War Economy Means the Abolition of the Market

The main driving fuel of life in Europe, gas, has increased in price by more than 700 percent since the beginning of last year (so, it’s not all about the war!) and is currently the most important and sought-after commodity in the world. Experience shows that it only takes five days without energy, electricity, and food for chaos to erupt on the streets.

However, even a glance at the recently shining democratic members of the Union suggests that we have stepped into, if not a wartime economy, then at least a pre-war one. After all, chroniclers of the times, the media, are already suggesting this. Simultaneously with the deterioration of European economic health, the term ‘war economy’ is increasingly mentioned in public discourse, no longer as a whisper.

For instance, Austria, the Netherlands, Sweden, and Denmark, according to Bloomberg, have already activated emergency economic plans. Germany has already completed the second of three steps towards full control over gas distribution, alongside the rationalization of other goods (water, electricity, food), which is already a practice of a war economy.

While some domestic analysts dismissively wave their hands in the style of ‘I haven’t heard a greater nonsense in a long time’, the American Politico stated three months ago that the EU is indeed preparing for a war-economic scenario. The document that Brussels waved around last summer, asking member states to save/reduce gas consumption by 15 percent by May next year, contains more than that. For example, a plan to pay companies and industries deemed ‘non-essential’ to voluntarily disconnect from the grid if needed or to be first in line for gas disconnection in ‘extreme cases’.

So, are we living in a war economy? Professor Luka Brkić from Libertas University says that a war economy is very simple – everything is under state control, and if necessary, it can simply confiscate property.

– The market does not exist, it is abolished; the one that possibly survives is the black market. There is not enough capital, so the (economic) war is financed by inflation, by printing money. The redistribution of all goods as well as prices are under the control of a central authority. We have already partially grazed this last point, as the administrative price control we currently have not only in Croatia but throughout the European Union does not tolerate a capitalist mode of production. Inflation is also a result of state interference in the market – Brkić points out.

Economist Ljubo Jurčić (whose recent advice on savings was met with ridicule by the public) adds that a war economy also implies complete rationalization of all goods (due to shortages) and their distribution according to some key (for example, a certain quantity of goods is determined per individual or household).

Are we living some elements of a war economy after all, and why, if we do not have a war on our territory, read in the new digital and printed issue of Lider.