Guns versus butter model

Guns versus butter model

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In macroeconomics
Macroeconomics
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...

, the guns versus butter model is an example of a simple production possibility frontier
Production possibility frontier
In economics, a production–possibility frontier , sometimes called a production–possibility curve or product transformation curve, is a graph that compares the production rates of two commodities that use the same fixed total of the factors of production...

. It demonstrates the relationship between a nation's investment in defense and civilian goods. In this example, a nation has to choose between two options when spending its finite resources. It can buy either guns (invest in defense/military) or butter (invest in production of goods), or a combination of both. This can be seen as an analogy for choices between defense and civilian spending in more complex economies.

The "guns or butter" model is generally used as a simplification of national spending as a part of GDP. The nation will have to decide which balance of guns versus butter best fulfill its needs, with its choice being partly influenced by the military spending and military stance of potential opponents. Researchers in political economy
Political economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...

 have viewed the trade-off between military and consumer spending as a useful predictor of election success.

This model does not typically correlate well with free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...

 economies.

Origins of the term


One theory on the origin of the concept comes from William Jennings Bryan
William Jennings Bryan
William Jennings Bryan was an American politician in the late-19th and early-20th centuries. He was a dominant force in the liberal wing of the Democratic Party, standing three times as its candidate for President of the United States...

's resignation as secretary of state in the Wilson Administration
Wilson Administration
Wilson Administration may refer to the administration of:*Woodrow Wilson*Harold Wilson...

. At the outbreak of World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...

, the leading global exporter of nitrates for gunpowder
Gunpowder
Gunpowder, also known since in the late 19th century as black powder, was the first chemical explosive and the only one known until the mid 1800s. It is a mixture of sulfur, charcoal, and potassium nitrate - with the sulfur and charcoal acting as fuels, while the saltpeter works as an oxidizer...

 was Chile
Chile
Chile ,officially the Republic of Chile , is a country in South America occupying a long, narrow coastal strip between the Andes mountains to the east and the Pacific Ocean to the west. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage in the far...

. Chile had maintained neutrality during the war and provided nearly all the USA's nitrate
Nitrate
The nitrate ion is a polyatomic ion with the molecular formula NO and a molecular mass of 62.0049 g/mol. It is the conjugate base of nitric acid, consisting of one central nitrogen atom surrounded by three identically-bonded oxygen atoms in a trigonal planar arrangement. The nitrate ion carries a...

 requirements, as it was also the principal ingredient of chemical fertilizer in farming. The export product was sodium nitrate
Sodium nitrate
Sodium nitrate is the chemical compound with the formula NaNO3. This salt, also known as Chile saltpeter or Peru saltpeter to distinguish it from ordinary saltpeter, potassium nitrate, is a white solid which is very soluble in water...

, a salt mined in northern Chile.

With substantial popular opinion running against U.S. entry into the war, the Bryan resignation and peace campaign (joined prominently with Henry Ford
Henry Ford
Henry Ford was an American industrialist, the founder of the Ford Motor Company, and sponsor of the development of the assembly line technique of mass production. His introduction of the Model T automobile revolutionized transportation and American industry...

's efforts) became a banner for local against national interests. Bryan was no more pro-German than Wilson; his motivation was to expose and publicize what he considered to be an unconscionable public policy.

The National Defense Act of 1916
National Defense Act of 1916
The National Defense Act of 1916, , provided for an expanded army during peace and wartime, fourfold expansion of the National Guard, the creation of an Officers' and an Enlisted Reserve Corps, plus the creation of a Reserve Officers' Training Corps in colleges and universities...

 directed the President to select a site for the artificial production of nitrates. It was not until September 1917, several months after the USA entered the war, that Wilson selected Muscle Shoals, Alabama
Muscle Shoals, Alabama
Muscle Shoals is a city in Colbert County, Alabama, United States. As of 2007, the United States Census Bureau estimated the population of the city to be 12,846. The city is included in The Shoals MSA. It is famous for its contributions to American popular music.-Geography:Muscle Shoals is located...

, after more than a year of competition among political rivals. A deadlock in Congress was broken when Senator Ellison D. Smith
Ellison D. Smith
Ellison DuRant "Cotton Ed" Smith was a Democratic Party politician from the U.S. state of South Carolina. He represented South Carolina in the United States Senate from 1909 until 1944....

 from South Carolina sponsored the National Defense Act of 1916 that directed "the Secretary of Agriculture to manufacture nitrates for fertilizers in peace and munitions in war at water power sites designated by the President". This was presented by the news media as "guns and butter."

