Eve here. NATO members in Europe have been tackling a frenzy over an immature collection where Russia has won the Ukrainian War and the US is trying to defensively leave them to their own devices. That, of course, means that the evil Putin will soon be in Paris! Despite the rising energy costs due to Sankan, the UK and European economies are already in disappointment, Hans’ militarism is currently prevalent, but they are under budget stress. The Big Arms program only makes it worse.
So “Military Keynesianism” is, at least in theory, a way to square its surroundings. But how well does that actually work?
George George Wu, a longtime economist who worked for Cyprus’ central bank, worked in a senior role at Valyas, including head of government during the financial crisis.
Spending more on defenders will help you achieve stability that supports economic growth and unleash prosperity through new jobs, skills and opportunities across the country
– Kiel Starmer, Press Relay, February 25, 2025
introduction
Europe’s commitment to pursuing responsibility for the threat from Russia is partly justified on the ground that increasing military spending stimulates economic growth. In other words, military festures are seen by policy makers as a form of Keynes pump priming. This was a neat argument used by European policymakers, and it wasted persuading electors to accept a significant increase in defence spending at the expense of the welfare state. However, there is little evidence that Keynes’ militarism provides the intended outcomes of the Trepreneurs. Certainly, the economic realities of military production and prosecutors undermine the implicit assumption that the multiplier of defense spending is large enough to generate Keynesian-type stimuli.
Military Production and Procurement
The military equipment for most of the total European weapons systems is imported from America, Israel, South Korea and more. Table 1 below is used from the 2024 edition of TREDS In International Arms Transfer, published by the Stockholm Institute for International Peace in March 2025. The most prominent observation is the domination of art supplies from America. The percentage of imported goods from the United States varies from 45% (polar) to 97% (Netherlands). As Sipri states:
“Arms imports by NATO members in Europe have more than doubled (+105%) between 2015-19 and 2020-2020. The US provided 64% of these weapons, providing a significantly larger share than 2015-19 (52%).”
Table 1 – Selected European NATO Importers of Major Weapons and ESIR Suppliers, 2020-24
Source: Table You adapted from Table 2 in Sipri International Arms Transfer Trends, 2024
Due to the capacity constraints in the European arms industry and the domination of American technical know-how, in the short to medium term, American weapons are rarely replaced by domestically produced weapons in Europe. Increases in military spending in Europe will benefit the US economy more surprisingly than Europe.
For example, in countries like France where weapons systems are procured primarily from domestic producers, many components are often quantitative. Therefore, the impact of military spending on the domestic economy is limited.
Another factor that needs to be considered in the production process. The increasing sophistication of weapon systems involves capital-intensive production methods rather than labor-intensive methods that were common before the 1980s. The refined refinement of fighter jets, tanks and warships brings long lead times and cost overruns. The history of weapons systems after World War II is also filled with examples of unreliable or inappropriate armament. This is especially true for tanks, fighter jets and ships, but similar issues arise with relatively simple products. For example, the UK government currently needs to replace 120,000 body armor plates due to cracks.
Technology spinoff
Keynes’ militarism advocates argue that one way military spending stimulates economic growth is through technological innovations in the military, ultimately woven into the civilian sector. Empirical evidence of a technical spinoff is unfinished. Subacademic studies show that there was subsub-evidence of technical spinoffs during the Cold War, when there was an arms race and when military spending was higher than in post-Cold War periods. Oher’s research includes a spin-off fountain. In fact, spinoffs tend to be in the opposite direction, ranging from civilians to the military sector, to subformations known as “spin-in.” A 2005 research paper by Pauldan and Duncan Watson using panel data concluded:
One of the issues measuring spinoff falsehoods is the long-standing delay between the onset of military research and development and current applications in the private sector. These time lags can grow over several years, overlapping both the economic dynamics of the private economy and the interaction of spinoffs and spin-in. Therefore, it becomes difficult to deny the cause and effect.
The real beneficiary of re-contract
While European politicians try to trick themselves and their electorate that increasing military spending is a form of Keynes’ stimulation, the actual irritation is found in the prices and stock prices of major manufacturers and in the bank accounts of corrupt state authorities. In an article published in Naked Capitalism on January 31st of this year, I argued that arms producers are the main beneficiaries of the conflict. There was nothing new in this argument, but submission was useful. Chart 1 below, taken from an article in January, shows the stable performance of two large-scale US military manufacturing related to instability in non-arm manufacturing.
Like Regubt State Office, weapon history locks the environment into corruption. Interested readers can find them on the internet. For the purposes of our discussion, an appropriate example is when Ursula von der Reyen was the German Minister of Defence between 2013 and 2019, dealing with military-related contracts. This is the same Von Der Leyen who proposed in March this year to set up a European sales mechanism that would allow for a pool of military prosecutors. Von Der Leyen’s vague past as German defense minister should serve as a warning along with the controversial handling of the Covid vaccine contract.
Conclusion
The economic narratives used by politicians in Europe in NATO countries to justify an increase in military spending should be viewed skeptical. Ultimately, the decision to increase military spending must be based on military and strategic considerations, not undoubtedly economic benefits. Also, the expected economic benefits should not be used to divert from the unreliable austerity schedule, where SEMs are now firmly back on the table. Keynes’ mirorism is a poor substitute for Keynesianism.
