Disarmament And The Prospects Of American Capitalism
Brand, H .
"The basic problems facing the world today are not susceptible to a military solution." — JOHN F. KENNEDY. The problem of disarmament goes to the roots of society. Military force has been the...
...The essential impotence of military power they suggest does not, of course, entail disarmament as a logical sequel...
...Beyond question, as Heilbroner remarks...
...Nevertheless, it cannot reverse the evolution of military technology which has spurred the growth of the aerospace corporations...
...The invasion of Cuba did not fail for lack of a "limited warfare" capability, and the wall in Berlin was built despite the presence of American tanks and reinforcements all over Western Europe...
...There is, furthermore, the immense fact of the developing European Common Market, whose rising challenge it is impossible to meet by retreating into a fascist-isolationist "Fortress America...
...Also, these firms possess very little flexibility in converting to or diversifying into such markets...
...In former periods, when conventional warfare and preparations for it prevailed, sufficiently heavy increases in military procurement would result in additions to both labor and capital...
...Federal funds for R&D in fiscal 1960 amounted to $7.742 billion, 87% of which (or $6.7 billion) was allotted to defense...
...56 U. S. Steel n.l...
...It is more likely that we are entering a plural world of nations and that men of the type of Nehru, Tito, Nasser, Nkrumah, Castro, Quadros and Bourguiba will govern it for some decades ahead...
...n.1.—not listed...
...51 Source: Department of Defense releases...
...A moratorium on such increases—a "finite deterrent" such as Eisenhower seems to have envisaged rather than a growing "overkill" capacity—this would appear to be a basic condition for a genuine disarmament policy...
...We cannot delve into the reasons which have given rise to the need to reorganize and centralize the armed forces...
...By contrast, only 2% and 7 11 , respectively, of sales of General Motors and Chrysler went to the military in 1960.* Further illustrating the profound shift in armaments technology over the past decade are the changes in rankings listed in Table III...
...Notwithstanding high and rising defense spending, economic ad vancement in the U. S. has lagged seriously since the early fifties...
...Defense spending authority proposed in President Eisenhower's last budget (for fiscal year 1962) was pegged at $46.3 billion, up $366 million or less than 1% from fiscal 1961...
...The technical-economic effect of defense spending has probably been to exacerbate gradually the disproportions in the U. S. economy, Partly, this is ascribable to the changing character of military technology, discussed below...
...Table II shows, for a few selected industries, value added and capital expenditures calculated on a per-employee basis...
...In sum, the occupational structure of the armaments industry looms as one of the more substantial obstacles to the progress of disarmament...
...Rather, it would have to be, and likely will be, the kind that will attune the U. S. economy more closely with evolving world conditions...
...It is difficult to foresee internal crises of similar depth in the U. S. It is equally difficult to foresee—not that the U. S. may embark on a hesitant military adventure which could not possibly decide anything—but how, if it were a quasi-fascist power, it could hold anything but the most rotten boroughs abroad, and how it could retain the worldwide authority which remains so important a prop of its power...
...Nevertheless, military sales undoubtedly play a key role in the product and marketing plans of certain strategically placed companies...
...Hence, politically, tighter civilian control over, and greater centralization of, the military must remain inconsequential...
...It is a development to which the quotation cited at the head of this article addresses itself: Military means can affect it, but only marginally...
...Countries like Brazil and India may become great powers...
...Yet, economic growth has always been an indispensible condition of the existence of the industrial and financial oligarchy in the U. S. Arms spending has, at best, propped the economy, but has hardly stimulated growth...
...Defense spending supports a large sector of the economy without disturbing the political status quo...
...Military force has been the right arm of the nation-state...
...These conditions will be increasingly shaped by the rise of the developing countries...
...Procurement of ordnance and vehicles, for example, valued at $4.7 billion in fiscal year 1953, fell to a post-Korean low of $400 million in 1959...
...The tension between those needs and these interests will grow...
...When is enough enough...
...The latter's emphasis on more "limited warfare" forces does not represent such a difference...
...Sc ordnance 38% Construction 2% Aircraft & parts 94% TOTAL INDUSTRY 6% Source: Economic Impacts of Disarmament, U.S...
...viously, the skills and brains that have gone into most of the $250-million ICBM base at Omaha are very different from those that built the great dam at Dalles, Oregon...
...mach'y 5% Ordnance 100% Fabric...
...It includes labor costs, profits and depreciation set-asides, and taxes paid...
