Social Costs

In the theory of economics, Social Cost is the sum total of all  costs associated with an economic activity. It includes two kinds of costs:

1. Costs borne by the economic agent (Private Costs or Cost of Firm's production function)
2. Costs borne by society at large (external to firm's private costs called external costs or externalities) 

Social Cost (S) is therefore sum of Private Costs (P) and External Costs (E). 

S = P + E

External Costs or Externalities can be of two types - Positive Externalities and Negative Externalities. An example of Positive Externalities is when a supplier of educational services indirectly benefits society as a whole but only received payment for the direct benefit received by the recipient of the education. The benefits to society of an educated populous are Positive Externalities. 

Environmental Pollution is an example of a social cost where Negative Externalities are produced. The cost of degrading the environment is seldom borne completely by the polluter. These costs result in Negative Externalities borne by the entire society or group of entities in a society.

Relevance to War

War - as any other activity includes both private costs as well as external costs. 

Governments or anti-governments that enter a war are also economic institutions in a broader sense. Therefore they too have factors of production - investment in defense is one such form of factors - and can be called as private costs. 

War, much like any other activity, also has external costs or externalities. 

Those that engage in war or the so-called proponents of war claim that war produces positive externalities - They say that "spending on defense produces peace and peace is a positive externalities". 

Those that disengage from war or the so-called proponents of anti-war strongly argue that war produces enormous amount of negative externalities. Failure of education system in Afghanistan or inhuman gender issues in Iraq are examples of negative externalities. 

This part of the website engages an active debate on the topic:

"War Produces Negative Externalities"

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