Markets are discovery mechanisms. In war adaptation and discovery are a matter of survival.
Ukraine began the war with a traditional military procurement system. Large, standardised orders from suppliers chosen by the defence ministry with no room for adjustment to individual circumstances. Ukraine’s key innovation was to decentralise military acquisition, placing the funding and decision-making power in the hands of military commanders on the front lines.
Enabled by their earlier implementation of a public electronic procurement system Prozorro, groundbreaking in its own right by allowing greater price competition and transparency, Ukraine launched DOT-Chain Defence in July 2025. Perhaps best described as an ‘Amazon’ for weapons systems, Military units independently select, order, and reserve the necessary equipment, see delivery timelines, leave feedback, and receive quick responses. The system is designed to eliminate unnecessary bureaucracy and allow frontline brigades to order in exactly the resources they need at any given time with minimal delay. If a product is low-quality individual units will cease to order it as soon as battlefield conditions expose its flaws, providing rapid feedback to manufacturers to improve their products.
The e-points system is another recent deployment. A unit carries out a combat mission and uploads video proof of its achievements, targets destroyed etc., to the DELTA combat and control system. The unit is then awarded e-points at the end of the month, a virtual currency which it can use to purchase the weapons systems of its choice.
By introducing clear incentives at every step of the process, combat units are motivated to provide results, manufacturers to improve quality and the Ukrainian military machine becomes ever more effective.
Imagine this applied to all of government.
However, it is worth pointing out that this is a special case. Sir Humphrey Appleby once pointed out that since government departments can’t measure their success by profits or losses they measure their success by the size of their budget and the size of their bureaucracy. The Ukraine war has brought a very clear and objective way to measure success or failure, and without that feedback mechanism markets don’t work nearly as well.
Nonetheless, Ukraine, in prior times notorious as one of the most corrupt countries in Europe, has shown in this war remarkable innovation, light footedness, economy and competence. Words one rarely associates with Government. Necessity truly is the mother of invention.
“Bomber” Harris went directly to family owned manufacturers (Britain had a lot of them then) during World War II to get equipment his air crews needed – he signed the documents himself and dared the government to dishonour them, he knew that the Ministry of Supply system did not work.
Admiral Nimitz used market methods to keep the Pacific forces going – as the Roosevelt Administration did not place a high priority on defeating Japan (even though it was Imperial Japan that had attacked the United States) – instead their priority was Europe.
So such methods are known.
As for what the post says about Ukraine – it sounds like the Russian Army system where commanders of units are given a budget and our expected to get the equipment for their men out of that budget, one problem in the Russian Army is that commanders sometimes steal the money.
The Romans also used such a system – with commanders of Legions, indeed often the ordinary Legionaries, were expected to buy their own equipment out of the money sent to them.
The Emperor Diocletian (who abolished the old Legions – replacing them with smaller, but far more numerous, units) got rid of that decentralized system, instead establishing state arms factories with rigid control of everything – enforced by a newly established secret police.
The modern education system, the history books (“why do you not cite books”) and so on, love Diocletian – claiming he “ended the crises of the Third Century” with his “reforms”.
It doesn’t really matter (from a distant enough perspective) if the Ukraine procurement system ‘works’. Its value to others is that there is a real world example of how a centralised bureaucratic procurement system is not necessary.
Perhaps it is only in the digital age that clear incentives at every step of the process may be applied and thus contribute to the success of a goal? Perhaps the stunning success of drones is not the only lesson?
It makes you wonder what other centralised functions of the clerisy may be dispersed.
Discovered Joys – yes indeed Sir.
And for an example of a centralized military procurement system that does not work….. the British military system.
Amen to all that (above)!
You have to be careful about what you measure. For instance, probably the biggest effect of WW2 anti-submarine air patrols was to force the German submarines to stay underwater and thus make them
slow and relatively blind. If you just measured sinkings based on gun camera footage might lead to an underinvestment.
Then again, maybe the propaganda value of video footage is itself worth a lot.
The “aircraft damage paradox,” classically known as survivorship bias, highlights the danger of drawing conclusions from incomplete data. During World War II, the U.S. military wanted to armor its bombers without making them too heavy to fly. They mapped bullet holes on returning planes, finding heavy damage on the wings and fuselage, but none on the engines or cockpit.Initial military instinct was to add armor to the heavily damaged areas. However, statistician Abraham Wald recognized the flaw: they were only analyzing planes that successfully returned. The bullet holes in the wings simply proved that an aircraft could take damage there and still fly. Conversely, planes that did not return were likely shot in the “undamaged” areas, meaning hits to the engines or cockpit were fatal. Wald successfully argued that armor should be added to the seemingly untouched parts of the returning aircraft.
– From Gemini
@Discovered Joys
It makes you wonder what other centralised functions of the clerisy may be dispersed.
For what purpose? It depends on what you are measuring. If the purpose were to provide better, more efficient government services to the people then you might be right (however, I’d remind you of the nine most terrifying words in the English language.) But generally that is not at all the metric, or shall we say the currency, by which government services are measured. The people who make the decisions do so in their own self interest and a badly served public has very little negative consequence to them, especially if they are a civil servant immune to discipline and termination. Rather the currency used is “does it increase my budget, establishment and power?” And decentralization is anathema to that goal.
In Ukraine the self interest of those in charge is absolutely tied to their success on the battlefield which is why a system like this is viable.
It’s also a special case due partly to geography in that it is a prolonged, drawn-out conflict that allows time for feedback mechanisms to work. In the case of Taiwan, a conflict would likely be over (one way or another) relatively quickly, so there would be no time for feedback and adjustment (plus the factories themselves would be bombing targets).