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War: what is it good for? (Not innovation-led growth.)

There’s been some discussion recently about whether war is good for innovation or not. Tyler Cowen argued that a lack of wars was hampering innovation and economic growth.

“Fundamental innovations such as nuclear power, the computer and the modern aircraft were all pushed along by an American government eager to defeat the Axis powers or, later, to win the Cold War.” (I'm not sure I agree with Tyler's claim that the Internet was built to survive a nuclear strike, but aliquando bonus dormitat Homerus and all that.)

John Aziz disagrees, pointing out that economic growth was at an all-time high in the peaceful period after WW2. John also makes the powerful point that wars themselves destroy far more wealth than they create through innovation, and divert far more resources. “Economic growth is meaningless if it just ends in mass destruction,” as he puts it.

What John and Richard Jones agree on is that the Cold War was a particularly fruitful war from the point of view of innovation. It saw big military build-ups, relatively few wars, and lots of wondrous innovations driven by state defence spending (as Mariana Mazzucato observed in The Entrepreneurial State).

I thought it was worth highlighting a few qualifications to this story:

1. High technology seems to be less useful in winning actual wars than generals think. The Manhattan Project features in Tyler's article and in many stories about war and innovation, but it might not be typical of war-winning investments. David Edgerton makes the point that for the cost of developing and building two atomic bombs, the US could have built enough B29s to bomb Japan to extinction. (If you doubt the Americans' willingness to do this, don’t forget that in 1944, 13% of Americans believed that all Japanese people should be exterminated after the war – slide 61). Edgerton also argues that most of Churchill's innovative war machines were ineffective. And going back further, medieval warfare from Morgarten to Agincourt is full of accounts of knights in plate armour (the high-cost military innovation of the day) being humbled by opponents armed with bows and spears.

So perhaps the Cold War, which clearly did involve lots of high-tech defence spending and associated innovations, isn't a very typical war. Relatively little intense fighting went on, and displays of might (for example to discourage the Russians - this was after all the war that gave rise to game theory) were very important. So it's plausible that the Cold War was unusually innovation precisely because little blood was shed.

2. The Cold War could have turned out differently. Nowadays if anyone thinks of the world of Threads and When The Wind Blows we breathe a sigh of relief and move on quickly. But when we assess the net effects of forty years of nuclear stand-off, we should remind ourselves that the balloon could well have gone up.

The post-Cold War economy is like a gambler who bet big and won. Perhaps instead of judging Cold War innovation based on the world as it is now, we should average across the possible worlds in which half the world’s cities were reduced to ash. If we did this, the benefits of semiconductors, GPS and ARPANET would look like scant compensation.


Stian Westlake

Stian Westlake

Stian Westlake

Executive Director of Policy and Research

Stian led Nesta's Policy and Research team. His research interests included the measurement of innovation and its effects on productivity, the role of high-growth businesses in the e...

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