Re: Republican Military Keynesianism Redux

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

In reading Earnst Cassirer's The Myth of the State  I came across a sentence
in the chapter on Hegel: "Hegelianism has had to pay the penalty of its
triumph", which I think is very applicable to Statism.  The state apparatus of
the New Deal, as constructed under FDR, evolving into the post war
military-industrial complex.  Hans Morganthal of the University of Chicago
(Politics Among Nations) developed the theme that American post-war foreign
policy was "imperialistic" in the non-perjoriative sense of the word, because
it was expansionist and empire-building for the post war Pax Americana. Of
course, both an interventionist government and a military-industrial complex
are necessary for an "imperialistic" foreign policy.
The hawks and doves/gun or butter debate touches on another key issue in
American foreign policy: arms control and its scholastics, within the Cold War
general framework of a bi-polar ideological struggle.

The post WWII arms control regime is divided between conventional arms and
nuclear arms because the separate logic governing them are as different as
those governing Newtonian mechanics and Einstein
relativity.  It is historically inaccurate to think that a military industrial
complex always existed in America. Captains of industry like Andrew Carnegie
and Henry Ford were consistently vocal in their anti armament
and anti war sentiments.  The military was relatively small for the size of
the nation up to the eve of WWI, and defense contracts were negligible and
less than prestigious. Respectable businesses were not
particularly interested in government defense contracts. Even navy
ship-building was mostly done in government yards.

Nevertheless, Jane Addam (1860-1935), woman suffrage leader and peace
activist, recipient of the 1931 Nobel Peace Prize, led the Woman's
International League for Peace to protest at the Hague in 1915,
asserting  private profit from armament to be a hindrance to the abolition of
war, but America's entrance to WWI stopped further protests and the post-war
extensive demobilization in America made disarmament a non issue.

The Washington Conference of 1912-22 sanctioned parity for the American and
British navies.  The lack of public resistance on the navy built-up was partly
due to the navy, unlike the army (excepting the National Guards), having a
more defensive role, given America's long coastlines on two oceans, and partly
because the navy had always been more professional and less dependent on
conscription than the army, thus insulating it from demobilization pressures.
War planning in WWI caused a radical restructuring of the economy. Yet the
aggregate profits of American industry were lower in the war years of 1917-18
than in pre-war 1916.  While wages increased generally, lower wages increased
more than the cost of living, thus raising the living standard of the poorer
working classes.  Labor benefited from full employment and from government
regulation on hours and working conditions.  Farmers became better off
financially during the war, but agriculture fell further behind industry. The
railroads gained spectacular efficiency
from centralized government control. Shipping became a super efficient
industry through logistics support for a large army in Europe.

The most significant fact was that about 10 million men, 25% of the work
force, were taken out of productive work and had be supported at a high level
of military consumption.  The lesson was that by a deliberate collective
effort, an enormous expansion of production was effectuated through a planned
economy. The return to normalcy after the war dismantled the American war
production machine and prevented it from making any contribution to economic
expansion in peace time.
In the spring of 1934, Fortune magazine ran an article entitled "Arms and
Man", a cheap expose unworthy of its lofty title.  Among other things, it
claimed that while it cost $25,000 to kill an enemy soldier, Chicago gangsters
were doing it for $100 a head.  Senator Gerald Nye (Republican, North Dakota),
chairman of a special committee to investigate illegal links between business
and armament, entered the
article into the Congressional Records, remarking that "there has not been
published in ages anything so enlightening." The Nye investigation exposed a
few well known "surprises" about the international arms trade: that bribery
occurred in Latin America and Asia, that home governments were enlisted to
secure foreign sales, that arms manufacturers always sold to any customer
paying cash or with good credit regardless of morality or politics, and often
to both sides of the same conflict, and that arms embargoes were universally
opposed by the arms industry as ineffective and only resulting in smuggling.
The
investigation did revealed that DuPoint's plant near Nashville had grossed a
profit of 40,000% on its capital, soliciting a response from Pierre DuPont
that since his company was selling technology rather than a commodity to the
government, looking at return on capital was misleading.