...But the results will necessarily be (and are) compromised by the resistance of entrenched class and sectional interests, which are rarely legislated out of existence...
...In addition, it interposes major difficulties to the adjustment of the American economy to world conditions...
...The military and its supporting industries, based as they are on the strategy of nuclear deterrence, have virtually lost their defense function which alone could rationalize their parasitic existence...
...To sum up: The great increases in arms spending under President Kennedy do not bode well for disarmament and belie much of the talk about it...
...Low profits in defense assure high profits in nondefense markets...
...it is as yet difficult to discern the power bases that will replace it...
...And that in order to keep in being those aggregates of vital skills that underlie our capability...
...This contrasts with the older line durables industries, where the income multiplier can be associated with direct labor payments as well as high capital outlays (indirect labor payments), thus greatly intensifying the multiplier effects...
...machinery 21% Business services 4% Radio Sc communic...
...The arms race is continuing...
...and (2) an external settlement analogous in significance to the Peace of Westphalia in 1648...
...This is not because the U. S. cannot "afford" a combination of large armaments expenditures, a generous foreign aid program, and a high standard of living for all...
...We need only point to some of the articles appearing in the Newsletter of the Committee of Correspondence, to Paul Goodman's piece in the Winter 1962 DISSENT, or to the work of the Center for the Study of Democratic Institutions...
...It is not fortuitous that "national unity" can be achieved where spending for the defense of the flag is involved but not for a system of much-needed medical insurance, for student scholarships or, generally, for raising consumer purchasing power...
...We cannot do justice to these problems within the framework of this article...
...We have deliberately abstained from discussing alternatives to armaments spending in concrete detail...
...The effect of the income multiplier arising in the aircraft and electronics industries, then, seems predominantly associated with payments to labor directly engaged in them...
...Already during the first six months of fiscal 1962, it ran to $3.4 billion, 58% ahead of the same period the year before...
...It has been raised again by the Kennedy Administration and is slated to run to $1.7 billion in fiscal 1963...
...Over four-fifths of the decline in employment [resulting from complete disarmament] would be in four industries—aircraft and parts (which includes missiles), radio, ordnance, and ships and boats" (page 44...
...On the other hand, Kennedy's defense boosts are largely related to considerations of internal military politics rather than to changes in strategic concepts...
...3) the profound industrial shifts which changing military technology has occasioned...
...Weapons technology has already made a military establishment based on nuclear arms a danger rather than an aid to the defense of the state...
...firms engaging in it must be virtually underwritten by the Government and, in fact, frequently are creatures pure and simple of the defense effort...
...For this the Kennedy Administration bears a major share of responsibility...
...We have to rely on the theoretically demonstrable but statistically unproven concept of the income multiplier to argue the global effects of defense spending...
...Not so today...
...they are similar in nature...
...This economy and the social system it supports cannot survive unless it faces outward and unless it gives worldwide scope to the expansionary forces inherent in it...
...The Administration has no clear notion of national power in this era (nor has anyone else...
...2) The aircraft and electronics industries are characterized by (a) high labor intensity when compared to other, especially hard goods, industries, as well as relatively low capital expenditures...
...Yet the arms race, if continued, can lead to a kind of neo-barbarism...
...In any case, the idea of a quasi-fascist America assumes a world such as Robert Heilbroner in his Future as History seems to postulate: One of hostile "proletarian" nations to which an oversatiated U. S. reacts by isolation and authoritarianism...
...is the plateau, the long-range policy to which our defense buildup is geared...
...Hence also, it prevents (or delays) the political reactions and changes which must precede a solution of these problems...
...it represents a cost, not a contribution...
...No other country anywhere spends such an enormous proportion of its wealth for military purposes...
...According to the United Nations Report on the Economic and Social Consequences of Disarmament, defense spending represents the equivalent of nearly three-fifths of average annual expenditures for fixed capital in the U. S. (including outlays for plant and equipment, public works, residential construction, and the like...
...Thus, the danger of "escalation" from "limited" to nuclear war is clearly postulated and forewarned against...
...The table has the advantage of not only showing given industries' output for direct sales to the military but, being based on input-output analysis, of also reflecting their indirect contribution to the defense effort...
...Kennedy, however, embarks upon this undertaking in a self-defeating manner...
...Nor, needless to add, can the growing potential of Russia be dealt with that way...
