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p The economy is the material and technical basis for military work and war. Other things being equal, the higher the economic potential of a country the greater her military power. That is why to assess the military potential of a country and her possibilities for building up and maintaining armed forces the attention should be focused on the scale, development level and structure of its material production and the existing objective prerequisites for expanding economic activity in a war emergency.

p Soviet publications on military and economic subjects contain definitions of “economic” and "military-economic potentials”. A country’s economic potential is her biggest possible output of goods with the existing productive forces and mode of production.

p Theoretically, the economic possibilities of a country are limited by the size and quality of such basic elements of productive forces as manpower reserves, natural fuel and raw material resources, available fertile land, the quality 67 and quantity of means of production, the level of scientific and technological development, the efficiency of economic management, etc.

Out of the whole body of statistical data furnished by bourgeois economists the most suitable index for estimating the economic potential of capitalist countries is the gross national product (GNP) expressed in market prices as the total of goods and services produced in a year. However, the GNP is but an approximate index of economic potential. First, calculated by methods adopted in bourgeois economic science, it contains a good deal of repeated counting owing, among other things, to the inclusion of the services. Second, it is not concerned with idle capacity, manpower reserves and existing national wealth, which may contribute substantially to a production increase whenever necessary. Third, it does not show the economic possibility to meet specific demands in definite terms of output.

Table 10 GNP of Main Capitalist Countries Constant (1970) dollars GNP (thous. dollars) mil. Per capita (dollars GNP 1950 1960 1970 1950 1960 1971) USA ........... 487.2 668.3 993.3 3,200 3,700 4,850 FRG ........... 55.8 117.1 186.2 1,120 2,110 3,020 Japan .......... 31.0 69.2 197.8 370 740 1,910 France .......... 54.6 84.3 148.2 1,310 1,840 2,920 Great Britain ....... 72.1 91.7 119.9 1,430 1,750 2,150 Italy ........... 30.9 53.5 92.9 660 1,080 1,700 Canada .......... 31.8 46.6 76.1 2,320 2,600 3,550 Australia ......... 14.6 21.7 36.2 1,790 2,110 2,880 Sweden .......... 14.2 19.6 30.8 2,020 2,620 3,820 Netherlands ....... 11.8 19.0 31.3 1,160 1,650 2,400 Belgium ......... 11.6 16.1 25.9 1,350 1,750 2,670 Switzerland ...... 8.4 13.2 20.4 1,800 2,450 3,260 Denmark ......... 7.3 10.0 15.7 1,690 2,190 3,200 Austria . . ..... 5.2 9.0 14.4 760 1,280 1,940 Norway . . .... 4.3 -*7 0 11.2 1,310 1,950 2,900

p Source: World Economy and International Relations, March 1972, p. 150 (in Russian).

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p The GNP can also be used as the basis for comparing the economic potentials of different countries and their possibilities for military work. For this purpose, the GNP values of the countries involved estimated in national currency must be expressed in one monetary unit, for instance, in the US dollar on the basis of its official rate of exchange.

p Table 10 shows the great superiority of the United States over other capitalist countries both in terms of output and in terms of GNP per head of population. However, this simple method of comparison fails to produce a true picture of the correlation of the GNPs of the countries involved. The point is that the rate of exchange does not correspond as a rule to the average purchasing power of currencies on the home market. Besides, the rate of exchange indicates the relative purchasing power of currencies only in respect of goods and services handled in international trade. As a result calculation of the GNP according to the official rate of exchange misrepresents the actual correlation of the production indices of the countries involved.

p To get a better estimate of the GNPs of different countries in one currency the physical volume of goods and services as part of the national product of each country is calculated in prices of one of the countries involved.  [68•1 

p Today, the military-economic potential of a country is largely determined by her industrial potential. This being so, the military-economic potentials of different states can also be estimated from their total industrial output. In 1948, the US share in the total industrial output of the capitalist world was 55.8 per cent. However, the post-war rehabilitation and development of the industries of the West European capitalist countries and Japan was accompanied by a decrease in the US share which stood at 40.9 per cent in 1970, i.e., not far above the pre-war level.  [68•2  We believe that the US industrial potential is somewhat larger than suggested by the data on its share in the total industrial output of the capitalist world. They relate to the actual annual output of general industrial 69 goods and fail to reflect a number of important indices. In assessing and comparing the military-economic potentials of individual countries account has to be taken of the following factors: 

p 1. Idle capacity and unemployment the level of which in the United States is higher than in other capitalist countries. In a war emergency the United States has greater possibilities for expanding output by using idle capacity and redundant manpower.

p 2. The size of national wealth and available stocks of raw materials and stores. In this respect, too, the United States has a relative advantage for expanding production over other capitalist countries.

p 3. The availability of resources of raw materials. The USA is much better supplied with almost all types of raw materials with US monopolies controlling also the rich natural resources of Canada and Latin America.

