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p Among the unfavourable consequences of the huge growth in military spending are also the limited possibilities of increasing federal appropriations for civilian needs. The general tendencies of the dynamics of military and civilian spending in recent decades have been marked by a close interdependence between the two: a substantial expansion of military outlays has invariably been accompanied by a decrease in the share of the civilian expenditure. Inasmuch as the expansion of military spending during the last 35 years has greatly exceeded the expansion of the expenditure for civilian purposes, the share of the latter in the total expenditure (both in relation to the federal budget and state and local expenditures) has been substantially reduced. In 1938 civilian spending amounted to about nine-tenths and in 1970, to over half of the total expenditures by federal, state and local governments.

p Moreover, the civilian expenditure during this period increased more slowly than the growth of the entire economy, specifically at a lesser rate than the growth of the GNP. Thus, during this period the GNP increased annually (in current prices) 8 per cent on the average, while civilian spending rose approximately 6 per cent. As a result, this expenditure which totalled 16.4 per cent in 1938, was only 10.2 per cent of the GNP in 1970.  [72•1  At the same time, as statistics reveal, the proportion of purchases of goods and services of a civilian character, made by the federal government, states, and local authorities, were considerably lower in the GNP of the United States during the 1950s 73 than in many West European countries; for example, it was smaller than in the Federal Republic of Germany, Britain, Sweden and Belgium.  [73•1 

p The overwhelming part of the civilian expenditures are disbursed by states and local governments.  [73•2  In this chapter we examine only the civilian spending under the federal budget.

p The limited scale of the budget resources remaining after military spending leaves only appropriations sufficient for satisfying the most pressing economic and social needs. The nature and scope of these appropriations is illustrated by the figures given earlier in Table II-l. In the 1930s expenditures for relief and public works held first place in civilian spending. At the same time since the 1930s expenditures for large-scale agricultural programmes of the federal government have significantly expanded. At present about half of all the expenditures in the federal budget for civilian needs goes for various income security payments and agricultural programmes.

p The serious aggravation of the problem of surplus productive capacity in agriculture and the consequent elimination of a large number of farmers resulting in the intensification of social friction and conflict, demanded substantial budget appropriations for federal agricultural programmes. Among the major structural changes in the mechanism of the functioning of American agriculture in recent decades is undoubtedly the development of a government market for the sale of farm produce. The size of the purchase of agricultural surpluses depends on a number of natural and economic factors. The federal expenditures for these purposes are among those items characterised by the greatest fluctuations. The purchasing role played by the main government agency, the Commodity Credit Corporation (CCC), can be judged by the following data: in the second half of the 1950s and the first half of the 1960s, the CCC removed from the free market and handled the sale of one-fourth to one-half of the total wheat harvest, one-seventh to two- 74 thirds of the cotton crop and so on.  [74•1  Operations on such a scale demanded considerable appropriations. To this must be added the cost of storaging the stockpile of commodities accumulated at government warehouses: in 1960 alone, these expenses including the interest paid by the CCC on respective loans reached $1,000 million.  [74•2 

p The increasing gap between the production potential of US agriculture and the existing possibilities for utilising that potential, is demonstrated by the substantial increase in the cost of financing federal agricultural programmes. Suffice it to say that in the 1970 fiscal year these expenses were approximately ten times greater than in the 1951 fiscal year and 6-8 times above the level of the period following the Great Depression in the mid-1930s.

p A substantial part of this money goes directly for various programmes designed to restrain the increase of agricultural output (an acreage restriction, and so on). The programmes for diverting land from productive use were always regarded as temporary measures, but most of them in one form or another have been continued up to the present. In the 1969 fiscal year about half of all the budget appropriations for the Department of Agriculture were used to pay for reductions in the planting of cotton, wheat and feed grains on the basis of annual programmes and programmes for the long-range removal of the land from use.

p The purchase of a tremendous amount of agricultural commodities and the removal of ever larger areas from cultivation constituted an indispensable condition for the development of US agriculture in the post-war period. But even all these measures could not ensure a solution to the problem. Clifford M. Hardin, former US Secretary of Agriculture, in remarks made in 1969 before a subcommittee of the House, referred to a number of studies which “showed that excess capacity to produce will continue through 1980 even with the most favourable assumptions".  [74•3 