War planning by the War Production Board in WWII learned from the dismal
experience of the the War Industries Board of WWI.  Immediately upon its
establishment, the WPB conducted a complete national inventory of material and
capacity for setting priorities and allocations. Its advantage over its
predecessor was its final authority not only over industries but also over all
production, including consumer goods.  As
such, it had power to  halt civilian automobiles in favor of munition
production. A second and more important advantage was that war planning could
immediately be manned by in-placed trained personnel of the New Deal, a point
correctly made by Chuck Grimes. The economic benefits of war was substantial:
full employment, price stability through control and rationing, insatiable
economic demand, priority allocation of resources to support the spectacular
miracle of production. The American economy quickly became addicted to these
euphoric vitamins from war.

At the end of WWII, the New Dealers, now powerful and unapologetic, were
determined to extend war planning into peace time. The economic tools
developed in war by the War Production Board, such as data on national income
and production, were readily applicable to peace time management of the
economy. The National Bureau of Economic Research had made significant
advances in understanding the phenomenon of business cycles, monetary and
fiscal policy implications and the economics of the banking system. Employment
and unemployment data were readily available through national registration of
insurance and social security.
The lessons of the post WWI demobilization and the abrupt return to "business
as usual" of the New Era which led to the calamitous depression in 1929 were
fresh in the minds of the public and government
officials after WWII. The need for a planned "mixed" economy that was "neither
pure capitalism nor socialism" became  mainstream conventional wisdom until
the 1970s.

Post WWII demobilization affected the economy differently than that of post
WWI, due to the availability of a host of social programs: unemployment
insurance; a system of public employment agencies; government guaranteed bank
loans for home buyers, farmers and entrepreneurs; a GI Bill for education;
veteran medical benefits and hospitals, etc. Even price control continued
until the Fall of 1946 for fighting inflation and speculation.  War-time
saving by the public fueled a pent-up demand for big ticket consumer items:
home, automobiles, appliances, etc.  Congress passed the Employment Act of
1946 which required an annual economic report to Congress and a formal
administration program for implementing the policy aims of the Act.  It also
created the Council of Economic Advisors.

Post war economists devised the famous concept of "structural unemployment"
which for the U.S. economy was defined at 4% of the work force.  Three
"scientific" factors behind structural unemployment were identified by the
Economic Advisors to the President:
1) post war baby boomers population jump;
2) racial discrimination, and
3) the existence of  chronic depressed areas.
The solution for these structural factors were considered to be requiring
different time frame than economic cycles.  The baby boom problem was to be
solved by a lengthening of the education and enlarging enrollment, thus
reducing the number of first time job seekers and delaying their entrance to
the job market.  The racial issue would have to wait decades (until Kennedy
and Johnson and in large measure still unsolved today despite tokenism), and
the Area Development Act would tackle the third issue. This "scientific truth"
condemns 4% of the American work force (about 8 million workers) into
permanent exile from the economy and allowed the economics establishment to
close its eyes to this man-made "natural" evil without being guilty of
derelict of duty.

If even cancer can be conquered, it is unbelievable that structural
unemployment cannot be solved.  The real reason it has not been solved is
because the economics establishment has accepted the condition as
scientifically "natural" and thus depriving vital and financial oxygen to all
necessary research into seeking a solution.

Even then, two alternative economic scenarios for post WWII were generally
accepted as unavoidable.
One expected a return to high unemployment and depression and deflation, while
the other anticipated high inflation as a natural price for keeping
unemployment low.
International geopolitical developments soon provided a third scenario which
was quickly seized by a convenient coalition of diverse domestic interests:
the ideological anti-Communist right; academia and
think-tanks which thirsted after research funds, big business which wanted to
continue war contracts in peace time, demobilized military officials who
joined the private sector who sought to maximize the value
of their war time experience in the private sector, government planners who
saw a way to militarized the peace for economic purposes.
The Cold War was not only good politics, it was good economics and even good
science.

