The Economic Challenge

Abstract

These words by a nineteenth-century student of public finance are just as applicable to the period since the Second World War as they were to the period he was writing about. All post-war governments have faced the problem of balancing the need to sustain a strong defence posture with the essential requirement of trying to maintain a healthy economy (upon which effective military capabilities ultimately depend). The continuing economic problems faced by Britain for much of the period since 1945 have posed a major challenge for defence planners and are unlikely to become significantly easier in the years ahead. To understand the nature of this challenge we need to consider the relationship between defence policy and the economy which has developed since the Second World War.

While strongly insisting on the great advantages that are certain to result from the maintenance of peace, and the reductions of military and naval expenditure, it is quite as essential to assure that so long as present conditions last, a well-organized and effective system of defence is a necessary art of state expenditure… To maintain a due balance between the excessive demands of alarmists and military officials, and the undue reductions in outlay sought by advocates of economy, is one of the difficult tasks of the statesman.

C. F. Bastable, 1895¹