Boom and Bust

The United States may buy itself two things with its $1 trillion defense budget of 1981 to 1985. The first is an economic decline of the sort that comes about once or twice in a century. The second is a nuclear war.

This country is in the early years—not, despite the new shine of the Carter Doctrine, at the very beginning—of the most expensive military boom in history. In the process, the distinction between the military and the nonmilitary modes of the American economy is being suppressed. So is the distinction between nuclear and nonnuclear war. The continuum of money and destruction is being projected, through investment in military research and development, into the far future.

The expansion in military science and technology is the most ominous component of a defense budget that is dense with the ghosts of past and future wars. The new defense boom has been welcomed—in the US Congress, for example—as a response to recent events in Southwest Asia and elsewhere. But its main focus, instead, is on nuclear conflict.

The greatest increase in any major category within the 1981 budget is for “research, development, test and evaluation,” or “RDTE.” Spending on strategic and other nuclear weapons increases particularly fast, as does futuristic research at the “leading edge” of military technology. With the money it spends to buy and keep scientists and engineers, the Defense Department is designing the weapons of ten and twenty years from now. With its research boom, it is defining a revised American doctrine of science-intensive war.

This effort is not new, and it is scheduled to persist for the balance of the five-year defense plan. The proportion of defense spending devoted to research and the procurement of new weapons has increased steadily since 1976. This constitutes, as the Report shows, the first sustained boom in US military investment—investment in Southeast Asia aside—since 1960-1963.

The RDTE budget for 1981 is $16.5 billion. The MX missile—the race track of Ozymandias that Herbert Scoville described in the previous issue of The New York Review—is its most expensive item. The MX is allocated $1.5 billion in research money: this is more than the combined RD budgets for the Department of Labor, the Department of Education, the Department of Transportation, the Environmental Protection Agency, the Federal Drug Administration, and the Center for Disease Control; over 140 percent of the RD budget of the National Science Foundation.¹

This allocation for the MX is only part of a build-up in research on nuclear, anti-nuclear, and post-nuclear weapons systems. The “science and technology” program (“advanced research,” “technology opportunities,” and so forth) receives special commendation from Defense Secretary Brown, who presided as Director of Defense Research and Engineering in 1961-1965 over the first great boom in strategic research, and is now concerned to “overcome the effects of reduced funding during the 1965-75 period.” It is as though the years of obscurity, of the bargain basement, low technology Vietnam war were over; as though military scientists can now step out into the clear light of particle beams, space optics, and blue-green lasers.

The military doctrine that Brown outlines is suited to the epoch of innovative war. He returns again and again to concepts of flexibility, precision, “selective and measured” attack and calibrated retaliation. Even the hopes and dreams of Russian leaders are measured; to the calibration of retaliation is added a calculus of values, in which the utility of certain “political control targets” exceeds that of, let us say, the entire city of Gorky, with missile sightings adjusted accordingly. Is there to be a further role for social scientists and moral philosophers in the teams of savants who are nourished by Sea Launched Ballistic Missiles?

The notion of “flexibility” is a leading piety of American strategic doctrine. Nor is there anything new about the idea of a “continuum” of nuclear weapons. But it is elevated by Brown into the writing on the wall of future destruction, from bazookas to particle weapons. “A continuum of deterrence,” an “unbroken continuum” from “conventional to intercontinental forces”: the word occurs five times in a brief discussion of so-called “theater” nuclear weapons, for use within one region such as Europe. At one extreme is the American first strike. “Even supposing a US first strike,” Brown muses at one point in the report, the Russians would have many surviving weapons.

This exercise in the use of the conditional is not likely to reassure those, such as the authors of the most recent SIPRI World Armaments and Disarmament Yearbook, who see in the MX missile system and in the latest anti-submarine technologies a refinement of the US ability to strike first at its enemies.² Next in the continuum come the varieties of intercontinental retaliation dictated by the doctrine of “countervailing” force. Here again the emphasis is on precision, on choosing frequently among military and political targets, on “retaining an assured destruction capability” for the weeks of burning cities, social destruction, and ionizing radiation which would follow a limited “exchange.”³

