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Military Keynesianism:
Found at informationclearinghouse.com
The ongoing U.S. militarization of its foreign affairs has spiked precipitously in recent years, with increasingly expensive commitments in Afghanistan and Iraq. These commitments grew from many specific political factors, including the ideological predilections of the current regime, the growing need for material access to the oil-rich regions of the Middle East, and a long-term bipartisan emphasis on hegemony as a basis for national security. The domestic economic basis for these commitments, however, is consistently overlooked. Indeed, America’s hegemonic policy is in many ways most accurately understood as the inevitable result of its decades-long policy of military Keynesianism.
During the Depression that preceded World War II, the English economist John Maynard Keynes, a liberal capitalist, proposed a form of governance that would mitigate the boom-and-bust cycles inherent in capitalist economies. To prevent the economy from contracting, a development typically accompanied by social unrest, Keynes thought the government should take on debt in order to put people back to work. Some of these deficit-financed government jobs might be socially useful, but Keynes was not averse to creating make-work tasks if necessary. During periods of prosperity, the government would cut spending and rebuild the treasury. Such countercyclical planning was called “pump-priming.”
Upon taking office in 1933, U.S. President Franklin Roosevelt, with the assistance of Congress, put several Keynesian measures into effect, including socialized retirement plans, minimum wages for all workers, and government-financed jobs on massive projects, including the Triborough Bridge in New York City, the Grand Coulee Dam in Washington, and the Tennessee Valley Authority, a flood-control and electric-power-¬generation complex covering seven states. Conservative capitalists feared that this degree of government intervention would delegitimate capitalism – which they understood as an economic system of quasi-natural laws – and shift the balance of power from the capitalist class to the working class and its unions. For these reasons, establishment figures tried to hold back countercyclical spending.
The onset of World War II, however, made possible a significantly modified form of state socialism. The exiled Polish economist Michal Kalecki attributed Germany’s success in overcoming the global Depression to a phenomenon that has come to be known as “military Keynesianism.” Government spending on arms increased manufacturing and also had a multiplier effect on general consumer spending by raising worker incomes. Both of these points are in accordance with general Keynesian doctrine. In addition, the enlargement of standing armies absorbed many workers, often young males with few skills and less education. The military thus becomes an employer of last resort, like Roosevelt’s Civilian Conservation Corps, but on a much larger scale.
Rather than make bridges and dams, however, workers would make bullets, tanks, and fighter planes. This made all the difference. Although Adolf Hitler did not undertake rearmament for purely economic reasons, the fact that he advocated governmental support for arms production made him acceptable not only to the German industrialists, who might otherwise have opposed his destabilizing expansionist policies, but also to many around the world who celebrated his achievement of a “German economic miracle.”
In the United States, Keynesian policies continued to benefit workers, but, as in Germany, they also increasingly benefited wealthy manu¬facturers and other capitalists. By the end of the war, the United States had seen a massive shift. Dwight Eisenhower, who helped win that war and later became president, described this shift in his 1961 presidential farewell address:
Our military organization today bears little relation to that known by any of my predecessors in peacetime, or indeed by the fighting men of World War II or Korea.
Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women ate directly engaged in the defense establishment. We annually spend on military security alone more than the net income of all United States corporations.
This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence – ¬economic, political, even spiritual – is felt in every city, every statehouse, every office of the federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.
Eisenhower went on to suggest that such an arrangement, which he called the “military¬-industrial complex,” could be perilous to American ideals. The short-term economic benefits were clear, but the very nature of those benefits – which were all too carefully distributed among workers and owners in “every city, every statehouse, every office of the federal government” – tended to short-¬circuit Keynes’s insistence that government spending be cut back in good times. The prosperity of the United States came in¬creasingly to depend upon the construction and continual maintenance of a vast war machine, and so military supremacy and economic security became increasingly intertwined in the minds of voters. No one wanted to turn off the pump.
Between 1940 and 1996, for instance, the United States spent nearly $4.5 trillion on the development, testing, and construction of nuclear weapons alone. By 1967, the peak year of its nuclear stockpile, the United States possessed some 32,000 deliverable bombs. None of them was ever used, which illustrates perfectly Keynes’s observation that, in order to create jobs, the government might as well decide to bury money in old mines and “leave them to private enterprise on the well-tried principles of laissez faire to dig them up again.” Nuclear bombs were not just America’s secret weapon; they were also a secret economic weapon.
Such spending helped create economic growth that lasted until the 1973 oil crisis. In the 1980s, President Ronald Reagan once again brought the tools of military Keynesianism to bear, with a policy of significant tax cuts and massive deficit spending on military projects, allegedly to combat a new threat from Communism. Reagan’s military expenditures accounted for 5.9 percent of the gross domestic product in 1984, which in turn fueled a 7 percent growth rate for the economy as a whole and helped reelect Reagan by a landslide.
