In his famous dystopian novel Nineteen Eighty-Four (*) George Orwell described a world enthralled to a permanent war economy which was an “economy existing by and for continuous warfare.” It is said that the idea for the novel came in 1944 and the novel itself was written just after the war.
In the late ’40s the leadership of the US in business, government, the military, and others believed that the US economy had been “saved” by the war. They further worried that the US economy might sink back into the Great Depression when peace finally came to the world. What to do? What to do?
One did not wish for a continual WWII style nightmare; but rather for a low grade, safe to both sides, conflict. Hey! A Cold War! The USSR would be the perfect enemy. With spies, the Russians knew before the war was over we were going to betray them. The CIA helped by always painting a dark and frightful picture of Russian supermen who would take over the world and give us Orwell’s dystopian vision if the Sainted West did not stand and fight. The media and the schools did their part.
Unfortunately for the leaders, the USSR suffered from a fatal flaw that had been pointed out in the 20s by von Mises. (coming discussion on that in the econ 101 series) The USSR folded its tent after about 70 years and we looked around for another long term enemy. Today, we are waiting for China to become the new Great Enemy and in the meantime we have to make do with little, weak enemies like Afghanistan, Pakistan(**), or Iraq.
War is the health of the State and the bane of the people. Freedom leads to prosperity and the “mixed model economy” based on force, fraud, and drones leads only to ruin.
So; what to do? What to do? What to do?