But the nature of armament was fundamentally changed with the arrival of the
age nuclear weapons. Initial calculations were concluding that the cost
effectiveness of nuclear destruction was geometrically superior to
conventional bombs in term of TNT per dollar. The problem was that only the
United States had the bomb, thus there was no need for a large stockpile and
also no need for even conventional arms. It is reasonable to surmise that of
various interests that helped the Soviet to quickly develop a nuclear
capability, ideology had not been the only consideration.  Arms control
scholasticists in U.S. think tanks were actively promoting the need to let the
Soviet have the bomb and an effective delivery system, being confident at the
same time that the U.S. could stay technologically and quantitatively ahead
enough of the
Soviets to not compromise national security. By 1971, total offensive force
loading (nuclear warheads) stood at: US 4600 and USSR 2000.

The military on both sides soon embraced arms control, having understood that
arms control was the deadly enemy of disarmament which all military leaders
detest like the plague.  Within the verity of arms control was the need to
make it easy for the opponent to reach a normative state of parity to play the
game but not any overwhelming advantage to win the game.  That state of parity
is known as stability.
If either side achieves de-stabilizing advantage, the incentive for surprise
attack would be enhanced.  So giving the Soviets nuclear secrets up to a point
was to enhance the protection of the U.S. security.

Eisenhower, a conventional war warrior, who had an old soldier's distaste for
the new technology and the new scholastics, whose entire career was built with
his inability to complete a whole sentence, had Malcom C. Moos, his speech
writer, to come up with the eloquent and catchy term: "military/industrial
complex."  Eisenhower was confronted with a new and dangerous phase of the
arms race.

The technological imperative has pushed weaponry toward intercontinental
missiles openly demonstrated by Sputnik in 1957 and the prospect of missile
launching nuclear submarines was becoming real. Not being able to tell the
American public about military "secrets" that America's enemy already knew,
and not being able to overcome a soldiers averse to giving an enemy military
secrets, Eisenhower naively thought
that by alerting the public on the unsavory link between business and the
military would slow down the arms built-up.  There is truth to the saying that
generals always re-fight the last war in the current one.
Eisnhower, too old to fight the next war, was trying to frame its rules by
slowing the development of its armament technology.  Eisenhower knew that
Sputnik was a stunt rather than a real feat. It was a showcase for big booster
rockets at the time when America was achieving radical size and weight
reduction of her hydrogen bombs, making big booster missile irrelevant as a
delivery system.  As it
turned out, big boosters provided the technological imperative for the
development of  MIRV (multiple independently-targetable reentry vehicles)
technology more than a decade later.   Yet public and press hysteria forced
both Eisenhower and Kennedy to loose control of their defense budgets to
include large amounts of waste and redundancy to remove the "missile gap".  So
Sputnik actually did more to hurt the less developed soviet economy down the
road than any other factor. It was a fact that advisors to Reagan, understood
and urged on him a strategy of a new level of conventional arms race in the
name of nuclear arms control that eventually bankrupted the Soviet economy and
thereafter the Soviet political system as well. The Cold War was not won by
American democratic ideals.  It was won by an American arms control strategy
that was sustainable only by a capitalistic system.  George Kennan was
dishonest and wrong in claiming otherwise during his later years, and those
who claim him to be a "dove" are either hopelessly misled by devious
propaganda. The beatification of a "dovish" Kennan is part of a comprehensive
campaign to glorify the "natural and scientific" superiority of capitalism
over socialism.

The US now is seeking a replacement of economic role of the Cold War.  The
attacks on Iraq and Yugoslavia were part of that search - it is a convenient
way to burn off fast technical obsolescence to make room for the next
generation of smart bombs and cruise missiles.  The economies of
Massachusetts, California and Texas are closely tied to smart bomb production
at a cost of $1 million a pop.

With the public acceptance of the "missile gap" after Sputnik in 1957,
internecine warfare within the Department of Defense known respectably as
inter service rivalry broke out in earnest and in public.  The Air Force
proposed to rename itself as the Aerospace Force, and promoted the irrelevant
and basically non-existent missile gap.  The Navy harked back to science
fiction to point out spaceships are the provence of the Navy because ships
have always been naval vehicles.  The Army, fearful of becoming obsolete in a
strategic nuclear age, promoted the concept of limited nuclear wars where the
foot soldier remain key.  The term "wish list" became Pentagon budget parlance
to denote serious fantasy.

