Note to readers: this blaster contains two clearly marked inserts that were not in my Time essay. Also, in introducing Seymour Melman's important work below, I should have mentioned that it was Melman's considered belief in the possibility of putting together a political coalition to facilitate the conversion of the defense industry to civilian production. Conversion is a exceedingly complex and highly controversial subject; and to date, conversion has not been accomplished in any meaningful way, but that does not mean conversion is impossible. Here, that possibility or impossibility is not at issue in this essay; my focus is on the very short term: namely how in the next few months the defense dependency may induce politicians who have been captured by the defense industry to react to the looming budget sequester by flinging the middle class off the fiscal cliff.
Chuck Spinney
By Chuck Spinney, Time (Battleland), Nov. 13, 201
This recent essay – America the Third World Nation in Just 4 Easy Steps – describes how our political addiction to the free-trade ideology of neoliberal economics has helped to de-industrialize America and thereby impoverish much of the American middle class.
My essay describing the decline of manufacturing employment will give you a sense of the mind-boggling magnitude of what has happened. While “4 Easy Steps” makes passing references to the increasing dependence of the manufacturing sector on military spending, as well as the financialization of economy (but not the latter’s Siamese-twin ‘managerialism’), the authors do not develop these points. Without implying any criticism of this excellent essay, my aim today is to tweak your interest in these omissions, particularly America’s defense dependency.
The late Professor Seymour Melman of Columbia University wrote a prescient book, Profits Without Production (Knopf, 1983) that explained how the militarization and managerialization of our economy were becoming the central causes of the decline in America’s manufacturing competitiveness. This decline started in the 1970s, but Melman showed how it grew out of seeds planted by the permanent military mobilization of a huge defense industry in the 1950s.
The birth date for the permanent war economy was 30 September 1950.
On that day, President Harry Truman officially signed NSC-68, a document that became a blueprint for the containment strategy for waging the Cold War. Central to this strategy was the establishment of a large, permanently-mobilized defense manufacturing sector.
They justified the permanent mobilization, in part, with an economic rationalization reflecting their contention that the World War II production miracle proved the multiplier effects of Military Keynesianism, or in their words: “the economic effects of the [NSC-68] program might be to increase the gross national product by more than the amount being absorbed for additional military and foreign assistance purposes.”
The post-WWII economic boom in the U.S. (with our competitive performance aided in part by the lingering effects of the WWII damage to the world’s other major industrial economies) hid the adverse economic effects of the economic diversion attending to the permanent war economy unleashed by NSC-68. Nevertheless, by early 1961, the accumulating damage caused by the diversion was apparent to some insiders: President Eisenhower famously warned the nation about the rise of misplaced power posed by the rise of a large permanent standing arms industry, which he said, pointedly, was new in our national experience.
The accumulating damage wrought by the permanent war economy started to accelerate in the 1970s, and by 1980, the cancer metastasized: militarization and managerialization began to openly thrive at the expense of the traditional high-wage manufacturing sector, in effect, siphoning off money flows via a combination of government handouts and favorable tax treatment that in effect rewarded both the looting of the tax base and the draining of competitiveness and ingenuity from the civilian manufacturing sector (via the increased defense subsidy, leveraged buyouts, offshoring of jobs, emphasizing short-term focus to pump stock prices, etc.)
Continue reading “Chuck Spinney: Killing America – Government Specifications Cost Plus”