During the Clinton years military spending fell to about 3 percent of GDP, but the economy rallied strongly in Clinton’s second term due to the boom in information technologies, weakness in the previously competitive Japanese economy, and¬ – paradoxically – serious efforts to reduce the national debt.(3) With the coming to power of George W. Bush, however, military Keynesianism returned once again. Indeed, after he began his war with Iraq, the once-erratic relationship between defense spending and economic growth became nearly parallel. A spike in defense spending in one quarter would see a spike in GDP, and a drop in defense spending would likewise see a drop in GDP.
To understand the real weight of military Keynesianism in the American economy today, however, one must approach official defense statistics with great care. The “defense” budget of the United States – that is, the reported budget of the Department of Defense – does not include: the Department of Energy’s spend¬ing on nuclear weapons ($16.4 billion slated for fiscal 2006), the Department of Homeland Security’s outlays for the actual “defense” of the United States ($41 billion), or the Depart¬ment of Veterans Affairs’ responsibilities for the lifetime care of the seriously wounded ($68 billion). Nor does it include the billions of dol¬lars the Department of State spends each year to finance foreign arms sales and militarily re¬lated development or the Treasury Depart¬ment’s payments of pensions to military re¬tirees and widows and their families (an amount not fully disclosed by official statistics). Still to be added are interest payments by the Treasury to cover past debt-financed defense outlays. The economist Robert Higgs estimates that in 2002 such interest payments amounted to $138.7 billion.
Even when all these things are included, Enron-style accounting makes it hard to obtain an accurate understanding of U.S. dependency on military spending. In 2005, the Government Accountability Office reported to Congress that “neither DOD nor Congress can reliably know how much the war is costing” or “details on how the appropriated funds are being spent.” Indeed, the GAO found that, lacking a reliable method for tracking military costs, the Army had taken to simply inserting into its accounts figures that matched the available budget. Such actions seem absurd in terms of military logic. But they are perfectly logical responses to the require¬ments of military Keynesianism, which places its emphasis not on the demand for defense but rather on the available supply of money.
The Unitary Presidency
Military Keynesianism may be economic de¬velopment by other means, but it does very often lead to real war, or, if not real war, then a signif¬icantly warlike political environment. This creates a feedback loop: American presidents know that military Keynesianism tends to concentrate pow¬er in the executive branch, and so presidents who seek greater power have a natural inducement to encourage further growth of the military-industrial complex. As the phenomena feed on each other, the usual outcome is a real war, based not on the needs of national defense but rather on the do¬mestic political logic of military Keynesianism. As U.S. Senator Robert La Follette Sr. observed, “In times of peace, the war party insists on mak¬ing preparation for war. As soon as prepared for war, it insists on making war.”
George W. Bush has taken this natural polit¬ical phenomenon to an extreme never before ex¬perienced by the American electorate. Every president has sought greater authority, but Bush – ¬whose father lost his position as forty-first presi¬dent in a fair and open election – appears to believe that increasing presidential authority is both a birthright and a central component of his his¬torical legacy. He is supported in this belief by his vice president and chief adviser, Dick Cheney.
In pursuit of more power, Bush and Cheney have unilaterally authorized preventive war against nations they designate as needing “regime change,” directed American soldiers to torture persons they have seized and imprisoned in var¬ious countries, ordered the National Security Agency to carry out illegal “data mining” sur¬veillance of the American people, and done everything they could to prevent Congress from outlawing “cruel, inhumane, or degrading” treat¬ment of people detained by the United States. Each of these actions has been undertaken for specific ideological, tactical, or practical rea¬sons, but also as part of a general campaign of power concentration.
Cheney complained in 2002 that, since he had served as Gerald Ford’s chief of staff, he had seen a significant erosion in executive power as post-Watergate presidents were forced to “cough up and compromise on important principles.” He was referring to such reforms as the War Powers Act of 1973, which requires that the president obtain congressional ap¬proval within ninety days of ordering troops in¬to combat; the Budget and Impoundment Con¬trol Act of 1974, which was designed to stop Nixon from impounding funds for programs he did not like; the Freedom of Information Act of 1966, which Congress strengthened in 1974; President Ford’s Executive Order 11905 of 1976, which outlawed political assassination; and the Intelligence Oversight Act of 1980, which gave more power to the House and Sen¬ate select committees on intelligence. Cheney said that these reforms were “unwise” because they “weaken the presidency and the vice pres¬idency,” and added that he and the president felt an obligation “to pass on our offices in bet¬ter shape than we found them.”
No president, however, has ever acknowledged the legitimacy of the War Powers Act, and most of these so-called limitations on presidential pow¬er had been gutted, ignored, or violated long be¬fore Cheney became vice president. Republican Senator John Sununu of New Hampshire said, “The vice president may be the only person I know of that believes the executive has somehow lost power over the last thirty years.”
Bush and Cheney have made it a primary goal of their terms in office, nonetheless, to carve executive power into the law, and the war has been the primary vehicle for such ac¬tions. John Yoo, Bush’s deputy assistant attor¬ney general from 2001 to 2003, writes in his book War By Other Means, “We are used to a peacetime system in which Congress enacts laws, the President enforces them, and the courts interpret them. In wartime, the gravity shifts to the executive branch.” Bush has claimed that he is “the commander” and “the decider” and that therefore he does not “owe anybody an explanation” for anything.(4)
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