Judy Klein – The Rules of War and the Development of Economic Ideas

Sometimes navigating through the field of economics can feel like dodging bullets in a metaphorical war.

But to INET grantee Judy Klein, a professor at Mary Baldwin College, this is no metaphor. Rather, Klein believes that understanding the protocols of war developed during World War II is at the core of understanding modern economics.

In her forthcoming book, Klein will delineate how models and modeling strategies established for the practical needs of war eventually wound up in economic research. As it turns out, the rules of combat and the rules for thinking about financial, economic, and monetary policy have deeply similar roots.

For example, Klein looks at aerial battles involving B-17 bombers and the mathematical models developed to forecast where enemy planes would be when the bullets hit them. She then follows those lessons as they were applied in the development of the adaptive expectations hypothesis.

It’s a fascinating, thought provoking topic. War is hell. Does economics have to be, too?



Please could you let us know if this book is available for pre-order somewhere?



...but there should always be a winner if his victory is connected to the death of a loser? Do we exist for or against one another?


War is an extension of politics (Carl Von Clausewitz). Politics is the art of negotiating competing ideas, for power, resources, survival or other activities. Ideas extend beyond the life and death of winners and losers, both in politics, war, and economics.

Really, isn't the point of modern economics to explain human behavior? Human behavior is based on the cognitive response to circumstances of the (broad definition) environment. Therefore, it isn't a great leap to model one set of ideas, responses and decisions, that deal with bullets and bombs, using the same math for the set of ideas, responses, and decisions we've come to be so very familiar with in the supermarket and stock market.

It is about time we had a book like this.

See also, the PRISM publication from the National Defense University. That is about as close as it gets for modern economics infiltrating military doctrine at this time. Hey, it's a start.

Good work Ms. Klien, and thank you for making the link and writing this book.


The Japanese have thought about business as war for a long time. Many Asian cultures think about commerce similarly. That's why many of them are so export focused and create enormous barriers to imports. They perceive having a large trade surplus as "winning the war."

It may well be that modern economic modelling was influenced by militaristic thinking but economic thought has been infused with such thinking for a very long time. So this book doesn't seem to be saying anything new.

Moreover, economic models/modelling are heavily influenced by two factors that make them seem more militaristic than they are. The first is non-cooperative game theory which be definition is adversarial, unless long-term relationship are being explored. The other is the adversarial nature of American culture which influences the way we think about Economics because many, many influential Economists are American (as least many more so than other fields).


Thanks for the talk and the book.

Now that we've established that the current economic system is built on war-thinking, what about creating an Economics of Peace?

I know of a few examples, but would love to hear more! Maybe we can build on the great works of:

- Economics of Compassion (S. Mensikov, article 1993 http://buddhism.lib.ntu.edu.tw/FULLTEXT/JR-BH/bh117522.htm)

- Gandhi's economics of Ahimsa (non-violence) by Kumarappa (1951) http://www.scribd.com/doc/8693162/Gandhian-Economic-Thought-by-JCKumarappa

- Satish Kumar's holy trinity of Soil, Soul and Society: http://youtu.be/-EQ1HtzXxQU. 'Peace comes from trust, war comes from fear'

- Economics as if People Mattered (Small is Beautiful, E.F. Schumacher, 1973) available here: http://su.pr/3nzoSb

I am looking forward to get in a conversation with those of you interested in the Economy of Peace.
Thank you, Sarah


I personally think that the only reason for wars is Economical benefits. History tells us that the basic reason of wars is economies, one country attacks other to gain taxes, fertile lands for agriculture, and men power to work for personal interests. Russia attacks Afghanistan to make a good route for their business. America attacks Iraq for economical reasons.
The world should realize that these types of attacks may strengthen an economy, but it will be harmful for overall world's economy. Today's economic stress is the ultimate results of these types of activities.

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