We are experiencing a serious economic recession now. No economic policy will work to overwhelm the recession. Increase in saving no longer works as there is no place to invest the money in. Keynesian economic policy only works to avoid the hard-landing and slow the speed of economic downturn. The market potential indices explained by New Economic Geography theory do not have a positive impact on the productivity when all economic regions in the globe are in the recession or the depression. In order to expect the long-run recovery, it requires an exogenous shock such as a technological innovation and discovery of a new natural resource.
According to Kondratieff cycle theory, the current economic recession should be called "the winter". The winter comes every 50 or 60 years. The last winter was the WW2, and the previous to the last one was Spanish-American war. The winter comes when an economy loses the target of investment due to the excess supply of already developed technologies. The excess population, i.e. the excess labour supply, is also the cause of the winter. In order to keep investing to artificially stimulate the market multiplier to activate an economy and to prevent the excess labour supply, a war occurs. Provoking a war is the best way to encourage the investment to capital and increase the labour demand. However, as our great Adam Smith, the father of economics, mentioned, war, i.e. the investment to the defence, would never encourage rise in productivity.
This is mainly fault of countries (or any sort of economic region) which have failed to make their economic policy functional enough to avoid the harsh winter. War occurs to clear this failure. War should not occur due to the fact that war reduces the sum of utility in society because of the distress caused by death of members of families, close friends, and significant others, and loss of properties. However, as human-beings and their society are not perfectly rational enough to perfectly function their economy in a perfectly rational way the failure tends to be inevitably made.
Nowadays, due to the situation that nuclear weapons exist, the war whose impact is enough overcome the winter will not occur because this sort of war will induces destruction of the entire globe. Some individuals claim that the "War on Terror" is the war taking place due to the current winter situation. But, this "War on Terror" does not seem to be big enough to reduce the excess labour supply in the globe and to artificially encourage the market multiplier.
Emile Durkheim may explain this situation. According to Durkheim, the current post-industrialised society is less altruistic and less fatalistic than the traditional society. However, the current post-industrialised society is more anomie. In the anomie, many people tend to become psychologically pathetic due to loss of their direction to live.
I guess that the death of many people may occur due to an increase in suiside caused by psychological pathology instead of the war.