Response time became a major factor in strategic nuclear defense. Response
time to enemy attack by long range bombers with nuclear bombs had been
shortened to hours, as compared to weeks by the movement of conventional
troops and tanks. With the on-coming missile age, response time was further
reduced to
minutes.  Kennedy was the first president who had "the button". Kennedy's
political deal with the American Right was that while he would be liberal in
domestic economic policy and civil right politics and he would be a fervent
Cold War warrior in foreign relations. That inverse relationship between
domestic and foreign policies, as engineered by Kennedy, is still visible
today.  Clinton, upon entering the White
House, served notice to all that his first term was going to be devoted
entirely to domestic issues, with foreign policy taking a back seat, meaning
no change from the Reagan/Bush foreign policy.
Starting with Kennedy and not withstanding the Eisenhower warning, defense
expenditure rose.  The defense budget of 8 years of Kennedy/Johnson exceeded
the pervious 15 post war years, even not counting Apollo, which was disguised
as a civilian project to reach the moon for scientific purposes instead of a
heavy payload missile research program that it really was. Richard Barnet
detailed in his The Economy of Death published in 1969 detailed the rise of
new super rich like David Packard who parlayed an electronic hobby in his
garage into a $300 million personal fortune by the mid 60s; Simon Ramo and
Dean E. Wooldridge of TRW which catapulted from a $6,000 operation in auto
parts into a $120 million defense contractor in a few year by 1967.
Since these companies were involved in selling "threat reducers", it was
necessary for them to first sell "threats". James T. Ling, the conglomerateur
of LTV, who with a $3,000 investment built a $3.2 billion
business, declared to the press: "one must believe in the long term threat."
Believing in security threats, unlike believing in God, had its secular
rewards.
The two-way revolving door for business executives and military officers
between the Pentagon and the private sector nurtures a common culture in which
fundamental assumptions are accepted as givens.
McNamara and the Whiz Kids, fresh from turning the Ford Motor Company back
into profit by making cars cheap in both price and quality, brought the same
systems analysis approach they borrowed from war planning back to the Pentagon
where it had begun, and developed into a high science by the strategic bombing
program of the Air Force, but had since been largely forgotten by the post war
generals.
With mission oriented cost/effectivenss, concepts of kill-ratio; flexible
response; etc, McNamara de-politicized the military and in the process,
militarized politics. Foreign relations becomes exceedingly
complex and dominated by nuclear strategic scholastics.  It fell mostly beyond
the grasp of non specialists because of the special logic of arms control
scholastics and unique parlance defy common sense. Labeling
Kennan a dove is part of this confusion.

The logic of nuclear arms control evolved into a modern scholasticism that
gave new meanings to the language of war.  Deterrence, rather than victory,
became the sacred aim.  Since political accommodation was ruled unrealistic
with an opponent possessing the power of instant massive destruction, peace
can no longer be achieved through diplomacy until nuclear war is eliminated as
a possibility.  The doctrine of deterrence was based on a balance of terror,
to make war so mutually destructive that the very thought of it was enough to
terrorize potential opponents to maintain peace. The doctrine of massive
mutual
assured destruction (MAD) became enshrined in every think tank. The originator
of this type of theory was Herman Kahn in his famous Thinking about the
Unthinkable, which defines stages of escalation of terror that the final stage
of war will never come. These stages are to be so well understood by both
opponents that the first sign of escalation was enough to induce a
de-escalation back to normal. DECON1 and DECON2 became common strategic terms
that spilled over to the movies. Under this theory,
stability is achieved only by parity of military capability.  Weapons that
kill people are stabilising (good, because they reinforce terror as a
deterrent to nuclear war), weapons that destroy weapons are
de-stabilizing (bad because they reduce terror by providing protection against
destruction). This is the context in which the proposed Star Wars, NMD and TDM
were debated originally.   Civil defense is bad because it implies a
preparation to neutralize an enemy counterattack after mounting a first
attack, in order to launch a second attack.

