On war and economics

9 Sep, 2020 at 12:31 | Posted in Economics | 3 Comments

clusThey soon found out how difficult the subject was, and felt justified in evading the problem by again directing their principles and systems only to physical matters and unilateral activity. As in the science concerning the preparations for war, they wanted to reach a set of sure and positive conclusions and for that reason considered only factors that could be mathematically calculated …

It is only analytically that these attempts at theory can be called advances in the realm of truth; synthetically, in the rules and regulations they offer, they are absolutely useless. They aim at fixed values; but in war everything is uncertain, and calculations have to be made with variable quantities. They direct the inquiry exclusively toward physical quantities, whereas all military action is intertwined with psychological forces and effects. They consider only unilateral action, whereas war consists of a continuous interaction of opposites.

Models may help us think through problems. But we should never forget that the formalism we use in our models is not self-evidently transportable to a largely unknown and uncertain reality. The tragedy with mainstream economic theory — and the ‘theorists’ that Clausewitz criticised — is that it thinks that the logic and mathematics used are sufficient for dealing with our real-world problems. They are not. Model deductions based on questionable assumptions can never be anything but pure exercises in hypothetical reasoning. And that kind of reasoning cannot establish the truth value of facts. Never has. Never will.


  1. And I think it was Michael Hudson who said: ” “free trade” is the mercantilism of the hegemon.”

    • Of course it is. And this is the historical background to which Classical/Neo classical trade theory developed.

      Place: Britain. Time: the age of imperialism

      Britain tried to force open Chinese markets to deal to close a trade deficit and force it to import opium; its plundering of India is estimated to have cost the country USD45 trillion.

      Free trade theory was an instrument of soft power. Part of its hegemony over knowledge and ideas.

      Classical and Neo-classical theory arose during the age of imperialism and in the British empire. Its philosophical foundations, in relation to its view of man and society, stripped of tinkering, remain fundamentally unchanged.

  2. Clausewitz famuosly wrote that war “is the continuation of politics by other means.”. I think that definition became outdated by the establishment of imperialism, when colonies became an economic neccesity. Globalized att the scramble for Africa. The 19:th century definition would be “… the continuation of economics ..”, and today, with the scramble for oil and 7 countries i 5 years, war has become the continuation of finance – by crimes against humanity.

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