Emacs-File-stamp: "/home/ysverdlov/leninist.biz/en/1985/WITB291/20100314/099.tx" Emacs-Time-stamp: "2010-03-18 17:21:57" __EMAIL__ webmaster@leninist.biz __OCR__ ABBYY 6 Professional (2010.03.18) __WHERE_PAGE_NUMBERS__ bottom __FOOTNOTE_MARKER_STYLE__ nil __ENDNOTE_MARKER_STYLE__ [0-9]+ [BEGIN] __AUTHOR__ GEORGI TSAGOLOV 099-1.jpg __TITLE__ WAR IS THEIR BUSINESS
THE US MILITARY-INDUSTRIAL COMPLEX

__TEXTFILE_BORN__ 2010-03-18T16:43:27-0700 __TRANSMARKUP__ "Y. Sverdlov"

Progress Publishers

Moscow

[1]

Translated from the Russian by Dmitry Belyavsky Designed by Yuri Luter

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BoeHHO-npOMBIUMeHHBM KOMrUieKC CI1IA
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__COPYRIGHT__ MMbicjn>", 1981
English translation of the revised Russian text
© Progress Publishers 1985
Printed in the Union of Soviet Socialist Republics

..1307000000-060 U014(01)-85

[2]

CONTENTS

Page ~

Introduction......................... 5

Chapter One. The Genesis of the Military--
Industrial Complex......................... 23

Bourgeois Historiography............... 23

The Marxist-Leninist View of the Military-- Industrial Complex.................... 31

The US Military-Industrial Complex: Distinctive Features ....................... 37

The Links......................... 51

The Military-Industrial Complex as Part of the
Imperialist System................... 61

Chapter Two. The War Corporations ......... 76

The Chief Contractors................. 77

On Top of the War Business Heap......... 87

The Military-Industrial Complex: Fading
Away?........................... 99

The Arms Exporters.................. 105

Military Superprofits.................. 110

Chapter Three. The Weapons Tycoons........ 119

The Biggest Arms Manufacturer........... 120

The Missouri Sphynx of the Military Industry . 134

Howard Hughes and His ``Heirs''.......... 140

Charles Thornton and Litton Industries..... 145

Thomas Jones and the "Invisible Bomber" ...

149 The Owners of Lockheed and Other MilitaryIndustrial Corporations................ 152

3

Chapter Four. AH the Pentagon's Men ........ 162

``The Biggest Organization"............. 162

The Pentagon Hierarchy: the Top Rungs..... 167

The Mechanics of Arms Purchases......... 173

The Bureaucratic Colossus.............. 178

The Militarist Triangle................. 182

Chapter Five. The Political Elements of the Military-Industrial Complex ................ 193

Washington Officialdom................ 193

Helpers on Capitol Hill ................ 202

Behind the Front of Civic Organizations..... 213

The Think Tanks of the Military-Industrial
Complex.......................... 221

Chapter Six. Billions Down the Drain......... 228

The Arms Race and Unemployment........ 228

The Tax Burden of Militarism............ 233

``Guns Over Butter Equals Inflation"....... 240

The Enemy Who Can Devastate the Economy . 245

Chapter Seven. What Aggravates the Threat..... 256

The Influence of the Military-Industrial Complex: Degree and Limits................ 256

The Military-Industrial Complex Goes International ............................ 265

The Generator of Militarism............. 275

Conclusion .......................... 290

[4] __ALPHA_LVL1__ INTRODUCTION

``Let him who desires peace, prepare for war," is a quotation from Vegetius, a Roman military historian and author. A favorite with militarists, this adage sounded aggressive when it was first uttered but has now acquired a particularly sinister meaning. It and others like it are often heard from US advocates of the arms race.

At the end of the 1970s the American Enterprise Institute for Public Policy Research sponsored the publication of a book entitled Grand Strategy for the 1980s.! Among its authors were General Maxwell Taylor, formerly chairman of the Joint Chiefs of Staff, and Admiral Elmo Zumwalt, ex-Chief of Staff for the US Navy.2 Both are Vietnam veterans: the former was in charge of army and the latter, of naval operations. Now, retired, they are fighting those who want the arms race to be curbed. The thrust of the entire book is against any agreements which might help reduce war preparations. Pointing to the old "Soviet threat" bogey, they claim that US policy "has become too lightly armed" as it is and recommend a sharp hike in military spending to prevent the Kremlin from achieving "world dominion for Soviet-led communism." Grand Strategy opens with an epigraph taken from Frederick the Great: "Diplomacy without 5 arms is music without instruments.''

It appears that the book written by General Taylor et al. has become a manual for those who actually plan and implement US policy. At any rate, the ideas set forth in this manifesto of militarism coincide completely with Washington's current course of spurring up the arms race, fomenting anti-Soviet hysteria and preparing to suppress by force of arms the struggle for national liberation and freedom.

Time magazine, a publication no one has ever accused of being too liberal, wrote: "Turning from economic troubles at home to the Soviet threat abroad, the Reagan Administration announced the largest---and most expensive---- peacetime military buildup in US history. The fiveyear plan would more than double the current defense budget, pushing it from 171 billion dollars in fiscal 1981 to 367.5 billion in 1986. Over the full five years, the money sought would total 1.5 trillion dollars.

``In the celebrated Reagan analogy, that would be a stack of 1,000-dollar bills 103.5 miles high.''^^3^^

The abrupt increase of the military budget is accompanied by a new impetus to the arms race the development and manufacture of radically new types of mass destruction weapons. On August 6, 1981, Hiroshima Day, the President of the United States ordered full-scale manufacture of neutron weapons, the most cynically murderous type of nuclear arms. The newest strategic systems are being developed and deployed---Ohio class missile-carrying submarines, MX intercontinental missiles, B-l and Stealth bombers, cruise missiles, etc. Steps are being taken to accelerate the manufacture of chemical, laser and space-based weapons. This unprecedented military buildup includes 6 099-2.jpg __CAPTION__ This Time diagram shows that in
the next few years US military
expenditures will grow much faster
than total Federal outlays [7] plans to increase the numerical strength of the armed forces by almost a quarter of a million men by 1986. The interventionist "rapid deployment forces" are being beeted up. Washington openly proclaims strategic concepts treating nuclear war as "thinkable," especially if fought in Europe. Scenarios for a preemptive nuclear, strike are being drawn up. Having declared a crusade against communism, the United States is building up its military muscle and demanding that its allies, too, arm themselves to the teeth.

This new paroxysm of aggressiveness in the United States is not accidental. Paradoxically, the obsession with force is a sign of weakness with US imperialism. The past decade has witnessed three economic slumps, unheard-of inflation and unemployment. The situation in the world capitalist economy has deteriorated greatly. Inter-imperialist contradictions have grown particularly acute, with Japanese and West European monopolies pushing their US rivals aside both on the world market and within the United States. Over the 1970s, the US share of the world exports total has diminished by almost 20 percent.

The difficulties capitalism has encountered have affected its policies. Since the early 1980s, opinions have clashed over the key issues of US foreign policy. Those opposing detente, arms limitation and improved relations with the Soviet Union became noticeably more active. In an effort to distract the Americans' attention from urgent domestic problems, shortsighted representatives of the ruling bourgeoisie began to manipulate the mass media in order to provoke crises abroad and brandish the Soviet threat bugbear. These tactics were based on the belief that the country had largely overcome the "Vietnam syndrome" and forgotten the 8 lessons of the gravest crisis the entire US " positions of strength" policy experienced at the turn of the 1960s and 1970s. The more aggressive imperialist quarters began to display reckless adventurism, ready to attain their selfish goals even at the cost of mankind's vital interests.

Of course, it is no longer easy to marshal old arguments to justify war preparations. The emergence of nuclear missiles has revolutionized the military science, the ways, scope and consequences of warfare. The destructive effect of nuclear weapons defies imagination. A single salvo fired from a submarine today can be more powerful than all the explosive devices detonated not only during World War II but also throughout human history. The destructive effect of nuclear weapons can be augmented by a massive use of highly accurate ballistic missiles. The total yield of all the nuclear weapons stockpiled throughout the world is estimated at 60 megatons---the equivalent of about three million Hiroshima bombs.^^4^^ A very small part of this is enough to turn Earth into a lifeless celestial body.

Any sane man can see that there can be no victors in a nuclear war, that the belief in the possibility of a ``limited'' nuclear war is a dangerous illusion. Such a war will inevitably spread across the globe. Besides, the world can be plunged into the abyss by accident. This growing risk is evident from the repeated cases of false alarm signals about alleged attacks against the United States transmitted to NORAD Headquarters, and from the practical steps taken by the Pentagon to ensure better readiness for delivering surprise nuclear strikes. The very first few hours of a world nuclear war will bring death to hundreds of millions of people. Stifl more will be killed slowly and painfully. Add 9 to that the numerous genetic flaws affecting many generations---that is, if man as a species survives at all.

Hundreds of books about the madness of the nuclear arms race published recently in the West highlight the growing concern for the future of the world. For example, here is what Jonathan Schell, an American author, says in The Fate of the Earth, " [Although nuclear strategists] speak of a period of `recovery' after a limited attack, the likelier prospect is a longterm radical deterioration in the conditions of life.... To restore [these] essentials of life takes time; but there would be no time. Hunger, illness, and possibly cold would press in on the dazed, bewildered, disorganized, injured remnant of the population on the very first day of the attack. They would have to start foraging immediately for their next meal. Sitting among the debris of the Space Age, they would find that the pieces of shattered modern economy around them ... were mismatched to their elemental needs.''^^5^^

Or take this excerpt from the Report of the Olof Palme Independent Commission on Disarmament and Security Issues, "considering the potential long-term effects of many nuclear explosions on the human gene pool and the incidence of cancer, to say nothing of the likely effects on the ozone layer and resultant destruction of animal and plant life and eventual climatic changes, human life itself could be in jeopardy. Thus, humanity would face the ultimate risk---its own extinction.''^^6^^

In other words, modern warfare is suicidal, and the arms race threatens to set off the powder keg man is sitting on. Averting the war threat has become the most important global issue. Naturally, this leads the enemies of peace 10 to think up all kinds of spurious arguments.

They would have us believe that the danger is rooted in the "incessant Soviet arms buildup" and in "international terrorism," which forces the United States, a country dedicated to peace, to strengthen its defenses and protect its vital interests. "The Soviet Union underlies all the unrest that is going on," the 40th President of the United States told The Wall Street Journal. The opponents of detente usually refrain from openly preaching their militarist creed, but demagoguery fails to conceal their true goals.

However, some do slip up and begin talking tough. The New York Times Magazine had this to say about Alexander Haig, the first Secretary of State in the current Republican administration: "Not since the late Secretary of State John Foster Dulles has so powerful an American leader issued the warning that the United States 'has been sleepwalking too long' and must now 'snap out of it' to engage anew in the global cold war." Then, of course, there was the famous occasion when Mr. Haig put all other US warhawks to shame with his remark to Le Figaro Magazine of France: "There are things more important than peace." The phrase has been reported worldwide, and it will take a long time to live it down.

When the sound of the war drum was especially loud in the United States, the 26th Congress of the CPSU was held in Moscow. War and peace were discussed at length there too. It was stated, in particular, that, "a war danger does exist for the United States, as it does for all the other countries of the world. But the source of the danger is not the Soviet Union, nor any mythical Soviet superiority, but is the arms race and the tension that still prevails in the world. We are prepared to 11 combat this true, and not imaginary, danger hand in hand with the United States, with the countries of Europe, with all countries in the world. To try and outstrip each other in the arms race or to expect to win a nuclear war, is dangerous madness.... To safeguard peace---no task is more important now on the international plane for our Party, for our people and, for that matter, for all the peoples of the world."'

Millions of people had a chance to compare what was said in Washington with what was said in Moscow, to the obvious disadvantage of American politicians. The peace effort of the Soviet Union and other socialist countries is making it increasingly clear who really values the interests of mankind and who is ready to use them merely as bargaining chips to attain selfish goals, who is the mainstay of peace and champion of the right to life, the foremost human right, and who, striving for world domination, invents tall tales about outside threats and pushes the world to the brink of disaster.

True to the Leninist principles of peaceful coexistence, the Soviet Union is working purposefully and consistently to ensure detente and prevent nuclear war. In his speech to the constituency of Moscow's Kuibyshev District Konstantin Chernenko, General Secretary of the CPSU Central Committee and Chairman of the Presidium of the USSR Supreme Soviet, noted that the curbing of the nuclear arms race was instrumental for the cause of peace. World public opinion welcomed the proposal advanced in this speech to the effect that relations between powers possessing nuclear weapons be guided by certain norms and principles. Of particular importance is the Soviet pledge not to be the first to use nuclear weapons.

Such is the position held by the socialist 12 world. The Soviet Union and other socialist countries want detente to continue and develop; they want nations to coexist peacefully and all disputes to be settled through negotiation.

Behind the opponents of detente in the United States and in other imperialist countries are powerful military-industrial complexes. Gaining multibillion-dollar profits from military contracts, arms manufacturers and the military in the government apparatus are doing all they can to keep up international tensions and to prevent disarmament and even restrictions on the manufacture of mass destruction weapons. Behind the cover of the campaign over the "Soviet threat" they themselves have launched, they provoke new dangerous and costly rounds of the arms race. And, by exporting military equipment and weapons, they create new hotbeds of tension all over the world.

