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Securitizing the Economy, Harbinger of Policy Failure?

September 10, 2012

Faced with rising rival powers and the unraveling of a previously unparalleled global hegemony, the leading intellectuals of a maritime imperial power suddenly latch onto the idea that it is economics and human capital, not sheer military might, that is the core of national power. Gifted in their insight into the real nature of geopolitical strength, these farsighted intellectuals attempt to incorporate domestic policies into a new conception of national power, foreign policy, and security strategy that can successfully overcomes the partisan nature of domestic political debate.

This was the case, of course, of the advocates of National Efficiency in the United Kingdom in the late 19th and early 20th century. Drawing variously on conservatives, advocates of Imperial Federation, and even Fabian socialists, the Efficiency lobby in the U.K. also thought that the obvious changing realities of geopolitics demanded the government, in order to preserve its foreign policy strength, undertake new measures to decisively revitalize the domestic economy, and its material and human base. In many cases, these domestic interventions drew inspiration from countries such as Germany and Japan, or from Britain’s imperial activities abroad. These intellectuals and policymakers wanted to more tightly intertwine domestic and economic policy with foreign policy, and did strongly believe in doing “nation-building at home.”

James Traub, writing in Foreign Policy, recalls many of their core arguments and even the conceptual elements of their advocacy:

As a public service, therefore, I suggest a reconceptualization of “foreign policy” in such a way as to provoke an actual debate. At the heart of the national security strategy which President Barack Obama promulgated in 2010 is the premise that a nation’s capacity to project power is proportional to its underlying economic strength. It is the economy, not the military, that is the “foundation for American leadership” and “the wellspring of American power.”

In his 2008 campaign, Obama promised to restore America’s global competitiveness. But then, as the economic analyst Matt Miller recently put it in the Financial Times, Obama had to ignore America’s creeping economic cancer in order to deal with the heart attack it was suffering when he took office.

There is no doubt that economics and foreign policy are related. But applying this sort of model quickly leads to all kinds of conceptual obfuscation and policy dysfunction. It is quite obvious to everyone that U.S. national power and prosperity depends, to some extent, on curbing excess expenditures and investment into growth industry. This is a banal point. One faction believes this can be done through reducing or at least curbing the growth in the size of government domestically and letting the private sector take care of this activity, the other believes that cuts in defense will open room for government investment that is sustainable in the long-term. Traub, clearly a representative of the latter, would like to essentially securitize the view of his camp. If politics ought stop at the water’s edge, then Traub and many who think like him would prefer to see the waters rise. Interestingly, Traub’s conceit of economic weakness as a “cancer” falls right in line with the organic conceptions of the political community that pervaded the 19th century antecedents of arguments for National Efficiency.

The problem with these sorts of National Efficiency arguments are subtle. Of course it makes sense to design economic policies with a mind toward enhancing national power and remaining compatible with security concepts, but doesn’t this mean simply thinking about national power in a broader sense? Instead, the problems with these sorts of arguments is that instead, it securitizes and geo-politicizes (forgive the term, please) domestic policy in frequently unproductive ways. After looking at the bloated, dysfunctional and politically haphazard way defense spending is treated by civilian policymakers, expanding the aegis of government policy options that deserve this sort of special treatment could easily become grossly deleterious.

Treating economics as a component of national security will most likely not lead to more sound, rational policy-making. Turning domestic policies into foreign policy is, as I have written before, is not going to result in some enlightening moment of clarity. The existence of a consensus on security policies, when it does exist, is in part because defense policy is beholden to bureaucracies that can approximate a “deep state” (albeit within an extremely shallow and circumscribed sense) that remains constant, and the executive has an incredible amount of weight in foreign policy and national security compared to other fields. Despite the tremendous amount of rhetoric and attention devoted by administrations and candidates towards economic policy, the executive does not and can never have the same degree of influence over economic policy, let alone economic outcomes, as he does over national security. Even despite these centralized, elite tendencies in national security policymaking, the subject itself remains the subject of frequently extreme partisan contention.

Trying to make building bridges or curing cancer national security priorities is not going to appreciably improve the chances these policies will be enacted, nor will they likely result in significant improvements to American national security generally. Economic power is the feedstock of national power, but even within what we consider economic policy, domestic economic strength in and of itself does not easily or automatically translate into national power. American geopolitical power, even in the economic realm, relies much more on America’s ability to translate this wealth into military might, institutional strength, and, to some extent, favorable normative and cultural space for American ideologies and interests.