From here to the long-range “theater” nuclear weapons—such as the Pershing II and cruise missiles which will be able to strike from Western Europe into the Soviet Union—is a mere nudge along Brown’s continuum. Thence to the array of “battlefield” and other nuclear warheads, of which the United States maintains some 7,000 in Europe alone, and “many thousands more” elsewhere. “Conventional” weapons, too, are to be found in the rainbow of modern war, often, indeed, launched from “dual purpose” nuclear or nonnuclear artillery, missiles, planes, and ships. At the end of the continuum, chemical weapons, of which the “deterrent stockpile” is to be maintained in 1981, which feature (“lethal chemical munitions concepts”) in the Army’s 1981 research budget, and for which “a facility that will have the capability to build binary chemical bombs, warheads and projectiles is being designed.”

What is most remarkable about the doctrine of the continuum from nonnuclear to nuclear conflict is the cool and precise rhetoric in which it is described. Brown notes that “we have no more illusions than our predecessors that a nuclear war could be closely and surgically controlled.” But the Report returns obsessively to the promise of such illusions: to “increased NATO options for restrained and controlled nuclear responses,” to the “effectiveness and versatility” of nuclear-armed destroyers in the Indian Ocean.

This is the banalization of the nuclear epoch. We no longer find the pious disclaimers, the epithets (“of course; terrible”) which earlier defense secretaries once appended to the words describing nuclear war. Nor are there frequent references to “the limited utility of nuclear weapons” (Donald Rumsfeld in the last Republican Defense Budget). The phrase “total war” is used casually in a discussion of defense spending. The unthinkable is being thought, ignored, presumed upon.

The Report puts forward three sorts of arguments in favor of increased defense spending. The first, and most familiar, suggests that because the Soviet Union is spending much more than the United States on its military effort, the United States must now rearm. The Report is full of speculation on Russian intentions: the fact that their forces in Eastern Europe are “much too offensively oriented,” and that their positions in the Far East are “apparently designed for offensive operations”; their curious propensity to “take more seriously than we have done, at least in our public discourse, the possibility that a nuclear war might actually be fought.” But the argument relies in general upon the simple reiteration of relative expenditures.

The shortcomings of such comparisons are well-known, as the Report itself comes close to acknowledging. They are selective, in that they sometimes measure the Soviet Union against the United States and sometimes NATO against the Warsaw Treaty Organization. They pass lightly over the proportion of Russian military efforts which is directed not against NATO but against China. They move even more expeditiously past the sharp qualitative advantages enjoyed by the US, such as the “rather startling asymmetries” which SIPRI detects in US and Russian strategic submarines.⁴

The comparisons of dollar costs are even more misleading. They are measured, the Report explains, “by what it would cost to buy Soviet programs (including personnel) in the US economy.” Estimates are thus arrived for such quantities as “Soviet resources devoted to RDT & E.” One has only to imagine the reverse exercise to see the tenuousness of such calculations. A Russian “estimate” of American military research would start, to be sure, with the published budget figure of $16.5 billion. To this it would add the $1.3 billion which the Department of Energy will spend on nuclear weapons and other defense research, and a sizable part of NASA’s $5.6 billion RD budget. The Russian economists next need to calculate what portion of RD spending by American business supports the military effort, notably in two industries, aircraft and communications equipment, which are called by the government “defense product industries.”

At this point, they might decide what it would cost “to buy” this science and technology in the Soviet Union—to reproduce the utility of Hewlett-Packard’s basic research, or of such military contractors as Penn State University.⁵ Do they multiply by two? Or three? Or is Penn State unreproducible? All that remains for our diligent academicians is to head, charts in hand, for the Armed Services Committees of Mr. Smirnov and Mr. Ustinov and the other titans of the Soviet Union’s military-industrial complex.⁶

This exercise is not frivolous. Some such sequence may indeed have helped to determine the present arms race. We can assume that the Soviet Union reacted to the American military build-up of the late 1960s—an effort directed in large part at Southeast Asia—by investing in military research. The weapons that the Russians are building now are the products of that research. The Americans in turn react by increasing their own research, which will produce the arms race of the early 1990s; such are the dynamics of comparative weaponry.