Military-industrial complexes have become particularly dangerous at the time of revolutions in science and technology, especially military technology. Fomenting militarism and promoting the arms race, they increase the risk of nuclear catastrophe, whether deliberately or unwittingly.

Recent developments abound in examples that prove it. In 1977 the Carter administration gave up its program of manufacturing the B-l strategic bomber. However, Rockwell International, the chief contractor, stepped up its work on the project instead of abandoning it. Simultaneously, aided by its allies and stooges in the Pentagon and among politicians, the company joined the chorus of those who claimed a "vulnerability gap" would open in the 1980s, upsetting the strategic balance in favor of the Soviet Union. Finally, the scaremongering paid 13 off: on October 2, 1981 President Reagan announced the decision to begin production of one hundred missile-carrying bombers offered by Rockwell International. The cost of the project is estimated at 40 billion dollars. The President's decision promises hundreds of millions in added profits to Rockwell International; its stock immediately went up 30 percent.

Similarly, when the Carter administration refused to finance the production of the F-15 Strike Eagle fighter-bomber, McDonnell Douglas and its six main subcontractors---Hughes Aircraft, Litton Industries, Sperry Rand, Ford, General Electric and IBM---went ahead and produced it. Then, under Reagan, McDonnell Douglas and its team persuaded the Pentagon to accept the F-15 and had the US Air Force sign a contract for the delivery of a batch of these planes. Without any government authorization, General Dynamics manufactured an improved version of the F-16 fighter and faced the Air Force with a fait accompli. While the MX missile program was still hanging in the balance, Martin Marietta Corporation and its contractors were already working against time to develop it. While it was still unclear who would be awarded the Stealth bomber contract and even whether the project would be approved at all, Northrop had already invested more than 200 million dollars in its production.^^8^^

According to Le Monde diplomatique, talk about an outside threat to the United States usually increases when a government contract with this or that company is about to expire. This threat makes it absolutely imperative to produce a new weapon which, quite by accident, has already been developed by the company in question.^^9^^

In the mid-1970s the US military-industrial 14 complex mounted an especially vitriolic campaign against detente, contributing significantly to the disruption of positive developments in US-Soviet relations at the juncture of the 1970s and 1980s and to the steep rise of aggressive militarism in US foreign policy.

The increasing influence of the military-- industrial complex in all aspects of life in the United States, including foreign and domestic policy, has long been accepted as a fact. Even politicians and ideologists hostile to the Soviet Union stress the sinister aspect of this development. Over 20 years ago President Eisenhower, referring to the military-industrial complex, warned that "in the councils of Government, we must guard against the acquisition of unwarranted influence, whether sought or unsought.''

A similar point was made by Jimmy Carter in his interview to British television in November 1982. Linking the difficulties in the Senate ratification of the SALT 2 Treaty to the military-- industrial interests, the Christian Science Monitor wrote in July 1979 that powerful interests in the United States opposed any agreement with the Soviet Union which could ease the tensions between Washington and Moscow because such tensions were good for their business.

Alan Wolfe, an American sociologist, remarked in The Nation (March 22, 1980) that there were "highly-placed crazies, in Washington and out, who were never comfortable with detente and would be happy to see it pass from the language." In the early 1980s, the New World Review noted that US foreign policy had taken an extremely dangerous turn for the American people and for the world in general. The aggressive right wing, the magasine noted, who in the 1950s had hatched plan after plan for wiping the Soviet 15 099-3.jpg __CAPTION__ ``Is America strong enough?"
Newsweek wonders. One gathers from
what it says that still more should
be spent to be able to stand up to
the "Soviet threat" [16] 099-4.jpg

More New Weapons Reagan Wants for the Services
NAVY
»1 more Nlmitz class nuclear aircraft carrier
* USS Oriskwy aircraft canter to be reactivated
* 2. battleships to be refurbished
* 1 nuclear attack submarine
* 1 Aegis missile cruiser
* 2 patKSl frigates
» 8 F-14 Tomcat fighters »12 F-18 «9h»«s
AIR FORCE
* Manned bomber to get initial funding
* 60 A-10 close-support warplanes » 24 F-16 advanced ftj^tter-borrtbsm
* 12 F-1S Eagie interceptors
* 8 A-6 Intruder attack aircrat;
* 8 KC-10A air tankers
* 2 E-3A airOorna warring and control aircraft
* 2,340 SUmrindw air-to-air missiles
ARMY
* 360 M-i ara) 1 £0 M-60A tanks
»18 UH-flOA BteckhB* hrtteopters
* 6 AH- 64 attack helicopters
« S38 W antty combat vehicles
» 795 ftotand anst 234 Patriot atr-defaiisa
missiles » 38 OtVAD air-detense guns
* 200 howitzer artillery pieces
MARINES
* 12 W-88 Harrter jump jets
* 1 iSO-4t «mphtt*)u8 assault ship, down payment
* 3 CH-836 Svstet SJallton helicopters
* 2,866 TOW antitank missiles

__CAPTION__ U.S. News & World Report
advertises some of the latest types
of weapons the Reagan
administration is planning to
acquire to reinforce the US armed
forces __PRINTERS_P_17_COMMENT__ 2-349 [17] 099-5.jpg __CAPTION__ Laser-armed spacecraft [18] Union off the map, were again rearing their head, reveling in nuclear insanity.

``The Boom in Defense," a feature article in Newsweek, said: "The euphoria is practically palpable. Stock prices of giant contractors like Boeing and United Technologies are moving higher on the New York Stock Exchange.... [With] Washington on a new, stop-the-Soviets spending spree, there is little danger that the spigots will be turned down---and for the defense industry, that means prosperity ahead.''^^10^^

Ronald Reagan's administration proved especially responsive to the interests of the military-industrial complex. The Republican team not only accepted the militarist torch from the Democrats but raised it even higher.

In April 1981 the spaceship Columbia inaugurated the space Shuttle program. But this did not merely mean a new step in space exploration: according to Aviation Week and Space Technology, the United States sees the Shuttle program as a key element in its effort to deploy laser weapons in outer space, with the Pentagon maintaining that "laser battle stations in space offer the potential to alter the world balance of power.''^^1^^ *

According to US press reports, the United States intends to spend 300 billion dollars on space militarization over the rest of the century.

Amid the deteriorating international situation, the CPSU and the Soviet Union refuse to be provoked and continue to work steadfastly and patiently to remove the war threat and preserve and develop detente.

In his speech at the February 1984 Plenary Meeting of the CPSU Central Committee Konstantin Chernenko, General Secretary of the CPSU Central Committee and Chairman of the __PRINTERS_P_19_COMMENT__ 2* 19 Presidium of the USSR Supreme Soviet, stressed: "We are well aware of the threat the aggressive imperialist quarters pose to mankind by their reckless adventurist moves---and we raise our voice to draw the attention of all nations to this threat. We do not seek military superiority, nor do we intend to dictate to others, but we will not permit the existing military equilibrium to be upset.''^^12^^

Our country is not alone in the struggle for peace; it is working side by side with other socialist countries, the international working class, the national liberation movement and all other champions of progress and peace. The realistic quarters of the bourgeoisie, too, see no alternative to peaceful coexistence.

Today, success in the drive toward peace depends to a great degree on correct assessment of the alignment and composition of the forces within the camp of detente's opponents and on knowledge of the increasingly involved mechanics of the arms race and the motive forces of militarism. This makes it especially topical to examine the US military-industrial complex, a major source of the war threat and the arms race.

Victor Hugo once said that no army is able to stop an idea whose time has come. Today, no task is more urgent for humanity than curbing the arms race. We must hand to the new generations a blooming Earth and not a lifeless desert. But erecting insurmountable obstacles to nuclear war calls for thorough knowledge of those who benefit from the arms race, who, in their pursuit of superprofits, force big and small nations to increase their military budgets. These are, first and foremost, the US militaryindustrial tycoons---a small but very influential group of people who call the tune in Washington 20 and cast a sinister shadow on world affairs in general.

The question of why the military-industrial complex plays an increasingly important role in the system of imperialism today deserves a close scrutiny. This calls for a more precise identification of its composition and structure, and for drawing a dividing line between the Marxist and the bourgeois interpretation of the military-industrial complex as a specific social phenomenon. Naturally, the scope of a comparatively short book makes it impossible to deal with this broad and complex subject comprehensively. Nevertheless I hope that the following pages will add to the picture of the military-- industrial complex and to the understanding of its growing role under imperialism.

Introduction

~^^1^^ Grand Strategy for the 1980s, American Enterprise Institute for Public Policy Research, Washington, D.C.,1978.

2 Other authors of this monograph include General Bruce Palmer, the main architect of the US intervention in the Dominican Republic, Bruce Holloway, formerly chief of Strategic Aviation and then of the entire Air Force, and General Theodore Milton, US representative with NATO until his retirement in 1974.

~^^3^^ Time, March 16, 1981.

~^^4^^ See Peace and Disarmament. Academic Studies, Progress Publishers, Moscow, 1982, p. 52.

~^^5^^ Common Security. A Programme for Disarmament. The Report of the Independent Commission on Disarmament and Security Issues under the Chairmanship of Olof Palme, Pan Books, London and Sydney, 1982, p. 52.

21

~^^6^^ Ibid.

~^^7^^ Documents and Resolutions. The 26th Congress of the Communist Party of the Soviet Union, Novosti Press Agency Publishing House, Moscow, 1981, pp. 30-31, 40.

~^^8^^ Fortune, November 16, 1981, p. 15.

~^^9^^ Le Monde diplomatique, April 1982, p. 20.

~^^10^^ Newsweek, February 4, 1980, p. 39.

~^^11^^ Aviation Week and Space Technology, February 16, 1981, p. 16.

~^^12^^ Pravda, February 14, 1984.

[22] __NUMERIC_LVL1__ Chapter One __ALPHA_LVL1__ THE GENESIS OF THE
MILITARY--
INDUSTRIAL COMPLEX __ALPHA_LVL2__ BOURGEOIS
HISTORIOGRAPHY

Over the past fifteen years, prominent American scholars and statesmen have written many books on the military-industrial complex.^^1^^ Most of these books appeared at the juncture of the 1960s and 1970s, generated by the antiwar movement, the political trends of the times and the bankruptcy of the "positions of strength" policy, especially the debacle of Vietnam.

In the academic literature, the military-- industrial complex was criticized by such bourgeois researchers as John Kenneth Galbraith, Seymour Melman, Richard Barnet and George Kennan.^^2^^ Their books continue to highlight the concern among the realistic members of the ruling class about the possibility of the military-industrial complex precipitating a third world war and pushing the United States into the abyss of nuclear catastrophe. Besides, this bourgeois criticism often reflects the views of those groups of the ruling class which gain nothing from militarism and even have to give up part of their profits to the military-industrial complex in the form of taxes. However, there is a different trend among those writing on the subject. It is becoming increasingly popular to deal with the military establishment not from 23 the standpoint of peace but in an effort to enhance the efficiency of the US war machine (take, for example, works by Murray Weidenbaum, Adam Yarmolinsky or Ronald Fox).

Bourgeois authors offer a wealth of facts concerning the operation of the military-industrial complex. Some of the books describe the progressing militarization of the United States, the trend toward a hybrid of sorts between a military and a civilian society.^^3^^ Bourgeois researchers state that military production has been monopolized by a handful of companies which inflate the military budget merely to increase their profits. There is open talk about the web of personal ties binding together military-- industrial monopolies and the Defense Department. But, whatever the causes of this criticism, bourgeois experts on the military-industrial complex are almost invariably prisoners of their class approach to the subject, and this makes them either gloss over its true nature or, at times, end up as its defenders. Bourgeois recommendations for freeing the United States from the "disastrous rise of misplaced power" usually boil down to advice to increase the involvement of Congress and the academic community in military decision-making.

The interpretation of the military-industrial complex especially typical of bourgeois historiography could be seen from the following definitions suggested by American authors: "a conglomerate of elites---a military elite, an industrial elite, a banking elite, a labor elite, an academic elite---which seeks its own aggrandize^ ment through global expansion"^^4^^ or "an informal and changing coalition of groups with vested psychological, moral and material interests in the continuous development and maintenance of high levels of weaponry, in preservation of 24 colonial markets and in military-strategic conceptions of internal affairs.''^^5^^ There are claims that "in a basic sense, the military-industrial complex has existed as long as there were men who specialized in the fabrication of arms, and men who specialized in using arms in combat". Other definitions describe the militaryindustrial complex as "congressmen, labor leaders, corporation executives, church spokesmen, university professors and professional soldiers along with the host of followers and families dependent on them" or as "a group of national resources---public and private; military and civilian; political and academic---combined together for the provision of the common defense in support of a national strategy of deterrence through preparedness.''^^6^^ Since the range of people connected with the war machine is quite wide in the United States today, some researchers suggest replacing the term "military-industrial complex" with "military-industrial-- academiclabor-management-political complex."