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p Another category of civilian expenditures consists of transfer payments related to federal public welfare programmes. Some of these programmes were previously inaugurated by the Roosevelt Administration during the years following the Great Depression when the inadequacy of all kinds of private charity programmes was fully revealed.  [75•1  But payments under the social security system in the United States thus far remain quite limited as compared, for example, to expenditures by many West European countries. Thus, in 1960 in the USA expenditures under the social security system amounted to 5.3 per cent of the national income, while in Britain they were 9.6 per cent, Italy 14.9 per cent, France 16.2 per cent and the Federal Republic of Germany 17.0 per cent of the national income. At the same time the American social insurance system places a comparatively heavier tax burden on the workers in the form of insurance payments made by factory and office workers themselves: in the United States they contribute 41.0 per cent, in the Federal Republic of Germany 37.3 per cent, Britain 27.0 per cent, France 19.2 per cent and Italy 15.2 per cent of all the resources which make up the respective funds.  [75•2  Professor Musgrave believes that in respect to governmental welfare programmes, the United States lags behind Europe by a quarter of a century.  [75•3 

p The war on poverty programmes announced by the Johnson Administration were even more modest in real life. Little more than half of all the spending under public welfare programmes are financed through federal budgetary channels. Escalation of the war in Indochina sharply increased tensions in the federal financial system and led the federal government to whittle down the modest appropriations used for increasing relief to the poorest families. “The ‘unconditional war on poverty’ declared by the President has proved to be highly conditional, dependent on 76 limited annual appropriations,” remarks James L. Sundquist. Total appropriations for these purposes were inadequate “and, under the pressures of Vietnam spending, are not rising".  [76•1  The government welfare programmes which rest on extremely curtailed appropriations simply cannot dig up or even shake the roots of poverty, roots which extend deep into the economic and socio-political fabric of contemporary American society. Moreover, it should be noted that a number of procedures in the war on poverty programmes are based on bureaucratic practices degrading to the human dignity of thousands of Americans. The emergency nature of many programmes, their brief duration and the “piling up" of one programme on top of another impart to the entire public welfare system an extremely confused and contradictory nature. That is why, according to the popular Newsweek magazine, welfare itself “is a maddening mix of compassion and callous bureaucracy, penny-pinching and shocking waste—the shame of a nation. And the problem is growing at an alarming rate."  [76•2 

p The forced nature of the federal budget expenditures on agriculture, welfare and relief and their connection with the sharply conflicting nature of economic and social development of contemporary capitalist society are obvious and hardly require any special comment. One need merely note that the prime reason compelling the federal government to decide on increasing these expenditures has been the increased activity of the mass movement directed against the serious material privations suffered by millions of American families.

p At the same time, lately, as a result of the widening of the range of government policy and above all as regards ensuring conditions for long-term economic growth, there have been increases in some other budget appropriations. Basic shifts in contemporary economic theory and practical financial policy are being disclosed with particular clarity in the federal government’s changing approach to expenditures for education and vocational training. Formerly it 77 was assumed that intensive accumulation of capital utilised by private entrepreneurs was a necessary and sufficient condition for economic growth. Particularly strong emphasis on the role of increasing investments was reflected in some neo-classical models of economic growth which became widespread in the literature of the first post-war decade. But an analysis of aggregate production functions shows that in these models the main role is played not by an increase in the size of capital but by a change in the form of the production function itself. Many authors associate these changes above all with investments in “human capital" and improvement of the quality of manpower.  [77•1 

p But the private enterprise principle, because of its nature, cannot ensure an adequate development of the system of general and special education. Nevertheless, even in present times, the most consistent supporters of the neo-liberal concept continue to defend the system of private schools and higher educational establishments, in other words, the financing of education from private sources, as one of the major prerequisites for the existence of a “free and democratic society".  [77•2 

p The contradictions between the potentialities of the richest country in the world and the backward educational system became glaring at the threshold of the 1960s. The country lacked 600,000 classrooms.  [77•3  The system of educational establishments, as pointed out in one of the Presidential messages to Congress, was absolutely inadequate for ensuring universal literacy.  [77•4  The results of a survey showed that in some areas more than half of the population could not pass the test of so-called functional literacy, in other words, could not read, write and make elementary mathematical calculations.

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p The requirements of economic growth in conditions of the rapidly spreading scientific and technological revolution are coming into ever sharper conflict with the restricted possibilities of the private educational system. This is reflected in the “human capital" concept which became especially widespread recently. “Human capital,” says Nobel Prize Winner Professor Samuelson, “has a profit yield like that of material capital, but our market system does not carry investment to an optimal point.  [78•1  This gives rise to demands for the extension of government investments in “human capital".

p Under conditions of intensive military and technological progress and the re-equipment of the army with new sophisticated weapons, even representatives of the military establishment call for a substantial increase of government appropriations for general and special education.  [78•2 

p The concept of the need to increase “investment in human beings" is also gradually making its way into Congress. Let us refer to the following example. Not so long ago the financial burden for education was almost entirely placed upon state and local governments. For many years the coalition of conservative forces in Congress blocked all bills which called for increasing federal appropriations for education. But in recent years the blowing of “new winds" has been felt here as well. In 1965 the US Congress for the first time passed an Elementary and Secondary Education Act which substantially extended the financing of school education from federal sources. In the following four years federal budgetary expenditures on education more than doubled. In assessing^ these changes one should take into account the fact that the increased skill of workers is reflected in increased efficiency of production and, consequently, 79 in the first place, in a growth of the profits of employers.  [79•1 