It is ironic that the post Cold War, near universal opposition to terrorism on
a small localized scale is promoted by the same government that employed
massive global nuclear terrorism as the basic tool for
constructing an arms control regime that enabled it to win the Cold War.
Clausewitz' concept of total war, the aim of which is not merely to rob the
enemy of military capability, but to destroy the enemy's will to
resist, was revived a a gospel by nuclear war scholasticists.  War, according
to Clausewitz, was merely continuation of diplomacy by other means.   Karl von
Clausewitz (1780-1831), in his influential book: On War, would insightfully
identify diplomacy as merely an extension of war, is a tailor-made dogma that
modern nuclear war regime needs. Prior to the onset of the Clausewitzian view,
traditional military doctrine always considered diplomacy as an instrument of
peace while war is the result of failed diplomacy. Clausewitz, being a realist
of the age of Napoleonic wars, would view war as a natural condition in human
affairs. His ideas would enjoy renewed attention in the post Second World War
era
of superpower Cold-War military doctrine in which, due to technological
imperative and ideological irreconcilability, war by nuclear weapons, though
undesirable, is considered as an inherent and imminent
possibility and its deterrence achievable only by making its projected outcome
utterly unbearable to the surviving side.  It is a war prevention
scholasticism based on the politics of terror and fear.

Under this doctrine, prevention of nuclear war would rest on the
unacceptability of the horror of mass destruction threatening both opponents,
an end state terror that would justify a permanent militarization of peace as
the price for survival.  Diplomatic options in Cold-War superpower relations
would escalate from a relatively fluid scenario of if-then (if you transgress
with action - then you will be attacked), to the impasse of either-or (either
you desist in intention or you will be attack) and finally to the locked
position of neither-nor (neither would you start - nor would you be attacked),
all based on the doctrine of
"Massive Mutually Assured Destruction", known among nuclear warfare
scholasticists by its perceptive acronym: MAD.

This was the point when the term Hawks and Doves appeared in war politics.
Dove wants weapons that kill population (ICBM), Hawks want weapons that
destroy weapons (ABM- a bullet to shoot an incoming bullet, known as a
solution in search of a problem.)  Doves want to expose the population to
defenseless attack, as hostage to peace.  Hawks want civil defense to protect
population. Doves want unprotected missiles, espoused to enemy attack to
remove fear of a second strike.  Hawks want mobile missiles that are hard to
target and deep protective silos for missiles that will survive a first
attack. Doves want B-52 bombers (470 bombers) that are slow enough for a
recall, Hawks want missile launching nuclear submarine (64 Poseidon SLBMs each
with ten 50 kiloton warheads and 600 Polaris missiles) under the North Pole
that can launch after Washington is obliterated. Technological imperative
gives the world MIRVs- Multiple Independently targetable vehicles, named
Minuteman III, each carrying three 20 kiloton
warheads (100 Minuteman III, 900 Minuteman I&II), Doves want to deny the
defense system, (54 Titan IIs with 10 megatons, 10 times Minuteman's kill
power) of any second strike capability. Donald Rumsfeld, spelled out his
hawkish views in the Rumsfeld Commission Report last year.

The latest agreement with the Russians not to aim ICBM warhead on American
cities is in fact a victory for the Hawks. Strategic Arms Limitation Talks
(SALT), negotiations between the United States and the Soviet Union resulted
in two treaties and several less formal agreements. SALT I, began in 1969 and
ended in 1972, with agreement on the Anti-Ballistic Missile Treaty (ABM
Treaty) and the Interim Agreement on the Limitation of Strategic Offensive
Arms. The ABM Treaty limited the number of weapons and radar equipment allowed
each country and regulated their type and location, while allowing for
continued development of weapons. The treaty also established commission for
monitoring violations and considering further arms control proposals. Under
the Interim Agreement, the parties agreed to limit their supply of strategic
missile launchers to the numbers and types then existing or under
construction, but they allowed for the improvement of those existing types.
Both NMD and TMD require the abrogation of the ABM treaty.