Evidently American authors want to shift the responsibility for the dangerous activities of the military-industrial complex onto almost all social strata and to picture it as an organic part of any type of society, irrespective of its historical conditions.^^7^^

Such vague definitions and this approach ignore the most important thing---the class, social nature of the military-industrial complex---and gloss over the differences between its basic forces and the methods it uses to ensure its domination. No distinction is drawn between the GIs who ingloriously lost their lives in Vietnam and the generals who, alive and well, kept working on scenarios for crushing the Vietcong; between the Pentagon maintenance workers and the Joint Chiefs of Staff; between 25 Caspar Weinberger's secretary and major stockholders of McDonnell Douglas and United Technologies.

European bourgeois researchers offer equally vague concepts. For example, Professor Jacques Soppelsa of the University of Paris calls, in his article "The American Military-Industrial Complex and Jimmy Carter's Foreign Policy," for "moving away from elementary, even simplistic approaches" typical, he claims, of both American and most Soviet experts who see the military-industrial complex merely as a " homogeneous bloc of militarists and imperialists."8 Soppelsa's "extended structure" of the militaryindustrial complex includes four major components: purely military organizations, the military industry, research centers and Congress. Each component comprises several subdivisions, Soppelsa lists meticulously. But the article offers nothing new for an understanding of the military-industrial complex---neither about the hierarchical structure of these "heterogeneous elements" nor about the historical framework of the phenomenon.

Especially prominent among experts on the military-industrial complex is John Kenneth Galbraith. An outstanding US economist and imaginative critic of the uglier aspects of capitalist society, he made an attempt to trace the roots of US militarism and of the military-- industrial complex in How to Control the Military, published as early as 1969. These issues have also been examined in detail in his other works--- New Industrial State, Economics and the Public Purpose and The Age of Uncertainty. Galbraith has earned well-deserved respect as a denouncer of US reactionaries and top brass, as a vigorous participant in and ideologist of the US antiwar movement and advocate of positive US-Soviet 26 relations. However, some of the provisions in his treatment of the military-industrial complex are unacceptable.

The cornerstone of his concept is the precept that an "industrial system" [i.e., the world of big monopoly corporation.---G. T. ] needs uninterrupted growth. In his view, arms manufacture is the sphere where these corporations can secure great allocations with minimal effort and where production itself entails practically no risks. Having once tasted this, companies no longer want to give up the advantages the war business brings. Hence the strong pressure on their part to have the arms race continued. Besides, the scientific and technological revolution multiplies the "growth needs of the industrial state" many times over.

According to Galbraith, bureaucratic trends making headway in private and government-run organizations are another important factor in the development of the military-industrial complex. The community of interests of private and government bureaucracies gives rise to their mutual support, or "bureaucratic symbiosis." "In the United States bureaucratic symbiosis reaches its highest state of development in the relation between the weapons firms and the Department of Defense and its constituent elements. Lockheed, Boeing, Grumman or General Dynamics can develop and build military aircraft. This serves their affirmative goal of growth with the concurrent reward to their technostructures. The public bureaucracy that is associated with research and development, contracting, contract supervision, operations and command is similarly rewarded by the development and possession of a new generation of planes.... The technostructure of the weapons firm is a natural source of employment for those 27 who have completed a career in ... the public bureaucracy. Leadership in the Department of Defense, by the same token, is extensively in the hands of men recruited temporarily from senior positions in the technostructures of the weapons firms. Not only is this exchange rewarding to individuals, but it serves, more than incidentally, to cement the symbiotic relationship.''^^9^^

Like some other bourgeois authors, Galbraith is trying to ascribe the phenomenon of the military-industrial complex to any highly industrial state irrespective of its social system---- including the Soviet Union. This point, made especially clear in The Age of Uncertainty, is a logical outcome of his theory about the alleged convergence of the two social systems. Previously, Galbraith used the "trend toward convergence" to explain the transition from the Cold War to detente. Today the same theory underlies his contention that military-industrial complexes exist in both systems. Galbraith attributes the continuation of the arms race---of fatal competition---to the impact of these complexes on US and Soviet policies. "It is a manifestation," he claims, "both in the United States and in the Soviet Union, of the public power of the military establishment and of those who make the arms.... In the United States the great weapons firms supply the armed services with the weapons they seek. The Air Force, Navy and Army reciprocate with the orders to the corporations that provide the profits and employment by which they function and flourish. The corporations and the services combine to conduct the research and development which make the current generation of arms obsolete and make necessary the next.

``This is the first symbiosis. The second is 28 between the United States and the Soviet Union. The same process in only slightly different form exists there. Each power, by its innovations and acquisitions, then creates the need and incentive for the other power to do the same---or more. Thus each works with the other to ensure that the competition is self-perpetuating.... Both countries are caught in a squirrel wheel, a trap.''^^10^^

Similar views are held by Richard Barnet, a political scientist on the board of directors of the Washington-based Institute for Policy Studies. He writes in his book The Giants: Russia and America, "Military bureaucracies are developing in the Soviet Union that are mirror images of American bureaucracies. Their expansion risks the further militarization of policy....

``For any rational political leader, war is indeed unthinkable, but huge military bureaucracies in the two countries are paid to think about it every day, to plan for it, and to develop scenarios for `winning'. The madness of one bureaucracy sustains the other. The technological nightmare into which we have entered is an environment that chokes rational thought."!^^1^^

There is nothing surprising about bourgeois authors' attempts to maintain that the military-industrial complex is organic to any highly industrial state no matter what its social system. Their task is to make capitalism appear more attractive, to deny or at least alleviate its responsibility for the development of the military-industrial complex. But, by rejecting a social and class analysis of contemporary society, these liberal bourgeois critics of militarism actually present an apologia of both capitalism and the military-industrial complex itself.

29

Typically, both Galbraith and Barnet are reluctant to deal at length with the "Soviet military-industrial complex." The reason is clear: in the Soviet Union or other socialist countries there are no classes, social strata or professional groups interested in war or war preparations. But, whether deliberately or unwittingly, bourgeois ideologists take no notice of this.

Neither can one agree with Galbraith's and some other authors' contention concerning the requirements of scientific and technical progress. The scientific and technological revolution does not itself create, but merely aggravates, the problem of the military-industrial complex.

As to bureaucratic trends, one should not reduce the entire issue to them, although they are on the rise. After all, aside from the top brass, the government bureaucracy connected with arms purchases and the top level company executives (technostructure), the military-- industrial complex also comprises major stockholders of munitions producers. In the final analysis, it is they and not the managers who call the tune in these corporations. Meanwhile, attempts to present all military-industrial tycoons as bureaucrats at least distort and oversimplify the picture of the group standing at the helm of the military-industrial complex.

Bourgeois researchers, even liberals like Galbraith, are unable to offer a scientific explanation of this phenomenon. Their suprahistorical approach to the problem from the viewpoint of social institutionalism and technological determinism prevents them from analyzing it in depth and comprehensively.

30 __ALPHA_LVL2__ THE MARXIST-LENINIST
VIEW OF THE
MILITARYINDUSTRIAL COMPLEX

Marxism-Leninism sees the military-industrial complex as a logical product of contemporary development of capitalism---a society which, in the words of Marx, "is no solid crystal, but an organism capable of change, and is constantly changing.''^^12^^ The essence of capitalism as a historically definite form of exploitation of man by man remains unchanged, but its socio-economic system is becoming increasingly complex. This fully applies to the era of the general crisis of capitalism; this stage not only heralds the demise and decomposition of the last exploiter society but also adds new features and contradictions to the bourgeois system.

Marxist literature treats the military-industrial complex above all as an alliance between the biggest arms manufacturers and the military section of the imperialist state apparatus. Therefore, tracing the origins of the military-- industrial complex means, first and foremost, examining the emergence and development of specific monopoly-more precisely, state-monopoly--- alliances, structural forms and groups in modern capitalist society. The rapid growth of the productive forces and the increasing socialization of capitalist production were what nurtured the military-industrial complex; what actually gave birth to it was the convergence of statemonopoly and militarization processes inherent in imperialism and especially pronounced in the general crisis of the bourgeois system.

The term "military-industrial complex" is a recent invention and neither Marx nor Engels nor Lenin ever used it, but the essence of this phenomenon was analyzed by Lenin. He 31 examined the economic content of imperialism and showed the indelible link connecting militarism with the expansionist nature of the monopoliesy-the entities which superseded free competition capitalism. Several of Lenin's works stressed the special role the alliances of munitions trusts with highly placed military and political leaders played in the preparation and launching of World War I, among them his articles `r'Who Stands to Gain?'," "Capitalists and Armaments," "Armaments and Capitalism." Lenin wrote: "A shower of gold is pouring straight into the pockets of bourgeois politicians, who have got together in an exclusive international gang engaged in instigating an armaments race among the peoples....

``An ingenious capitalist set-up! Civilization, law and order, culture, peace---and hundreds of millions of rubles being plundered by capitalist businessmen and swindlers in shipbuilding, dynamite manufacture, etc.! "^^13^^

Lenin devoted an entire section of his Notebooks on Imperialism to questions related to the military-industrial complex. The "Notebook `Brailsford' " quotes The War"of Steel and Gold, by the British historian Henry Noel Brailsford offering numerous cases of merger of successful British, German and French military-industrial firms with government quarters and discussing the political influence of such militarist alliances.^^14^^

But Lenin did not intend to create an integrated, comprehensive theory of the militaryindustrial complex. In his major works on imperialism he pursued other goals---above all, to examine the economic essence of the imperialist stage in capitalist development and to expose the causes of World War I. Having integrated the new economic and political 32 developments into a single whole, Lenin advanced Marx's theory of capitalism and created his own theory of imperialism as the highest and final stage of the bourgeois system, the eve of the socialist revolution. While he did deal with military-industrial alliances and their instigation of the arms race, this issue was not an independent theoretical problem of primary importance at the time. Besides, Lenin evaluated militarist alliances before he had developed his theory of state-monopoly capitalism, at a time when the military-industrial complex was in its embryonic stage.

World War II brought these capitalist complexes to a new, more mature stage. The militarist establishment in Germany was especially noticeable among them. Closely intertwined with Hitler's clique, the military-industrial monopolies of Krupp and other arms manufacturers were the prime sources of Nazi Germany's aggressiveness.

The next period when these complexes developed rapidly was the Cold War, when the United States emerged as the leader of the imperialist bloc and laid claims to world domination "from positions of strength." The postwar military-industrial complex in the United States grew so big that it dwarfed both its predecessors and its contemporary counterparts in other capitalist countries. The advent of the age of nuclear missiles has pushed the problem of the military-industrial complex into the foreground.

This complex, a phenomenon existing throughout the imperialist era, although to varying degrees, is developing and undergoing considerable change. Each period leaves its imprint on its forms and functions. Besides, there are substantial differences among the various __PRINTERS_P_33_COMMENT__ 3-349 33 national forms of the military-industrial complex.

During the preparations for and in the course of World War I, spokesmen of rival imperialist military-industrial complexes, for all their patriotic lip service, cooperated closely and were often stockholders in enterprises producing armaments to be used against their own countries.^^15^^ Cases of such cooperation grew even more frequent during World War II.

Today the military-industrial complex of the United States and other imperialist powers is spearheaded against the socialist countries. The complex continues its lavish arms deliveries to rival developing countries, fomenting international conflicts. For example, Newsweek reported that in its 1981 move to expand AWACS sales to Saudi Arabia, the US administration planned to "offer Israel sensitive electronic equipment and additional satellite intelligence to help offset the Saudi AWACS advantage.''^^16^^

This cynical approach was described in Arsenal of Democracy, a 1978 book by Tom Gervasi, a former US counterintelligence officer: "We find new markets for our weapons industry.... The arms and aerospace industries in particular had grown to a point where the domestic market could no longer sustain them.... Consequently we began subsidizing an arms race in the Middle East.... More than one war has been fought with American weapons on both sides.... All the salesmen need do is sell the latest weapon to one country and wait for its neighbor to respond with jealousy or fear. That is how amis races are born. Generations of weapons quickly obsolesce their predecessors, and that is how arms races are continued.''^^17^^

Previously, Marxist historians dealt with individual aspects of the military -industrial 34 complex while examining the development of finance capital, state-monopoly capitalism and militarism---i.e., without singling out this phenomenon as an independent subject. In the early 1960s, the term "military-industrial complex" entered Marxist literature, and at the turn of the 1960s and 1970s its content was explained in documents adopted by the CPSU and the world communist movement.

Speaking at the June 1969 International Meeting of Communist and W°r^ers' Parties, Leonid Brezhnev noted: "The influence of the so-called military-industrial complex, i.e., the alliance of the largest monopolies with the military in the state apparatus, is growing rapidly in the most developed capitalist states. 18 The Main Document of the conference stated: "The basic interests of the peoples demand the intensification of the struggle against militarism in all its forms, particularly against the military-industrial complex of the USA and other imperialist states.''^^1^^^ The CPSU Central Committee document on the 100th anniversary of the birth of Lenin said that, "the military-industrial complex has emerged as the shock troops of imperialism which encourages reaction in domestic and foreign policies of bourgeois countries.''^^20^^

The Program of the Communist Party USA includes the following paragraph: "The most sinister component of state monopoly capitalism is the military industrial complex. This is the combination of military brass with financiers and corporate directors whose companies profit from the trade in weapons. The characters of this netherworld rotate between posts in the Pentagon, the Defense and State Departments and the armaments industries. They wangle lush contracts for the manufacture and sale of the 35 latest death-dealing technology. They are the most ardent advocates of the nuclear arms race.

