The Permanent Arms Economy

  • M. C. Howard
  • J. E. King
Chapter
Part of the Radical Economics book series (RAE)

Abstract

Perhaps the most obvious (and certainly the most sinister) difference between the post-war and pre-war worlds was the level of military expenditure carried on by the victorious powers. Disarmament had not been complete even after the First World War, but there was no precedent in the peacetime history of capitalism for the scale of arms spending which was now being undertaken. In 1950 military expenditure accounted for 6.6 per cent of the United Kingdom’s GNP, for 5.5 per cent in France and 5.1 per cent in the United States; a decade later the figures were 6.5 per cent, 6.5 per cent and 9.0 per cent respectively.1 One explanation for this persistent militarism was what the liberal economist James Tobin was later to describe as the ‘naive theory’ of arms spending, which saw it simply as ‘a response to world events’.2 However, this is less naive than it sounds. Undoubtedly there were serious political barriers to disarmament after 1945. France and (less desperately) Britain were embroiled in colonial wars, the United States was defending its newly-won ‘informal empire’, and all three were engaged in the long Cold War confrontation with the Soviet Union and China.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Notes

  1. 1.
    D. Smith and R. Smith, The Economics of Militarism (London: Pluto Press, 1983), p. 23.Google Scholar
  2. 2.
    J. Tobin, The New Economics One Decade Older (Princeton, NJ: Princeton University Press, 1974), pp. 41–51.Google Scholar
  3. 4.
    S. Melman, The Permanent War Economy: American Capitalism in Decline (New York: Simon & Schuster, 1985), pp. 140–1.Google Scholar
  4. 5.
    F. Engels, ‘Can Europe Disarm?’ (1893), pp. 810–32 of O. Henderson, The Life of Friedrich Engels, volume II (London: Cass, 1976).Google Scholar
  5. 6.
    K. Kautsky, ‘Altere und Neuere Kolonialpolitik’, Die Neue Zeit, 16, 1897–8, p. 781;Google Scholar
  6. 6a.
    K. Kautsky, ‘Finanzkapital und Krisen’, Die Neue Zeit, 29, 1910–11, pp. 802–4.Google Scholar
  7. 7.
    K. Kautsky, ‘Der Erste Mai und der Kampf Gegen den Militarismus’, Die Neue Zeit, 30, 1911–12, pp. 106–9.Google Scholar
  8. 8.
    R. Luxemburg, The Accumulation of Capital (London: Routledge & Kegan Paul, 1951 first published 1913). Ch XXXIIGoogle Scholar
  9. 9.
    J. Robinson, ‘Introduction’ to Luxemburg, Accumulation, pp. 27–8. See also M. Kalecki, ‘The Problem of Effective Demand in Tugan-Baranovsky and Rosa Luxemburg’, (1967), in Kalecki, Selected Essays on the Dynamics of the Capitalist Economy (Cambridge: Cambridge University Press, 1971), pp. 146–55; andGoogle Scholar
  10. 9a.
    R. Rowthorn, ‘Rosa Luxemburg and the Political Economy of Militarism’, in Rowthorn, Capitalism, Conflict and Inflation (London: Lawrence & Wishart, 1980), pp. 250–69.Google Scholar
  11. 10.
    N.I. Bukharin, Economics of the Transformation Period (New York: Bergman, 1971; first published in 1920), Ch. 3; Rowthorn, ‘Rosa Luxemburg’, pp. 251, 260–1.Google Scholar
  12. 11.
    E. Varga, Two Systems: Socialist Economy and Capitalist Economy (London: Lawrence & Wishart, 1939), pp. 137–8 and 238; original stress. On Varga see Ch. 1 of this book.Google Scholar
  13. 12.
    N. Moszkowska, ‘Erwartung und Wirklichkeit’, Periodikum für Wissenschaft-liche Sozialismus, 16, 1960, p. 10.Google Scholar
  14. 13.
