Rearm Europe. Reindustrialize to defend Europe. This is the agenda that the political leaders of the European Union have been trying to promote lately, through the White Paper on European Defence, the BirArm Europe and the 2030 Availability plans. The excuses for the promotion of militarism are the war in Ukraine and the rapid and unstable change in international relations. In the face of the challenge that the European industry is facing, rearmament is being considered as a solution. The European Commissioner for Economic Affairs of the European Commission has put forward favourable economic arguments: militarisation will boost economic growth, stimulate innovation and create jobs.

These measures have also been welcomed by local governments. In the case of the Basque Government, he stressed the need to support the European defence project, which represents a golden opportunity for companies and their subcontractors. This aid is not new, but several studies have revealed subsidies granted by public administrations to companies in the war field, which in Orwellian language is called the defence industry.

Faced with the path of war as its goal, the anti-militarist movement has quickly and firmly denounced European rearmament, as well as the military industry of the Basque Country. Even from the academic world, the manifesto The arms industry is not the way(s) to go has been disseminated. The opposition to this economic war is evident. However, politicians and lobbyists insist on the economic advantages of this path. Is that how it is?

Military Keynesianism is behind this proposal. Accordingly, military spending can act as an incentive for economic growth. The government’s military spending (due to real or imaginary threats) favors aggregate demand. This boosts the economy both directly (through government purchases) and indirectly (through the multiplier effect). Some argue that maintaining employed capital and labor avoids recessions or depressions. In other words, for capitalist systems that lack coordination, war or threat of war is economically beneficial.

Is this proposal economically valid? The fiscal stimulus drives demand in depressions. Without a doubt, military spending is not the only way to stimulate the economy (other spending, tax cuts or waiting for Keynes’s animal surprise to recover can work).

What does the historical experience say? In Germany, the recovery began before Hitler and the fiscal stimulus was weak until 1937. Consumption was suppressed; no large multiplier effects were found. In the United States, World War II did not actually pull the country out of the Great Depression, and the real engine before that war was private investment. If we look at the Cold War, military spending increased during this period, but it decreased over time, despite the increase in prosperity. There is no simple relationship between economic health and military spending.

Military Keynesianism may be an interesting but weak theory, as the modern economy and historical data have shown. There is no solid theoretical or empirical support for the idea that military spending is necessary (or even particularly effective) as an economic remedy. Economic policy should not depend on war-driven stimuli. But this is the choice of the political and economic elites of Europe and the Basque Country.