Military spending, fiscal capacity and the democracy puzzle

This article elucidates the complex and occasionally counter-intuitive effects of the twin phenomena of democratization and modernization on the path of military spending between 1880 and 1938 by analyzing the relationship between various traits of democracy and the state's fiscal capacity. The conclusion, in the spirit of Kant, is that it is political participation which is most effective in reducing military spending. Other elements of democracy play a distant secondary role. In addition, fiscal capacity, which often emerges and increases in tandem with democratization, is identified as one of the major determinants of defense outlays, although its impact decreased between the two World Wars.