The Cold War Oxymoron

Why did the Cold War (1947-1991) unfold? Wars are declared by states for one reason or another; self-protection, resources, or territorial expansion are a few of the reasons.  To fight

Cold War Exhibit Entry. The Ford Library

Cold War Exhibit Entry. The Ford Library

a war, however, a nation’s people must be inflamed and rallied around a noble cause, else the people required to fight the war might have to be chained in place.  WWII was declared in the West when Germany and Russia invaded Poland in 1939 and, in the Pacific, when the Empire of Japan invaded the Republic of China in 1937.  Democracy and the Western way-of-life was the noble idea in the U.S., but in Western Europe and Great Britain, the noble cause was protecting the physical shores or recapturing one’s country. WWI was declared following the assassination of Austria’s Archduke Franz Ferdinand and his wife Sophie in Sarajevo, Bosnia by the ‘Black Hand’, a Serbian secret society. The noble idea was national pride.

The preceding is gross oversimplification.  To be sure, the learned have written volumes on each war throughout known history. And each tome was penned through the author’s particular analytical lens.  Every scholarly argument as to why and how a particular war began is stated, properly supported, and documented. However, if the observer is far enough away, the date of the war and the mechanism by which governments mobilize the citizenry to fight and die in it, are fairly discrete and unpretentious. On the receiving side mobilizing the citizenry is very simple; they fight to defend themselves or their culture from a perceived threat, or to help a friend do it. The Cold War, however, does not reduce to a reason and a noble idea. It is vexing.

The Cold War more closely resembles an economic construct; some weird and wonderful 6a00e551f080038834017d40ff1fa7970cKeynesian cycle whose bubble finally burst in 1991, when President Clinton declared the Cold War over. A British economist, civil servant, director of the British Eugenics Society, director of the Bank of England, part of the Bloomsbury Group of intellectuals, et cetera, John Maynard Keynes, is one of the founders of modern macroeconomics, and he greatly influenced the economic policies of western governments. Developed during the 1930s, Keynesian economics is a theory promoting government intervention in the marketplace and monetary policy as the best way to warrant economic growth and stability as well as level out the ‘boom and bust’ cycles[1].  In the U.S. in 2007, the intervention first by the Bush administration and continuing through the Obama administration to save the ‘too-big-to-fail’ companies through the Troubled Asset Relief Program, TARP, and the Federal Reserve’s $80 billion a month bond buying program are direct applications of Keynes’ theory.

Keynes theories were 180 degrees juxtaposed from the classical (or neo-classical) liberal economists who argued for a free market with the role of government being very small andHayek confined. Friedrich Hayek and Milton Friedman, two such economists, argued that government should be as small as possible in order to allow the exercise of individual freedom. They maintained that free markets would, in the short to medium term, automatically provide full employment, as long as workers were flexible in their wage demands. Not surprisingly, almost all governments adopting or adapting Keynesian policy recommendations versus the classical liberal approach have resulted in the crony capitalism that is destroying personal freedom and the marketplace in today’s world.  For the record, my bias is to the classical liberal.  Continue reading