...Firms like IBM (with military contracts in 1960 representing 22% of total sales), General Electric (23%), RCA (25%), Sperry-Rand (27%), Burroughs Corp...
...It is hard to see a basic difference in strategic concept between the Eisenhower and Kennedy administrations...
...equipt...
...As has been indicated, for many corporations defense work is a means of subsidizing research overhead and of offsetting fluctuations in civilian sales...
...From its very inception, the Administration has stepped up the defense budget...
...For an interesting discussion of this and related points, see also State Capitalism in the United States, by Paul Crosser...
...The major share of the Kennedy Administration's increase in the defense budget provides for the purchase of 1200 bombers, 1200 landbased intercontinental ballistic missiles, and an eventual total of 41 Polaris submarines, carrying 656 missiles...
...and (b) a high component of professional personnel (engineers and scientists) in their occupational makeup...
...The obvious basic one is the evolution of military technology since World War II...
...have a broader base...
...It is evident from what has been said that the shrinkage in the useful life of weapons, owing to rapidly evolving technology, does not have the same effect as the consumption of materiel during past periods of war and preparation for war...
...Moreover, in view of the finer steels needed in defense today, it probably yielded a disproportionately high share of steelmakers' profits and required above-average man-hours of work...
...The renewed emphasis on a "limited war" potential may help—and it is probably not unrelated to —employment and capacity utilization in the capital goods industries...
...Nearly this entire sum was paid to industry under Government contract, thus financing around three-fifths of industry's total R&D bill...
...There is a nagging fear among thoughtful persons of a trend towards a kind of American fascism...
...3) In contrast to aircraft and electronics, the older line durables industries with their vast capital investment account for a relatively small share of defense procurement...
...The Federal Government, by virtue of its fiscal powers, taxes away substantial sums, thus drawing upon the economy's potential savings which, because of the risk of lower profit yields, the private sector has become increasingly unwilling to absorb for investment purposes...
...Daedalus, Fall 1960...
...metals 8°Jo Instruments 20% Fuel & power 7% Transportation 6% Petroleum 10% RR & trucking 5% Primary metals 13% Trade 1% Iron & steel 10% Service, etc...
...It is, in the economic sense, in the class of luxury goods, a form of highly organized waste which adds nothing either to the nation's reproductive powers nor to its potential for growth...
...The obstacles inhibiting this realignment and, with it, disarmament, loom at present as far more formidable than the pressures promoting it...
...In the past, Europe's defense effort was comparatively great, yet Europe enjoyed long periods of economic growth...
...Missiles procurement, at only $245 million in fiscal 1953, has climbed steadily, and is budgeted at $3.9 billion for fiscal 1963.* This shift from the older to the newer types of military hardware has resulted in the creation and growth of firms almost entirely dependent on defense work, i.e., without significant civilian markets...
...Here lies a major reason why it is at least an open question whether the financial and industrial oligarchy which dominates the American economy will accept rising levels of defense outlays permanently, unless they can be justified on principles of military rationality, which they can not...
...30, Sept...
...Nevertheless, there is no gainsaying the fact that, where formerly a large military establishment benefited the older line basic and soft goods industries directly—coal, iron and steel, machinery and ordance, chemicals, textiles, and food—this is not the case today to anything like the same extent...
...Procurement for the Army, including mostly conventional weaponry, amounted to $5.4 billion in the 1961 fiscal year (under Eisenhower...
...The figures for "Radios & Related Products" are from that Census...
...But the Kennedy Administration, even if this were its objective, lacks the independent political foundations to do so...
...It has the drawback of using 1958, a recession year, when non defense output of metals and machinery was depressed, and the share of defense in these industries' business was abnormally large...
...This, however, requires (1) internal political changes as fundamental as occurred in the Jacksonian era or the Civil War period...
...General Dynamics 1 12 IBM 16 30 General Motors 21 1 Chrysler 22 13 Burroughs Corp...
...refers to fiscal–year periods...
...America's defense effort was small, yet it, too, enjoyed growth...
...as we have seen, a total of "only" 656 Polarist missiles, for example, is expected to be operational after 1964...
...While defense spending draws on private funds which, without it, would probably be redundant and thus depress profit rates, it cannot be said that it has the positive effect of providing profitable investment outlets on any large scale...
...The fiscal system could evolve further in the direction of propping American capitalism, if the latter existed in a kind of "isolated state...
...III It is an open question whether the interests of America's financial and industrial oligarchy are identified in any static, permanent manner with the maintenance of a great military-industrial complex...
