Pigou on War Finance and Welfare

This paper reviews A. C. Pigou’s contributions to policy discussions pertaining to war finance across three distinct periods: the early phase of World War I from 1915 to 1916; the final phase of World War I from 1917 to 1918; and the post-war phase from 1919 to 1925. We establish that the distribution of the fiscal burden of war finances was a major theme of Pigou in the early phase of the War, but, as the end of the conflict drew near his focus shifted to the sustainability of public debt and proposals to reduce that debt. In the post war phase, his reflections shifted to the necessary elements of future political, fiscal and economic stability. We conclude by suggesting the grounding for his analysis of policy issues during each of these three phases can be traced back to his major pre-war work, Wealth and Welfare.