ABSTRACT
Introduction Modern economic theory assumes that economies can grow at a constant rate fed by exogenous technological progress. Macro economic theory also assumes that technology drives the economy forward. Organization theory assumes that workers do not share company goals. They are at best indifferent about the company. The same applies to employers who easily replace one employee with another on competitive labor markets. Management theory differs from economic theory. Economic growth is not obvious and requires a positive vision on man and society as explained by Peter Drucker. Investment in productive capacity is based on growth expectations. Expectations of decline become a self fulfilling prophecy, if investment comes to a halt. Declining economies feature negative net investments. Stagnant economies just reinvest cash flows to buy identical assets. Growth, stagnation and decline are steered by investor expectations and subsequent realizations. Growth occurs when expectations were realized on average. Decline occurs when expectations were not met. Investors in capitalist economies decide to fund some projects and reject others. Investment is subject to uncertainty: some projects succeed, while others fail. Some people will rise while others descend on the social ladder. The unpredictability of investment outcomes shakes prevailing social hierarchies and reshuffles social positions. Liberal market economies distinguish between ex ante valuations and ex post outcomes of investment. Peter Drucker emphasized that nontraditional societies need belief systems that instill hopes of a better future. But the future results from individual endeavors. This differs from belief systems that want to use state powers to realize ex ante ideas on who are the losers and the winners of the economic game. Productive investment is one way to attain economic goals. But people can also attempt to increase their wealth by using force to seize assets from individuals and groups. Convictions of physical superiority have made people and nations use violence to achieve their goals. We can distinguish two different economic motives to wage war. Wars have been fought to obtain scarce natural resources. Wars have also been fought to establish or expand empires that appropriate surpluses from subjugated people. The first motive applies to (subsistence)
economies that are assumed to have reached barriers to growth. Precivilized communities that required more land to feed an increasing population attacked other tribes to occupy their lands (Keeley 1996). However, alleged resource scarcity has also prompted wars in modern periods. The second type – wars to expand empire – want to extend control of both land and people to appropriate surpluses. Wars to obtain scarce resources are total wars, while imperial wars can be labeled limited wars, since they want to keep people alive. War results from conscious decision making. The same applies to innovation investment. Moreover, both aggressors and innovators expect their ventures to be successful. Economic growth based on productive investment is a positive sum game. War, by contrast, is a negative sum game as it destroys physical structures and human life. However, war can be a positive sum game for the victorious party, if the spoils of wars exceed their costs. Economic growth through investment in innovation constitutes the antithesis of war. Innovation also constitutes the antithesis of stagnation that flows from staying with tradition. Both innovation and war constitute departures from traditional ways of life. Warfare and innovation both require leadership that depicts a picture of a better future. Both war and innovation have uncertain outcomes. Both military leaders and entrepreneurs need to build organizations to attain their goals.