p At the same time, it would be obviously wrong to exaggerate the practical role of this re-evaluation of priorities. In a private enterprise society the dominant ideology, as previously, views the main purpose of all economic activity as the accumulation of material wealth. The functions of the state, too, are evaluated accordingly: in its simplest form such conception regards the government’s function as one of merely promoting an increase in the supply of automobiles and other durable commodities for people possessing the adequate financial means. But this in essence is the orientation for the entire system of priorities of most persons participating in the process of economic decisionmaking. That is why some of the big employers are especially vocal in their opposition to programmes for extending the government’s role in public spheres like education, social insurance, etc. “When a Galbraith or Myrdal suggests a greater concentration on the public sector, the automatic response of businessmen is—’socialism’ ".  [79•2 

p This tendency stands out clearly in the position held by Congress: in recent years most Senators and members of the House, at best, agreed to allocate for education and other “investments in human beings" a certain part of the additional tax revenue in periods of intensive economic growth; but they flatly refused to radically revise the entire structure of governmental spending or to finance these programmes by increasing taxes on large incomes and correspondingly reducing private spending.  [79•3 

The limited nature of the federal programmes of “ investment in human beings" is seen especially in medical care.

80 Throughout the post-war years the number of doctors per 1,000 of population, far from increasing, even somewhat decreased.  [80•1  There is an acute shortage of disease-prevention measures, above all for children. At the beginning of the 1960s, 20 per cent of all children under the age of five, were not given any prophylactic treatment against poliomyelitis.  [80•2 

p One of the main factors tending to make private medical care less accessible is its increasing cost. The total sum of money spent by Americans to pay for doctors’ fees, medicines and hospital care is rapidly mounting: in 1950 these expenses totalled $11,000 million and in 1970, according to estimates, about $60,000 million. But not less than half of this increase was caused by inflation; people are compelled to spend an ever larger proportion of their income to pay for the higher cost of hospital care, doctors’ services and so on.  [80•3  The higher cost of medical service outstripped not only the rise of retail prices of consumer goods but the increase in rates for other services purchased by people.

p “For growing numbers of Americans,” it is pointed out in the President’s Message to Congress of February 18,1971, “the cost of care is becoming prohibitive and even those who can afford most care may find themselves impoverished by a catastrophic medical expenditure."  [80•4  The position of the American people is steadily growing worse because of the specific features of market relations in the private system of medical service. “As a purchaser of medical services, the patient is usually in no position to choose how to spend his medical dollar. ... Doctors are forbidden under rules of medical ethics to advertise fees, and the subject is rarely raised during doctor-patient interviews. Few patients are capable of judging the relative qualifications of local doctors, and many fear a low fee indicates lack of competence."  [80•5 

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p The inadequacy of medical service and its rising cost disastrously affect the position of the poorer American families. Half of all the children of poor families receive no inoculations against ordinary children’s diseases. Paid medical care is becoming less and less accessible. In the 1960s paid visits to a doctor by persons of families with annual incomes up to 2,000 dollars were half as many as in families with an income of $7,000 and more. The number of visits to a dentist in families with a higher income are approximately three times greater than the same figures for families with low incomes.  [81•1 

p Yet it is the poorest sections of the working people that are in the greatest need of medical care. A survey showed that child mortality from influenza and pneumonia in what are known as poverty areas was 3.5 times greater than similar figures in other districts.  [81•2  Another survey reveals that the mortality rate (calculated per 100,000 population), as a rule, increases as the income of the families decreases: among the most propertied sections of the population the rate was 6.17 and among the poorest sections, 9.91. In the poorest families the cause of death more frequently is a disease like tuberculosis. Particularly high is the mortality rate among the Negro population. Deaths during childbirth among non-white women are four times higher than among white women.  [81•3 

p All this no doubt reveals the limited possibilities of capitalist society’s public health system. In the richest country in the world it is impossible to satisfy the most urgent needs for medical and other services. In February 1971 President Nixon stated: “Nineteen months ago I said that America’s medical system faced a ’massive crisis’. Since that statement was made, that crisis has deepened."  [81•4  The federal government’s expenditure for the health service system which now 82 amounts to only 7 per cent of the total does not cover even one-third of the increased cost of medical care.

p In conditions when a substantial part of the national income is redistributed through governmental budgetary channels, the majority of the population cannot be indifferent to the government’s financial policy. With every passing year the American people feel more and more the adverse consequences of the policy which devotes the main share of the resources of the federal budget to military preparations and increasingly realise the inadequacy of social and cultural appropriations.  [82•1 

Today it is clearer than ever before that the factors which facilitated a growth in military spending and restricting the scale of social and cultural appropriations were closely linked with the entire economic, socio-political and ideological structure of contemporary American society.