I was a young economist at the International Monetary Fund in the early 1990s working in its main policy-making department and, on the side, going on IMF missions to Bulgaria, as the country made a harrowing transition from the inefficiencies and mindlessness of central planning to democracy and the market and, in time, full membership in the European Union, a much better project than remaining an impoverished satellite of the Soviet Union. Working with the IMF Bulgaria team was stimulating and exciting, as the IMF and the World Bank geared up into the uncharted territory of assisting the countries in Central and Eastern Europe to (hopefully) making that transition as less painfully as possible.
The end of the Cold War, precipitated in great part by the enlightened leadership of Mikhail Gorbachev, unleashed an intense debate among economists and policymakers about the opportunities that would be created by the reallocation of military spending to more productive forms of expenditure, more directly linked to economic and human development. This was referred to as the “peace dividend” and for those of us who had long believed that war and violence were an extremely ineffective means of achieving political ends, all of this was cause for celebration. By the early 1990s I had met Jonathan Schell several times and he strongly reinforced in me the conviction that the postwar period had been characterized by a gradual but significant erosion in the effectiveness of military force as a means to achieve political and strategic objectives.
The changing context for warfare
Historically, war was often an effective tool for territorial expansion, economic dominance, and political control, with technologically advanced militaries subjugating entire populations with relatively small forces. Francisco Pizarro and a relatively small band of adventurers quickly subjugated Atahualpa and his several thousand fighters and rapidly turned the Incas into virtual slaves and came to exert control over vast territories. However, the utility of this model began to wane with the emergence of industrialized warfare and increasing economic interdependence, which raised the costs of military conflicts substantially.
…even the most powerful nations have repeatedly found themselves unable to achieve their military objectives, despite possessing superior firepower and vast resources.
The advent of nuclear weapons, the global spread of democratic governance, and a greater awareness of the shared humanity of all peoples have dramatically altered the trade-offs associated with war. In the postwar period, even the most powerful nations have repeatedly found themselves unable to achieve their military objectives, despite possessing superior firepower and vast resources. The examples are many: from the 1956 Suez Crisis and Britain’s inability to assert its influence over Egypt, to France´s defeat in Algeria and the United States failures in Vietnam, to the Soviet Union’s invasion of Afghanistan. A more recent example, of course, is Russia´s invasion of Ukraine; contrary to expectations on the part of the Russian government that the conflict would prove short-lived on account of the country´s vast military superiority, Russia was not able to achieve its strategic objectives and, instead, sustained huge losses in human lives and financial resources and by restructuring its economy to strengthen its military industrial complex, it has undermined its future economic prospects. These examples illustrate the diminishing effectiveness of war, even for nuclear-armed states, highlighting that military force might no longer guarantee strategic success. The observation that authoritarian and democratic states alike have failed in their military campaigns suggests that this decline in the utility of war is not contingent upon governance systems but rather is a function of deeper structural changes in global politics and economics.
The economic and human costs of war
The escalating costs of modern warfare further underscore its declining utility. To take a recent example, the United States invested trillions of dollars in military interventions since 2001. The Watson Institute at Brown University estimated in 2017 that wars in Iraq, Afghanistan, Pakistan and Syria had cost over $4.3 trillion or 23% of GDP at the time. These accumulated military expenses have, no doubt, contributed to the rising stock of public debt in the United States and the fact that in 2023, for the first time, the US budget paid out more on interest on the public debt than on the US military. But these numbers, impressive as they are, only capture accounting costs, not opportunity costs and productivity losses. How many additional million jobs could have been created by redirecting some of the monies allocated to the war effort to investments in healthcare, infrastructure, clean energy, education, and other productivity-enhancing areas? Would a trillion dollars have made a difference in the fight against cancer or the mental illnesses that afflict a growing share of the US population? The questions are too painful to raise.
Beyond direct military costs, these conflicts have also had immense human and political consequences. The prolonged military presence in Afghanistan, despite the initial goal of dismantling the Taliban and fostering democracy, ultimately led to an outcome where the Taliban regained control in 2021 and proceeded to reimpose it medieval, misogynistic, repressive forms of governance, raising questions about the efficacy of prolonged military engagements. While interventions may achieve short-term tactical victories, they often fail to create long-term stability, making war and violence an increasingly inefficient instrument of policy.