``Incorporated in the military-industrial complex is a network of secret and semi-secret government agencies. These form an 'invisible government' beyond the reach of the voters; the National Security Council, the CIA, the FBI, the Pentagon and select Congressional and White House committees whose schemes and activities are shielded from public scrutiny.''^^21^^

The Marxist concept of the military-- industrial complex continues to develop. The 26th Congress of the CPSU noted the special role of this complex in spurring up the arms race and stressed the need to keep this problem under thorough examination: Military expenditures are rising unprecedentedly. In the United States they have climbed to an annual 150,000 million dollars. But even these astronomical figures are not high enough for the US militaryindustrial complex.... It is clamoring for more....

``Some new phenomena in the capitalist world, specifically the features of the present stage of capitalism's general crisis and the rapidly growing role played by the military-industrial complex and the transnational corporations, require study.''^^22^^

In his examination of new forms of militarism, the political scientist Vadim Zagladin wrote: "The rapidly growing role of militarism in the life of society dominated by monopoly capital has led to the emergence of a radically new phenomenon---the military-industrial complex which united the military and the business interests in the name of ensuring the highest possible profits and defending the moribund social system. Throughout the capitalist world, military-industrial complexes have turned into powerful sources of economic and 36 political clout. The emergence of the military-- industrial complex meant that militarist and the top brass, originally servants of bourgeois society as a whole, were turning into its masters.''^^23^^

Researchers into the development of statemonopoly complexes in today's capitalist society made an important contribution to the understanding of the nature of the military-- industrial complex. In this connection State-- Monopoly Complexes, a 1979 monograph by a team of Soviet economists, deserves special mention.^^24^^

__*_*_*__

To sum up, the genesis of the military-- industrial complex is explained by the development in modern capitalist society of distinctive military-state-monopoly relations, alliances, structures and groups. One cannot blame the military-industrial complex alone for militarism and the arms race. Imperialism begets militarism and, under state-monopoly capitalism, the latter has given rise to an extremely reactionary and aggressive alliance of the monopolist core of the war business with the militarist and promilitarist elite of the state apparatus. As the military-industrial complex grows, it creates its own institutions, propaganda agencies and lobbies and acquires allies and fellow-- travelers. It becomes a force in its own right, which boosts militarism and the arms race.

__ALPHA_LVL2__ THE US
MILITARY-INDUSTRIAL COMPLEX:
DISTINCTIVE FEATURES

Over most of America's 200-year history, the role of the military was marginal in national 37 affairs. Drawn up by the founding fathers of the United States, its Constitution was to check as it were, the growth of the influence of the military. As a rule, the President---the Commanderin-chief of all the armed forces---was a civilian. Only the US Congress had the power to declare war or allocate funds for military purposes. Of course, the American bourgeoisie had always used the military for its class purposes. But the role they were to play in politics was strictly limited and narrow. In other words, for a long time the military were controlled by civilians and civilian authorities.

However, the situation changed after World War II. The top brass succeeded in gaining a foothold and, subsequently, consolidating their positions in the United States' top echelons of power. Arms manufacturers became their rich and powerful allies. This militarist alliance began to exert increasingly effective influence on all aspects of the country's life.

The comparatively low degree of militarism which existed in the United States for such a long time cannot be explained away by claims that US capitalism was ``unique'' and " dedicated to peace." The United States has followed the beaten track of expansionism and aggression from the very beginning, and these features intensified sharply in the era of imperialism. "It is generally supposed that the American military ideal is peace," C. Wright Mills quotes the editors of Fortune magazine in his book The Power Elite. "But unfortunately for this high-school classic, the US Army, since 1776, has filched more square miles of the earth by sheer military conquest than any army in the world, except only that of Great Britain. And as between Great Britain and the US it has been a close race, Britain having conquered something 38 over 3,500,000, square miles since that date, and the US (if one includes wresting the Louisiana Purchase from the Indians) something over 3,100,000. The English-speaking people have done themselves proud in this regard.''^^2^^"

Throughout the 18th and 19th centuries US aggression was mostly confined to the North American continent. Scattered Indian tribes and other militarily and economically weak neighbors were unable to effectively resist the US expansion. Over its first century, the United States, possessing relatively small armed forces, increased its territory tenfold. According to Ronald Fox, an American researcher, the strength of the US Army was 9,000 officers and men in the mid-19th century.^^^6^^ Note that the United States was free from the anxieties typical of countries who had great military powers as neighbors. All this made militarism in the United States develop slower than in Europe.

In the 1870s Marx and Engels remarked that in the United States the military did not hold sway the way they did in Europe. In the 20th century, however, the gap was closed. By the early 1900s US capitalism not only entered its imperialist stage of development but also became the world's biggest industrial producer. This gave a fresh and powerful impetus to the struggle for greater colonial possessions and broader spheres of influence. But by that time, the world had already been partitioned, and this meant that the United States joined the interimperialist armed struggle for redesigning the spheres of influence. The United States stepped up its war preparations considerably and rapidly built up its armed forces, especially the navy.

World War I encouraged further growth of US militarism. At that time Lenin wrote that the United States was "sunk into the all-- 39 European filthy, bloody morass of bureaucratic-- military institutions which subordinate everything to themselves, and suppress everything.''^^27^^ In his "Letter to American Workers" Lenin noted that US billionaires, geographically the most secure, "have profited more than all the rest.... They have grabbed hundreds of billions of dollars. Every dollar is sullied with the filth of ' profitable' war contracts.... And every dollar is stained with blood---from that ocean of blood that has been shed by the ten million killed and twenty million maimed.''^^28^^ At that time the United States witnessed the rapid rise of state-monopoly capitalism, described by Lenin as "war-time penal servitude for the workers and war-time protection for capitalist profits."29 An incentive appeared encouraging the emergence of military-industrial alliances, and the US Congress decided to hold a special investigation of the war industry. Somewhat later, Senator Gerald Nye who chaired the investigation stated: "In America alone the World War created 22,000 new millionaires.... There is altogether too much truth to the assertion that war and preparedness for war are nothing more than games, games for profit.''^^30^^ It was also stressed that the "unhealthy alliance" between arms contractors and military institutions "brings into being a self-interested political power which operates in the name of patriotism and satisfies interests which are, in large part, purely selfish." The commission of inquiry stated that, "such associations are an inevitable part of militarism" and that they are among the "economic evils of war," "to be avoided in peacetime at all costs." Suggestions to this effect included a recommendation to nationalize the private sector of the military industry---but the proposal was tabled.^^31^^

40

In the period between the two world wars US monopoly capital kept gaining very important economic positions all over the world. Increased foreign investment and foreign trade were followed by the expansion of the armed forces---this time including both the navy and the air force. Nevertheless, up to World War II the bloc of the military with the arms manufacturers had not yet taken a distinct shape in the overall system of US imperialism. Much of military production---practically all the materiel for the Army and a large part of the vessels and weapons for the Navy---was concentrated at government-owned factories. Private arms deliveries were mostly supplied by branches of companies specializing in civilian products. The size of the Defense Department and the scope of the military industry were still comparatively small.

World War II provided a new catalyst for militarist developments in the United States. The military-state-monopoly capitalist system, revived at that time, not only added to the wealth of the already established finance capital but also aided in the emergence of new tycoons. Above all this concerned the aviation and shipbuilding industries in the newly opened and booming West and Southwest. Located far from the major theaters of operation, the United States manipulated the wartime market conditions to consolidate its positions in the world capitalist economy and politics.

After World War II, the role of the United States in the weakened capitalist system increased substantially. The US share in the total industrial output of the capitalist world rose from 34.9 percent in 1938 to 53.9 percent in 1948. As the leader of the imperialist camp, and the "savior of the free world," the United 41 States laid claim to world hegemony. The Cold War was launched against the socialist countries. Resisting vigorously the rise of the national liberation movement, the United States assumed the functions of a world policeman. It unleashed the Korean and the Vietnam Wars; military blocs were established and strengthened under its aegis. The United States turned into the focal point of worldwide reaction and militarism and 099-6.jpg __CAPTION__ A US Lance missile. These missiles
axe operational in the NATO armed
forces in Western Europe 42 began unprecedented war preparations. The White House intends to impose its will on other nations by acts of intervention and aggression and by undeclared wars. These purposes are served by the more than 1,500 US military bases in 32 countries.

Sometimes one can come across frank admissions of all this in the American press. Take, for example, the quotation from Army magazine, December 1974: "We have fought our wars primarily for political reasons---to protect American interests and further American policies and objectives---but have justified them in moralistic and idealistic terms of 'protecting freedom's frontier' and 'keeping the world safe for democracy.' "

The advent of the scientific and technological revolution in the mid-20th century and the development of nuclear missiles have brought radical changes to the military economy. US state-monopoly capitalism has become 099-7.jpg __CAPTION__ A US landing party in Guantanamo 43 099-8.jpg __CAPTION__ Arms procurement takes an
increasing share of total US military
outlays strikingly militarist. Note that this trend in the development of US imperialism in the military-- statemonopoly direction is occurring in peacetime. The US national budget is increasing many times over, with the part devoted to military needs growing especially fast. While from 1789 to 1917 the total budgetary expenditure of the United States was some 30 billion dollars,32 after World War II over two trillion was spent on military needs alone. Between the two world wars US average annual military spending was less than one billion dollars. In the 1950s the figure was 40 to 50 biUion and in the 1960s, 50 to 80 billion. In the latter half of the 1970s the US military budget exceeded 100 billion dollars and in the early 1980s, 200 billion. "Immediately prior to World War II, the military services numbered 139,000. In 1973 44 more than 3 million men and women were serving in the United States military.''^^33^^

The military sector of the US economy is expanding more rapidly than the civilian one, and the Pentagon is carrying an enormous weight in the state system. Scores of thousands of companies and an increasing number of industries are being drawn into military production. A lion's share of this effort is taken care of by a handful of major companies, most of them specializing overwhelmingly or even exclusively in military products. The Pentagon is turning into the richest and most powerful agency: its budget accounts for a quarter to one half of the entire Federal budget and its property, for over 50 percent of all Federal property.

Since they have a community of interests, the arms manufacturers and the Pentagon have formed a powerful military-state-monopoly group prominent in the overall system of US state-monopoly capitalism. Swept high on the wave of militarism and greatly interested in whipping it up, this alliance is working frantically to accelerate the arms race.

As the influence of the US military-industrial complex grew, warning messages became increasingly frequent. Dwight Einsenhower was the first statesman to openly oppose its " unwarranted influence". In his farewell address televised on January 17, 1961, he warned against the acquisition of unwarranted influence by the military-industrial complex, perhaps the most often quoted statement by a US President. Later, however, it turned out that the term "military-industrial complex" was not coined by Eisenhower himself but by his ghostwriter Malcolm Moos, subsequently President of the University of Minnesota. It appeared that in his farewell address, Eisenhower was perhaps 45 trying to acquit himself of the responsibility for the many failures of US foreign policy and to put the blame squarely on the military-industrial 099-9.jpg __CAPTION__ The US is stepping up preparations!
for chemical warfare 46 complex---the blame necessarily shared by a government pursuing the policy of state-- monopoly capitalism of which the military-industrial complex is part. Antiwar sentiment ran particularly high during the term of the Johnson administration: not only mass rallies in front of the White House demanded an end to militarist domination but there was also -widespread Congressional opposition to the demands of the Pentagon and the military corporations. The national press increasingly featured antimilitarist statements.

Perhaps some part of the US ruling elite did finally realize that the arms race was a reckless venture or that an inflated military budget inevitably aggravated the domestic socio-economic problems in the United States itself. Or perhaps the bourgeoisie not involved in the war business grew tired of paying taxes to satisfy the insatiable military-industrial complex. Apparently, all these factors did play their part, but the most important reason was different.

The changed alignment of world political forces, the exacerbation of intercapitalist contradictions and the Vietnam fiasco led to a crisis of US imperialist foreign policy, of its Cold War strategy. The quarrels and rivalry among different groups of the monopoly bourgeoisie and among their spokesmen in politics intensified. This was why the ``doves'' got the upper hand of the ``hawks'' in the American ruling class. The US elite refused to take the blame for the numerous foreign and domestic policy setbacks and was looking for a scapegoat. The choice was the military-industrial complex whose inordinate ambitions had allegedly led the country astray. No wonder that the problem of the military-- industrial complex was made into an issue or prime importance in the late 1960s, when the United 47 States was hit by a severe socio-political crisis.

The growing difficulty of making political capital from reckless military ventures was becoming clearer to realistic US politicians---- witness the untimely political demise of Lyndon Johnson. It was hardly an accident, too, that Richard Nixon---originally a political protege of Lockheed Aircraft and the Bank of America, who, in the 1940s, had made his career in Congress as an anticommunist witch-hunter, and who later, as Vice-President, had done much to aggravate US-Soviet relations---proclaimed transition from "an era of confrontation to an era of negotiation" when he became President in the late 1960s.