...32%), and American Tel...
...By contrast, margins in aircraft and parts for the same period were 1.7% and depreciation also 1.7%.** However, the factor of relatively low profits should not be made too much of...
...Yet the economic benefits, if any, of military procurement outlays are confined to a much narrower band of occupations and industries than was the case when conventional warfare prevailed...
...Nevertheless, whatever the political reasons and rationalizations for the maintenance of a great military establishment, it is a means of keeping the economic system going...
...Unlike former stages of military technology, the present one is based on a relatively narrow range of industries...
...We are buying more strength in nearly all areas of military power and the Kennedy buildup started from a plateau which the present Administration now admits was higher and stronger than that of any other power in the world...
...Everywhere on the globe today the trend toward reorganizing and centralizing the military is observable, partly no doubt because the military can no longer be permitted to be a state within the state...
...Partly, it is due to the strong impetus defense spending has given to the expansion of the unproductive sectors of society—whether in the military apparatus itself or in defense-related research...
...Still, they must be regarded as a prime indicator...
...4) Having dealt with some of the specific effects of defense spending, we now turn briefly to the implications of its role as the major channel of Federal expenditures...
...Statism in economic affairs where they touch—as they do increasingly—upon the international interests of American capitalism is incipient already in numerous financial, foreign-trade and foreignaid arrangements...
...asks Hanson Baldwin, the military expert of the New York Times (January 21, 1962...
...It must be strong in defense production, strong in civilian production...
...No nation can afford it any longer, not because it results in intolerable inequities (which it does,) but because it saps the strength of society and, particularly, of the state...
...Now, Europe's defense effort is small, America's is vast, but where Europe has been blessed by an extended boom, America's growth has remained stunted since the early fifties...
...The very technology which nurtures that complex also undermines its usefulness as an instrument of national power...
...of Technology 41 82 DuPont 52 38 Olin Mathieson Chemical 53 33 Bethlehem Steel 61 41 Ford Motor Co...
...industry is summarized concisely in Table I. Table I • • . OUTPUT USED BY THE MILITARY AS PER CENT OF TOTAL OUTPUT OF INDUSTRY Industry % of output Industry °Jo of output for military for military Chemicals 5% Ships & boats 61% Nonelect...
...But, judging by the extent of Federal subsidization of industrial research and development (R&D), the actual proportion of such personnel paid from (or with the help of) defense funds must be far larger...
...The dependence of the American economy on arms manufacture is unquestionably a major bar to disarmament...
...It is evident that value added per employee in aircraft and parts as well as in radios and related products—both heavily oriented towards missile produc tion—runs considerably below the average for all manufacturing...
...The very web of American society will need to be rewoven if disarmament is to become a reality...
...It was not preceded by radical changes in social structure...
...Some form of planning would be required, however, to ease the shift...
...The technical reasons for this are not hard to find...
...This fact makes them active members of the military-industrial complex...
...This is commonly taken as the measure of the economy's dependence on such spending...
...In fiscal 1963 (starting July 1, 1962), defense spending authority is slated to rise another $2.1 billion to $54.7 billion...
...But, ob • Author's estimate based on Table I0 of Industry Manpower Surveys No...
...The assumption is questionable...
...Objective pressures will eventually compel some form of health insurance as they already are working their way in urban renewal...
...procure ment was considerably accelerated at the time...
...On the other hand, however, it represents a center of power outside the older ruling cadres of industry and finance...
...It is probable that a high level of armaments will coexist with the process of adjustment to evolving world conditions which will be imposed upon this society...
...Granted, an electronics engineer can be retrained to become a civil engineer...
...What...
...The Federal Executive, when based on broad, autonomous social movements, can resist and perhaps redirect that drift...
...planning, as a social instrument, would tend to have a conservative rather than a radical aim" in the U. S.,* although planning, like other basic policies which rulers are at times forced to adopt, can give rise to changes ultimately weakening the social foundations of their originators...
...Department of Labor, January 1962...
...It is part of the national product only statistically...
...88% Prof...
...However we would want to label it, such planning could not be of the type on which Hitler and German Big Business reached implicit agreement: A military buildup combined with national autarchy with a view to eventual economic dominance of Eastern Europe...
...Closely associated with the characteristic of labor intensity in the major defense industries is the peculiar occupational structure to which today's military technology gives rise...