In an insightful paper written at the turn of the century, the Johns Hopkins scholar Michael Mandelbaum noted that not only had the costs of war risen significantly due to the interlinkages of economies and the integration of financial markets but how the public perceived war and violence had also changed in major ways with wars of aggression no longer perceived as a noble, patriotic enterprise, a legitimate expression of one´s love for country, but often being perceived as a criminal enterprise, involving grand corruption, massive violations of human rights, abuses of international rule of law, and so on. The Institute for Economics and Peace in its Global Peace Index highlights that the number of conflicts resulting in a decisive victory to either side has fallen from 49 per cent in the 1970s to less than 9 per cent in the 2010s. The number of conflicts that end through a peace agreement has also fallen significantly, from just under 23 per cent in the 1970s to just over 4 per cent in the 2010s.
Nuclear deterrence has also played a crucial role in shifting global attitudes toward war. The catastrophic potential of nuclear warfare has made large-scale conflicts an unthinkable proposition for rational leaders. President Harry Truman once stated that initiating a nuclear war was “totally unthinkable for rational men.” The destructive power of nuclear weapons not only ensures mutual annihilation but also renders traditional notions of victory obsolete. Daniel Deudney notes that a large nuclear war might render humanity extinct, a consequence of human actions without any historical precedent. In his view, this planetary risk itself justifies an equally unparalleled enhancement of the global structures of order and governance with enough means and channels to diminish or counterbalance the annihilation risk. With the possible exception of Russia (an authoritarian state with a comprehensive machinery of repression), this realization may have restrained even the most powerful states from pursuing aggressive military campaigns, reinforcing the idea that war is an increasingly costly and irresponsible endeavor.
Despite these constraints, violence persists in many regions, often driven by sectarian conflicts, ideological extremism, and regional power struggles. However, even in these localized conflicts, military solutions frequently fail to produce lasting peace. The economic, social, and psychological costs of war extend far beyond battlefield casualties. Millions of people are displaced, economies are destabilized, and societies are left to grapple with the long-term consequences of violence. The treatment of wounded soldiers (physically and/or psychologically) will often put onerous pressures on future budgets, quite aside from the shattered lives and the damage to societies stemming from the multidimensional consequences of violence. The post-war reconstruction efforts in Iraq and Afghanistan demonstrate that military interventions often leave nations in fragile and precarious states, requiring extensive resources to rebuild infrastructure, governance institutions, and civil society. These indirect costs, including loss of productivity, psychological trauma, and social disintegration, further erode the rationale for using military force as a primary tool of statecraft.
The economic burden of global violence is staggering. The war in Ukraine is another example of the deterioration in global peace and security and its associated costs. According to the Stockholm International Peace Research Institute (SIPRI) the conflict in Ukraine has caused global military spending to reach a 35-year high.
Yet another dimension of the costs of war and violence pertains to the changing nature of global catastrophic risks. More than one million US citizens succumbed to COVID-19 in 2020-21 according to a John Hopkins University of Medicine estimation, more American fatalities than during World Wars I and II, and the Korean and Vietnam wars put together. An awesome military establishment, including thousands of nuclear weapons, was totally useless in protecting the population from an airborne virus. At least 15 million people, taking the official WHO estimates, died because of COVID globally and this large number reflects at least in part the lack of preparedness in countries across the planet, including among high income countries, whose investments in their respective public health infrastructures, with few exceptions, were inadequate to address the onset of the pandemic, as compared to their prior expenditures in their military establishments.
The future of the peace dividend
So, the “peace dividend” is not just about a future reallocation of resources to human development that would be made possible by the creation of a sounder and more credible collective security mechanism as called for, for instance in A Second United Nations Charter: Modernizing the UN for a New Generation, but it also refers to the potentially catastrophic risks that we are taking on in the future because we are misallocating resources now, spending massively on defense while leaving unattended climate change mitigation, pandemic preparedness, the shamefully high levels of malnourishment in the world, among others. We may well come to regret this and by then, unfortunately, it might be too late.