Mobilising For Failure - The Economic Transition to War and how Nations get it Wrong

Quick Overview

Nations consistently fail the economic transition to war by neglecting peacetime preparation, leading to critical bottlenecks during wartime mobilization characterized by unstable demand, supply chain crises, procurement system failures, and rampant corruption.

Key Points: The transition to war involves three phases: peace time (preparation), the messy transition, and wartime, with unstable demand being a core economic issue forcing a trade-off between civilian needs and military production ("nukes or nurses"). Peacetime investment bottlenecks are primarily political and financial complacency, where preventative measures are undervalued until a crisis forces massive spending peaks followed by 'peace dividends' that hollow out industrial capacity. Wartime mobilization often shifts the bottleneck from funding (which becomes available via debt or rationing) to the physical availability of goods, exemplified by recurring "shell crises" due to shortages of energetics like TNT. Price inflation for war inputs is an inevitable outcome when too much money chases too few essential goods; for example, the price of a 155mm shell rose from about €2,000 to €8,000 between early 2022 and October 2024. Wartime procurement systems seize up due to peacetime design, leading to rushed, often flawed efforts to rewrite rules, such as the US War Powers Act of 1941 temporarily giving the president authority to ignore contracting laws. Ukraine demonstrates devolved and informal procurement, notably through the 'Brave One' marketplace, which allows units to use earned 'e-points' (for destroying Russian equipment) to directly purchase necessary items like drones, fostering unit competition and immediate resource allocation. The rush to mobilize during war inevitably brings out corruption, as seen in the American Civil War scandals involving fraudulent contracts, substandard goods (like sawdust-filled gunpowder), and massively inflated prices, which thrive when regulatory oversight is abandoned.