In his 1913 study Krieg und Kapitalismus (“War and Capitalism”), economist Werner Sombart argues that the operations of European militaries helped to usher in capitalism and the Industrial Revolution. Sombart proposes that early modern warfare was Janus-faced. In the short term, it was economically destructive, yet in the long run, it made possible the highly productive modern economy. This notion reappears in other books by Sombart, notably The Quintessence of Capitalism.
Sombart’s thesis has received scant discussion in recent years. Still, one scholar proposes that Sombart’s ideas on this and other topics merit “attentive consideration.” What follows is an attempt to provide such consideration.
Military service as character-building
Sombart maintains that military training cultivated character traits necessary for the full development of capitalism. These included discipline, patience, respect, the capacity for large-scale cooperation, and the ability to follow instructions.
It is indeed plausible that mental habits instilled through military training can carry over into the civilian world and have economic effects. Thus, a study of over 1000 “truck driver trainees” found that “those who had previously served in the military were more patient.” This seems even more impressive because, in the same study, secondary education appeared to make one less patient. Incidentally, being a veteran was also “a strong predictor of lower BMI [Body Mass Index].”
Most anecdotal examples point in the same direction. For instance, sociologist and Visiting Fellow with the Ayn Rand Institute Nikos Sotirakopoulos credits military experience with having paved the way for his conversion from Marxism to capitalism. Following his service, Sotirakopoulos “was way more disciplined” and “appreciated things like hard work [and] commitment” more than before.
Sombart also believes that the behaviour of entrepreneurs was foreshadowed by that of military commanders, in that “the qualities of the good general are those needed by the successful undertaker.” The biographies of noteworthy entrepreneurs lend credence to this statement. Nathan Rothschild, famed businessman, financier and founder of the German branch of the Rothschild family, was nicknamed “the general in chief” by his brothers, and contemporaries compared him to Napoleon Bonaparte.
Militaries as promoting innovation
By Sombart’s account, production of military supplies introduced many useful new methods. It promoted early standardization and mass production in various industries, from textiles to baking. Moreover, it helped to spread new techniques for iron smelting, drilling in metal, and so forth.
Brian Balkus, a market intelligence professional, has authored two accounts of military-driven innovation which dovetail with Sombart’s analysis, both in Palladium, a publication popular with Silicon Valley technologists.
In the United States, military research and development efforts during the Cold War spawned “a golden age for scientific funding” and an efflorescence of American physics. “From 1960 to 1968,” notes Balkus, “the number of doctorates awarded in physics doubled.” Because policymakers were keen on real solutions, meritocracy reigned and “credentialism,” or the overreliance on ossified systems of professional advancement, was less potent than it is now.
In Israel, the military program known as Talpiot recruits highly intelligent youths and trains them to work in research and development. According to David Kutasov, a veteran of the program, “at Talpiot they beat [conventionalism] out of you.” Balkus assesses that Talpiot graduates have brought immense benefits to Israel’s economy, thanks in part to the skills the program taught them.
Political scientist Hal Brands likewise contends that, “while Cold War defense spending did reshape the American economy, it was mostly in a good way.” This included its dominant role in research and development, which made possible “commercial spinoffs including computers, semiconductors and the internet.” Brands quotes historian Diane Kunz’ criticism of Dwight D. Eisenhower: “it was precisely the American defense spending he condemned that brought unheard-of prosperity to the United States,” referencing Eisenhower’s famed warnings against the growth of the military-industrial complex.
On a more banal level, the potential for military innovation is expressed in journalist Scott Christian’s observation that “practically everything [men] wear has its roots in military dress.”
Transfers of military organizational practices
According to Sombart, “before ever organization began to play its very important role in modern capitalist undertakings, it was already a mighty force in the management of armies.” Indeed, he posits a causal relationship between countries’ military aptitude and their possession of “those capitalist qualities that owe their existence to efficient military drill.”
Sombart cites economics journalist Arthur Shadwell’s opinion that the efficiency of German industrial organization is due to military experience. “Employers and employed,” paraphrases Sombart, “have both been through the training, they have both learned in the same school that order and discipline are needful for any organized powers, be they military or industrial.”
Elsewhere, Shadwell remarks that German workers’ hygiene has improved spectacularly within living memory, attributing the change in part “to military training.” “German workmen and factory hands,” he writes, are cleaner than their British counterparts. “The sergeants take care of that in the barracks, and the habit sticks.”
Postwar American history similarly illustrates the utility of military management practices transplanted to the civilian sphere. John Tierney and Roy Baumeister write: “After the war, corporate America had new planning heroes, like the Whiz Kids, a group of World War II veterans who reorganized the Ford Motor Company.”
The financial system
For Sombart, the financial system’s development was substantially furthered by the trade in war bonds; war “created” the securities exchange.
Here, too, Sombart’s view holds up in some measure. According to Niall Ferguson, “after the creation of credit by banks, the birth of the bond was the second great revolution in the ascent of money.” The bond market, he observes, was kick-started by warfare. “Without wars,” moreover, “nineteenth-century states would have had little need to issue bonds.”
Of the Napoleonic era, Ferguson comments: “Once again… the opportunity for financial innovation was provided by war.” As an indirect consequence of the Battle of Waterloo, the bond market became much more convenient for buyers. Bonds issued in London were denominated in pounds, not foreign currencies, and interest could be received at any of several European locations.
Conclusion
All this having been said, none of the above implies that war is desirable. Still, the economic and social impact of military activity short of war is an appropriate consideration when thinking about policy issues like the optimal amount of military spending or the ideal size of an army.
