The political economy of milorg

Abstract Kenneth Boulding argued that the people and organizations that constitute the war industry hold a special place in economic systems. They blur the line between private and public, and producer and destroyer. At the core of the war industry is the unique military organization, or what Boulding called “milorg,” which includes the entire network of public and private organizations, and the people who populate those organizations, involved in the war industry. The purpose of this paper is to explore the political economy of the milorg by engaging in comparative institutional analysis. We do so by comparing how the milorg, relative to private firms outside of the military industry, answers four fundamental economic questions—(1) What is to be produced? (2) At what price and quantity is it to be produced? (3) How is it to be produced? (4) With whose resources is it to be produced? To explore the answer to these questions we focus on incentive and epistemic institutionalism. Incentive institutionalism focuses on the incentive structures created by different institutional arrangements. Epistemic institutionalism, in contrast, focuses on the different forms of economic knowledge emerging from different institutional arrangements.