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Guns Not Butter: The Impact of a War Economy on the U.S.

By       Message David Model     Permalink
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In 2007, the U.S. government spent $766.5bn on defense excluding the costs of the wars in Iraq and Afghanistan. Estimating the costs of American military adventures and defense budgets and relating the expenditures to social and economic needs at home are a common refrain of critics of American foreign and defense policy. It is a tautology to elucidate the merits of allocating part of those funds to social and economic needs at home.

The issue often ignored in critiques of misplaced spending by the U.S. government is the historical context whereby successive American governments since World War II have consciously created and maintained a war economy. In this context, expenditures on wars and defense are perceived as necessary to a healthy economy. On the other hand, harm to economic and social institutions have been more extensive and fundamentally undermined by the long-term impact of sustaining a war economy since WW II.

The embryonic stages of building a war economy occurred after World War II when George Kennan, Ambassador to the Soviet Union, warned policy-makers at home about the threat posed by the USSR and when Paul Nitze, head of the Policy Planning Staff in the State Department, chaired a NSC study which culminated in NSC-68 on April 14, 1950. NSC-68 established the framework for a war economy by proposing that massive military spending was essential to maintaining the security of the United States and to offering protection to the free world as America's inchoate leadership required following the War. According to NSC-68:

"The capability of the American economy to support a build-up of economic andmilitary strength at home and to assist a build-up abroad is limited not, as in the case of the Soviet Union."

As well, the Report emphasized the imperative of a continual build-up of military strength when it stated that:

"The execution of such a build-up, however requires that the United States have an affirmative program beyond the solely defensive one. Every consideration of devotion to our fundamental values and to our national security demands that we, achieve our objectives by the strategy of the cold war, building up our military strength."

When the threat of communism vanished with the fall of the Soviet Union and the justification for a war economy disappeared, a new danger was manufactured; the threat of terrorism, leading ineluctably to the specious war on terror.

One of the most grievous by-products of the war economy is the diversion of funding for research and development to products with a military application although there were spin-offs to the civilian economy. Thomas Woods, in What the Warfare Really Costs estimates in the 1950s and 1960s between one third and two thirds of all researchers landed in the military sector.

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For example, the U.S. government spent $5.8 trillion on research and development of nuclear weapons which were deployed in silos in the hope that they would never be used. In his book Pentagon Capitalism, Seymour Melman, a professor of industrial engineering at Columbia University, wrote that:

"From 1946 to 1969, the United States government spent over $1000bn on the military"This sum of staggering size does not express the cost of the military establishment to the nation as a whole. The true cost is measured by what has been foregone, by the accumulated deterioration in many facets of life, by the inability to alleviate human wretchedness of long duration."

There are many nations which having avoided the pitfall of allocating too much money to defense, were able to build a strong social safety net such as single-payer health care, free post-secondary education and programs to alleviate poverty. The United States spent taxpayer's dollars on defense under the pretext that there was a threat to the security of the United States. Nicaragua, Guatemala, Chile, Iraq, Afghanistan, Yemen and Grenada to mention a few were considered a threat to U.S. thereby costing billions of dollars.

Nevertheless, we do have very sophisticated computers and cell phones developed by companies such as Motorola and Bell Labs who were funded to a large extent through the Department of Defense or Energy out of the defense budget. In other words, taxpayers have been funding research for advanced military technologies and have forgone the benefits of government programs that could have been financed with that money. The upside is that they can call their bankers on a cell phone to determine how much longer they can afford to live in their homes.

The diversion of taxpayer's dollars to defense and wars in 2009 during a severe economic and financial crisis causes terrible hardships at home and contributes to the growing structural problems in the economy.

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But 2009 has only further weakened the social fabric and economic foundations in the United States where the impact of a war economy since 1945 has already done virtually irreparable damage.


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I have been a professor of political science at Seneca College in Toronto. I have published five books the last of which "Selling Out: Consuming Ourselves to Death" was released in May/08. As well, I have been featured in CounterPunch, Z (more...)

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Guns Not Butter: The Impact of a War Economy on the U.S.