Growth, the necessary industries to create, maintain, and project power, and dual-use industries and economic ties are important to national security. There are many ways to achieve growth, and the very types of military power a country relies on can shift the sort of economic policy that is necessary to effectively support force strength and power projection. A framework of “competitiveness” easily leads to poor metrics in national security. Traub, in an earlier piece, described an “infrastructure race” in which the U.S. was somehow failing in comparison to China to adequately invest in infrastructure. The idea of competitiveness and economic strength as the most critical metric is incredibly misleading in this respect. For example, there is no logical reason in the world we should be spending as much on infrastructure as China is. While it would be nice if U.S. infrastructure was better or more efficient, China is a country emerging from centuries of wretched mass poverty with a massive rural hinterland that is unthinkably undeveloped by American standards.

To the extent that infrastructure promotes growth, investing in infrastructure is good. There are, however, many totally awful ways to invest in infrastructure that promote waste, fraud, shoddy construction, and the creation and reinforcement of local patronage networks rather than national economic strength. Sure, China’s authoritarian development model allows it to construct infrastructure at a nigh-unprecedented rate and scale. It also allows it to suppress news or provide brutal solutions to the massively damaging environmental consequences of much of its projects, exploit or cover up the corruption from their construction, or silence reports about the frequent and disastrous consequences of construction projects that failed to prioritize sound construction. At least China has an actual national security imperative to construct or repair massive amounts of new roadways, railways, and ports. After all, China needs to support a massively growing volume of trade, extend and maintain control of coastal power over rural and remote areas, especially ones with restive minorities, and build up internal lines of communication that can enhance the deployment of military forces to China’s borders, or out of the range of hostile power projection.

A framework of competitiveness that focuses on metrics such as infrastructure, education, or scientific research often misses the point. The Germans, in many ways, had equal or superior educational, scientific, and infrastructure capacities to Allied states. Yet these did not translate into economic might per se, nor did economic might inherently translate into military strength. The Germans were far more efficient at killing their enemies in World War I, dollar for dollar and pound for pound, but they still lost the war. In World War II, each side invested in a wide variety of technological innovations, many of which proved irrelevant or unsustainable in a wartime setting. Similarly, in the Cold War, Soviet parity or superiority in certain industries and fields did not readily translate into superior economic strength, let alone superior geopolitical influence.

Securitizing the economy is just likely to bring the worst aspects of securitizing policy along with it. Instead of some bipartisan or post-partisan national consensus on how to grow the economy that translates into effective policy, treating the economy as a national security matter will simply become a cudgel to promote normal political interests, as already happens throughout the defense industry itself. Securitizing a field of policy seems incredibly risky and likely to encourage awful behavior, even if it does produce a bipartisan consensus. In the financial sector, unhealthy connections between the private sector, regulators, and policymakers encouraged bad economic policy that allowed banks to inflate their national importance in order to achieve favorable regulatory treatment. In the defense industry, the at least somewhat justifiable label of securitization has produced obvious waste and inefficiency through which legislators and private industry representatives have been able to excuse or malignantly encourage all manner of behavior with the exculpation of national security.

This is all assuming, of course, such a consensus actually emerged. In many aspects of national security, nakedly partisan debates and reflexive oppositionism still endure, and indeed even those posing as post-partisan visionaries will make concessions to naked partisanship simply as the price of the legislative and political game. For the late 19th century Britons envisioning policies of National Efficiency, Imperial Federation and other schemes to keep Britain competitive in an age of rapidly growing economic giants, the policies that passed failed to effectively arrest decline or preserve world stability, and a great many fell on the rocks of a domestic political consensus that stubbornly refused to form. This is why the advocates of efficiency at that time, too, longingly eyed or even overtly supported the supposedly more efficient national powers of Germany and Japan. While our defense policy deeply needs to be brought into economically sustainable levels, trying to treat economic policy as a matter of national security will only introduce the current flaws in national security dialogues into the economic realm. The desired bipartisan, technocratic consensus that would make this policy sensible is even less likely to appear within the economic realm than it is within the defense realm, where it is sorely necessary and reasonably expected.

One Comment leave one →
  1. September 16, 2012 10:30 am

    A slight tangent based on your paragraph starting “To the extent that infrastructure promotes growth, investing in infrastructure is good.” The EU loves to invest in infrastructure, believing it always promotes growth. Yet here in the Czech Republic, where we could use some road and rail upgrades thankyouverymuch, the money disappears into various black holes. All major construction contracts go to one of two companies, which are both very politically connected and which subcontract to each other regularly.
    We have the highest cost per km of new motorway in the EU.
    Meanwhile, in W Europe, do they really need more infrastructure? It might be nice, but W Europe already has pretty dang good infrastructure. At the same time, the levels of technical education and innovation, the only areas that Europe has a shot at comparative advantage, are sadly inadequate. The only really innovative big companies are Saab and Siemens.
    Well heck, I was sure I was going somewhere with this, and would be able to merge back into your main themes by the end. Possibly just commenting on the tendency to say ‘x -> economic growth’ where x is something with nice concrete metrics. Pardon the rant. 🙂

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