The Economics of Troy

Economics has been the silent player in every war fought, both in literature and in the real world.

War has always been about economics. It has given birth to and laid waste to several economies. When Homer wrote the Iliad – a tale that made Helen of Troy the most famous woman in the world – he also wrote about how the Mycenaean kingdom went to war for a decade and it is this war, one of the most famous to be fought, that we now know as the Trojan war. While most of the Iliad focuses on the Trojan side of the war, it is on the Mycenaean side that the economic side effects of war can be observed.


To sum up the Iliad briefly – A prince of Troy elopes with Helen, who was the sister-in-law of Agamemnon, the King of Mycenae. Agamemnon, who had always desired to possess Troy, used this incident as an excuse to launch a full scale attack on it. The war went on for a decade with massive losses on both sides and eventually ended when the Mycenaean Kingdom pretended to withdraw their troops and sent in a monumental wooden horse as “an offering to Athena”. The Trojans rejoiced and accepted the wooden horse but little did they know that the “offering”, in fact contained enemy soldiers who attacked the city from the inside, went on a rampage and took the women and children back as slaves.


But, why are wars like the Trojan War even fought? In a single phrase – for a resource. Agamemnon wanted Troy. It was a kingdom, located in such a place that it controlled all the trade in and out of the Black Sea. As a resource, the land that Troy was built on was of prime importance. Controlling trade would have given Agamemnon unparalleled power. Other kingdoms would have become dependent on Mycenae for supplies of various goods and this dependency would have allowed the Mycenaean kingdom to make immense profits in trade.


In a strikingly similar situation, the Iraq war was also fought for a resource – oil. The United States did enter with the primary objective of freeing Iraqi citizens from a tyrant but the goal of gaining control over Iraq’s mammoth oil fields and reserves, though unsaid, remained a priority. Oil prices impact the global economy regularly and a controlling such an important resource would give a country like the United States an upper hand like no other. Wide fluctuations in oil have been driving factors in recessions as well as in the collapse of regimes. Sudden falls in the price of a resource as widely consumed as oil, can lead to huge losses in the revenues of the exporter countries while the importer countries are able to use the resource more liberally, save their resources and instead, invest in other industries like manufacturing.


Economists Joseph E. Stiglitz and Linda J. Bilmes rightly pointed out that, “The question isn’t whether the economy has been weakened by war, the question is only by how much.” Wars, especially one of the magnitude fought in Troy, have a ripple effect. To fight the war, Mycenae would have had to pour resources into making bronze weapons and arms. They would have had to pay the salaries, food and shelter of their soldiers, their battleships as well as its subsequent upkeep. A very large chunk of their resources would have been used up in the Trojan War with no returns in sight. War, as a whole, is an extremely non-productive venture. Money spent on arms is money poured down the drain. This money could have been used to invest in productive avenues such as – infrastructure, health, education and manufacturing. Investment in such areas increases the economy’s long term output and boosts productivity for the future.


One can find a parallel in the American economy during 2003. The invasion of Iraq meant spending money to refurbish the depleted military equipments and material, creating reserves for future veterans, payment of “death gratuity” to families of deceased soldiers along with a myriad of other expenses. All this meant that the U.S. ended up with a debt of $1 trillion including the cumulative interest on the borrowings to be paid. None of these expenses directly leads to the increased economic growth because the expenses of war, much like war itself, give no returns and in most cases, no long term economic benefits. But the same money spent on education, improving infrastructure or providing medical aid would give the economy a real boost because that would be productive public expenditure. After all, as Keynes has taught us, government spending will create jobs and through lower interest rates and increased productive public expenditure, countries can ensure that peacetime economies operate at or near full employment.


Some might, and have argued that war can actually help the economy by creating employment. Could this have happened in the Trojan War? The Mycenaean army would have recruited presumably, thousands of soldiers to fight a ten year long war. That is indeed, job creation. Likewise, the United States increased recruitment for the Iraq War.  But military spending will always create lesser jobs than the same amount of money would have, if invested in other sectors.


The reasoning behind this is that a greater percentage of spending on education, infrastructure and healthcare stays within the kingdom/country creating more domestic jobs. Also, a significant portion of the salaries paid to soldiers are spent abroad, where the domestic economy doesn’t get any direct benefit of this spending. Moreover, as the average pay in military jobs is higher than in other sectors, there are lesser no. of jobs created in the military than there could have been created in these other sectors.


These long drawn out wars – both the Trojan War and the Iraq War of 2003 were fought in the hope of gaining monopoly over a resource. These were wars fought for economic reasons, under far-fetched facades of love and heroism. The truth we can see is that real countries have somehow managed to replicate the wars fought on the pages of books. They have the same goals, their wars have the same consequences but what will these countries learn from the tale of Troy? Will it be a cautionary tale of using war to capture resources? Because while the Mycenaean kingdom could boast of causing the downfall of Troy, it was their weakened economy that collapsed and it was their kingdom that eventually fell into the hands of another.


The economics of war is ubiquitous. It can be observed in every war the world has witnessed to every great battle that the poets have penned down. The similarities between these fictitious and real wars are visible but the question remains, will they end the same?

Ahalya Rajesh

Junior Editor

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