Negative economic repercussions of disarmament

Disarmament would raise both general problems of maintaining the over-all level of economic activity and employment; and specific problems in so far as manpower or productive capacity might require adaptation to non-military needs.

There are some aspects of the process of disarmament which would raise problems significantly different from those that have been experienced in the usual process of economic growth. While many of the continuous changes in the composition of demand work themselves out only over a long period of time, it seems reasonable to assume that disarmament, once decided upon, would occur more rapidly. For some components of military demand, the whole of the shift might occur within a very short period of time such as a single year.

The reallocation of resources attendant upon disarmament would therefore pose some special problems. Even with the successful maintenance of total effective demand during a period of disarmament, significant problems of adjustment would remain in specific sectors and areas of the economy. Part of the personnel released by the armed forces and the armaments industry would have to be trained or retrained so as to permit absorption into peacetime occupations. Some plant and equipment would have to be converted. Productive capacity might contract in some industries, and might have to be expanded in others. Where the manufacture of armaments has been concentrated in particular regions, it would be necessary either to shift resources out of those regions to other areas of growing demand, or alternatively to undertake schemes of redevelopment. The necessary steps would have to be taken to modify the direction of research and of technological development. Some less developed countries (dependent on exports of a few raw materials and commodities) might suffer economically from a sudden reduction in demand, a closing down of military bases, or the rapid sale of raw material reserves.