The second argument in favor of the military boom suggests that the “growth in international turbulence” in Afghanistan, Africa, the Caribbean, Thailand, and elsewhere makes such an effort essential. One may question whether the times are, indeed, notably turbulent. There are relatively few wars underway, and revolution is distinctly on the retreat. It is even more questionable whether acquiring the capacity to construct particle beam weapons in the 1990s is likely to reduce turbulence in the Third World in 1980. One of the major new projects, the CX airlift plane, is recommended for “contingencies outside of Europe,” yet it is some years from being deployed. The strategy of knowledge-intensive war suggests that the United States will look for precision and measured responses in its worldwide military efforts: in other words, the use of tactical nuclear weapons. Is this what the Carter Doctrine requires? Is this what Congress is buying with its bucks?

Brown’s report, meanwhile, demonstrates a far more muscular attitude to US military intervention outside Europe than has been seen for some years. “Our defense establishment could be faced with an almost unprecedented number of demands,” Brown writes. We are not far from Henry Kissinger’s recent thoughts, when after considering whether US troops would be welcome in Oman he said:

“The immediate crisis shouldn’t deflect us from other areas of potential danger. The situation in Turkey requires our urgent attention. Thailand could be a dangerous situation. Morocco remains under attack from adversaries armed with Soviet weapons. Central America is in turmoil. We may yet be needed in Southern Africa.”⁷

The third argument is the murkiest. It suggests that “perceptual problems” are critical, that the United States must increase its military spending lest it “lose, not from war, but from changes in perceptions about the balance of nuclear power.” Even those who accept this argument—I do not—should ask themselves whether the United States is buying the right power and the right perceptions with its new defense dollars. Must it sell the far future with blue-green lasers? Is the Brown Doctrine of science-intensive war the best standard under which to fight the battle of perceptions? It should be added that the Report’s calculus of “perceptual” costs and benefits is bizarre. Thus we learn that “the aura of great US military power” is “a legacy of World War II, Korea, the Cuban missile crisis, and even (up to a point) Southeast Asia…,” that “the mining of Haiphong Harbor demonstrated the deterrent effect of mines….”

The Brown position is based on a view of the American economy and American society as organized around knowledge and science. The Report contrasts the “manpower-intensive Soviet economy” with the “more capital-intensive and technologically advanced American economy.” The obvious strategy, thus, is to lead from strength or from comparative advantage; to prepare to fight an automated and innovative war. This choice has the further advantage of appealing to the apparent preferences of the Congress for hardware and for clean wars.⁸

Yet even on these terms, the strategy is perilous. The Report is full of allusions to “problems with material readiness, in part because of the advanced equipment coming into the forces.” We learn, in passing, of production problems in constructing nuclear attack submarines, of “shore processing software, computer loading and array reliability problems” with Navy sensor systems; that the Air Force finds it difficult to maintain “their increasingly complex equipment,” given “maintenance backlogs” and “increases in our accident rates”; that the Army’s “telephone switches in Europe are obsolete, require continuous costly maintenance, and often break down,” and will be replaced by German digital switches.

We are not far from the more familiar problems of the civilian economy: from subway systems whose sensors break down, and hospitals in which electronic hardware surpasses medical software, from the maintenance problems of DC 10s (the Federal Aviation Administration’s budget for civilian RD is less than that allocated to one Navy aircraft). The military has conventionally assumed that because it can afford the most elaborately redundant controls, and because its operations are isolated from the messiness of real life clinics and sewage tunnels, it is thereby free from such tribulations. Even this may no longer be the case.

There is a related and deeper contradiction in the notion of knowledge-intensive war. The United States is practicing a variety of “la guerre savante,” the stylized struggle which has dominated European wars since the sixteenth century. But as Fernand Braudel shows in his new Les Temps du Monde, such struggle is only possible when it is practiced by both sides at once; the veterans of Flanders campaigns who brought their learned battle formations to Oran in the 1590s and to Brazil in the 1630s found opponents who were playing in a different game.⁹

The United States cannot expect that the Soviet Union will continue to join in its high science game, as this game becomes ever more idiosyncratic and ever more indulgent. The American military is choosing those weapons systems which are, in Robert Oppenheimer’s phrase, “technically sweet.” But this sweetness seems increasingly determined by the most introspective of scientific cultures. Are the random dashes and dummy missiles of the MX “sweet” to Russian probability theorists and computer scientists? The arms race implicit in the new military boom requires the most precise coordination of national scientific emotions, as the United States and the Soviet Union move together toward the MX, to “invulnerable” missiles for the Russians, pressure on SALT, new missile defenses, pressure on the ABM Treaty, laser weapons, more pressure to abrogate the ABM Treaty, warfare in space.