    F. Pollock, ‘State Capitalism: Its Possibilities and Limitations’ (1941), in A. Arato and E. Gebhardt (eds), The Essential Frankfurt School Reader (Oxford: Blackwell, 1978), pp. 89–90.Google Scholar
  15. 14.
    P.M. Sweezy, The Theory of Capitalist Development (New York: Monthly Review Press, 1970; first published 1942), pp. 309–10.Google Scholar
  16. 15.
    P.M. Sweezy, ‘Peace and Prosperity’ (1953), in Sweezy, The Present as History (New York: Monthly Review Press, 1953), pp. 364–5;Google Scholar
  17. 15a.
    cf. M. Kalecki, ‘The Economic Situation in the United States as Compared with the Pre-War Period’ (1956), in M. Kalecki, The Last Phase in the Transformation of Capitalism (New York: Monthly Review Press, 1972), pp. 85–97.Google Scholar
  18. 16.
    P.A. Baran and P.M. Sweezy, Monopoly Capital (Harmondsworth: Penguin, 1966), Ch. 7.Google Scholar
  19. 17.
    H. Gintis, ‘American Keynesianism and the War Machine’, in D. Mermelstein (ed.), Economics: Mainstream Readings and Radical Critiques (New York: Random House, 1970), p. 248;Google Scholar
  20. 17a.
    cf. M. Reich, ‘Does the U.S. Economy Require Military Spending?’, American Economic Review, 62, 1972, pp. 296–303.Google Scholar
  21. 19.
    Melman, Permanent War Economy, p. 18: SIPRI Yearbook. 1989. p. 136.Google Scholar
  22. 21.
    R. Smith, ‘Military Expenditure and Capitalism Revisited’, paper presented to ESRC Political Economy Study Group seminar, London, 27 February 1987; R.P. Smith, ‘Alternate Models of Military Expenditure’, Discussion Paper in Economics 87/17, Birkbeck College, London, 1987; P. Dunne and R. Simth, ‘Military Expenditure and Unemployment in the OECD’, Defence Economics, 1, 1990, pp. 57–73; Symposium on the Political Economy of Military Expenditure, Cambridge Journal of Economics 14, 1990, pp 395–505.CrossRefGoogle Scholar
  23. 22.
    A. Szymanski, ‘Military Spending and Economic Stagnation’, American Journal of Sociology, 79, 1973–4, pp. 1–14.CrossRefGoogle Scholar
  24. 23.
    R. Smith, ‘Military Expenditure and Capitalism’, Cambridge Journal of Economics, 1, 1977, pp. 61–76;Google Scholar
  25. 23a.
    E. Chester, ‘Military Spending and Capitalist Stability’, Cambridge Journal of Economics, 2, 1978, pp. 293–8CrossRefGoogle Scholar
  26. 23b.
    Smith, ‘Military Expenditure and Capitalism: A Reply’, Cambridge Journal of Economics, 2, 1978 pp. 299–304.Google Scholar
  27. 24.
    Reich, ‘Does the U.S. Economy’; M. Pivetti, ‘Military Expenditure and Economic Analysis: A Review Article’, Contributions to Political Economy, 8, 1989, pp. 55–67.Google Scholar
  28. 26.
    M. Bleaney, The Rise and Fall of Keynesian Economics (London: Macmillan, 1986), pp. 103–4.Google Scholar
  29. 27.
    M. Kidron, Western Capitalism Since the War (Harmondsworth: Penguin, 1970), pp. 12–13, 42–7.Google Scholar
  30. 28.
    Ibid, pp. 49, 55–61; M. Kidron, ‘Capitalism: The Latest Stage’, and ‘Imperialism: Highest Stage but One’, in Kidron, Capitalism and Theory (London: Pluto Press, 1974), pp. 11–31 and 124–42;Google Scholar
  31. 28a.
    C. Harman, Explaining the Crisis: A Marxist Reappraisal (London: Bookmarks, 1984), pp. 75–121.Google Scholar
  32. 28b.
    See also A. Martineau, Herbert Marcuse’s Utopia (Montreal: Harvest House 1986), pp. 48ff, 58, 94ff.Google Scholar
  33. 29.
    Compare K. Marx, Theories of Surplus Value, volume I (London: Lawrence & Wishart, 1969), p. 216 and ibid, volume II (London: Lawrence & Wishart, 1969), p. 423.Google Scholar
