Graeme Wood

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Economics by Other Means

The New York Sun
April 16, 2008

To be an economist nowadays is to be a professional smartypants, gleeful in explaining away nearly everything everyone else does or cares about. Got a funny name? Ask an economist, not Mom and Dad. Worried about spotted owls? Check out this incentive structure. Think each “X-Men” movie is worse than the last? Have I got a regression for you. In recent years, as if to signal that they have exhausted the field of human behavior, economists have tried (and largely succeeded) to move on to other species and explain capuchin monkey behavior as well.

“Castles, Battles, and Bombs” (University of Chicago Press, 424 pages, $29), co-authored by an economist, Jurgen Brauer, and a historian, Hubert van Tuyll, purports to explain military history through economics. It examines seven key moments in the last thousand years of warfare — among them, the building of castles in the High Middle Ages, France’s decision to irradiate the South Pacific with costly nuclear testing during the Cold War, the role of private military contractors in the Italian Renaissance, and the bombing of Germany in World War II. These are all, the authors say, susceptible to economic analysis and elucidation. If economics can explain the behavior of capuchin monkeys, then surely it can explain the behavior of Frenchmen.

The book does so, however, with only middling success. Each chapter uses a familiar economic concept to explain one of these decisive choices in military history. An introductory chapter gives clear but dry definitions of such principles as “opportunity cost,” “diminishing marginal returns,” and “substitution” for those who need them. In the historical discussion, however, the authors only fleetingly display any of the quantitative cleverness that makes for the most interesting economic history.

And economic history without numbers turns out to look an awful lot like regular history. The discussion of the High Middle Ages, for example, highlights the superiority of castles to battlefield armies, and the costs of building a castle. Castles are expensive, the authors say, but the next-best alternative was to strengthen an army — which required huge upkeep costs and risked total destruction if ever actually sent out to, you know, wage battle. This discussion is not without interest, or even without wit —”By definition, an army is superior to a castle in offense. After all, a castle cannot move” — but it provides no surprising insight about the nature of castles, and its stated goal of illustrating the concept of opportunity cost feels like a distraction.

Other parts of the book have similar failings. In the chapter on the Italian Renaissance, the authors explain the origins of the armies of Italian city-states by the failure of the system of condottieri, the private military contractors who signed condotte, or contracts, to provide security to the city-states up to the mid-16th century. (Machiavelli, knowing scoundrels by sight, famously doubted the contractors’ fidelity.) The history of these Florentine Blackwaters is remarkable, and the approach — a reading of the actual contracts between the mercenaries and their paymasters — a fruitful one, since their agreements make clear that both parties simply had no way to trust each other.

But couching the history in economic terms is less helpful than the authors believe. Is this a “principal-agent problem”? Surely it is. But Machiavelli and numerous historians since have managed to analyze the contractors without reference to the economic jargon of information asymmetry here. The discussion is not wrong, and indeed is peppered with useful facts about the condottieri and why the city-states transitioned into use of standing armies. But if the language of economics is necessary, then the authors should use it; otherwise, they should eschew it as much as possible. In this case, one longs for more economics, if there must be any. A good start would be with numbers, of which there are simply not many before the chapters on the modern era. (A function of the scarcity of records from before the last century.) Too often, doing economics without numbers can resemble shooting target practice with blanks.

The later chapters do become more quantitative, and better. A discussion of the strategic bombing of Germany in the Second World War features rich data and lucidly rendered theoretical analysis, packaged as an explanation of how the Allies ignored the concept of diminishing returns, at the cost of many, many lives on both sides. The bombing, the authors say, was a long exercise in overkill — it accomplished less and less with each sortie, and alternate uses of valuable American and British resources went neglected because of a misguided faith that pounding away at German cities would break what was actually a deconcentrated German supply train.

Another chapter about postwar France explores its force de frappe — an incredibly expensive nuclear-weapons program that was substituted for conventional military forces in an effort to recover the country’s historic status as a superpower. Their scrutiny is again engaging, and it helpfully identifies the debates that have formed the basis of security and nonproliferation studies. But again, the economic argument feels forced. Substitution is not a difficult concept, and the authors need not have relied so slavishly on economics to explain French strategy. What is perhaps more interesting than how the French hankered for restored grandeur is that they hankered at all. Not every superpower in decline takes these extraordinary and potentially destructive steps to reassert itself; the French willingness to do so does not yield obviously to economic treatment.

“Castles, Battles, and Bombs” rides the coattails of two other books: Jared Diamond’s “Guns, Germs, and Steel” (1997), whose title is echoed here, and Steven Levitt and Stephen Dubner’s “Freakonomics” (2005). “Freakonomics” made it possible, even cool, to use economics to explain the everyday — crime rates, say — and the bizarre, such as rigged sumo championships. Mr. Diamond’s book, for my money the most fascinating of the three, used geography and biology to explain the character, and fate, of civilizations. What differentiates the present volume from these other more engaging ones is that the economics is not a tool for analysis but the very star of the show. The other books show how their disciplines can illuminate more about seemingly distant fields — the economics of sports, the geography of politics. In this book, the larger stories of wars, arms races, and technology are foils for the economic protagonist to showcase his best tricks. The subtitle of this volume is “How Economics Explains Military History,” but one emerges with the impression that it might better be vice versa.

Mr. Wood is a staff editor at the Atlantic.

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