A “Climate War Economy”? Medium-run Macroeconomic Disequilibrium of the Green Transition

Drawing on the historical analogy with War Economy, this article investigates the concept of a “Climate War Economy” (CWE) to address the medium run macroeconomic imbalances inherent in the green transition. We argue that, as in war economies, the green transition is likely to generate a structural disequilibrium between constrained supply and rising demand, leading to medium-run inflationary pressures. This article uses the CWE analogy to open a broader discussion on the economic and political relevance of revisiting the macroeconomic stabilization tools deployed during World War II. It first examines how, in response to wartime constraints, governments suspended market mechanisms through price and quantity controls. Then, it explores the parallels with today’s green transition. By tracing the reasoning behind these interventions, the article shows how this historical experience can inform climate policy-makers and enriched ecological macroeconomics. Finally, the paper addresses the limitations of the war economy analogy, while arguing that price and quantity controls can be used to manage the macroeconomic imbalances of the green transition without undermining liberal democratic principles.