Introduction: the policy issues

Arms producers and arms industries are controversial: they are often criticized and condemned. But such criticisms need to be addressed and carefully considered. Arms firms and whole arms industries cannot be dismissed and proscribed without more detailed and careful analysis and evaluation of their apparent “wrongdoings”.

This chapter sets the scene and outlines the policy issues to be explored in the book. Are arms industries important: if so, why, and which other industries are viewed as important? Do they provide “good value for money”, or are they inefficient, corrupt and immoral; should they be condemned as “merchants of death”; and do they exploit their market power at the expense of taxpayers? What can and should governments do about them: should privately owned arms firms be subject to tighter government regulation or should they be taken into state ownership, and will state ownership solve the “problem”? These and other questions will be addressed in this book, at the end of which the reader will be able to reach a more informed judgement about the economic aspects of the arms industry. In this chapter, the arguments surrounding the arms industry will be presented and assessed. A legal approach would ask what is the case for the prosecution and what are the arguments for the defence? A starting point requires an explanation of why economists disagree about arms industries and other policy issues, followed by a definition of the arms industry.

Why economists disagree

The typical view of economists is that where there are ten economists there will be ten views and only one will be correct, but no one knows who will be correct!

Economists have good reason to disagree. Their disagreements might focus on differences of view about the relevance of a specific theory (e.g., Keynesians versus monetarists), on whether theories should be accepted or rejected on the basis of their explanatory power and predictive accuracy, or on the realism of their assumptions. Disagreements continue over the accuracy and reliability of evidence and on the appropriateness of particular policy solutions in relation to each economist’s value judgements and their views about the best solutions.