Quoted usage of term


Perhaps the best known actual usage (in translation) was in Nazi Germany
Nazi Germany
Nazi Germany , also known as the Third Reich , but officially called German Reich from 1933 to 1943 and Greater German Reich from 26 June 1943 onward, is the name commonly used to refer to the state of Germany from 1933 to 1945, when it was a totalitarian dictatorship ruled by...

. In a speech on January 17, 1936, Minister of Propaganda Joseph Goebbels
Joseph Goebbels
Paul Joseph Goebbels was a German politician and Reich Minister of Propaganda in Nazi Germany from 1933 to 1945. As one of Adolf Hitler's closest associates and most devout followers, he was known for his zealous oratory and anti-Semitism...

 stated: "We can do without butter, but, despite all our love of peace, not without arms. One cannot shoot with butter, but with guns." Sometime in the summer of the same year, Hermann Göring
Hermann Göring
Hermann Wilhelm Göring, was a German politician, military leader, and a leading member of the Nazi Party. He was a veteran of World War I as an ace fighter pilot, and a recipient of the coveted Pour le Mérite, also known as "The Blue Max"...

 announced in a speech, "Guns will make us powerful; butter will only make us fat."

Another use of the term was Margaret Thatcher
Margaret Thatcher
Margaret Hilda Thatcher, Baroness Thatcher, was Prime Minister of the United Kingdom from 1979 to 1990...

's reference in a speech that, "The Soviets put guns over butter, but we put almost everything over guns."

This metaphor served as the title for an episode in season 4 of the hit TV show "The West Wing" (1999-2006) that focused on the portion of the federal budget devoted to foreign aid.

The song "Guns Before Butter" by Gang of Four
Gang of Four
The Gang of Four was the name given to a political faction composed of four Chinese Communist Party officials. They came to prominence during the Cultural Revolution and were subsequently charged with a series of treasonous crimes...

 from their 1979 album Entertainment! is about this concept.

In the movie "Baby Boy" starring Tyrese Gibson & Snoop Dogg, The Character Melvin brakes down the differences of guns and butter to Jody and Sweetpea

Great Society example


United States President Lyndon B. Johnson
Lyndon B. Johnson
Lyndon Baines Johnson , often referred to as LBJ, was the 36th President of the United States after his service as the 37th Vice President of the United States...

's Great Society
Great Society
The Great Society was a set of domestic programs in the United States promoted by President Lyndon B. Johnson and fellow Democrats in Congress in the 1960s. Two main goals of the Great Society social reforms were the elimination of poverty and racial injustice...

 programs in the 1960s is an example of the guns versus butter model. While Johnson wanted to continue New Deal
New Deal
The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were Roosevelt's responses to the Great Depression, and focused on what historians call...

 Liberalism
Liberalism
Liberalism is the belief in the importance of liberty and equal rights. Liberals espouse a wide array of views depending on their understanding of these principles, but generally, liberals support ideas such as constitutionalism, liberal democracy, free and fair elections, human rights,...

, he was also in the arms race
Arms race
The term arms race, in its original usage, describes a competition between two or more parties for the best armed forces. Each party competes to produce larger numbers of weapons, greater armies, or superior military technology in a technological escalation...

, the Cold War
Cold War
The Cold War was the continuing state from roughly 1946 to 1991 of political conflict, military tension, proxy wars, and economic competition between the Communist World—primarily the Soviet Union and its satellite states and allies—and the powers of the Western world, primarily the United States...

, and Vietnam War
Vietnam War
The Vietnam War was a Cold War-era military conflict that occurred in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. This war followed the First Indochina War and was fought between North Vietnam, supported by its communist allies, and the government of...

. These put strains on the economy, and hampered his Great Society programs.

See also

  • Peace dividend
    Peace dividend
    The peace dividend is a political slogan popularized by US President George H.W. Bush and UK Prime Minister Margaret Thatcher in the early 1990s, purporting to describe the economic benefit of a decrease in defense spending. It is used primarily in discussions relating to the guns versus butter...

     — The amount of civilian goods produced by a decrease in defense spending.
  • Arms race
    Arms race
    The term arms race, in its original usage, describes a competition between two or more parties for the best armed forces. Each party competes to produce larger numbers of weapons, greater armies, or superior military technology in a technological escalation...

  • List of references to guns and butter in popular culture

External links