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Military Spending and Profit Rate: A Circuit of Capital Model with a Military Sector

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  • Adem Y. Elveren

Abstract

This paper aims to contribute to the theoretical discussions on the effect of military spending on the economy. To this end, it first modifies the circuit of capital model proposed by Duncan Foley in 1982, which represents money value stock-flow relations for capital in Capital Volume II. Foley’s model is extremely useful for examining the relationship between military spending and the rates of profit as it allows one to specify the parameters in both the military and civilian sectors. By incorporating the military sector, the adapted model shows that a larger military sector is associated with a higher rate of profit. Second, the paper provides some empirical evidence on the US for 1968–2008 for the main proposition of the theoretical model.

Suggested Citation

  • Adem Y. Elveren, 2022. "Military Spending and Profit Rate: A Circuit of Capital Model with a Military Sector," Defence and Peace Economics, Taylor & Francis Journals, vol. 33(1), pages 59-76, January.
    • Handle: RePEc:taf:defpea:v:33:y:2022:i:1:p:59-76
    DOI: 10.1080/10242694.2020.1832394
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    Cited by:

    1. Adem Yavuz Elveren & Ünal Töngür & Tristian Myers, 2023. "Military spending and economic growth: A post-Keynesian model," Economics of Peace and Security Journal, EPS Publishing, vol. 18(2), pages 51-65, October.
    2. Ceyhun Elgin & Adem Y. Elveren & Gökçer Özgür & Gül Dertli, 2022. "Military spending and sustainable development," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1466-1490, August.

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