In the early 1970s, as the Soviet Union and the United States concluded important agreements on preventing nuclear war and limiting the arms race, and as US-Soviet relations swung toward detente, the swift rise in US military spending, one of the foremost indicators of the influence wielded by the military-industrial complex, began to slow down. Gradually, the subject of the military-industrial complex moved to the back pages of leading bourgeois newspapers and periodicals. Simultaneously, it lost its prominence as an issue of politics. Why talk about it, it was argued, when different interests had gotten the upper hand in Washington. Steps were taken to prevent the military-- industrial complex from regaining its erstwhile power. For example, a special Congressional commission was set up to watch against weapons manufacturers bribing Defense Department and other government officials to push through lucrative contracts.

Still, from time to time the press featured critical reports on the military-industrial complex. The scope of its operations in the United 48 States and abroad was highlighted by the Lockheed scandal. The investigation revealed that people like Prime Minister Kakuei Tanaka of Japan, Crown Prince Bernhard of the Netherlands and Franz-Joseph Strauss, leader of the West German Christian Social Union and former Defense Minister, received bribes from this California-based corporation. The Lockheed scandal had not yet run its course when a court investigation began into the dealings of Northrop, another Pentagon favorite. It turned out that many other firms were also involved in bribing top-level politicians in scores of countries and poisoning the political climate to ensure favorable market conditions for arms sales. The sums earmarked for the purpose were growing. For example, in 1978 Grumman allocated 28 million dollars for ``promoting'' the sale of eight F-14A fighter planes to Iran. The deal fell through, but by that time six million dollars had already been spent on "fees.''^^34^^ However, against the general background of detente, many bourgeois propaganda organs presented these cases as annoying but not really important incidents.

Meanwhile, already during Gerald Ford's term---and, to a certain extent, even toward the close of the Nixon presidency---military expenditures resumed their upward climb. The military-industrial complex regained open government support.

While only recently "greedy militarists" were denounced as responsible for practically any setback, in the latter half of the 1970s the blame for the galloping inflation, for the monetary, energy and even economic crises was shifted squarely onto workers with their " inordinate demands" of wage increases, on the OPEC members who were striving to establish __PRINTERS_P_49_COMMENT__ 4-349 49 just oil prices---on anyone but the military-- industrial complex. Moreover, many prominent US figures and bourgeois propaganda organs ascribed the objectively inevitable weakening of the positions held by US imperialism in world affairs to a "lack of will" and "unwarranted concessions to the Soviets." Calls for tougher policies mounted---naturally, coming mostly from the military-industrial complex itself and the political interests close to it. Generally however, the leaders of the military-industrial establishment behaved more circumspectly, apparently in an effort to avoid another barrage of criticism.

Detente made the military-industrial complex more than uneasy. Firmly committed to revive the Cold War, its leaders escalated their manipulation of public opinion. From the mid-1970s, old reactionary political organizations serving the military-industrial complex were restructured and new ones established---among them the notorious Committee on the Present Danger. From its inauguration, the Carter administration eyed the military-industrial complex favorably. For example, on February 18, 1978, The Nation wrote that "the administration was contemplating the same kind of global thinking that brought us Vietnam." Since the beginning of the 1980s the White House has become even more consistent in pursuing its militarist policy.

__*_*_*__

To sum up, after World War II the role of the US military-industrial complex has increased both within the nation and among all its counterparts in other imperialist powers. As it appears today, this complex has been shaped by a whole range of factors, some old and well 50 099-10.jpg __CAPTION__ During the 1980 election campaign;
both presidential candidates spoke
for continued militarization. established, others, the product of recent decades. Among all these elements, the statemonopoly nature of military production deserves to be examined in detail.

__ALPHA_LVL2__ THE LINKS

An analysis of the links which bind the military-industrial complex together points, first and foremost, to the community of interests connecting the top levels of military-industrial corporations and of the military bureaucracy. Indeed, the different constituent parts of the military-industrial complex are equally interested in an increased share of the national budget being earmarked for military purposes, in international tensions and conflicts and in the arms race: the bigger the military program adopted, the higher the profits of the arms-producing corporations and the more generous the rewards to the military and other government bureaucrats involved in the elaboration and __PRINTERS_P_51_COMMENT__ 4* 51 implementation of these programs. None of the chief elements of the military-industrial complex is able to attain its selfish goals without support from others. Hence their mutual attraction and support.

Nevertheless, one can hardly reduce all or even most of the links binding the military-- industrial complex into an integral whole to a community of interests. The very nature of military production, exlusively oriented toward the government market, generates especially firm bonds between the corporations and the state. This situation on the military market is worth a closer look.

As the capitalist formation develops, the scope, structure, organization and essence of the military sector of the economy undergo considerable change---except for one feature: unlike other economic sectors, military production is always closely connected with the state.

This is rooted in the distinctive nature of military products and their use value. Weapons and other materiel are destined exclusively for government consumption.^^35^^

In the preimperialist stage the organization of the military sector of the economy was essentially shaped by the two main forms in which the system of state capitalism functioned: (1) state property in the means of production and (2) contracts and puchases of military products from private manufacturers. Besides, for several objective reasons, government armories played the foremost part in military production.

In the era of premonopoly capitalism the size of the weapons market was comparatively small. Confined, as a rule, to small arms and artillery pieces, army materiel accounted for a small share of this or that nation's total military expenditures. For example, in the latter half of 52 the 19th century, 80 percent of all military spending went to maintain the armies' personnel. With the absence of stable demand for weapons, the privately-owned military industry was developing relatively slowly: most armaments were manufactured by government factories and armories.

Under imperialism, the nature of the military sector of the economy has changed. Since the close of the 19th century, the rapid development of the productive forces has made armaments considerably more sophisticated and costly. The concentration of capital and the emergence of monopoly agglomerates has made mass production of weapons easier. Besides, the increasingly frequent wars and other armed conflicts have pushed up the demand for weapons. Given all this, a military economy based chiefly on government armories was no longer capable of meeting these growing demands. This became especially obvious during World War I.

Industrial enterprises working under military contracts became more numerous. The development of weapons it took virtually all the major industries to manufacture strengthened the hand of private companies even more. Government armories were pushed aside, and private enterprises, long aware of the advantages offered by a market that had become guaranteed and extremely lucrative under imperialism, began to supply the overwhelming majority of weapons and related services. For example, by the mid20th century government-owned enterprises in the United States accounted for less than five percent of the total amount of Defense Department contracts.^^36^^ And, despite the fact that a great number of companies were involved in military production, most of it was concentrated in the hands of a small group of firms.

53

It follows that the organization of the military economy under imperialism rests on the system of state-monopoly capitalism and, of the numerous forms the latter takes, the one in the foreground is not state property in the means of production but government contracts with and arms purchases from the biggest monopoly corporations---the distinctively military market. This market differs substantially not only from the market of the free competition era but also from the contemporary market of conventional consumer goods like television sets, refrigerators, autos, or toothpaste. The salient feature of the military market is that its manufacturers and consumers are connected very closely. Since the manufacturer works under contract to the consumer, this relationship goes far beyond the traditional commercial framework and is established even before actual production begins. The manufacturer has precise knowledge of the quantity and quality of the goods the consumer needs. Prices are also fixed in advance.

Lenin pointed to the specific features of the military market in his article "Introduction of Socialism or Exposure of Plunder of the State?" published in Pravda in June 1917: "When capitalists work for defense, i.e., for the state, it is obviously no longer `pure' capitalism but a special form of national economy. Pure capitalism means commodity production. And commodity production means work for an unknown and free market. But the capitalist `working' for defense does not `work' for the market at all---he works on government orders, very often with money loaned by the state.''^^3^^'

While ruling out nationwide planning for the benefit of all society (possible only under socialism), capitalism does use certain forms of 54 planning. The main contradiction of capitalism is reflected, among other things, in the fact that while anarchy reigns in the capitalist economy as a whole, individual capitalist enterprises operate on a planned basis.

As the productive forces develop and production becomes increasingly socialized under capitalism, planning grows more widespread. Lenin repeatedly noted the progressive `` undermining'' of commodity production and the growth of planning efforts as the transition to monopoly capitalism occurred.^^38^^ Even earlier than that, Frederick Engels also mentioned the fact.^^39^^ Both stressed that in bourgeois society planning was essentially capitalist and that it served the ruling class which makes its profits "according to plan".^^40^^

As monopoly capitalism evolves into statemonopoly capitalism, the scope of planning increases. Planned, management goes beyond the confines of individual monopoly associations and covers a growing number of sectors and industries. Examining state-monopoly capitalism, Lenin remarked that "capitalism is now evolving directly into its higher, regulated, form.''^^41^^ State-monopoly planning has become the highest and final form of planning under the capitalist mode of production.

Since the military sector of the economy has always been closely connected with the state, this was where state-monopoly capitalism developed first and foremost. Naturally, the undermining of conventional market relations and the growth of planning here began much earlier and advanced much faster and farther than in the civilian industries. It is no accident that the military sector gave birth to the " program, planning, budgeting system" (PPBS). This system of planning (for the entire complex 55 and not for individual companies), introduced in the Defense Department under Robert McNamara in 1961, clearly reflects the planned nature of military-state-monopoly capitalism. One has every reason to say that today's capitalist military economy (or at least its central part) is a market economy more in form than in content. In this sector the planned and not the commodity type of capitalist relations dominates.

And so one can state that planned economic organization, which is the essence of the system of military contracts under imperialism, binds the state and the military-industrial complex closely together. In the military sector the undermining of commodity production is especially pronounced and elements of state-- monopoly planning grow particularly swiftly. Coordination and contacts which underlie the contract system under imperialism forge firm links between military-industrial corporations and military and other government agencies. Traditional market contacts have been replaced by permanent links binding the producer and the consumer together and even blending them into a single whole.

The fact that the contract system undermines market relations and plays an important role in the development of the military-- industrial complex is often reflected in works by US researchers too. "In the Defense Industry there is little that resembles the free market," J. Ronald Fox says in his book Arming America.^^4^^"2 "The government," Professor Walter Adams notes, "deals with contractors, a large percentage of whose business is locked into supplying defense, space or atomic energy needs.... This unique buyer-seller relationship, which defies analysis by conventional economic tools/lies 56 at the root of the military-industrial complex and the new power configurations generated by it.''^^43^^

The change in the system of arms purchases which occurred after World War II further enhanced its status as the factor cementing the military-industrial complex. While before the war relations between private arms manufacturers and the military departments were based on the competitive "open bidding" principles, today 90 percent of all arms deals are concluded after "closed bidding"-type negotiations. In 1947 Congress approved the Armed Services Procurement Act, setting forth competitive bidding as the underlying principle to be followed in peacetime but listing 17 exceptions. In actual fact, exceptions have become the rule and vice versa. The most important and most expensive military contracts are now concluded via "direct negotiations" between the Defense Department and one or several contractors. "Monopolies introduce everywhere monopolist principles," Lenin wrote. "The utilization of `connections' for profitable transactions takes the place of competition on the open market.''^^44^^

Still, the merger of military-industrial corporations with government agencies is not at all confined to a community of interests and the contract system. The revolution in military technology which made it much more sophisticated and costly has also contributed greatly to the consolidation of the complex. To promote their selfish aims, the Pentagon and the monopolies skilfully manipulate the scientific and technological revolution which, in the United States, has advanced first and foremost.in the military sector. Individual monopolies and even groups of monopolies are no longer capable of producing modern weapons on their own. More 57 and more often, the state invests and takes part in the development and manufacture of the more sophisticated types of weapons. State capital is merging increasingly with the capital of military concerns.

The state generously supplies military-- industrial corporations with fixed and working capital and with preferential credits. By the late 1960s the corporations engaged in weapons manufacture and development of military technologies had at their disposal government-owned factories and equipment worth 14 billion dollars. Besides, military-industrial corporations tap government sources for a large part of their working capital by regularly drawing cash from the Treasury in the form of advance payments for products to be delivered. A survey of 40 major corporations conducted by the US Logistics Management Institute has shown that government funds make up almost 55 percent of the total capital circulating in the military production sphere.^^45^^

The government also finances most of the research and development performed by the corporations. The share of R & D in their overall expenditures increased as the scientific and technological revolution advanced and has always been bigger in the military than in the civilian industries. In the 1970s government contracts for military R & D projects brought many major companies one-third of their annual returns. Also, the government supplies the monopolies with free R & D information from its own laboratories and research centers. According to the Soviet economist Gennady Kuzmin, the extremely large share of R & D costs in the overall production expenses of modern w^ apons (up to 90 percent in some weapons systems) and the fact that all R & D is financed 58 almost wholly from the national budget have led to a merger of government-owned R & D centers with those belonging to military-industrial corporations.''^^46^^

The militarist state-monopoly union is also enhanced by the increasingly close personal ties between military-industrial tycoons and toplevel Defense Department officials and army officers. As Business Week wrote on August 9, 1952, "in business circles the word has gone out: Get yourself a general! What branch of government spends the most money? The military. Who ... is an expert on red tape? A general or an admiral. So,make him chairman of the board." Tracing the growth in the number of retired army officers among corporation executives after World War II, the US sociologist C. Wright Mills remarked: "It is difficult to avoid the inference that the warlords, in their trade of fame for fortune, are found useful by the corporate executives more because of whom they know in the military and what they know of its rules and ways than because of what they know of finance and industry proper.''^^47^^

Surveys conducted by Congressional committees in 1959 and 1969 have indicated that in 1959 the Pentagon's 100 biggest contactors employed 768 retired army officers from the colonel's rank up; ten years later the figure jumped to 2,072---including 210 with Lockheed Aircraft, 169 with Boeing, 141 with McDonnell Douglas, 113 with General Dynamics, etc.^^48^^

In the 1970s the number of retired army officers in the corporate elite continued to grow. In 1975 alone, 620 Pentagon officials of the major's rank and up joined the military industry. The figure for 1976 was 1,044. A similar process is developing rapidly in the reverse direction too. In 1975 170 and in 1976, 374 59 executives from military-industrial companies received high-level appointments in the Pentagon. Describing this exchange of personnel in the 1970s, Senator William Proxmire, who had studied this aspect before, remarked that the revolving door between the defense industry and the Pentagon was not only open but spinning madly. One illustration of the way army officers and businessmen circulate between government agencies and weapons manufacturers is the career of Alexander Haig. From NATO's Supreme Allied Commander, Europe he became President of United Technologies, an aerospace corporation, in 1979 and, a year later, US Secretary of State.

