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Seminar: Changing Dynamics of Security and Economics

In the second of our seminars on security and economics, GPPAG held on January 4, 2011 a roundtable-discussion on the topic of "The Changing Dynamics of Security and  Economics", with participation from NPS and invited participants (Marianna  Vintiadis, Sid Winter, Giovanni Dosi).  
The aim of the seminar was to have a collective brainstorm on select issues about the relationship between economics, economic strength, and national security. Our starting point for the discussion was a paper written 1989 by Professor Sidney Winter (with a foreword and afterword that he had prepared for the seminar). The paper discussed some of the key relations between economic strength and national power, starting from Paul Kennedy’s (1987) thesis linking changes in military strength and political dominance to divergent rates of growth of national economies. Professor Winter outlined three themes that would be important for understanding future relations between the economic and national powers.

First, nuclear weapons add a dimension to military strength that is absent from Kennedy's history and that complicates the picture considerably. A nation with a nuclear deterrent is arguably more immune to serious challenge than the size of its economy or its conventional forces might suggest. If mutual deterrence limits conflict among major powers, can other forms of conflict reach levels where they play a role in "confirming" (per Kennedy) shifts in relative economic strength? What complications can arise from nuclear proliferation and from the possibilities of non-state actors becoming nuclear?  Will nuclear forces come to be distributed in the world in a way that corresponds more closely to the distribution of economic strength, or will those two domains evolve independently?

Second, the trend to “globalization" (meaning international economic interdependence), affects the linkage between the economic and military spheres.   It suggests, first, that general economic strength is relevant in armed conflict only to the extent that it has been translated into "forces in being" at the start of the conflict (a dramatic contrast with World War II). Second, it might imply that national financial strength has become much more important relative to "factories," i.e., national capacity for producing armaments. The simple argument for that is "weapons can be purchased in the world market," but then there are several other reasons, including ones relating to other forms of power and dimensions of conflict. Will future conflicts be mostly economic in nature?

Third, it is clear that the institutional and social arrangements of a nation powerfully affect the translation of economic strength into various forms of national power. Nations can be seen as systems of individuals and organizations that try and shape their futures, but each have different limited rationalities, imperfect foresights, as well as different interests and different connections to "national" identity and ambition. In a metaphorical sense, nations "choose" how much effort to allocate to various forms of influence on other nations, including military forces. They also "choose" the specific uses and organization of that effort. But these processes of "choice" are complex indeed. Today in the U.S., we see these processes going forward in a context of pressure toward lower overall effort, with attendant intense controversy over particular weapons systems - and against a background shaped at least as much by mismanagement of the domestic economy as by international conflict and power concerns.   

After Winter’s presentation of the core issues there were remarks from the other panelists on topics relating to Winter's discussion (and to the area of economics and security in general. For example, Marianna Vintiadies discussed how globalization and changes in the economies have led to changes in intelligence gathering processes in private businesses and the relations between private intelligence companies and national security agencies. Those changes included increasing use of contractors; room for (and role of) ambiguity in the case running processes; the differences in security and quality control, and issues of loyalty and changing professional identities (from private to national security intelligence and vice versa) and the role of government. There are parallels here to Winter's "globalization” theme; a complex, internationally "outsourced" procurement process has some striking vulnerabilities and ambiguities. Following that, Giovanni Dosi discussed some relations between military industries and innovation. Up until about the time of the Manhattan project, there was not much influence of military procurement on innovation (military R&D was lower than agricultural R&D). But the Manhattan project and World War II generally introduced new patterns that became fully institutionalized in the Cold War.  Defense-related research changed the rate and pattern of innovation for the entire economy. Dosi discussed how procurement is especially important in the early stages of 'technological paradigms'(Dosi, 1982), and how Europe had underestimated the civilian importance of military R&D. The history suggests that it is particularly significant in the early stages of a paradigm that the funding and "lead user" role of defense research has a strong impact on the civilian economy. The last decades have seen maturing of the technological paradigms and changes in transferring of technology (technological knowledge is often sticky and difficult to transmit, (Nelson & Winter, 1982).  

The subsequent discussion also raised issues of lack of transparency (in production of weapons and technologies), the role of economic powers on contemporary issues and potential conflicts, and the overall changing economic gravity and balance among national powers.

We hope to be posting a longer seminar report shortly as well as papers related to the topic.  

Dosi. G (1982): "Technological paradigms and technological trajectories: A suggested interpretation of the determinants and directions of technical change <>," Research Policy <>, Elsevier, vol. 11(3), pages 147-162, June

Nelson, R. & S. Winter (1982): An Evolutionary Theory of Economic Change. Harvard: Harvard University Press.

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