Walter Isard, Charles H. Anderton
October 1, 1999
In this part we wish to present a short, but compact survey of the main strands of thought in the literature on peace economics up to 1992. A more detailed and thorough survey requires a book-length manuscript currently being written. There are many ways in which this survey can be organized. One way would address first the question of why there is conflict, proceed to the identification of specific economic factors generating or lying behind conflicts, hone into the consequent phenomena of military expenditures and arms races, perhaps then investigate the interplay of economic factors in specific conflicts (including those leading to major unrest, wars, revolutions and terrorism), examine the basis for arms control, and finally at all stages probe into the manifold direct and indirect effects (the impact) of arms escalation, control and disarmament. To proceed in this way, however, is not very useful. The literature on peace economics is "helter skelter," appearing in diverse journals and books without adhering to any semblance of organization. Hence we choose to present first some general conceptual materials to help identify the myriad of forces and problems that have been encountered. Then we proceed to survey the literature, for the most part on operational models and hypothesis testing, following the four approaches suggested by economic reasoning that Arrow (chapter 2) uses in treating the economic effects of arms reduction. These are: standard resource allocation theory, macroeconomic stability analysis, modern growth theory, and political economy thinking. We find examination of the literature in this manner at least as good if not better than any other that has been proposed. However, we discuss writings on arms race models and arms control which are the outgrowth of the standard resource allocation problem in a separate section. Also since there are extensive writings on sectoral and regional impacts of military expenditures which employ models derived from both standard resource allocation theory and macroeconomic stability analysis, we add a section on these impacts after the discussion of macroeconomic stability analysis. Finally, we end up with a section on conflict management analysis and procedures, a topic of concern to all social sciences and many professions, and one on which economists have made notable contributions.