------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (September 2008)

G. C. Peden, _Arms, Economics and British Strategy: From Dreadnoughts to 
Hydrogen Bombs_. Cambridge: Cambridge University Press, 2007. xiii + 384 
pp. ?55 (cloth), ISBN: 978-0-521-86748-1.

Reviewed for EH.NET by Mark Harrison, Department of Economics, 
University of Warwick.


George Peden is Professor of History at the University of Stirling and 
the author of several influential studies of British public and military 
policy at various times in the twentieth century. _Arms, Economics, and 
British Strategy_ brings it all together into a detailed 
reinterpretation of the period starting in 1904, the year that saw the 
launching of the _Dreadnought_, the world?s first armor-clad battleship, 
and finishing in 1969, when the British government committed its 
independent thermonuclear deterrent to Polaris submarines.

The book is divided chronologically into six chapters, devoted 
respectively to the periods before and during World War I, the interwar 
period, World War II, and the nuclear and thermonuclear periods of the 
atomic age. Each chapter discusses the policy makers of the time, the 
technological shocks affecting the supply and demand for military 
equipment, considerations arising from the state of the economy, and the 
strategic context and repercussions. The common theme is the choices 
that had to be made given ?the tendency for the costs of new weapons 
systems to rise more rapidly than the national income? (p. 1).

In every society planning for the contingency of war is conducted under 
conditions of great uncertainty, and requires competing interests to 
overcome mutual suspicion and resistance. Without hindsight it is rarely 
clear what distinguishes the national interest from special pleading and 
conversely. One pleasing aspect of the book is the care with which Peden 
exploits the knowledge gained from knowing what happened next without 
using it to criticize unfairly the choices made by those who lacked the 
benefit of experiences that still lay in the future. Not accidentally, 
given this, the most difficult chapters are the last two; unlike the 
periods ending in 1914 and 1939, the Cold War did not end in the 
finality of an all-out conflict that proved the worth or otherwise of 
the insurance policies taken out against it.

Peden keeps a range of targets in his sights. At the center is the 
conventional wisdom on British military decline over the twentieth 
century. This parallels (and takes some inspiration from) outmoded 
stereotypes of Britain?s relative economic decline in portraying the 
British armed forces as led by amateurs and equipped by conservatives 
who failed to lift their eyes above the short term horizon. In 
successive chapters Peden refutes the latter description, attributed in 
various aspects to Corelli Barnett, Michael Howard, Mary Kaldor, and 
Paul Kennedy, among others. In making his case he draws on official 
statistics and documents in the national archives, the memoirs and 
personal archives of the political and military actors, a vast secondary 
literature, recent studies by his comrades-in-arms David French (on 
military matters) and David Edgerton (on industry and science), and his 
own previous research.

A theme of the interwar years that Peden rescues from undeserved 
obscurity is that of economic stability as the ?fourth arm of defence? 
(p. 132). In the late 1930s, Treasury officials argued that price 
stability and the competitiveness of traded goods were an essential 
element of the country?s capacity to wage war without external 
assistance. This resonates to some extent with Mancur Olson?s finding 
(in _The Economics of the Wartime Shortage_, 1963), based on the 
experience of 150 years of warfare, that the best peacetime preparation 
for war was to trade and specialize on the basis of comparative advantage.

The book is economically written, with an intimidating range of 
reference. Beyond a clear division into parts, there is little help for 
the reader in the way of signposting or other coordinates.

The context might have been enriched and simplified at the same time by 
more explicit analysis of the rising cost of new weapons. Peden 
demonstrates that the real unit cost of the major weapon systems -- 
airplanes, tanks, and vessels -- was increasing monotonically, implying 
a rising share of national income required to build a given array of 
units. This was one factor that drove successive British peacetime 
administrations to shrink the numerical size of the armed forces. As 
Peden points out, this does not mean that the armed forces became less 
powerful militarily; the destructive power, and so military value, of 
each unit also rose at a dizzying pace. The advent of the atomic bomb 
did not mean more destruction, but it meant that the same destruction 
that previously required mass bomber formations could now be achieved by 
one plane and one bomb.

So, rising costs were not the sole factor in the evolution of public 
choice in this field. A confounding factor was that ratios of military 
value to the economic cost of weapon systems were also on an upward 
trend. To complicate matters, value-to-cost ratios of different weapon 
systems most likely rose at different rates, implying incentives to 
substitute among them. Substitution would have been limited, however, by 
further factors. One (to which Peden gives considerable attention) was 
the changing patterns of complementarity among weaponry in different 
uses. Another was the remorseless rise in the minimum efficient scales 
of both production and use of military equipment. Finally, different 
periods offered varying scope for mitigation of increasingly difficult 
national choices through international trade and military collaboration.

To conclude, this is a rich, profound, sometimes difficult work of 
historical scholarship that deserves to make a lasting impact in its field.


Mark Harrison is Professor of Economics at the University of Warwick and 
editor of _Guns and Rubles: The Defense Industry in the Stalinist 
State_, published by Yale University Press and the Hoover Institution in 
2008. Email: mark.harrison at warwick.ac.uk.

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