An Economic Model of The East-West Confrontation

Abstract

In this paper, we develop a comprehensive analytical perspective on the contemporary conflict situation between the United States and the Soviet Union, based upon standard concepts and methodologies in contemporary economic thinking. The perspective involves static-model specification, comparative-statics analysis, and a possible extension of the model to dynamic uncertainty circumstances. Applications of the model include results on the determination of socially optimal armaments spending and on the effect of the invention and dissemination of nuclear weapons upon the probability of war. The complexity of the comparative-statics results obtained on the basis of an apparently quite-simple static-model specification reflect the complexity of the contemporary human predicament. Because of this complexity, the model does not necessarily support the widespread contemporary presumption that the invention and dissemination of nuclear weapons has reduced the probability of total war.