Re: SV: [OPE] Studying unproductive labor: CEPR report

davez@kth.se

While military spinoffs can have a positive effect on productivity and 
output I think there can be little doubt that had the military budget 
been spent in civilian R&D instead the effects would have direct and 
greater.

The unproductive use of resources surely had an impact on long-term 
performance of the Soviet economy. If the resources were directed toward 
improvements of productivity, consumer goods and the implementation of 
more sophisticated planning techniques, the stagnation of the economy 
could perhaps have been avoided.

//Dave Z

Martin Kragh wrote:
> I think the experience of World War II shows that countries that entered the war with high unemployment rates actually experienced positive growth rates for the years 1940-1950. At least this is true for the US and most Western economies. For Germany, France, Finland and the USSR, the war was a major setback, but these were also countries where a lot of actual destruction and fighting occurred (one might also argue, that it was the countries who won the war that also experienced positive growth, of course the USSR also "won", but it was extremely pyrrhic, the losses they experienced are incomprehensible to the human mind). 
>
> There is no clear cut way to say whether or not military spending might act as a positive multiplier or not in the short vs. the long run. It depends on the initial circumstances, and the conditions in which the spending develops. In peace time, it is another thing again. Economic historian Mark Harrison argues that it is not completely easy to determine whether or not Soviet military spending during the Cold War constituted a net drain or not, since it is not easy do determine the interrelatedness of military spending and innovations, and the potential boost these might produce for the civilian sector. Still however, many historians love to preach that the USSR was "outdone" in the arms race with the US. However, this might not be the (main) reason the Soviet economy came to a naught in 1985.
>
> Just some thoughts.
>
> Kind regards,
> Martin  

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