by Ulrich Fromy
Mises.org
A war economy is characterized, above all, by an extremely high time preference (i.e., a focus on the present). The conduct of war requires that scarce resources—previously allocated to the production of capital or consumer goods—be reallocated to the mobilization and operational readiness of the nation’s fighting forces. As Mises said, “War can be waged only with present goods.”
The economy, therefore, rearranges and “shortens” the overall structure of capital to favor the immediate production of finished goods. Capital is then consumed in great haste to satisfy the war effort. Labor, resources and capital goods are directed towards the production of consumer goods, instead of the more distant stages of the capital structure, which, as stated before, are oriented towards the future and the perfection of the production structure.