THE NATURE OF THE PROBLEM
LIKE most economic problems, the economic problem of war is the allocation of resources among competing uses, specifically among uses considered more or less essential to the successful prosecution of the war. The change, however, in the use of resources required by war needs is almost certain to be much greater than ever occurs in peace, within a similar length of time. And because a state need not leave the direction of production to the "spontaneous integration of specialized functions through an autonomous price system," this economic problem is qualitatively different from the economic problems in which only private enterprise is involved. The essential difference is that the government has powers and obligations which do not characterize economic relations between individuals.
What the individual needs or desires he can secure in only two ways. He can use whatever productive powers, personal or property, he has at his command directly to produce it, or he can produce it indirectly by exchanging his own productive powers for it. An attempt to secure it, by force or fraud, without the transfer of a quid pro quo determined in a free market would be punishable by law. The state, on the other hand, usually does not offer its productive services in the market and typically acquires goods and services, or the command over them, by three means, none of which involves a quid pro quo -- taxation, confiscation, or the issue of money. (Although the possibility of borrowing is of great importance for this paper, it is omitted here as merely a mortgage upon future command, and not a final means of acquisition.) Between the government and individuals there exists not only an economic relationship but a power relationship.