was a massive step in what we call today, “the Information age”. Turing’s machine was one of the earliest computers.

But what’s this got to do with the economics of war, Chris?

Look around you and you’ll realise that everything is becoming decentralised or distributed and deflationary as a result.

This is a result of the economics of business changing as a consequence of technological changes. Micro power grids replacing nationalised power grids, 3D printing allowing localised manufacture, ride sharing decentralising taxi cartels, peer-to-peer lending decentralising traditional bank lending, file sharing disrupting the entertainment industry, the Internet itself disrupting the newspaper industry, Facebook disrupting and decentralising content – I could go on.

What we’re seeing is power shifting into the hands of individuals or at least small groups as apposed to large groups.

This same dynamic is at work with respect to war.

All wars are won or lost due to either side’s ability to secure supply lines, logistics, transportation, provisions, military hardware, and communications. And the ability to pay for all of them. Just as any business which can’t finance its plans goes belly up so, too, does any army.

Now, imagine an army with the ability to decentralise all of these elements.

This army is actually technologically and economically backward. This doesn’t sound threatening until you realise that:

  • This army can and does utilise the technology and economics of its enemy. No need to develop its own.
  • Transportation is not only provided to them but provided by their enemy.
  • This army benefits from acquiring its transport, provisions, and even military hardware from its enemy.
  • This army uses the communication tools necessary to conduct attacks at fractional cost… tools produced more often than not by its enemy… now out in the public realm

Would this not be a pretty powerful army?

Now, imagine this army is invisible. You can’t spot the soldiers because they look like so many other normal people. Furthermore, this army has no discernible head to cut off. There is no HQ to attack. The soldiers are dispersed, almost impossible to detect, and have already infiltrated the enemy’s borders. Heck, they’ve been invited in.

Khuram Butt, Rachid Redouane, and Youssef Zaghba… the 3 terrorists who went on a rampage on London Bridge and Borough Market this week… were soldiers of this army.

How would you fight such an army?

Katy Perry thinks we should “hug it out”. Teresa May wants to control social media. And London’s mayor Sadiq Khan thinks we need to just get used to it as it’s just “part and parcel of living in a big city”.

That’s certainly true of cities such as Kandahar or Mosul, which unfortunately is increasingly what Europes cities are beginning to look like.

Clearly, none of these are solutions. An idiot can see that.

Washington just upped the US military budget so that they can buy more wiz bang jets and horrendously expensive clunky ships. Generals fighting the last war.

Pray tell, how they’re supposed to stop to some lunatic who believes some 7th century medieval poorly written science fiction book and now has visions of 72 virgins in his head and a bomb strapped to his guts in a crowded subway station? Europe’s leaders are even worse. Brussels is full of globalists and socialists who promote bad policies and then insist the whole continent pay for their mistakes.

The Western governments of the world are both clueless, ignorant and stupid. They’re also too afraid to call a spade a spade for fear of being demonised for being politically incorrect. But most importantly, they’re broke. This is a good thing because nation states which are a relic of the Industrial era are going to go away as well but that’s a conversation for another day.

Clearly they’re not going to solve these problems anyway, and, in fact, the economics of war have changed so radically that it ensures they’ll go away.

Remember, the most basic social contract a citizen has with his government is that of security and government cannot provide it.

The answers lie with private enterprise.

Private companies such as Stabilitas, who are using crowdsourcing, and AI are already doing more for individuals and businesses than governments are.

The truth is the economics of war have changed and that means that the technology that won the last war isn’t going to be the one that wins this one.

– Chris

“War is the ultimate realisation of modern technology.” — Don Delillo


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