Calls to nationalize America’s defense industries are not new—they typically come when high defense spending is punctuated by domestic economic crisis or when the US military is engaged in an unpopular war. At the height of the Vietnam War, the liberal economist John Kenneth Galbraith argued for making the defense industry de jure what it already was: a public corporation that relied heavily on public support and subsidy. He was motivated to make this argument because of the role that a profit-driven industry plays in militarizing US foreign policy, and in part because he knew that increasing spending on defense would decrease investment in President Kennedy’s New Frontier package of economic and social programs.
Since that time, formal US military spending has gone from $45 billion to nearly $700 billion annually. As social programs have atrophied, the major defense industry corporations have diversified their sectors to take on essential government functions, including data management and healthcare administration, further expanding their share of government contracting. And thanks to axiomatic public subsidies, defense firms have little to fear from any market discipline that might endanger their high annual profits and essentially recession-proof stock valuations. Governments, of course, keep secrets, but the spread of hidden bureaucracies and obscured financial networks around defense contracting push more and more decision making into the shadows. Deeper forms of public regulation or outright takeover of the defense sector is not only reasonable but necessary.
The current crisis prompted by the coronavirus pandemic has laid bare—more than ever before—the costs of under-investment in non-defense sectors like health and welfare programs within the United States. The swiftness of calls for nationalizing parts of the American economy during the coronavirus crisis has been breathtaking. Nevertheless, American neoliberalism dies hard. Worker assistance is temporary, means-tested and tightly regulated, corporate bailouts are programmatic, broad and opaque. Advocacy for a nationalized defense sector has to tackle some of this conventional wisdom at the same time that it advances a realistic form of public sequestration. In other words, sequestration advocacy must acknowledge and build upon the past technical successes of defense industries and their public funders at the same time it advances a radical reorganization of that relationship. Nationalization done in this way can be less blunt and more contoured.
Dispelling Industry Myths
The sociologist Fred Block critiques the enduring idea of a perfectly functioning market where external political intrusions only end in failure as “market fundamentalism.”[1] Just as the mythology around protecting the supply of oil has served to justify American militarization of the Gulf, market fundamentalism has justified ignoring or avoiding greater public engagement with the process of crafting economic policy. The rationale is that nationalization would threaten the dynamism of private defense industries, spelling the end of the country’s qualitative lead in technologies and development. Another conventional argument about impediments to nationalization evokes the way the US political economy is structured around a federal system with co-equal branches of government operating through a myriad of boards, associations and organizations. The rationale here is that top-down and centralized forms of industrial policy making, as practiced in the East Asian or European contexts, are simply not attainable.
Both objections, however, are rebutted by the actual history of the American defense industry. Since the 1970s, three industry developments have moved in tandem. First has been the emergence of “a particular cluster of federal agencies that collaborate closely with private actors in pursuit of security-related objectives.”[2] In other words, the defense industrial complex counts as America’s most successful form of industrial policy. Hardly the laissez-faire of neoliberal economics, these public-private institutional relationships have allowed for long-term planning, experimentation and commercialization of defense technologies.
A second development, following from these public-private relationships, is the widely acknowledged contributions of defense firms to transformative techno-innovations. Every step of these technological evolutions was guided not by competition or the price mechanism but by close coordination between firms and government planners.
The third important industry development is that while the development of the American defense sector has been distinct in some ways from the neoliberal order, it has nevertheless replicated some of its anti-politics. Since the 1970s, Congressional abandonment of defense and intelligence oversight has allowed rubber stamp approval of budgets. To further flatten political disputes around defense budgeting, the nation’s largest defense manufacturers have dispersed research, development and production facilities across state and congressional districts. While their corporate headquarters are clustered in wealthy zip codes on the East and West coasts, a network of subsidiary production and research facilities is intentionally dispersed much more broadly. Ironically, these developments advocate for, not against, the unique possibilities of American defense nationalization.
Decentralized Nationalization
The pursuit of defense sector nationalization would not need to clash with the country’s administrative and institutional decentralization as much as conform to it. The dispersal strategy of private contractors can be repurposed to fit the politics of decentralized nationalization. For example, the network of Federally Funded Research and Development Centers (FFRDC) that undergirds defense research and development offers a compelling template. In New Mexico, one of the poorest states, the location of Sandia National Laboratories among a cluster of other military research organizations has resulted in a state with “more PhD-holding scientists and engineers per worker than any other state in the union.”[3] As a result, that state’s congressional delegation and political leadership have been champions of federal research and technology development. Without the impetus to war, the spread of this kind of research and technology can instead address the very real and urgent need to rebuild and expand much of our country’s industrial and technological infrastructure.
The predominance of military basing in the American South and West recycles those regions’ conservative politics back into national defense policies. Not surprisingly, southerners and the children of service personnel dominate active duty rosters, and retired personnel tend to live near their former bases or go to work for defense contractors in the same area. The Midwest and the Northeast, by contrast, have historically not participated to the same extent. Structural changes that disperse participation in the defense sector could prove a powerful tool to open political economies and public investments to wider social interests and agendas. It could also prevent firms from shipping their operations overseas. Just as commercial conglomerates and big agribusiness have exploited trade and investment regulations in order to drive down wages and increase profits, so too have defense firms. Lockheed Martin, Boeing, Textron, General Dynamics, General Electric, Honeywell and Raytheon Technologies all operate low-wage subsidiaries in Mexico that manufacture parts that are shipped back to the United States. Ironically, current factory closures in Mexico and India due to the COVID-19 pandemic are causing issues up the supply chain, resulting in delays for weapons deliveries to industry customers in the United States and elsewhere.
There is no guarantee that nationalization alone will lower budgets, end waste or quickly lessen the political attractiveness of a militarized foreign policy. What is known, however, is that the usual methods of opposing America’s militarized approach to global engagement has made little impact.
The pandemic has opened up the space for radical dialogue on government priorities—but budgetary space must also be made if we are to implement many of the most urgent changes. Advocacy for such a shift requires contending with arguments in favor of the status quo and responding to claims that the industry cannot be transformed, or the tired canard that the defense industry is the last bastion of decent-paying manufacturing jobs in the United States. Understanding how the industry manages to take its largesse and spin that into broad structural support for foreign wars is a critical step in that direction.
[Pete Moore is associate professor of political science at Case Western Reserve University and a member of MERIP’s editorial committee.]
Endnotes
[1] Fred Block and Margaret R. Somers, The Power of Market Fundamentalism: Karl Polanyi’s Critique (Cambridge: Harvard University Press, 2014).
[2] Linda Weiss, American Inc.?: Innovation and Enterprise in the National Security State (Ithaca: Cornell University Press, 2014), p. 4.
[3] Andrew Schrank and Josh Witford, “Industrial Policy in the United States: A Neo-Polanyian Interpretation,” Politics and Society 37/4 (2009), p. 528.
