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MICHAEL TAILLARD
ECONOMICS AND
MODERN WARFARE
THE INVISIBLE FIST OF THE MARKET - SECOND EDITION
Economics and Modern Warfare
Michael Taillard
Economics and
Modern Warfare
The Invisible Fist of the Market
The 1st edition of this book was written in 2011, and it was the first
book I had ever written. Since that time, many things have happened.
World events have taken a turn in which there has been a dramatic
increase in the concern for, and application of, economics in combat sit-
uations. Many of these things offer a more modern look at the princi-
ples described throughout the 1st edition, while others offer clearer, less
abstract examples of concepts which may, on their surface, seemed to be
difficult to believe as having truly useful benefits. There are even brand
new types of economic tactics being used today, offering us an opportu-
nity for a wholly new chapter.
It is not just the world that is new, either. Since the 1st edition of
this book, I have been published many more times, and my writing has
matured, primarily due to my improved understanding of what makes a
good book. Despite the popularity of this book, still distributing roughly
3500 copies per year even 5 years after it was originally written, I con-
sider this my 2nd worst book in terms of style (the worst being Analytics
and Modern Warfare). So, while the purpose and structure of this 2nd
edition will remain wholly true to the original, you will note that there
are many changes to the book which incorporate clearer descriptions,
better examples, and subtle improvements to the style of writing used.
The ultimate goal of this 2nd edition is to ensure that the contents
of this book provide the most up-to-date information available and to
improve upon those things which provide no fundamentally new or
updated information. With luck, this will bring greater exposure to the
vii
viii A Note from the Author on the Second Edition
ix
x Preface
***
In 1776, Adam Smith’s pivotal economic treatise, An Inquiry into the
Nature and Causes of the Wealth of Nations, was published wherein
Smith describes what he saw as “the invisible hand of the market”; a
metaphorical reference to the market forces of supply, demand, and price
that naturally control production and consumption within and between
nations assuming no intervention by the government. He detailed with
great accuracy and at great length the nature of the free market as he saw
it and the processes by which we, as people, allocate resources through
production and trade. The natural behaviors that we exhibit and pro-
cesses to which we all adhere in our interactions to acquire the neces-
sities for comfort and survival are, as Smith described them, predictable
and measurable. Since that time, and particularly since the start of the
Preface xi
It’s often overlooked that the use of economic manipulation was, for
centuries, successfully employed in combat settings despite the lack of
full understanding at the time for its potential. Since eras as ancient as
the Roman Empire until as recent as World War II, innovative strategists
have utilized economic tools without realizing exactly the implications
of their actions. As a result, many or most of these battles of seemingly
unorthodox methods have been all but forgotten, yet these battles are
the ones that illustrate most clearly the practical application of microe-
conomics and trade theory in submitting enemy forces while greatly
diminishing the risk of death and injury, particularly to friendly forces.
By analyzing the accounts of these records, a robust new division of mil-
itary strategy becomes possible that gives even small forces the potential
to significantly change battlefield dynamics.
In his book The Art of War, Sun Tzu says that, “Those who render
others’ armies helpless without fighting are the best of all.” He argues
that by the time physical conflict began it could already be determined
who the final victor would be. In fact, Sun Tzu believed that it could
be possible to win a war without any casualties at all, and it is through
economics that this belief has finally become nearly a reality. While armed
combat may never truly be completely replaced by other means so long
as irreconcilable differences occur, by learning from those successes and
failures of past events through the lens of established economic princi-
ples it is possible to come ever closer to this result. This is done through
the pursuit of original research based on new theory with the potential
to have important implications not for whether combat forces will be
needed but in what ways they will be most effective in submitting the
opposition with minimal, if any, physical confrontation.
It is the purpose of this book only to provide those details relevant
to the subject in question while making recommendations for areas of
possible future research. This is an introductory manual for the science
of economic combat kept simple for laymen and with mere insinuations
of advanced theory and mathematics to provide insight for those famil-
iar with the subject or inclined to pursue the study. By simply arranging
existing knowledge and providing the proper context for its understand-
ing, greater validity can be given to a brand new study with the poten-
tial to change warfare as we know it than if a lot of theoretical models
and speculation were to be provided, although that may come in future
books. As such, this book is arranged to as to explain very conservatively
how these principles work, then the final chapters of each “Part” will
Preface xiii
As with the 1st edition of this book, I still hold my old Army unit, the
456th MCT, in the highest esteem, attributing much of the inspiration
and success of this book to them.
xv
xvi Acknowledgements
5 Physical Confrontation 55
6 Systempunkt Targets 63
xvii
xviii Contents
10 Preclusive Purchasing 85
11 Resource Appropriation 91
12 Supply Exploitations 97
17 Counterfeiting 153
Afterword 285
Conclusion 289
Bibliography 293
Index 297
List of Figures
xxi
List of Tables
xxiii
CHAPTER 1