...Hence, it also helps mitigate the aggravation of such problems as chronic unemployment, widespread poverty and deprivation, and low levels of public investment...
...Interesting, too, is the fact (not shown in the table) that the latter average for value added rose 25% in the 1954-59 period, while that for aircraft rose only 12...
...They) are caught," says Kenneth Boulding, "in an implacable dynamic of technological change which makes them increasingly less capable of defending the countries which support them, except at an increasingly intolerable cost...
...It is difficult to estimate how many scientists and engineers are directly engaged in the defense effort...
...6%) gain major advantages for their civilian markets from research paid by, and know-how obtained from, their defense work...
...It would be better to say that it is a measure of what is taken out of the economy...
...Then, more of the same was produced in increasing quantity...
...This thesis is not unreasonable considering that it is typical for this Administration of skilled ward politicians, preoccupied as they are with preserving "national unity," to make even costly concessions in order to gain desired objectives...
...This, then, is a basic institutional aspect of defense spending in the U. S., one that exists parallel to, but is also a part of and conditions, the world situation which has given, rise to the vast military establish ment here...
...Per cent of net sales based on data from The Value Line Investment Survey...
...A major war, deliberately staged, is inconceivable...
...The Kennedy Administration has, moreover, stated that it will not hesitate to use nuclear weapons should conventional ones prove inadequate...
...These industries were listed as predominantly oriented to missile production in the 1958 Census of Manufactures...
...It exists in a world in which the private appropriation of wealth has become a costly anachronism...
...In the U. S.," states the U. N. Report already referred to, "owing to the concentration of military expenditures in a limited num ber of industries, only a few industries would be affected sharply by reductions in military demand...
...Its exact terminology will evolve in time...
...The basic attitude of American corporations that governs their production and financial policies is summed up well in the following statement of a major defense supplier before a congressional committee: "Reviewing the history of two almost disastrous wars and appraising the technological and ideological realities of this century, it is my conviction that defense must be a permanent way of life...
...there are frequent shifts in the product wanted...
...A significant measure of planning would have to be preceded (or accompanied) by deep changes in the relationship of political forces in this country...
...Nor does it serve this purpose indirectly, i.e., either by making territorial expansion possible or by otherwise enhancing America's power to impose its own ecenomic system...
...in effect, however, it has defined national power largely in terms of enhanced nuclear prowess combined with a nebulous "limited war" capability...
...It is because the American fiscal structure cannot accommodate such a combination...
...it merely facilitates it...
...Kennedy's policies have, of course, greatly strengthened the militaryindustrial complex...
...But rising procurement of missiles—and it is here that the major boosts have been all along—yields relatively much larger additions to labor than to fixed capital in the affected industries...
...It is all very well to cite peaceful alternatives to military spending such as those impressively listed on pages 87 and 88 of Seymour Melman's book The Peace Race...
...In Western Europe, the obsolescence of national boundaries has become an acknowledged fact...
...It has come to serve distinct functions of internal political and economic stability, promoting not only its own purposes but also propping those older ruling strata of American society...
...Coming to office at a time when there loom major problems of economic and social adjustment no longer susceptible to mere administrative solutions, it seeks a specious national unity based mainly on intensifying the cold war and the military effort related to it —an undertaking both perilous and probably barren of results, internal or external...
...Diversification" works both ways, as Ford's recent acquisition of Philco (the latter having a large stake in • Data on military contracts awarded to prime contractors from Department of Defense releases...
...In earlier periods, the direct effects of defense spending were fairly broadly diffused and gave rise to a wide gamut of heavy capital goods investments...
...and where industrial power has simply ceased to be the monopoly of the West...
...Disarmament—and we think of it as a process, not a zero level of arms—requires an internal realignment of political forces...
...a nuclear physicist can switch to medical research...
...These clearly demonstrate the highly concentrated impact of defense in air craft and electronics and ships and boats...
...But, of course, it does not...
...The "plateau" is probably no longer determined by objective con siderations of the strategy of deterrence...
...No doubt, the sophisticated managers of big corporations know very well that a system of public health insurance would be cheap and efficient and would, by raising real incomes, serve indirectly to broaden the markets for the goods they produce...
...But before retraining can begin, the stake groups and individuals have in their investment in skills, and the link they have to the industries that support them must be thoroughly destroyed...
...Among its most important effects is to leave a large portion of the social surplus in private hands, thus further stabilizing and extending the hold of these elites on society (advertising, the stock market, corporate support of educational and research institutions, etc...