The epigraph to Brown’s Report is a remark made by Abraham Lincoln, in 1861: “I think the necessity of being ready increases—look to it.” That America’s leaders should choose, now, to evoke the last war fought in this country is itself awesome. The insignia to the Defense Budget should be not what Lincoln said on the eve of the Civil War, but rather what he said at its end: “It is sure that I have not controlled events, events have controlled me.”¹⁰

The last, striking contradiction of the doctrine has to do with its economic costs. These, too, are determined by the technology-intensive character of the projected boom. Yet they have been to an extraordinary extent forgotten in discussions of the Defense Budget. Just as it is assumed that investment in lasers will somehow encourage the loyal Pathans, that the incantation of numbers (4 percent real growth in defense spending) is itself useful, so too are the economic consequences of the boom ignored.

The Budget was greeted with enthusiasm: “Defense Stocks Lead Market Up,” and a survey of business opinion in the Wall Street Journal to the effect that “we’re in a war economy.” There seemed nothing, as in 1950 and 1966, that could so fortify business confidence as a vigorous defense effort. The recession of 1980, it seemed, was “postponed.” Yet this optimism is founded on a profound misunderstanding of the changes that have taken place in the American economy since 1970, and thus of the likely benefits of the defense boom.

Even the most rosy expectation does not deny that military spending will stimulate inflation. Previous arms booms began in years of moderate price increases (consumer prices increased 1 percent in 1950 and 2.9 percent in 1966); inflation in recent months has reached an annual rate of 16 percent. This tendency is likely to be exacerbated because many engineers, skilled workers, and high technology components are in short supply; the chairman of General Dynamics (the contractor for the Navy’s troublesome attack submarines) looks forward to “some type of priority system” favoring defense contractors.¹¹

It is much less likely that the boom will provide extensive new employment for American workers. In the first place, the character of defense spending is, following Brown’s dictum and the exigencies of the times, increasingly capital-intensive. If a billion dollars in the 1960s could procure a sizable arsenal of General Motors rifles for Vietnam, it will not now pay General Dynamics for a single Trident submarine. Secondly, by cutting into other government programs, military spending may jeopardize the most precarious of existing jobs.

One mysterious aspect of the economic crisis of the 1970s in the United States is the extent to which employment has continued to increase. This is in part because manufacturing industry here—far more than in France or West Germany—has maintained jobs. But it is also because employment in social and public services, particularly health services, has multiplied. Thus of the 9 million jobs created in the US economy from 1973 to 1978, one half were in services and state and local government (a further quarter were in retail trade). These jobs, often temporary or part-time, are peculiarly at risk in a recession; it is worth recalling that the last great surge in service employment in the United States was in the late 1920s, and was brought to an end by the Depression.¹² Will the overpaid aeronautical engineers of 1981 spend their disposable income on nursing home services? Or will the Carter administration, cutting government civilian programs to limit inflation and balance the budget, begin a new crisis of layoffs in social services?

There is one problem of the US economy which the military boom may be expected to alleviate. This is the decline in rates of growth of labor productivity in the 1970s, with an actual reduction in 1974 and 1979. It seems likely that shifts in the economy away from the production of goods for military consumption and toward the production of social services have reduced growth in productivity. Many industries that are dependent on defense enjoy high levels and high rates of growth of productivity. They buy components, intermediate inputs, from other equally vigorous sectors. The service industries, by contrast, tend to buy paper, construction, other services.¹³ Yet even here the stimulus of procurement may be limited. Perhaps modern defense contractors behave, economically speaking, like business services or technology consultants.

