The Uses and Limitations of Economic Analysis for Defence Policy Planning

Abstract

Moderation is the best antidote for illusory panaceas. This is no less true of economics than any other form of analysis. The extremist economist who believes that the real world is but a poor imitation (and, implicitly, all the worse for this) of his theoretical models is, happily, out of harm’s way in his cloister. At the other extreme, we have a minority who think that the real world is best represented by their theoretical models. The problem arises when either kind of extremist gets let loose on an organisation, encouraged by some change in policy or personnel, and proceeds to cause all manner of unnecessary tensions before being brought under control, usually by another change in policy or personnel. While there is some slight caricature in the above compared to what tends to happen, there is an element of truth in it and in looking at the possible influence of economic analysis on defence policy planning, without necessarily referring to specific times and places or specific institutions, we ought to start by arming ourselves against panaceas and the persuasive charm of those who purvey them.