[Bbang Gubneun Tajagi] There Is No Longer a War That Drives Economic Growth

The oldest central bank in the world is the Bank of England (BOE). It was founded in 1694, when England was at war with the France of Louis XIV, the "Sun King." At the time, King William III of England borrowed a large sum of money from financiers to raise massive war funds, and in return he approved the establishment of the BOE and granted it banking privileges. As a national credit system was built around the BOE, England was able to secure war funds in a stable manner and succeeded in blocking France's expansion.

Duncan Weldon, author of "The Invisible History of War and Money," defines the state as "the result formed as groups that have successfully waged war evolve and develop." In this book, which examines human history through war, Weldon introduces the concepts of "incentives" and "institutions" in order to understand war from an economic perspective. Incentives generally refer to economic rewards, and institutions refer to taxation, finance, and administrative capacities that have been developed and refined to conduct war efficiently. The BOE can be seen as a clear example of an institution created for efficient warfare.

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It is no exaggeration to say that the history of humanity is, in effect, the history of war. If we define a war as one in which at least one of Europe's major powers-England, Spain, France, Austria, Russia, or the Ottoman Empire-participated, then in the 16th century Europe spent 95 out of 100 years at war. In the 17th century, 94 years; in the 18th century, 78 years were war years. War was virtually a way of life. Up to this point, war could even be described as "a gift from Mars (the god of war)" in economic terms, as it had aspects that were beneficial. Before the 18th century, the world was short on resources. As populations grew, individuals' standard of living tended to decline. When many people died in war, the survivors could enjoy a larger share of resources. Moreover, in this period, although wars caused loss of life, in many cases the damage to the economic base-capital, livestock, buildings, and so on-was limited.

Weldon also interprets the Renaissance, which serves as a criterion for distinguishing the Middle Ages from the modern era, as a product of war. Medieval Italy was a mix of five great powers-Venice, Milan, Florence, the Papal States, and Naples-along with numerous small states, principalities, and city-states. Although wars were constant, it was more common to corner the opponent and force a surrender than to engage in large-scale battles. As a result, soldiers who accumulated enormous wealth emerged, and Weldon argues that their investment in culture and the arts made it possible for the Renaissance to begin in Italy.

As the world entered the 19th century, the nature of war changed. The Industrial Revolution of the 18th century dramatically expanded the capacity to mobilize resources, and institutions became more sophisticated, giving states the foundation to wage large-scale, sustained wars. In the 20th century, the total number of years in which major European powers were at war fell to 53, but the destructive power of war increased beyond comparison. War now destroyed not only countless lives but also capital, machinery, buildings, and other resources, leaving even the survivors poorer. The economic incentive of reward disappeared, and no rational person could welcome war anymore.

Even so, humanity went through two world wars and the Vietnam War, and in the 21st century Russia invaded Ukraine. Weldon points out that, despite the disappearance of economic incentives, such wars have occurred because of miscalculation. The side that chooses war overestimates its ability to mobilize resources and its chances of victory. Weldon concludes by criticizing this folly, noting that although war can hardly be justified today either rationally or economically, human beings have never been fully rational.

The Invisible History of War and Money | Written by Duncan Weldon | Translated by Yoon Jong-eun | Wolbuk | 360 pages | 24,800 won

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