...As is well known, the share of defense in the total output of goods and services in the U. S. has been between 9% and 10...
...The human problems would be great but not different qualitatively from those which have been—and still are—encountered in declining, technologically obsolescent sectors...
...Job lessness has steadily become more intractable...
...What can we surmise from these data as regards the secondary economic effects of defense spending, concentrated as it is in only a few industries...
...and irrelevant to the expansionist requirements of the dominant forces composing it—they would suffer attrition...
...Therefore, it is also a key factor in preserving the social and economic status quo in this country...
...World War II...
...Their income multiplier is probably low, partly because the relatively well-paid personnel in the defense industries may have a lower propensity to consume than workers engaged in mass production, partly because capital investments needed in these industries are relatively small...
...serv...
...Arms Control and Disarmament Agency, p. 25...
...The economic function of defense spending is, in this respect, unlike that of, say, imperialism which, for a brief historical span, provided such outlets...
...In the following analysis, we shall attempt to resolve these apparent contradictions, but in a necessarily speculative vein...
...The concessions often imperil the objective itself, a circumstance which reflects the thinness of the Administration's political bases, and not mere weakness of principle...
...But today's armaments industry represents an investment in exotic skills and equipment that does not lend itself to the kind of quick conversion to peacetime output experienced in the older line durables at the end of World War II...
...10025 $ 561 Source: Annual Survey of Manufactures, 1959, and 1958 Census of Manufactures, Preliminary General Statistics, Bureau of the Census...
...There are numerous interlocking financial and organizational relationships between firms oriented mainly toward civilian markets and firms dealing mainly in defense...
...firms than of firms in the older line durables and non-durables...
...World conditions as well as employment needs are compelling the U. S. to spur its economic growth...
...That structure now rivals the price system in being a means of maintaining the status of the capitalist elites in this country...
...But they cannot support it, at least not openly, since a common ideology links them with the small group of physicians and private insurance firms whose interests would be affected adversely, and since their own privileges are dependent in some measure on the maintenance of the conservative consensus...
...Business Record, National Industrial Conference Board, December 1961, page 27 $. ** Quarterly Financial Report for Manufacturing Corporations, FTC—SEC, Third Quarter 1961...
...The policies of the Kennedy administration, inadequate as they are in formulation, faltering as they are in execution, reflect some of these tensions...
...What would it solve...
...With few exceptions, the value of defense procurement contracts represents a far higher proportion of the sales of aircraft and electronics • Order of Magnitude Data on Comparative Expenditures by Functional Title, Department of Defense, January 18, 1962...
...It is hard to see such changes on the horizon...
...But Federal funds also constitute a strategic portion of R&D in other leading industries, financing 38% of non-electrical machinery's, a third of rubber's, and 28% of chemical's...
...The flow of Federal funds for R&D is, to be sure, no less concentrated than that of military procurement...
...Ford, in twelfth place in 1950-56, ranked 70 in 1960...
...defense contracts, the former only an insignificant one) exemplifies...
...Its foremost function has become the financing of Keynesian "holes in the ground" in the shape of a vast defense and space exploration effort...
...It may be noted that profits per dollar of sales or as a per cent of net worth of some major defense contractors do not compare very favorably with those of predominantly non-defense producers.* Reported profits often obscure the true financial strength of companies, which should also be gauged by depreciation set-asides, size of executive salaries, stock options granted, and the like...
...It is not easy to see where all the highly specialized talent associated directly with defense research would fit in case of a serious reduction in armaments expenditures...
...It entrenches class and other vested interests and stymies social development...
...We do not wish to minimize it: The 10 07, shown in Table I for the iron and steel industry, for example, equalled some six million tons of finished steel shipments in 1958...
...In sum, the technical requirements of today's weapons production necessitate a high degree of specialization...
...II Defense spending is a major prop, better: it is an integral part of the American economy...
...Conceivably, military means deter an attack on the U. S. But the real problem is how to preserve the international pre-eminence of the U. S. and that of its industrial and financial oligarchy, in a world where the social system on which it bases itself is becoming increasingly isolated...
...Tel...
...It is possible to explore only some key aspects of this contradiction...
...This is true...
...Planning is, of course, a political function in principle...
...These also affect more and more the still "free" foreign investment decisions of private corporations...
...It is likely that a number of new, strong states will evolve, be their forms of government "pluralistic" or authoritarian...
