At the heart of a cherished axiom in political science—“war made the state, and the state made war” (Charles Tilly, The Formation of States in Western Europe, 1975)—are assumptions about the mobilization of resources by state organizations for armed conflict, and how that mobilization, when successful, in turn builds stronger state organizations. Yet, as Rosella Capella Zielinski argues, political leaders are faced with different options in the financing of wars, with different consequences in terms of augmenting the capacities of the state and the state’s capacity to engage in interstate conflict. Zielinski presents these options in an elegant typology and proceeds to argue why national leaders might opt for one or another, balancing effectiveness in war financing with the political hazards of levying the costs of war on a population.
The core arguments of How States Pay for Wars are laid out concisely in the introductory chapter. Zielinski groups the strategies for wartime financing into three broad categories: direct resource extraction, such as wartime income taxes and conscription; indirect resource extraction, such as domestic borrowing, spending down reserves, and printing money; and “external extraction”: resources procured from abroad, including sovereign loans and foreign bonds (pp. 5–6). She argues that leaders formulate a “war finance strategy,” based on whether the state has the bureaucratic capacity to extract resources, whether leaders face fears of inflation, and whether the general population supports the war. This yields four hypotheses (p. 6). First, leaders are more likely to choose direct extraction if they fear inflation or if there is significant public support for the war, and the state has sufficient capacity to extract resources directly. Second, indirect and external financing occurs when there is little fear of inflation, low public support, or low extractive capacity. Third, external financing becomes necessary when the state must acquire key inputs from abroad and does not have the necessary currency reserves. Fourth, when fear of inflation and public support are high but the state does not initially have the capacity to extract resources directly, then it might invest in augmenting its administrative capacities, yielding Tilly’s war making and state making.
The rest of the book traces these hypotheses through case studies, as well as presentation of some descriptive findings from a data set on the financing of wars between 1823 and 2003 (Chapter 6). After clarifying key concepts and laying out the arguments and their logics more fully in Chapter 1, the author lays out three paired comparisons to explore particular claims: U.S. financing of the Korean and Vietnam Wars (Chapters 2 and 3), Britain’s financing of World War II and the Crimean War (Chapter 4), and the financing of the two belligerents in the Russo-Japanese War (Chapter 5). These comparisons allow the reader to identify how such factors as fears of inflation, public support, administrative capacity, and external requirements vary in different contexts, and in the same case over time.
The case studies themselves constitute excellent narrative accounts based on archival research. Zielinski is particularly adept at highlighting the ways in which the perspectives of economic advisors were closely integrated into structures of strategic decision making in the conduct of war and diplomacy with key allies. Her discussion of the fraught interactions among British and American diplomats and statesmen, given the dire context of Britain’s necessities to secure external funding, over the Lend-Lease Act (pp. 69–80) is particularly enlightening. And her comparison of Russian and Japanese extractive capacity and their different needs for external financing (pp. 88–102) reflects back on core questions of the limits of the state’s capacity to augment its extractive resources in the context of late development.
Zielinski's overall project reflects a welcome addition to analyses of foreign and military policy that take domestic politics—the strategic goals of and constraints faced by leaders—seriously (p. 118). But while a promising start in what one hopes will be a much larger area of research is acknowledged, any full accounting of the political economy of war finance must go beyond accounts driven by public opinion and mechanical reactions by politicians. At minimum, other structural considerations—such as the party system or the international financial regime—and other actors, such as the military–industrial complex and its backers in Congress, must be included for the analytical framework to transcend the contexts of the particular cases presented here.
By choosing Korea and Vietnam as cases, for instance, Zielinski holds many of these factors constant; these wars were largely prosecuted by Democratic presidents from southern or border states, with broadly similar party dynamics, bases of popular support, and postwar state structures, and in the context of the modified gold standard and the Cold War. One might expect that explanations of the financing of the U.S. wars in Iraq and Afghanistan, two-thirds of which were financed through domestic debt (p. 4f), would grapple with the fact that both wars coincided with massive tax cuts, and yet oddly there was little inflationary pressure throughout the 2000s. Zielinski's predictions might point toward indirect financing despite the initial popularity of the “Global War on Terror,” but as importantly, the George W. Bush administration was ideologically committed to supply-side policies, essentially the obverse of Lyndon Johnson’s Great Society, and was enabled by monetarism, yielding not inflation but financial crisis. And as the popularity of the wars in Afghanistan and Iraq waned and political tension emerged between fiscal hawks and neoconservative war hawks in the GOP, might we have expected a change in war financing to accompany changes in domestic politics and war aims? Or have the different circumstances of American political economy converged to prevent such a modification?
Finally, Zielinski’s analysis explicitly focuses on the causes of war-financing strategies—why leaders choose particular strategies from a menu of options—rather than their consequences. And yet the early and frequent invocation of Tilly in the book suggests that we are at least equally interested in what different forms of financing cause, particularly in terms of state strength and weakness. The cases in the book occlude these questions, however, because they include only great powers, which normally only rise or fall. A supplementary analysis of poor(er) countries might point to both greater constraints and thus fewer options for war financing, but also different political dynamics: nationalist mobilization that trumps public opinion, for instance, or inflation that affects some elements of society and not others.
One does not have to go far afield from the cases of this book to explore these questions. The Korean War led to a much stronger South Korea, certainly a party to the conflict but one financed externally. Vietnam also emerged as a powerful regional actor following more than a quarter century of conflict. On the other hand, repeated conflicts between India and Pakistan have not yielded much greater state capacity for either party. Moreover, such complex conflicts as Afghanistan or Congo, which have elements of both civil war and interstate conflict, are associated with enduring state weakness. Zielinski's analysis might well contribute significantly to these discussions—particularly when interacted with the substantial literature on natural resources and civil conflict—but it requires a reorientation of empirical focus away from choices faced by leaders of some of the most capable and powerful states in the world.
Overall, How States Pay for Wars represents a valuable contribution to a growing literature on the ways in which domestic politics interact dynamically with international circumstances in the formation of foreign and military policy. It provides us with an excellent analytic and empirical framework for explaining war finance, an important topic that is rarely studied on its own terms.
