📌 Subscribe to Think BRICS for weekly geopolitical video analysis beyond Western narratives.There’s a question that used to sound like something out of a Cold War think tank but is increasingly showing up in serious economic circles: what if the last engine of growth governments have left is the military? Not roads, not hospitals, not green energy — guns, jets, and missile systems.
It sounds alarming. It probably should. But according to Professor Vidhu Shekhar, it’s less a conspiracy theory and more an uncomfortable logical conclusion of where several major economies are heading right now.
First, a quick economics refresher
Keynesian economics — the idea that governments should spend their way out of downturns — has been the mainstream playbook since the Great Depression. You build stuff: highways, schools, power grids. You put people to work, money circulates, the economy recovers. Simple enough in theory.
Military Keynesianism follows the same basic logic, just with a different line item on the budget. Defense spending instead of infrastructure. Tanks instead of tunnels. The argument is that military expenditure can function as a counter-cyclical stimulus — especially when the private sector is too broke or too scared to invest.
This isn’t a new idea. The U.S. defense industry was central to post-WWII prosperity. What’s new, and what makes Shekhar’s analysis particularly sobering, is why governments might be turning to it now.
The problem: civilian economies are quietly maxing out
Here’s the core of the argument. Financial cycles aren’t some abstract academic concept — they’re baked into how capitalism actually works. Households and businesses borrow during good times, overshoot, and eventually hit a wall. When private debt crosses somewhere around 150–200% of GDP, the engine stalls. People stop spending because they’re servicing old loans. Businesses stop investing for the same reason. Even near-zero interest rates stop working.
Japan lived through this in the 1990s. China has been flirting with it for the better part of a decade. The U.S. and much of Europe aren’t far behind. When private balance sheets are exhausted like this, governments can try to compensate with public spending — but there’s a ceiling on how much that helps too.
That’s when the military starts to look attractive. Defense contracts don’t depend on consumer confidence. A government order for fighter jets doesn’t require households to feel optimistic about the future. It’s a sector that can absorb enormous investment regardless of what’s happening in the rest of the economy.
The danger hiding inside the logic
So far, this might sound like cold pragmatism. The problem is where it leads.
Military spending has a tendency to become self-reinforcing. Once one country ramps up, neighbors feel pressure to respond. Weapon stockpiles need to be maintained, then upgraded, then used and replaced. The economic incentive to keep the cycle going can start to warp foreign policy in ways that have nothing to do with actual security needs.
Shekhar draws a direct historical line here. German rearmament before both World Wars wasn’t purely ideological — there were real economic pressures underneath it. The risk isn’t necessarily that any one leader decides to start a war; it’s that the structural incentives of militarized economies make conflict more likely as a byproduct.
Smaller economies face a particularly grim version of this trap. Without the budget to compete in serious arms races, some end up manufacturing justification for small-scale conflicts or border disputes — just to keep their domestic defense sectors viable. The economics of militarization trickle down in strange and destabilizing ways.
Is this where we’re actually headed?
Shekhar is careful not to present military Keynesianism as inevitable, but he’s clearly not dismissing it as a fringe scenario either. The conditions that make it attractive are real and measurable. The political will to pursue genuine alternatives — sustained investment in sustainable industries, social programs, green infrastructure — keeps running into short-term electoral pressures and entrenched economic interests.
What makes this conversation worth having — and why this clip is worth your time — is that most public discourse about defense spending stays at the level of security and geopolitics. The economic logic underneath rarely gets examined honestly. Shekhar does exactly that, and it changes how the whole picture looks.
Watch the full interview below — Shekhar goes much deeper into the mechanics of financial cycles, the specific cases of China and Japan, and what he thinks a realistic off-ramp might look like.
Full interview →
You can also follow Professor Shekhar’s writing in Swarajya and Deccan Herald.
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