Thursday, December 29, 2016

Jonathan Nitzan and Shimshon Bichler — Military Keynesianism and the Military-Industrial Complex

Theories of Military Keynesianism and the Military-Industrial Complex became popular after the Second World War, and perhaps for a good reason. The prospect of military demobilization, particularly in the United States, seemed alarming. The U.S. elite remembered vividly how soaring military spending had pulled the world out of the Great Depression, and it feared that falling military budgets would reverse this process. If that were to happen, the expectation was that business would tumble, unemployment would soar, and the legitimacy of free-market capitalism would again be called into question.
Seeking to avert this prospect, in 1950 the U.S. National Security Council drafted a top-secret document, NSC-68. The document, which was declassified only in 1977, all but explicitly called on the government to use higher military spending as a way of preventing such an outcome.…
Since then the US is addicted to military spending to support the domestic economy and exports. Military spending is so endemic to the economy and so politically entrenched since it is dispersed through so many congressional districts as to be impossible to address rationally. The US economy is now dependent on "military Keynesianism."

The authors point out, however, that the "Keynesian" aspect began to unravel in the 1970s when the contract between capital and labor was broken by capital and the initial phase of the welfare-warfare state began to be taken apart in favor of the market-warfare state instead.

Real-World Economics Review Blog
Military Keynesianism and the Military-Industrial Complex
Jonathan Nitzan and Shimshon Bichler

2 comments:

John said...

They're missing a key part of the military Keynesianism. The Keynesianism could have been civilian: education, healthcare, transportation, pensions, welfare, etc. This would have given the population an extraordinary level of prosperity. But that would have in conflict with the class nature of the spending, which could have been directed, as it was instead, to the richest sectors in the country. This corporate welfare would initiate a boom in advanced technology: jet planes, computers, electronics, etc. It would thus also allow Washington to keep its new empire and extend it.

blissex said...

Military keynesianism is a bit obsolete, it has been replaced by what Colin Crouch called "privatized keynesianism", where private spending is funded by effectively state-guaranteed private debt, instead of public spending, civilian or military, funded by public debt.

The "never ending" streams of capital gains on ever bigger asset prices fueled by ever bigger state-guaranteed private debt has much replaced military keynesianism, and its apogee have been colossal amounts of home equity extraction with re-mortgaging both in the USA and the UK.