One of the manifestations and consequences of the way the military-industrial complex develops is the change in the role of both the state, originally merely a consumer, and the corporations, initially merely contractors. Government interference in the affairs of militaryindustrial companies is growing. Scores of thousands of Pentagon officials are involved, directly or indirectly, in the implementation of military programs. In other words the state as consumer of military products is increasingly becoming their producer too. The prominent US economist Murray L. Weidenbaum says in this connection: "In its long-term dealings with the companies or divisions of companies that cater primarily to the military market, the Department of Defense gradually has taken over, directly or indirectly, some of the decisionmaking functions that normally fall to businessmen; in this new type of relationship the military establishment, as the buyer, makes many of the management decisions about policy and detailed procedures that in commercial business would be made by the companies 60 themselves. This practice is reducing much of the distinction between the public and private activities of a large and important branch of the American economy.''^^49^^

In turn, the corporations begin to play a bigger part in determining the nation's weapons requirements. As John Kenneth Galbraith notes, in the case of weapons---missile systems and missile defenses, nuclear aircraft carriers, fighter aircraft, manned bombers ... the initiating decision is taken by the weapons firm [emphasis added.---G.T.] and by the particular service for which the item is intended.''^^50^^ Corporate representatives constantly advise the Defense Department and the services on the choice of this or that system of weapons. This also occurs within the framework of several state-monopoly organizations like the Association of the US Army or the Air Force Association officially charged with coordinating the activities of the military industry and government agencies.

__ALPHA_LVL2__ THE
MILITARY-INDUSTRIAL COMPLEX
AS PART OF THE
IMPERIALIST SYSTEM

The shaping and development of the military-industrial complex as a distinct state-- monopoly alliance occurs within a definite monopoly structure which has evolved under imperialism. This structure is subject to change. The military-industrial complex is not an appendage to it but its organic component. That is why tracing the origins of the military-industrial complex calls for an analysis of the way the monopoly structure changes in the modern capitalist world and for identifying the place the 61 military-industrial complex holds in this structure.

Major forms of early imperialist monopoly organization were examined by Lenin---in those days, cartels, syndicates and trusts. Lenin described the monopolies operating on the global scale as supermonopolies or monopolies of a higher stage.

Seeing capital concentrate and centralize, some researchers concluded that this would soon lead to the emergence of a single supertrust which would cover the entire national economy. Referring to the Morgans and the Rockefellers, the American John Moody wrote in the early 1900s: "It will be only a matter of a brief period when one will be more or less completely absorbed by the other, and a grand close alliance will be the natural outcome of conditions which, so far as human foresight can see, can logically have no other result.''^^5^^-^^1^^ When Moody advanced his theory of a single super-empire on US soil, European scholars---primarily John Hobson and Karl Kautsky---began speaking of a future international alliance of finance capital.

Lenin subjected the theories of ultraimperialism to well-argued criticism. He demonstrated that they were based on the false premise "that the rule of finance capital lessens the unevenness and contradictions inherent in the world economy, whereas in reality it increases them.''^^52^^ The trend of monopoly capital ^ development was indeed leading to a single trust, but it "proceeds in such circumstances, at such a pace, through such contradictions ... that inevitably imperialism will burst and capitalism will be transformed into its opposite long before one world trust materializes, before the ' ultra-imperialism,' worldwide amalgamation of national finance capitals takes place.''^^53^^

Today's realities fully bear out Lenin's 62 forecast. The monopoly structure of modern capitalism is totally unlike Kautsky's concepts. At the same time, the increasing socialization of production, further concentration and centralization of capital, the scientific and technological revolution and the growth of state-monopoly capitalism change the forms of monopoly organization and give rise to structures of a higher order.

In the early 1900s the trusts were the most mature form of monopoly organization. "The American trusts," Lenin wrote, "are the supreme expression of the economics of imperialism.''^^54^^ The Rockefellers' Standard Oil, the Morgans' United States Steel and the Mellons' Aluminum Company of America controlled 70 to 100 percent of the production and marketing of oil, steel and aluminum. Like cartels and syndicates, trusts were single-product monopolies, although even then combination did take place.

A superficial comparison between today's monopoly structure and that which existed at the beginning of the century may lead one to conclude that a certain deconcentration of economic power has occurred. Instead of a single trust, several firms share control of the oil, aluminum, steel and other industries. This has made the ``oligopoly'' theory popular in the West. However, in actual fact there has been no deconcentration. The biggest firms of a particular industry usually operate in secret accord, coordinating their activities---although they continue to compete with one another. The absence of legally formalized agreements does not mean that monopoly organization has ceased to exist and evolved into an oligopoly. We know that Lenin included "gentlemen's agreements" in the cartel category.

63

Even though traditionally the trust is seen as a monopoly of a higher order than the cartel, the movement from the former to the latter does not mean any reversal in monopolization. Unlike the cartels of the early imperialist era, today's cartels comprise whole trusts with scores and even hundreds of enterprises. These cartels represent a new level in the development of monopolization. The secret agreement between the Aluminum Company of America, Kaiser Aluminum and Reynolds Metals does not mean demonopolization compared to the prewar period when ALCOA alone controlled the aluminum market.

The trusts were compensated for the loss of exclusive control of individual industries by the accelerated expansion of the monopolies beyond the confines of their traditional sectors. Even before World War II, combination and diversification gave rise to a new monopoly form, the concern. Over the past fifteen or twenty years, the conglomerate concern, with its multi-industrial structure developed to the hilt, has become common alongside the older multi-industrial concern. Concerns and conglomerates have become typical of today's monopolies.^^55^^

However, even setting aside the international aspects in the development of monopoly capital, one must say that the monopoly structure of capitalism is not confined to cartels, syndicates, trusts, multi-industrial concerns and conglomerates.

Let us now turn to the finance oligarchy groups. Some of them emerged as early as the beginning of the century, but evolved into a ramified system somewhat later. They represent the stage in monopolization which follows that of concerns. Finance groups bind together 64 different concerns, trusts and banking monopolies which begin to operate in a concerted fashion. The cementing elements used by finance groups include personal ties, the system of participation, and long-term financial links. The result is a cartel of sorts uniting concerns, trusts and other monopolies---a monopoly complex or finance group, i.e., a monopoly entity of a higher order than the trust or the concern. "Finance groups," the Soviet economist Stanislav Menshikov stresses, "obviously represent a higher, more developed stage in the monopolization of production and circulation than any other form of private monopoly association.''^^56^^

Finance groups change considerably with time. Family groups were typical of the early imperialist period---witness the Morgan, Rockefeller, Du Pont or Mellon empires. Subsequently, these groups became intertwined and formed broader coalitions---in the United States, the Chicago or the Texas groups. These represent a more mature form of finance groups themselves.^^57^^

However, even finance groups are not the pinnacle of the changed monop'oly structure of contemporary capitalism. The growth of statemonopoly capitalism could not fail to introduce substantial changes into the forms of monopoly organization. At the junctures between private monopoly associations and the state, new structures of an order even higher than those described above emerge---the state-- monopoly complexes. Given the swift rise of militarism, the military-state-monopoly, or simply the military-industrial complex has become the most developed form of these.

Objections are sometimes raised to this interpretation of the military-industrial complex. Proceeding from the fact that military-industrial __PRINTERS_P_65_COMMENT__ 5-349 65 concerns are controlled by different groups of high finance, some researchers conclude that the military-industrial complex is merely a part of the overall finance monopoly establishment, and not an independent entity. They hold that the concept of the military-industrial complex has been the result of purely speculative unification of heterogeneous and loosely connected elements into a single category.^^5^^" However, this conclusion does not seem sufficiently well substantiated. First and foremost, one should not make an absolute of the extent to which Wall Street and other finance centers control military concerns: each monopoly member of a finance group does enjoy a degree of independence. And, as finance groups evolve from family enterprises to coalitions, this independence does not diminish. Besides, ``original'' materialconcerns and trusts---coupled with government agencies, can produce a different monopoly structure, even though it is closely connected with and comprises some of the elements of the established finance groups.

Indeed, Standard Oil (now Exxon) has always been and remains to this day the foundation of the Rockefellers' finance group. At the same time, it has become one of the " Seven Sisters" which make up a different monopoly conglomerate, the International Petroleum Cartel. Similarly, the orientation of military concerns toward different finance groups does not rule out a community of interests, enhanced by the close ties they all maintain with the Pentagon and some other government agencies. This makes it possible to speak about the development of a new structural form in the imperialist period-H;he military-industrial complex. As it develops, military cpncerns remain integral parts of different finance groups. 66 Simultaneously, however, they now form a new state-monopoly entity. Besides, their ties to the military establishment and related government agencies have become more important for these concerns than their contacts with banking monopolies. Without destroying the existing system of finance groups, the military-industrial complex complements and develops the monopoly structure of imperialism.

As to the affiliation of military concerns with different finance oligarchy groups, this merely testifies to certain contradictions and friction within the military-industrial complex. There is equally stiff competition in the state sector of the complex too. Each military service, strives to land as many contracts as possible at the expense of its rivals. Top-level government officials try to secure advantages by manipulating both leaders of bourgeois political parties and arms manufacturers.

According to the US sociologist Alan Wolfe, "the Army has suffered under Nixon and Ford at the expense of the Navy and the Air Force. While the services are supposed to be non-- partisan, each one has its political constituents. The Navy has long been the preserve of the Eastern Establishment. The Air Force is a product of the newer riches of the Sunbelt, the West and Southwest.... Under Nixon and Ford, the Air Force was promised the B-l bomber, a decision that Carter has reversed in favor of the other services.... For reasons like this, the Air Force hates the Democrats.''^^59^^

One should not lose sight of the fact, however, that friction within the military-industrial complex is much weaker than the mutual attraction of its components.

The military-industrial complex is not a speculative construct comprising heterogeneous __PRINTERS_P_67_COMMENT__ 5* 67 elements but a functioning system which unites interconnected parts into a single whole on the basis of state-monopoly relations. As a form of monopoly organization of an order higher than the cartel, the syndicate, the trust, the concern and the finance group---a form with not only private monopoly amalgamations but also some of the biggest government agencies as its organic parts, the military-industrial complex expresses the general trend of further statemonopoly transformation of capitalism. It would be a mistake to overestimate the " amorphous nature" of this state-monopoly subsystem, although the military-industrial complex has not yet evolved into a clear-cut system with its own distinct structure, management pattern or program of action. Experts in social psychology could, in all probability, describe it as one of the "big informal groups.''

In the imperialist period, monopoly structure evolves, its different forms emerging at different times. The change in monopoly structure does not merely mean a realignment of its constituent elements---like ``new'' finance groups pushing ``old'' ones aside and changing the composition of the monopoly elite. More substantial change also takes place. New forms arise and develop, while the old ones either disappear or are relegated to the background, or absorbed by monopoly structures of a higher order. The conglomerate concern, the coalition finance group and the state-monopoly complex are the chief types of monopoly organization under contemporary imperialism.

The military-industrial complex is a logical product of militarization, monopolization, the growth of state-monopoly capitalism and the aggravation of the general crisis of capitalism. Military production and the opportunities to 68 profit from arms deliveries were born a long time ago. But profiteering is not the exclusive raison d'etre of the military-industrial complex.

Viewed as a special form of militarism, the military-industrial complex is a form of its selfadvancement. As both the means of production and money appeared long before capital did, weapons and war profiteers had been in existence long before the advent of the military-- industrial complex. It took certain conditions for value to become a form of its self-- advancement in the shape of capital, the transformation of labor into a commodity foremost among them. The self-advancement of militarism also requires certain conditions. One was the monopolization of the economy: under free-- competition capitalism, arms manufacturers were unable to dictate their terms on the market. The emergence of monopolies introduced to the bourgeois system relations of domination and consequently, of coercion.

But that was not enough. The era of imperialism in general---and the general crisis of capitalism and its aggravation in particular---generate a number of favorable conditions and opportunities for the self-advancement of militarism. This concerns basic structural changes, above all, the rapid development of state-monopcly relations in the military sector of the economy. These give rise to the military-state-- monopoly complex which strives for continual aggrandizement and blows militarization out of all proportion. The military-industrial complex skillfully uses the objective realignment of world forces in favor of socialism at the expense of capitalism to justify its aggressive designs, claiming to defend the "frontiers of democracy" from the mythical "Soviet military threat.''