p 4. The existence of an efficient military industry. For the development and absolute size of military production the United States is far and away ahead of the other imperialist powers. The US share in total military production (nuclear weapons, missiles, aircraft, radioelectronic equipment, etc.) is notably larger than it is in the total industrial output of the capitalist countries. For instance, the share of the US aerospace industry in the total missile and aircraft production of the capitalist world is over eighty per cent.

p 5. Foreign investments, gold and foreign exchange reserves that can be used in an emergency to finance the expansion of production and the import of raw materials and endproducts and for other purposes.

p 6. Scientific and technological superiority of the United States over the other capitalist states.

p 7. The USA, although it is no longer out of reach for war, still has the geographical advantage of protection by the oceans over the West European capitalist countries.

p These factors suggest that the economic and the militaryeconomic potential of the USA is somewhat greater in comparison with its share in the total industrial output of the capitalist world.

p In comparing the economic and military-economic potentials of different countries, one has to bear in mind that 70 today they are largely determined by the advancement of science and engineering. In the past two or three decades, the importance of science and its use in production have grown immeasurably. The scientific and technological revolution has invaded every sphere of human endeavour, stimulating the rising productivity of social labour, creating objective prerequisites for the rapid development of productive forces and for a substantial increase on this basis of the economic potential of states. This leads to an expansion of their military-economic potential, i.e., to an expansion of the material and technical basis for the armed forces, to a greater possibility of using material and manpower resources for military purposes. In these circumstances, the absolute size of material resources consumed in military work can be increased with their relative share in the gross national product remaining the same or diminishing. For instance, in 1967/68 the US direct military expenditures (by the Defence Department, AEG, NASA), involved in stockpiling strategic materials and providing military aid to other countries, amounted to 85,200 million dollars, or 10.7 per cent of the GNP (1967), whereas in 1952/53, during the US war in Korea, they had reached their peak at 50,500 million dollars, i.e., at 15 per cent of the GNP.  [70•1  So, an increase in the economic potential owing largely to scientific and technological progress enabled the USA to wage its war of aggression in Vietnam spending more in absolute terms and less in relative terms than it did during the Korean war.

p The impact of scientific and technological progress on military potential is seen not only in the increased supplies of materiel to the armed forces but also in its far better quality, a highly important factor. The military uses of scientific and technological achievements have produced a revolution in military technology: fundamentally new weapons systems have been developed with characteristics by far superior to those of armaments used at the end of the last world war. The advent and rapid advancement of nuclear weapons, missiles and other types of modern armaments, the widespread use of electronics and cybernetics in the military field 71 combine to increase the destructive capacity of the armed forces at a much faster rate than the growth rates of the country’s economic potential as a whole.

p Science contributes to military potential primarily by further improving the means of warfare. Today’s spectacular progress of science and engineering makes it possible to develop new, more destructive weapons systems. The United States is widely using these possibilities to achieve its ambitious military and political goals. It systematically channels enormous funds into military research and development, a process accompanied by the advancement and rapid development of new means of warfare, as well as by the growing contribution of science and engineering to its military power.

p Advanced science and engineering as well as enormous material and manpower resources are needed to equip armed forces with sophisticated weapons systems. Science is increasingly becoming a direct productive force manufacturing means of warfare. Without a modern scientific and technological foundation a country cannot organise the production of nuclear weapons, delivery systems and other sophisticated weapons and related equipment.

p The USA regards its scientific and technological superiority over the other capitalist countries as a basic condition for retaining its position of leadership in the capitalist world. Therefore, the US ruling quarters use the country’s enormous economic resources to channel into R&D work far greater funds in absolute and relative proportions than those invested by other capitalist countries. Between 1949 and 1963, the main capitalist countries spent a total of 229,000 million dollars on R&D, of which the US share was 147,000 million dollars (over 64 per cent). So, the US share in R&D is far greater than it is in the total industrial output of the capitalist world. In recent years, the USA has been spending on R&D some four per cent of its annual national income, the FRG and France, only two per cent. In per capita terms, the USA spends four times as much on science as France and the FRG. Up to 14-15 per cent of the federal budget appropriations goes into R&D (0.8 per cent in 1939/40), as compared with about 5 per cent in Britain, the FRG and France.

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p The USA is ahead of the other capitalist countries for the share of government spending on R&D as well. According to some estimates, in 1962, it had 4,200,000 research scientists, engineers and technicians in R&D jobs (its total population was 187,000,000 at the time), while the figure for Britain, the FRG, France and the Netherlands taken together was only 520,000 (their combined population was 175,000,000).

p In the USA, R&D work has become a specialised field of business conducted on a wider scale than anywhere else in the capitalist world. This superiority is the most striking in the military field, in military technology in particular. Since in the USA science is geared to military needs much more than in the other capitalist countries, the absolute and relative size of its military spending is greater in comparison with its share in the general expenditures on R&D.

p By the end of the last century, the USA had moved ahead of Europe in production management and technology. Yet until the Second World War it lagged behind in applied and basic research. Aware of the steadily growing role of science and engineering in the military field and in economic development and seeking to end its dependence on Europe in basic research, since the Second World War the USA has been systematically spending enormous funds on R&D work and developed first-class technological facilities for experimental research and the advancement of science in general.