US military expenditures started to increase in the mid 1970s. Military contracts for goods and services—what the Defense Department comptroller calls “procurement,” which includes spending for maintenance goods and for foreign military sales—increased from $45.8 billion in 1976 to $55.6 billion in 1977 and $69.0 billion in 1979. ¹⁴ Yet this boomlet has done little for productivity growth. The Soviet economy, of course, is a poor example of the economic benefits of militarization. The Defense Department Report is generous with its estimates of Soviet economic growth in the 1980s. How can an elemental enemy be at the same time a pitiful and impoverished giant? Recent figures show, however, that the Soviet economy grew in 1979 at 2 percent as against a planned 4.3 percent, and industrial productivity 2.4 percent against 4.7 percent, with productivity in agriculture and transport falling.¹⁵

What, in these circumstances, are we to make of the military-induced boom in “business confidence”? It is perhaps the most ominous of the ghoulish economic indications of the past several weeks, not only for what it reveals about the perversity of capitalist economies. Business optimism, now, is evidence of a keening desire by American industry to return to the old economic and technological patterns of the 1940s, 1950s, and 1960s. The economic changes of the period since 1970 have amounted to a vast, if unintended and perhaps unwanted, transformation of the American economy toward the provision of social security. There has even, within this metamorphosis, been some conversion of scientific and technical efforts toward secular society; some social innovation. Now, every instinct of the American political economy seems to be crying retreat, to be crying war.

If one considers the history of the American economy in the twentieth century, it seems possible that military industries have functioned as a “leading sector”—in the economist Joseph Schumpeter’s sense of a dominant industry—during the long expansion of the 1940s to the 1970s. One does not have to believe in specific explanations of economic cycles such as Kondratieff’s to see that modern economic growth is characterized by long periods of expansion, more or less associated with a given “locus” of innovation. Such periods include, for the world economy, 1848 to 1873 and 1895 to 1920, as well as the post-World War II boom that ended in the early 1970s.¹⁶

There has been no undisputed leader during the US expansion of the postwar years. Instead, some theorists of economic cycles point to an assortment of leading industries, including electronics, consumer electrical goods, and air travel. What seems possible is that the military industries themselves have constituted such a focus. They do not function as a single or multiple industrial sector, as did the railroads and the automobile and electricity businesses in earlier booms, but rather as a cluster of industries joined by a common objective and a common customer. Their role in the wartime and postwar American expansion would certainly fit Schumpeter’s criterion for the longest waves of the economic cycles as “breaking up old and creating new positions of power, civilizations, valuations, beliefs and policies”; as well as creating new ways of organizing scientific research and innovation.¹⁷

If this speculation is plausible, what we should have seen in the 1970s was the elaboration and decline of military innovation in the United States. This obsolescence is what Mary Kaldor calls “baroque technology.”¹⁸ Is it to be glimpsed within the optimism of Harold Brown’s knowledge-intensive budget? Will the $200 million to be spent on Very High Speed Integrated Circuits produce some pale imitation of the past triumphs of military electronics and its civilian spin-off? Is the MX the residual monstrosity of the long expansion led by the military, and does it portend the decline not of the auto-industrial but of the military-industrial age, the Edsel and the Vega writ as large as the deserts of Utah?

The defense boom and the business confidence it inspires are from this perspective deeply disturbing. They suggest an instinctive return to the industrial and scientific culture of an obsolete expansion, the power of what Veblen, writing of the British railroad industry in the 1890s, called “the inertia of use and wont.”¹⁹ Such a reversion can only make the long cyclical decline of military industries more painful and more dangerous.

The United States in 1970—after the first decline in military spending for Vietnam—consecrated a fifth of its engineers, a fourth of its physicists, a fifth of its mathematicians, almost half of its aeronautical engineers to defense-related employment.²⁰ Estimates in the Rumsfeld defense budget suggest that the proportion did not fall during the Republican defense recession, and may have increased since.²¹ At the trough of the recession in military research, the United States devoted 28 percent of its national research and development effort to defense, as compared to 7 percent in West Germany, 19 percent in France, and 4 percent in Japan.²² An economy in the throes of decline cannot afford to lose this portion of its knowledge, of its educational system, of its future to old industries, and to destruction.

There is now, as not often in the world since Nagasaki, the intuitive possibility of nuclear war. There is also the possibility of a remilitarized world economy which will make this prospect more imminent, year after year, as the research boom becomes a boom in procurement, in strategic doctrine and in military culture. Very little is more important, in the spring of 1980, than to act against the one and against the other.