69

Viewed in the context of state-monopoly capitalism, the military-industrial complex is its organic and far from marginal part, its subsystem---a distinct military-state-monopoly complex.

The military-industrial complex and the greater role it plays express the increasingly reactionary nature and decay of the bourgeois formation at the contemporary stage.

__*_*_*__

In the narrow sense of the term, the military-industrial complex is an informal statemonopoly alliance of two interconnected but essentially different elements---(1) the corporations producing and supplying armaments and forming the very basis of the complex, and (2) the departments of the armed services and their bureaucratic elites. Both elements are bound together firmly not only by their common interest in promoting militarism but also by the system of state-monopoly relations, including the contract system of arms purchases based on the principles of "direct negotiations" and "closed bidding." The revolution in military technology has turned this system into the chief coordinator of both the activities and the convergence of the corporations and the military and other government agencies. This is where the political superstructure of the militaryindustrial complex springs from.

Each major component of the military-- industrial complex holds a special place in its structure and must be examined individually. The weapons corporations form the bedrock of the military-industrial complex. And now let us analyze these in greater detail.

70

Chapter One

~^^1^^ Seymour Melman, Pentagon Capitalism. The Political Economy of War, McGrow-Hill Book Company, N.Y., 1970; Ralph E. Lapp, The Weapons Culture, W.W. Norton and Co., Inc., N.Y., 1968; Richard F. Kaufman, The War Profiteers, The Bobbs-Merril Company, N.Y., 1970; John Kenneth Galbraith, How to Control the Military, Doubleday and Co., N.Y., 1969, Richard J. Barnet, The Economy of Death, Atheneum, N.Y., 1969, and Roots of War, Atheneum., N.Y., 1972; Adam Yarmolinsky, The Military Establishment, Harper and Row Publishers, New York, 1971.

~^^2^^ John Kenneth Galbraith, Economics and the Public .Purpose, Houghton Mifflin Company, Boston, 1973, The Age of Uncertainty. Houghton Mufflin Company, Boston, 1977; Richard J. Barnet, The Giants; Russia and America, Simon and Schuster, N.Y., 1977; Seymour Melman, The Permanent War Economy. American Capitalism in Decline, Simon and Schuster, N.Y., 1974; George F. Kennan, The Cloud of Danger. Current Realities of American Foreign Policy, Little, Brown and Co., Boston-Toronto, 1977.

~^^3^^ See, for example, Robert Perucci and Mark Pilisuk, The Triple Revolution: Social Problems in Depth, Little, Brown and Co., Boston, 1968; Adam Yarmolinsky, The Military Establishment; Super-State; Readings in the Military-Industrial Complex, Eld. by Herbert I. Shiller and Joseph D. Phillips, University of Illinois Press, Urbana, Chicago, London, 1970.

~^^4^^ Sidney Lens, The Military-Industrial Complex, Pilgrim Press and the National Catholic Reporter, Kansas City, 1970, p. 145.

~^^5^^ War, Business and American Society. Historical Perspectives on the Military-Industrial Complex, National University Publications, N.Y., 1977, p. 4.
N.Y., 1977, p. 4.

~^^6^^ Ibid., pp. 43, 4.

~^^7^^ For example, Chapter One of War, Business and American Society is entitled "Nineteenth-Century European Military-Industrial Complexes.''

^^8^^ Defense Nationale, January 1979, p. 100.

~^^9^^ John Kenneth Galbraith, Economics and the 71 Publie Purpose, p. 139.

~^^10^^ John Kenneth Galbraith, The Age of Uncertainty, p. 288.

~^^11^^ Richard Barnet, The Giants: Russia and America, pp. 171, 173.

~^^12^^ Karl Marx, Capital, Vol. I, Preface to the First German Edition, Progress Publishers, Moscow, 1974, p. 21.

~^^13^^ V.I. Lenin, Collected Works, Progress Publishers, Moscow, Vol. 19, 1973, pp. 106-07.

14 "The building and equipment of a dreadnought must mean at least a quarter of a million in profits to the firm which secures the contract. Such a stake is worth an effort, and these firms are well equipped for the exercise of political and social pressure. The sharelist of Armstrongs alone includes the names of sixty noblemen or their wives, sons or daughters, ... eight Members of Parliament, five bishops, twenty military and naval officers, and eight journalists. Among those interested in these firms there were ... two Liberal Cabinet Ministers... and two members of the Opposition Front Bench. There is... a correspondence between these share-lists and the membership rolls of the Navy League and the National Service League." Quoted in: V. I. Lenin, Collected Works, Vol. 39, 1976, p. 642.

~^^18^^ In his "Notebooks on Imperialism" Lenin quotes the following passage from Brailsford's book: " Capital has no patriotism. A leading German firm turns out to be conducted by French directors. German firms are rebuilding the rival Russian navy. Britsh firms have branches in Italy which are building those Italian dreadnoughts that are represented as rivals to our own. The Nobel Trust and till lately the Harvey Company were formed of all the leading armaments firms, British, French, German or American...

``All over the world these forces, concentrated, resolute and intelligent, are ceaselessly at work to defeat the ... forces which make for disarmament and peace. The number of persons who have anything to gain by armaments and war is relatively small, when measured against the whole population of the civilized world. But their ... stake is large, and they work in alliance with Society... and with finance."Ibid., p. 643.

72

~^^16^^ Newsweek, August 24, 1981, p. 17.

~^^17^^ Tom Gervasi, Arsenal of Democracy. American Weapons Available for Export, Grove Press, N.Y., 1978, pp. 10, 12.

This calls to mind Bernard Shaw's Andrew Undershaft, the munitions baron from Major Barbara, and his credo: "To give arms to all men who offer an honest price for them, without respect of persons or principles: to Royalist and Republican, to Communist and Capitalist, to Protestant and Catholic, to burglar and policeman, to black man, white man and yellow man" ( Penguin Books, 1945, p. 154).

~^^18^^ International Meeting of Communist and Workers' Parties, Moscow 1969, Peace and Socialism Publishers, Prague, 1969, p. 143.

f9 Ibid., p. 32.

~^^20^^ 100th Anniversary of the Birth of V. I. Lenin, Moscow, 1970, p. 39 (in Russian).

~^^21^^ New Program of the Communist Party USA. The People Versus Corporate Power, New Outlook Publishers and Distributors, N.Y., 1982, p. 21.

^^22^^ Documents and Resolutions. The 26th Congress of the Communist Party of the Soviet Union, pp. 27-28, 102.

~^^23^^ Vadim Zagladin, "The Working Class, Socialism and Peace", Mirovaya Ekonomika i mezhdunarodnye otnosheniya (World Economy and International Relations),No. 11,1979,pp. 6,7.

In the Soviet Union, some aspects of the militaryindustrial complex have been discussed in several articles and in the following monographs: G. M. Kuzmin, Military-Industrial Concerns, Mysl Publishers, Moscow, 1974; B. D. Pyadyshev, The US Military-Industrial Complex, Voenizdat Publishers, 1974; V.M.Milshtein, The Military-Industrial Complex and U.S. Foreign Policy, Mezhdunarodnye Otnosheniya Publishers, Moscow, 1975; State-Monopoly Complexes, Ed. by A. Demin, Leningrad. University Publishers, Leningrad, 1979 (all in Russian).

~^^25^^ C. Wright Mills, The Power Elite, Oxford University Press, N.Y., 1956, p. 177.

~^^26^^ See J. Ronald Pox, Arming America. How the U.S. Buys Weapons, Harvard University, Boston, 1974, p. 26.

73

~^^27^^ V. I. Lenin, Collected Works, Vol. 25, 1980, pp. 420-21.

~^^28^^ V. I. Lenin, Collected Works, Vol. 28, 1977, p. 63.

~^^29^^ V. I. Lenin, Collected Works, Vol. 25, p. 361.

~^^30^^ Quoted in: Gilbert Green, The Enemy Forgotten, International Publishers, N.Y., 1956, p. 57.

~^^31^^ Paul A. C. Koistinen, The Military-Industrial Complex. A Historical Perspective, Praeger, N.Y., 1980, p. 57.

~^^32^^ Charles E. Merriam, Robert E. Merriam, American Government. Democracy in Action, Ginn and Company, Boston, 1954, p. 774.

~^^33^^ J. Ronald Fox, Op. cit., p. 26.

~^^34^^ Tom Gervasi, Op. cit, p. 28.

~^^35^^ Arms sales to private buyers are established practice in several capitalist countries, but their share in the overall weapons market is negligible.

~^^36^^ See Planning and Forecasting in the Defense Industries, Ed. by J. A. Stockfish, Wadsworth Publishing Company, Belmont, 1962, p. 146. The share of the government sector in the US defense industry continued to contract. For example, from 1965 to 1977 the number of government-owned military factories dropped from 135 to 89, and the number of machine tools owned by the Defense Department, from 195,000 in 1968 to 90,000 in 1977.

~^^37^^ V. I. Lenin, Collected Works, Vol. 25, p. 68.

~^^38^^ In Imperialism, the Highest Stage of Capitalism Lenin noted that "the development of capitalism has arrived at a stage when, although commodity production still `reigns'' and continues to be regarded as the basis of economic life, it has in reality been undermined... At the basis ... lies socialized production." (Collected Works, Vol. 22, 1977, pp. 206-07).

~^^39^^ "In trusts ... unplanned production of capitalist society bows to planned production" (Marx/Engels, Werke, Vol. 20, Dietz Verlag, Berlin, 1968, p. 617).

~^^40^^ V. I. Lenin, Collected Works, Vol. 24, 1980, p. 306. See also Marx/Engels, Werke, Vol. 20, p. 617.

~^^41^^ V. I. Lenin, Collected Works, Vol. 24, p. 306.

~^^42^^ J. Ronald Fox, Op. cit, p. 26.

~^^43^^ Government in the American Economy. Conventional and Radical Studies on the Growth of State 74 Economic Power, Ed. by Robert B. Carson et al., D.C. Heath and Company, Lexington, Mass., London, 1973, pp. 260- 61.

~^^44^^ V. I. Lenin, Collected Works, Vol. 22, p. 244.

~^^45^^ See G. M. Kuzmin, Military-Industrial Concerns, pp. 223, 227-28.

~^^46^^/bid., pp. 221-22.

~^^47^^ C. Wright Mills, Op. cit, p. 214.

~^^48^^ See Adam Yarmolinsky, Op. cit, pp. 60-64.

~^^49^^ Murray L. Weidenbaum, The Economics of Peacetime Defense, Praeger, New York, Washington, London, 1974, p. 76.

~^^60^^ John Kenneth Galbraith, Economics and the Public Purpose, p. 186.

~^^51^^ John Moody, The Truth About the Trusts, Moody Publishing Company, N.Y., 1904, p. 493.

~^^52^^ V. I. Lenin Collected Works, Vol. 22, p. 272.

~^^53^^ Ibid., p. 107.

~^^54^^ V. I. Lenin, Collected Works, Vol. 23, 1974, p. 44.

~^^55^^ See I. D. Ivanov, Modern Monopolies and Competition. Forms and Methods of Monopoly Practice, Mysl Publishers, Moscow, 1980 (in Russian).

~^^56^^ S. M. Menshikov, Millionaires and Managers. The Modem Structure of the US Finance Oligarchy, Moscow, 1965, p. 293 (in Russian).

~^^57^^ For further information on coalition groups see, V. S. Zorin, "Monopolies and Washington" in C7S4: Economy, Politics, Ideology, Nos. 7, 8, 1978; R. S. Ovinnikov, Wall Street and Foreign Policy, MO Publishers, Moscow, 1980; G. N. Tsagolov, Hick Billionaires. New Groups of US High Finance, Mysl Publishers, Moscow, 1968 (all in Russian).

~^^58^^ I. I. Beglov, The United States; Property and Power, Moscow, 1971, pp. 6, 39 (in Russian).

~^^39^^ The Nation, February 18, 1978, p. 168.

[75] __NUMERIC_LVL1__ Chapter Two __ALPHA_LVL1__ THE WAR
CORPORATIONS __ALPHA_LVL2__ [introduction.]

Widespread in the American literature of the 1970s were the concepts of ``diversification'' of military production and ``reorientation'' of military-industrial concerns toward closer links with civilian industries. For example, Professor Murray Weidenbaum, Chairman of the Council of Economic Advisers under President Eeagan, one of the better-known advocates of the military-industrial complex, wrote that "the great bulk of military contracts" went "to the giants of industry.... There has been a notable trend toward mergers' and diversification in the defense industry. Very few of the top military contractors now depend on defense work for as much as two-thirds or even one-half of their sales. Most of them have now become primarily oriented to other markets....

``Yet that one proposition that the giants of American industry monopolize defense contracts, appears to be firmly established in the mythology of the military-industrial complex. Moreover, their great dependence, it is alleged, on defense work gives them ample reason to favor extravagantly high levels of military spending. That myth should be dispelled.''^^1^^

But dispelling that myth is not as easy as it looks. Facts prove that there is an influential 76 group of monopoly corporations in the United States oriented primarily toward military production and therefore interested in the arms race.

