The Economics of Military Spending

6 An econometric analysis of the nexus of military expenditure and the profit rate

Introduction

Marx argued that the driving force of capitalism is the persistent search for higher rates of profit, imposed by fierce competition among capitalists. However, he also noted that there are internal contradictions in capitalist production systems that prevent their unlimited expansion. Marx argued that mechanisation of production is the key process in the accumulation of capital. It leads to higher labour productivity as workers use more sophisticated tools and machinery while increasing the organic composition of capital. This causes one key contradiction of capitalism: mechanisation reduces the profitability of capital. However, Marx also noted ...