...One could argue, of course, that there is nothing inherent in capitalism which prevents the adoption of some of the programs mentioned above...
...The growth of the military establishment, then, and the related fact that defense spending has become the key stabilizer in the U. S. economy, is a consequence not merely of basic policy decisions but of conservative drift—drift in the sense of a quite mechanical resultant of (sometimes opposing) social forces...
...It would, in America, bring to full dominance the internationally oriented sector of American capitalism, although this would be but one feature of it...
...Eisenhower intervened—successfully—in Guatemala, sent troops to Lebanon, and kept ample numbers of military aides in Laos and Vietnam...
...Rather, by raising the defense budget, the Administration probably hopes to facilitate the rapid centralization of the military establishment under closer civilian control while at the same time appeasing the vociferous right wing among the military and its powerful allies in industry and Congress...
...1) The primary impact of the defense effort on U.S...
...They are condemned to remain administrative devices...
...These men and the forces they represent will not be linked in a monolithic "proletarian" international but will harken to their national needs, and these cannot be met without help from the U. S. and countries like it...
...For totalitarian countries, boundaries serve to keep their people in rather than to keep enemies out...
...the modern industrial corporation must...
...because of the tremendous research effort related to it, it is also accelerating...
...Missiles are highly intricate, intensively instrumented affairs, requiring massive outlays for research, development, testing and evaluation...
...This cannot be done without increasing intervention by the Federal Government in economic life...
...Table III . . . RANKINGS OF SELECTED KEY COMPANIES RECEIVING MILITARY PRIME CONTRACT AWARDS, 1960 AND 1950-56 Rankings Contractor 1960 1950-56 avg...
...They cannot affect in any fundamental sense the relationship of power between the White House on the one hand, and the Pentagon and its allies in Congress and industry on the other...
...Technically, there are no insoluble difficulties in shifting resources from one form of economic activity to another...
...Such expansion "creates" jobs, but not productive wealth...
...The social investment that both Russia and America have in the cold war and the arms race is vast and mere policy decisions cannot change this fact...
...the labor force has virtual ly ceased to expand despite the growing number of persons of working age...
...The bars to planning the U. S. economy are as formidable as those in the way of disarmament...
...There is no denying that such tendencies exist and that, in case of major "reverses"—a Castroite Brazil or Venezuela—the possibility of a "police state" in the U. S. mentioned by Goodman will arise...
...Their construction requires predominantly professional personnel: Of the 565,000 employees engaged in missile manufacture, roughly three-fifths are engineers and other professionals and semiprofessionals...
...industries 2% Trans...
...Inst...
...56% of Boeing's...
...And a key condition of overcoming this stagnation is the reallocation of the social surplus —which necessarily includes declining outlays for armaments...
...Furthermore, capital expenditures per employee in both these industries is far below the manufacturing average and, in fact, neither they nor value added can begin to compare with the true work horses of the economy, e.g., chemicals, motor vehicles, steel—nor even with such more labor-intensive industries as nonelectrical machinery and food...
...It can...
...We shall deal with: (1) the primary impact of defense spending...
...Subsequent boosts have lifted fiscal 1962 defense spending authority to $52.4 billion, for a total upward revision from the last Eisenhower budget estimate of $6.1 billion (or 13...
...Harvester 82 27 U. S. Rubber n.l...
...The evolution of new nations has been a fact of world politics since " The Future as History, New York, 1960, p. 145...
...The question is, what would an American fascism be the response to...
...depreciation, to 3.3...
...1960, and The LongRange Demand for Scientific and Technical Personnel, National Science Foundation, 1961...
...Nor is it likely that a strategy of "preemptive attack" is seriously being contemplated in responsible quarters, although Baldwin maintains that its advocates "are still strong...
...Armaments will be "superseded" the way national boundaries have become antiquated...
...This insulates them from non-defense mass markets, but also deprives them of the flexibility any energetic management covets...
...but it ignores the social bases on which capitalism, in the U. S. at least, still rests...
...Let us summarize: High and rising military expenditures are in large measure the result of internal political pressures, rather than of external conditions...
...2) its possible (or probable) "secondary" impact via the income multiplier...
...and much less with payments to labor in industries supplying aircraft and electronics with plant and capital equipment...
...According to an estimate of the Aerospace Industries Association, the R & D portion of the total cost of military weapons production has risen from 20% for an intercontinental bomber to 60% for an intercontinental ballistic missile...
