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Tuesday 22 Aug 2017 | 00:02 | SYDNEY
Tuesday 22 Aug 2017 | 00:02 | SYDNEY

Inequality and security: Some strategic implications



28 May 2014 13:05

Thomas Piketty speaking in Cambridge, Massachusetts in April 2014 (Wikimedia Commons

Thomas Piketty's widely discussed (and contested) treatise has put the spotlight on the social consequences of resurgent inequality across the developed world. Yet the scope of his work hints at even wider implications that extend to the fundamental political stability of both modern societies and the global system as a whole. Indeed, at the heart of his analysis of the evolution of modern economic disparities is an account of the relationship between inequality and security – both within and between states. In a series of posts I will explore these linkages, starting today with the relationship between rising inequality and international security. Are the two connected, and if so, what is the nature and strategic implications of the connection?

In Piketty's account, the linkage between international conflict and economic inequality is central, yet also historically contingent. The era of the world wars – what EH Carr famously referred to as the 'Twenty Years' Crisis' – disrupted income and wealth disparities that had surged through the Industrial Revolution, while fueling social demands for egalitarian policies. Piketty's implicit counterfactual is that, absent the shock of systemic war, these inequalities would have continued without disruption. International security dynamics are thus presented as a powerful but external force intruding upon the structure of economic relations.

Yet current scholarship suggests that the links between inequality and international security are reciprocal. To see this, it is useful to examine the lead up to World War I. The evolution of income inequalities through the 19th and early 20th centuries was tied to the first wave of globalisation, as increasing worldwide trade integration generated differential returns on the basis of comparative advantage. For the labour- and capital-rich societies of Western Europe, this meant an increase in returns to both labour and  capital, moderating the gulf that had emerged between the two, while marking the final death rattle of the land-bound aristocracy. 

Yet this moderation in inequality appears to have exacerbated strategic instability in Europe. David Rowe has argued that rising wages and investment returns generated political opposition to the efforts of Western European states to harness those resources for military purposes. This in turn generated anxiety among state leaders regarding the adequacy of their security preparations. Worse, these constraints undercut the perceived credibility of deterrent threats. The willingness and ability of leaders to defend alliance commitments was thrown into doubt. In sum, moderating inequality had the perverse effect of limiting the strategic flexibility and decisiveness of European statecraft. Contra Piketty, rather than war driving a moderation in inequality, a moderation in inequality produced the conditions that fermented war.

So we have a potential relationship between globalisation, inequality, and military effort. What light can this throw on more modern strategic dynamics? For starters, inequality can help explain the long-run fall in military spending across the developed world. Despite images of the Cold War as a period dominated by arms racing and militarisation, Western countries systematically reduced military expenditure from the 1950s onwards:

Trade and military expenditure (US & France). Sources: World Bank, Correlates of War Project

Why did this occur? On the one hand, military capabilities became increasingly capital-intensive, as more effective but complex and expensive machines replaced the mobilised masses of the world wars. On the other, this period also saw a second wave of globalisation, defined increasingly by capital mobility and (as Piketty notes) increasing returns to owners of capital relative to everybody else. The combination of these two dynamics raised the political costs of generating military power, and thus crimped military expenditure.

Despite Marxist predictions, rising inequality didn't lead the rich to push for an unbounded military build-up, because they ended up footing the opportunity costs. There was thus some truth to the perennial lament of Cold War hawks that the capitalist world had become increasingly decadent, unable and unwilling to invest in the capabilities to robustly offset Communist power. That this dynamic did not fatally undermine deterrence as it did prior to World War I can perhaps be credited to one clear distinction: the presence amid declining Western military investments in military capacity of a robust nuclear arsenal.

So has the combination of growing military capital intensity, the resurgence in high returns to capital relative to other economic factors, and the presence of nuclear deterrence provided the foundations for a gradual abnegation of war on the part of the developed world? Clearly not. Recent work reaffirms the complex interplay between politics, capitalism, and warfare. While tensions have declined between established developed democratic states, there has been no noticeable decline in the incidence of conflict between developed and less developed non-democratic states.

One particular explanation centres on the emergence of capital-intensive militaries. This is often taken for granted as a product of independent changes in military technology and doctrine. In contrast, Jonathan Caverley has contended that such force structures are themselves the product of the interaction of inequality with democratic institutions. Rather than putting their bodies on the line for national security through conscription, the mass of voters prefer to see the burden of defence shift to the wealthy minority within society. As a result, democratic societies tend to generate more capital-intensive militaries, an effect that is exacerbated by the level of inequality present (see below). Defence policy consequently resembles a form of social redistribution.

Income inequality and military capital intensity (US & France). Source: World Bank, Correlates of War Project

The catch, however, is that as the general citizen comes to bear less of the personal cost of military power, they are liable to become more tolerant of the use of force, leading democracies to chase conflicts and commitments that overstretch their resources. Thus while moderation in inequality drives strategic restraint, rising inequality may drive strategic adventurism. As Caverley notes,

(A) redistributive state is likely to attempt to compel others for low stakes and aggressively practice extended deterrence for increasingly peripheral prizes where it prefers the status quo.

Taking these insights together, we would expect rising inequality to have multiple effects on strategic postures of developed democracies, including a rise in capital intensity of military force structures, a decline in overall military spending, and a tendency towards strategic over-extension. To any observer of post-Cold War Western strategic behaviour, this analysis bears the uncomfortable ring of plausibility. The question now is whether these trends will continue to define strategic dynamics through the twenty-first century. 

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