No, we’re not saying that war is logical, per se, but that within its own frame of reference there are certain things that make sense, but also a lot that doesn’t. Much of modern “Currency Principle” economics is like that, where some of it makes sense within its own framework, but a lot that doesn’t, especially if you’re talking Keynesian economics.
Not to digress (you’ll see where this is going in a moment), but the “Austrian School” of economics is about as rigorously logical as you’re going to get, at least given the fundamental assumption of Currency Principle economics that the amount of money in the system determines the level of economic activity. The Austrians have principles, and they attempt to implement policies consistent with those principles. The Monetarists/Chicago School economists are similar, but sometimes act more pragmatically rather than consistently logically, but still attempt to adhere to principles.
It’s when you get to the Keynesians that things fall apart for the Currency Principle schools of economics, so much so that some Currency Principle adherents try to make the untenable claim that Keynesian economics is actually Banking Principle economics. No, the Banking Principle is that the level of economic activity determines the amount of money in the economy, not the other way around, which is at the heart of Keynesianism.
The difference is that where the Monetarists and the Austrians try to analyze and interpret reality in terms of their principles, the Keynesians — like Keynes — try to change reality to fit their principles. Thus, where the Austrians define inflation as any increase in the money supply (which is consistent with their view that money is a commodity), and the Monetarist define inflation as an increase in the money supply that outstrips the supply of marketable goods and services (which fits both demand-pull and cost-push inflation), the Keynesians define inflation as an increase in the price level after full employment has been reached. Any increase in the price level prior to reaching “full employment” is not “true inflation.” Reality is re-defined to fit theory. Similarly, Keynesians claim that the government can change the definition of money at will, depending on what economic or political goal is sought; reality is forced to fit theory.
This brings us to Russia’s economics of war. On Monday and Tuesday of this week, the Russians attacked Ukraine’s major cities with over 100 guided missiles and drones at a cost that Forbes magazine estimates at more than US$1 billion. Experts say this seriously depleted Russia’s irreplaceable stock of such high-tech weapons.
Russia claimed the attacks were in revenge for the damage to the Kerch Bridge connecting Russia to Occupied Crimea. In other words, in what amounts to a fit of pique, Russia expended a huge amount of its missile stocks to hit civilian targets at a time when their army is struggling for its life against Ukrainian counterattacks. It’s a little like the boxer who, instead of fighting his opponent, jumps out of the ring and punches out a spectator in the front row for cheering on his opponent. Not only does he forfeit the match, he is banned from boxing until Hell freezes over for such an asinine stunt.
One of the first things to keep in mind in warfare is never to do anything out of revenge or spite. All it does is outrage the enemy and anyone watching. Further, as a matter of prudence, you don’t go after civilian targets for any reason, such as a busy intersection, a children’s playground, or a scenic bridge. Finally, you really don’t want to waste scarce munitions against unarmed opponents or bystanders when you are faced with opponents who are outgunning you at every turn. It’s just plain stupid.
The other thing you never do is lie to yourself how the war is going. If you’re winning, be careful not to endanger your gains. If you’re losing, be prepared to cut your losses. Don’t try to redefine the reality of war to fit some preconceived notions . . . such as how easy it all is to conquer another country that doesn’t want to be conquered.
All this lends credence to the claim that 1) Putin is insane, and 2) he is in direct command, giving orders that make no sense, spreading only confusion and death as he guts what’s left of the Russian ability to wage what is increasingly seen as a personal vendetta of the Russian dictator.
It has happened before. In 1566 Turkish Sultan Suleiman the Magnificent decided he was going to make one more grand effort to take Vienna as the steppingstone to the conquest of Europe. He assembled one of the largest military forces seen in centuries and set out. Along the way, one of his columns was attacked by Count Miklos Zrinyi of Szegetvar, who killed a few men and made off with a small amount of loot. Instead of continuing on to the main goal of Vienna and stomping down the pesky Hungarian nobleman on the way back, Suleiman decided to teach Zrinyi a lesson and destroy him before proceeding to Vienna. Three months later, just before being forced to return to Istanbul for the winter, Suleiman ordered a final assault on Zrinyi’s castle, and died right before the attack. Suleiman “won” the battle but never made it to Vienna, having spent enormous resources and lost his own life taking an unimportant castle to carry out personal revenge.
Clearly Putin doesn’t care one bit what it costs to inflict damage on Ukraine, even if the cost is losing the war he started. A sane man would have stopped months ago, bogged Ukraine down in negotiations, and waited until the world got so bored with it that they forced Ukraine to cede territory to Russia just to get things back to normal. Of course, this would have bought Putin valuable time to rebuild his forces and restart the war as soon as it was convenient, but — as we said before — he is clearly insane, sacrificing everything he claims to want to gain in a pointless attempt to teach Ukrainians a lesson.
Putin has taught Ukraine a lesson, of course — don’t trust Putin — but he has also taught his own country and the rest of the world the same lesson. He gained nothing and lost his soul, anyway.
#30#
