There is much debate on what the nature of the Soviet Union's economy actually was. It is agreed by many that it wasn't in reality a true socialist or even a communist system. Some, like Seymour Melman and Jack Matlock, argue that it was something closer to a state-run capitalist system with a vanguard political party controlling it.
What is hard to argue with is the fact that what constituted a huge part of the Soviet economy in terms of input of resources -- and, ironically, what it has had in common with the U.S. economy -- was a sprawling and wasteful military-industrial complex guaranteed by the state to enable an arms race.
The Military-Industrial Complex in the United States
In 1864, President Lincoln expressed profound concern over the rise of corporations resulting from the Civil War and what it portended for the political and economic future of the country.
Advancement in industrialization led to more mechanized and phenomenally more destructive warfare in the 20th century, with the outcomes increasingly dependent upon material production and technology.
In World War I, military officers still played a critical role in the decisions to wage war which were based on previous strategies that were soon rendered outmoded due to a lack of technological expertise and inability to manage the more complicated industrial economics crucial to sustaining modern warfare. Thus, for expediency, government allowed responsibility for the war economy to be transferred from the Army to private industrialists who controlled the terms of war organization and procurement through the War Industries Board (WIB), a body comprised primarily of corporate executives and bankers.
Once this arrangement was established it was difficult to put the proverbial genie back in the bottle. Many of the major anti-competitive trusts running the war economy through the WIB had long desired a relationship with the state that would facilitate public subsidy of their interests. The war effort had proven a convenient means to this end.
Between 1918 and 1941, formal patronage was fostered between the War Department and Big Business for the first time outside the context of an actual war. Drawing on the WIB model, the War Production Board instituted favorable tax and profit standards for major industrialists who again dictated policies within their own economic sectors during World War II, usurping substantial decision-making from state actors.
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