  34. 30.
    E. Mandel, Late Capitalism (London: Verso, 1980), Ch. 9;Google Scholar
  35. 30a.
    cf. F.M. Gottheil, ‘Marx Versus Marxists on the Role of Military Production in Capitalist Economies’, Journal of Post-Keynesian Economics, 8, 1986, pp. 563–73.Google Scholar
  36. 31.
    L. von Bortkiewicz, ‘On the Correction of Marx’s Fundamental Theoretical Construction in the Third Volume of “Capital”’ (1907), in P.M. Sweezy (ed.), Karl Marx and the Close of His System (New York: Kelley, 1966), pp. 206–9, 214–15; cf. section V of Ch. 3 of volume I of this book.Google Scholar
  37. 32.
    P. Sraffa, The Production of Commodities by Means of Commodities (Cambridge: Cambridge University Press, 1960), pp. 7–8; see also Ch. 13 below. In joint production systems, however, there is no such simple intuitive definition of ‘basic’ commodities. Moreover, the causal importance of the conditions of production of basic commodities depends on the validity of the surplus approach in economic theory; see Ch. 15 below.Google Scholar
  38. 33.
    D. Purdy, ‘The Theory of the Permanent Arms Economy — a Critique and an Alternative’, Bulletin of the Conference of Socialist Economists, September 1973, p. 21; cf. Ch. 16 below.Google Scholar
  39. 36.
    Kidron, Western Capitalism, pp. 63–4; Smith and Smith, Economics, pp. 93–6; J. Cekota, ‘The Military Sector and Technological Change’, Peace Research 19, 1987, pp. 7–10 and 71–4.Google Scholar
  40. 36a.
    See however, J.M. Cypher, ‘Military Spending, Technical Change and Economic Growth: A Disguised Form of Industrial Policy?’ Journal of Economic Issues, 21, 1987, pp. 33–59.Google Scholar
  41. 37.
    Melman, Permanent War Economy; M. Kaldor, ‘Warfare and Capitalism’, in E.P. Thompson (ed.), Exterminism and Cold War (London: Verso, 1982), pp. 261–87Google Scholar
  42. 37a.
    cf. C. Barnett, The Audit of War (London: Macmillan, 1986).Google Scholar
  43. 38.
    C.Y.H. Lo, ‘Theories of the State and Business Opposition to Increased Military Spending’, Social Problems, 29, 1982, pp. 424–38.CrossRefGoogle Scholar
  44. 39.
    A.C. Pigou, The Political Economy of War (London: Macmillan. 1921), p. 24.Google Scholar
  45. 40.
    J.J. O’Connor, The Fiscal Crisis of the State (New York: St. Martin’s Press, 1973), pp. 154–5.Google Scholar
  46. 41.
    L. Harris, ‘The Arms Race: A Burden on the Economy’, World Marxist Review, 27, 1984, pp. 89–95;Google Scholar
  47. 41a.
    B. Fine and L. Harris, The Peculiarities of the British Economy (London: Lawrence & Wishart, 1985), Ch. 8.Google Scholar
  48. 42.
    J. Lovering, ‘The Atlantic Arms Economy: Towards a Military Regime of Accumulation?’, Capital and Class, 33, 1987, pp. 129–55.CrossRefGoogle Scholar
  49. 44.
    Ibid, p. 92; C.Y.H. Lo, ‘The Conflicting Functions of US Military Spending after World War Two’, Kapitalistate, 3, 1975, pp. 26–44.Google Scholar
  50. 44a.
    See also P. Kennedy, The Rise and Fall of the Great Powers (London: Fontana, 1989), pp. 447–698.Google Scholar
  51. 46.
    E.P. Thompson, ‘Notes on Exterminism, the Last Stage of Civilisation’, New Left Review, 121, 1980, pp. 3–31.Google Scholar

Copyright information

© M. C. Howard and J. E. King 1992

Authors and Affiliations

  • M. C. Howard
    • 1
    • 2
  • J. E. King
    • 3
  1. 1.University of WaterlooCanada
  2. 2.University of CaliforniaRiversideUSA
  3. 3.La Trobe UniversityAustralia

Personalised recommendations