A new approach to address oversights in the traditional arms race literature is presented. It involves five factors that have not been previously applied to arms races. The focus of military capability is not expenditures but weapons counts. The entire set of major powers is modeled as a system. A factor controlling for the level of environmental threat faced by each state is included. Domestic factors are included in the decision-making calculus of the state. It is assumed that states use simple decision rules rather than a complex set of calculations to make their decisions. The authors usc this approach to test a system of equations that model the number of capital ships of the major powers from 1860 to 1986 in different time periods. Results indicate that the overall approach has a good deal of validity.