SALT II begun in 1972, signed in 1979, set precise limits on the numbers of
each type of strategic launcher. The treaty permitted the testing and
development of certain kinds of launchers. Although the treaty never entered
into force, both the United States and the USSR pledged to abide by its
limits.
In 1982, President Reagan advanced his proposal for a Strategic Arms Reduction
Treaty (START). Direct talks between President Reagan and Soviet leader
Mikhail Gorbachev led to the signing of the Intermediate Range Nuclear Forces
Treaty in 1987. In 1991, President Bush and Gorbachev signed the START I
Treaty, by which the two countries agreed to reduce the number of nuclear
warheads by about 25 percent. After the breakup of the USSR in 1991,
negotiations on START I began between the United States, Russia, Ukraine,
Belarus, and Kazakhstan. All five countries eventually ratified the treaty,
which became effective in November 1994. The START II Treaty, which called for
the elimination of
almost three quarters of the nuclear warheads held by the five countries, was
signed in 1993.
START III limits the number of deployed strategic warheads to about 2,000 on
each side, enough to wipe out civilization many times over with a single first
strike.

It is true that defense peaked as a share of GDP (6.2) in 1986.  Before that,
it had nat been as high unless you go back to 1972.  In 1998, defense/GDP is
3.2%. The Clinton budgets causes defense/GDP to continue to decline.
Localized conflicts on the scale of the Gulf War cannot alter the basic trend
of stagnation in military spending.  Defense/GDP continued to decline from
1989 to the present.  The Bush administration is on record to rever that
trend. The real grease in military spending come from hardware and R&D, not
from soldiers' pay.  By supporting anti-missile defense, Clinton and the
Democrats already gave the contractors all they could have asked for.  There
is also the lead time factor.  Military Keynesianism involves first the
depletion of inventory and then the replacement phase later. Armed conflicts
even localized ones, accelerates this cycle.

The last thing a hardware vendor wants is a legitimate test of his product.
To maximize sales, both buyer and seller have an interest in controlled tests
that make them look good, not real tests which could be embarassing.  The
technical and budgetary fallouts are more R&D and upgrades. The B2 is now
costing $3 billion each due to upgrades.  The Stealth fighter will cost 30%
more to make it less vulnerable.  The new price will be around $65 million
each.  Yet Military Keynesianism meant more back in 1962 when defense/GDP was
near ten percent. It is precisely that MK has not been an significant factor
in cushioning
the economy in the post Cold War decade that gives new incentives for new
violent conflicts. MK has always had an international strategic dimension.
Reagon used it in Star Wars to bankrupt the USSR, paying the price of record
deficits and national debts. After the Cold War, the US economy was fueled by
neo-liberal globalization which got busted in 1997.

Military Keynesianism is now an necessary option, but it takes time and
eventually it will take a total war to work as in WWII.  The NMD and TMD
systems are part of the trend.  By 2003, MK will be in full swing with
military expenditure again  at 25% of the budget.  Regional conflicts such as
Iraq and the Kosovo bombing, run about $100 million a day in the first phase
and $200 million in the intensive later phases. Pretty soon, that adds up to a
lot of money, even though its pales against the California energy crisis of
$850 million loss a day.

The reason MK at this moment in history contributes relatively little to the
US GDP is because the US economy is so much bigger than its perceived
adversaries. In that sense, it is correct to observe that
its role has shifted from domestic economic stimulant to global geopolitical
weaponry.  But the very nature of war has changed, the link between economic
warfare and physical conflicts has become continuous.  Neither Russia or China
can afford an arms race with the US, so NMD and TMD will go forward but not to
completion for lack of a credible adversary.  The EU is on record in opposing
the two systems.  As for so-called rogue states, their identities are quite
whimsical and it may well change before the systems are operational.
Furthermore, the logic is faulty:why should a terroist resort to ICBM's that
are costly and difficult to launch when bottle of biological weapon can do
more damage as fraction of the cost?  Terrorism can only be fought with the
removal of injustice, not anti ballistic missiles.  The US can increase its
security by adopting a foreign policy more in tune with its professed values
of peace and justice for all.

Henry C.K. Liu

schulte-baeuminghaus wrote:

> It has allies and friends who will be comforted by a strong - even
> stronger - United States. I can even support the development of an
> anti-ballistic missile.