...Twenty per cent of these were employed in the industries most closely linked to defense...
...The ranking of General Motors, for example, number one in 1950-56, had dropped to 21 in 1960...
...For all manufacturing, profits per dollar of sales (or margins) amounted to 4.1% in the first three quarters of 1961...
...28 43 Minneapolis Honeywell 37 62 Mass...
...They can at best cap a lengthy process rendering that investment obsolete, a drag on society...
...This happened in mining and farming where skills have, however, been simple...
...For larger defense spending further extends the economic and social roots of the military and of the industries on which the arms race is based...
...This is far above the average for manufacturing generally...
...Quoted by Murray L. Weidenbaum in Planning and Forecasting in the Defense Industries, Belmont, Calif., 1961, page 159...
...Countries like Egypt, Yugoslavia, Ghana already possess influence by far exceeding their power...
...It is likely to characterize a lengthy historical period, lasting decades...
...The price which must be paid—in terms of the danger of accident and of the deleterious effects upon the fabric of the American body politic—for a military establishment based on nuclear weapons unlikely to be used will not, we submit, be granted over the longer run...
...For example, 65% of total net sales of General Dynamics (which was awarded $1.3 billion worth of defense contracts in 1960) went to the military...
...1960 is calendar year, 195056 avg...
...Thus, Kennedy has raised the defense budget over half again as much in his one year in office as Eisenhower did in seven...
...69% of the Martin Co...
...they cannot decide its course...
...Disarmament is not so much the alternative to nuclear war as to stagnation and retrogression...
...Production runs are short...
...Hence, some form of planning seems likely to develop, even against the resistance of that oligarchy, which would have to yield a share of its power to other forces in American society...
...Reviews of Data on Research & Development, No...
...The continued growth of statism is inevitable, but it cannot be an efficacious vehicle for protecting and enhancing the U. S. stake in world markets and investments if it is based on a stagnant national economy...
...70 12 Intntl...
...84% of sales of Lockheed Aircraft...
...and (4) its significance in terms of social politics as translated by the Federal budget...
...Greater civilian control of the armed forces could heighten the chances for disarmament, were such control not being bought at a price which may neutralize those chances...
...Yet long-term factors favor these pressures...
...Kennedy, two months after his inauguration, proposed a $2.7-billion increase, nearly 70% of which was to improve the strategic deterrent...
...For U. S. society or, better, fon the American state to reconstitute itself into a military-fascist entity would seem irrelevant to these worldwide trends—they do not call for such a response...
...in 1960...
...According to the National Science Foundation, there were close to 1.1 million natural scientists and engineers in the U.S...
...to be strong...
...By absorbing a large share of the social surplus, it helps maintain—or prevents any serious decline in—the high prevailing levels of profits, equity values, interest rates, and prices...
...In Germany and Italy, fascism was a means to overcoming severe internal crises...
...This realignment will not be definable in traditional and historically outdated terms of "liberal" or "conservative...
...The Government paid 87% of the aircraft industry's R&D performance, 68% of electrical equipment's, and 51% of scientific instrument's...
...The objective needs of the American state to maintain its status as a leading power, and the interests of the American capitalist elite and its following are not identical...
...New York, 1960...
...Value added is the market price of goods completed by a given establishment less the cost of materials purchased from others...
...Let us evaluate the two contending sets of forces...
...1% Elec...
...However, this circumstance affects the relative magnitudes to probably only a minor degree...
...Table II . . . VALUE ADDED & CAPITAL EXPENDITURES PER EMPLOYEE IN SELECTED INDUSTRIES, 1959 Industry Value added Capital per employee expenditures per employee Food & beverages $10922 $ 622 Textile mill products 6045 321 Basic chemicals 21077 1948 Steel 13459 1248 Nonelectrical machinery 10308 426 Motor vehicles 14496 630 Aircraft & parts* 8767 318 Radios & related products* 8178 386 Scientific instruments 10094 325 ALL MANUFACTURING ESTABLMTS...
...102, Missiles & Aircraft, U.S...
...No doubt, this consideration has played a role in the decision to expand the space program more rapidly, although the latter will generate further large accretions to the existing body of aerospace-related professionals...
...Over the 6-year period 1955-61 (the former year being the first post-Korean year unaffected by Korean-war outlays), the rise in the defense budget amounted to $5.3 billion...
Vol. 9 • July 1962 • No. 3