p R&D work on a vast scale requires a large body of research scientists, engineers and technicians. The number of specialists trained in the USA falls short of the growing demand. According to estimates, this shortage will make itself felt for quite some time. In this situation, the United States is going out of its way to encourage the immigration of foreign scientists.

p As far back as the thirties, dozens of leading scientists, Albert Einstein among them, fled nazi Germany and settled in the United States. During World War II scientists from Britain and other countries shared in the work on the Manhattan Project to develop the atom bomb. In that period however the USA employed a relatively small number of foreign specialists. The immigration of specialists from other 73 countries assumed massive proportions after the Second World War when the USA organised a veritable "brain drain" from its partners. According to Professor R. M. Titmuss of Britain, between 1949 and 1966 one hundred thousand scientists, engineers and medical specialists emigrated to the United States. As it costs an average of 40,000 dollars to train one research scientist in the United States, this "brain drain" saved it some 4,000 million dollars over the period, to say nothing of the enormous advantages baffling evaluation the United States derives from the employment of foreign specialists. They settle in the USA for the following basic reasons: first, much higher pay; second, excellent research facilities; third, the far wider range of R&D, and, finally, the easy immigration formalities the US Administration offers skilled specialists. The brain drain is causing great damage to countries they leave.

p The USA receives additional profits and “brainpower” by placing R&D contracts, particularly military ones, with research centres abroad. It has been estimated that during the 1967 calendar year about 0.5 per cent of all DOD R&D contracts was placed with foreign contractors.  [73•1 

p The brain drain and the use of foreign research centres for carrying out its R&D programmes help the USA retain its scientific, technological, military and economic superiority over other capitalist countries.

p Although the GNP and the volume of industrial output can be taken as criteria for assessing and comparing the economic potentials of different countries, they fail to indicate what share can be used for arms production and the maintenance of military equipment and personnel in combat readiness.

p Before it can set aside part of its economic and manpower resources for military purposes, a country must satisfy its civilian needs if only the basic ones. The latter change along with economic development and have distinctive national features varying with country’s history and traditions. For these reasons, basic civilian consumption varies from country to country and from period to period.

p The economic and military-economic potentials of 74 capitalist countries can be assessed with adequate precision by using a model of a hypothetical wartime economy based on an inter-sectoral production and manpower balance sheet.

p The difference between a country’s economic potential and basic civilian demand for goods and services represents her military-economic potential. So her military-economic potential is the biggest share of her economic potential available for military purposes.

p The absolute and relative volume of economic work for military purposes varies primarily with the volume of GNP and per capita output. Naturally, of countries with equal absolute GNP volumes (leaving aside production structure and the physical composition of GNP) and other relevant conditions, one with a higher per capita output can allocate more material resources for war.

p In fact, a country’s military-economic potential is, as a rule, slightly larger than the share of economic potential actually used by her armed forces, even in time of greatest military and economic effort. In each particular case, the actual utilisation of military-economic potential, i.e., its conversion into real military-economic and military power, is determined by such factors as whether or not the country is at war, the nature and intensity of the war, government policy and military strategy, the socio-economic system, state management, etc.

p In peacetime, the USA uses only a part of its military- economic potential for military purposes. In recent years, an average of eight to ten per cent of its GNP has been spent directly on military work.

p The US ruling quarters attach exceptional importance to the choice of strategy in preparing the economy for war. Leading university scientists and numerous specialists and advisers of government and private organisations are involved in work on this problem. In their analyses of military and economic aspects of nuclear-missile warfare American experts seek to evolve along scientific lines the most efficient methods of using the country’s economic potential for military work and of preparing her economy for war.

p Advocating full military preparedness and the use for military purposes of a large share of the country’s economic resources already in peacetime, i.e., justifying the arms race 75 theoretically, American military and economic experts attach great importance to the study, quantitative evaluation and comparison of the economic and military-economic potentials of major powers.

p Since the early sixties qualitative changes have been in evidence in US studies of military-economic problems. Traditionally, they deal with the economic war potential, conversion of industry, regulation of the economy in time of war and comparison of the economic war potentials of different countries. Such studies are carried on. What is more, their scope has widened. In recent years, the scope of studies of military-economic problems has expanded to include the economic aspect of military work, specifically the organisation and direction of armed forces and military industry enterprises; economic analyses to find an optimum solution to problems involved in estimating the demand for armed forces, military research and choice of weapons systems, logistical support of the armed forces, distribution of funds among individual arms and services, deployment of forces at home and abroad, etc.

p Thus, before World War II military-economic theory dealt only with problems involved in sizing up and mobilising military-economic potential, whereas today it is directly concerned with the economic aspects of military work, i.e., the ways and means of converting this potential into real military power. One of the key problems facing military- economic theory, however, is to suggest the most effective use of military resources. The US Administration gives close attention to the training of leading military and civilian executives handling equipment supplies to the armed forces.

The absence of centralised economic planning under capitalism creates additional difficulties for military mobilisation of economic resources and demands great government efforts to organise it, with special emphasis on finance.