__ALPHA_LVL2__ THE CHIEF
CONTRACTORS

It is true that many firms are involved in military production in the United States. Currently, 25,000 companies and agencies are primary contractors to the various branches of the Defense Department; many companies transfer part of their contracts to subcontractors who number over 100,000. These 125,000 contractors and subcontractors are active in scores of industries and in all the states. Not only the aerospace, electronics, shipbuilding and chemical but also the glassmaking, watchmaking, garment and food industries are involved, to varying degrees, in deliveries to the Pentagon. It is easier to list the corporations which receive no military contracts than those which share them. Not only Rockwell International but also Pepsico supply their products to the military. Not only monopolies but also thousands of small and medium-size businesses take part in military production. At first glance, this would seem to indicate that US capitalism has turned thoroughly militarist and that the military-industrial complex now covers the entire national economy. As, typically, some American researchers maintain, (M. Pilisuk and T. Hayden) it is not that the military-industrial complex is part of American society but American society itself is a military-industrial complex. Obviously however, it is wrong to equate the military-industrial complex with monopoly capital, let alone with the 77 entire nation. At best, this presents what is, today, merely a trend as a definitive reality; at worst, it removes the problem of the military-industrial complex as an issue in its own right and hampers the understanding of new phenomena, traits and contradictions of statemonopoly capitalism.

Despite the certain diversification of military production, most of it is in the hands of a very small group of corporations. Over recent decades some two-thirds of the Pentagon's contracts (in terms of value) have gone to only 100 companies and agencies (30 accounting for about one-half and ten---for approximately onethird). During the past 15 years the share of the biggest contractors in the overall amount of military contracts has remained quite stable (see Chart 1 and Tablel).

Concentration is especially great in the major weapons industries. Take the following statistics: 78 percent* of the total volume of shipbuilding contracts for the US Navy goes to only three firms---General Dynamics (its Electric Boat division), Litton Industries (its Ingalls Shipbuilding division) and Tenneco (its Newport News Shipbuilding division). Some 75 percent of all deliveries in the aerospace industry is made by nine corporations---McDonnell Douglas, Lockheed, Boeing, General Dynamics, United Technologies, Rockwell International, Hughes Aircraft, Grumman and Northrop. As few as ten companies have monopolized electronics---IBM, General Electric, RCA, ITT, Westinghouse, Honeywell, Sperry Rand, Litton Industries, Motorola and Texas Instruments. Often, the same companies---like Litton Industries or General Dynamics---appear among the top three, nine or ten firms in different industries.

To identify the composition of the private 78 sector of the military-industrial complex more precisely and to better reflect the alignment of forces in it, one should take into consideration the amount of the contracts received by the companies, the type of products delivered to the government's military agencies, the place of the given firm in the monopoly structure of the industry concerned and the share of military products in the overall output of the firm.

Such comparison between General Dynamics and Gulf Oil, both among the Pentagon's 100 biggest contractors, indicates that in 1982 General Dynamics, the foremost arms supplier, received 5.9 billion dollars' worth of contractsone might recall here that in 1940, when World War II was already being fought in Europe, the entire US military budget totaled only 1.5 __PARAGRAPH_PAUSE__

1940-1945 1951-1953 1958-1960 1965
Note: The top curve refers to the 100 and the lower, to the 30 companies. Compiled from: J. Ronald Fox, Arming America^ p. 44: Aviation Week and Space Technology, Feb. 2, 1976, p. 54; Oct. 22, 1979, pp. 74-75; July 7,1980, pp. 64-65; April 27, 1981, p. 200.

79

Table 1

Top 100 US Defense Department Contractors in Fiscal 1982*

Company
$Mln
Place 1981 1982

General Dynamics
5,891

3 1

McDonnell Douglas
5,630

1 2

United Technologies
4,208

2 3

General Electric
3,654

4 4

Lockheed
3,498

6 5

Boeing
3,238

5 6

Hughes Aircraft
3,140

7 7

Rockwell International
2,690

16 8

Raytheon
2,262

8 9

Martin Marietta
2,008

12 10

Grumman
1,900

9 11

Northrop
1,598

26 12

Westinghouse Electric
1,491

17 13

FMC
1,370

18 14

Litton Industries
1,316

11 15

Honeywell
1,217

22 16

International Business
Machines (IBM)
1,196

23 17

Sperry Rand
1,148

20 18

Radio Corporation of America 995

21 19

Ford Motor

896 33 20

TRW

868 34 21

Tenneco

844 15 22

Exxon

840 14 23

Texas Instruments

838 25 24

American Telephone and
Telegraph

752 24 25

General Motors

689 27 26

Congoleum

675 47 27

AVCO

667 37 28

Motor Oil Hellas

633 29 29

General Tire and Rubber

625 54 30

* The US fiscal year begins October 1 and ends September 30. All subsequent references are to fiscal years, unless indicated otherwise.

[80]

Company
$Mln
Place 1981 1982

Standard Oil Company of
California

603 19 31

Bendix

591 40 32

Teledyne

590 35 33

Textron

583 38 34

General Telephone and
Electronics

567 43 35

Singer

549 30 36

Ling- Temco-V ought

548 31 37

Phibro Salomon

520

-

38

American Motors

473 52 39

International Teleph. and
Telegraph

442 48 40

Guam Oil and Refining

436 36 41

Goodyear Tire and Rubber

423 51 42

Summa

420 84 43

North American Philips

409 45

44'

Todd Shipyards

404 39 45

You One Construction

371 37 46

First Colony Farms

369

-

47

Soberbio

355

-

48

Baton

336

-

49

Du Pont de Nemours Co.

326 94 50

Royal Dutch Shell

326 67 51

Standard Oil of Indiana

323 60 52

Hercules

308 55 53

Sanders Associates

308 75 54

Signal Companies

307 64 55

Mabco Prefabricated Bldg

292

-

56

Morton Thiokol

291 79 57

Motorola

287 72 58

Reyholds R.J. Industries

286 49 59

Gould

270 85 60

Harris

268 58 61

Atlantic Richfield

268

-

62

Pasific Resourses

265 61 63

Mobil

254 46 64

Pan American World Airways

252 63 65

AGIP

247 56 66

Science Applications

236 81 67

Aerospace

236 74 68

Johns Hopkins University

236 76 69 [81]

Company
$Mln
Place 1981 1982

Perm Central

234 73 70

Gulf Oil

220 93 71

Massachusetts Inst. of
Technology

219 82 72

E-Sy stems

214 57 73

Burroughs

214 80 74

Kaman

208

-

75

Sun

203 71 76

Duchossois Thrall Group

190 96 77

Oshkosh Truck

182

.

78

Coastal Dry-Dock Repair

182

-

79

Emerson Electric

182 65 80

Morrison-Knudsen

182 91 81

Fairchild Industries

179 41 82

Williams Int.

176 86 83

Control Data

175 83 84

HBH

175

-

85

Hospital Corp. of America

166

-

86

Mitre

167 90 87

Texaco

166 50 88

Hanil Dev. Co. Ltd. and
AL. Mabani JV

164

-

89

Getty Oil

162 59 90

Gulf States Oil

161

-

91

Varian Associates

156

-

92

Hewlett-Packard

152

-

93

Kuwait Petroleum

151 99 94

United Industrial

143

-

95

Mi Ryung Construction

141

-

96

Peterson Builders

139

-

97

Sun Chemical

139

-

98

Transam erica

138 100 99

Norris Industries

135

-

100

Source: Aviation Week and Space Technology, May 30, 1983.

__PARAGRAPH_CONT__ billion dollars. F-16 fighter planes, the Trident submarine-based missile system, Tomahawk cruise missiles and other materiel accounted for over two-thirds of all its sales. General Dynamics 82 is among the leaders in the aerospace and shipbuilding industries, and its ties with the Pentagon are very important to it. Significantly, it has long employed retired high-ranking Pentagon officers.^^2^^ Gulf Oil presents a different picture. In terms of the size of its military contracts (worth 162 million dollars in 1982), this company held the 90th place. Military deliveries make up less than one percent of its sales. Gulf Oil deals not in weapons but in petroleum products. Oriented almost exclusively toward the civilian market, this company can virtually ignore the Pentagon. Hence no retired generals or admirals on the Gulf Oil payroll.^^3^^

Among the Pentagon's 100 top contractors, General Dynamics and Gulf Oil represent two opposite extremes. IBM is a good example of a company in between. Although one of the chief suppliers of electronics to the military, it sells over 90 percent of its products on the civilian market. Still, its military contracts are important to it, and it employs retired highranking army officers.

It thus appears possible to divide the top military contractors into three groups. The first includes General Dynamics and some 30 companies, including Lockheed, McDonnell Douglas, Grumman, Northrop, Hughes Aircraft, Fairchild Industries, Sanders Associates, Chamberlain Manufacturing, Day and Zimmerman, Loral, Vinnell, and Sverdrop and Parcel. The second, together with IBM, is represented by some 40 firms like General Electric, Chrysler, Westinghouse, Teledyne, Texas Instruments and Hewlett-Packard. The third comprises Gulf Oil and about 15 companies, including Exxon, Standard Oil of California and Mobil.

The companies in the first group are, and those in the third group are not, part of the __PRINTERS_P_83_COMMENT__ 6* 83 military-industrial complex.^^4^^ The complex also includes the military divisions of the firms in the second group. In their efforts to secure military contracts, these divisions are backed by the might of their parent companies who, although producing mostly civilian goods, have no intention of losing this source of profit. For example, up to 1982 the multibillion-dollar contract for the XM-1 tank not only guaranteed to Chrysler powerful government protection but also offset the losses it suffered on the automobile market. American researchers also stress that some of the mostly civilian companies are increasingly turning to military production. For example, Richard Kaufman writes in his book The War Profiteers that "whether defense contracts represent five percent or fifty percent or more of a corporation's annual sales, they become a solid part of the business, an advantage to maintain or improve upon. A company may even work harder to increase its military sales than it does to build commercial sales, because military work is more profitable in many ways, less competitive and more susceptible to control through lobbying in Washington.''^^5^^

Aside from the Defense Department, there are two more government agencies in the United States devoting at least half their efforts to military purposes---the Energy Department which now performs the functions of the Atomic Energy Commission and the National Aeronautics and Space Administration (NASA). True, NASA's biggest suppliers are mainly those on the list of the Pentagon's top 100 contractors. But the Energy Department has its own contractors who manufacture nuclear weapons and are part of the private monopoly elements of the military-industrial complex. Foremost among them are Union Carbide, Idaho Nuclear, 84 Goodyear Atomic and Monsanto.

It appears that small companies specializing in deliveries of individual parts to giants like General Dynamics do not belong to the military-industrial complex. Naturally, one can hardly draw a dividing line between companies which are part of the military-industrial complex and those merely adjacent to it---there are various "transitional forms" here. To understand whether a given company is or is not part of the military-industrial complex, one should see whether the operations, of this company conform to the special military-state-monopoly relations which are basic to the military-industrial complex. At the same time, small and medium-size military-industrial companies provide an important support base to the military-industrial complex. Within the orbit of the 100 top Defense Department contractors there are some 30,000 permanent satellite subcontractors through which the monopolies of the complex bring pressure to bear on the political decision-making process. Tied to the war juggernaut, these small businesses provide fertile ground for reactionary political and ideological trends.

Although the corporations comprising the military-industrial complex often transfer some 50 percent of their contracts to other companies and the number of subcontractors involved in military production sometimes reaches several thousand this does not at all mean any significant decrease of the concentration and monopolization of the military business. According to American press reports, Lockheed, the prime contractor for the C-5A military cargo plane, directed the work of over 4,000 subcontractors. The biggest primary contractors are also awarded the biggest (in terms of value) part of the subcontracts. When the struggle for the primary 85 contract is over, some of the work is usually handed over---either directly or as subcontracts---to the competitors who have lost. In the spring of 1980 Boeing beat General Dynamics to a four-billion-dollar contract for airbased cruise missiles. But the Pentagon involved General Dynamics in the production of a certain part of the missiles designed by Boeing. Boeing's top 20 subcontractors include its chief aerospace competitors---United Technologies and Northrop.^^6^^

As science and technology advance, this kind of cooperation becomes typical of the private sector of the military-industrial complex, due not least to the growing specialization in the manufacture of different components of weapons systems. For example, William Research, a company involved in the Boeing missile program, is well-known for its small-size turbine engines for cruise missiles and reconnaissance planes. Northrop manufactures the rear part of the fuselage for the new F/A-18 fighter planes produced by McDonnell Douglas. However, this cooperation mostly reflects the way the private monopoly elite of the military-industrial complex shares the military contracts; it also aids the complex in further consolidating its positions and coordinating its activities.

To sum up, although the military-industrial empire has no clearly defined boundaries, its private monopoly nucleus is quite easily perceived---it is the 75 to 80 biggest military contractors manufacturing various weapons systems or their major components. The corporations of the military-industrial complex make up a •sizable part of the overall monopoly structure of the United States. This does not mean, however, that the biggest military contractors are the biggest US monopolies. In 1979, the four 86 largest US industrial corporations---Exxon, General Motors, Ford and Mobil---held, respectively, the 24th, 33rd, 26th and 48th place in the hierarchy of the Pentagon's clientele. Meanwhile, the top four military contractors---General Dynamics, McDonnell Douglas, United Technologies and Lockheed---appeared, respecively, 83rd, S4th, 26th and 82nd in the list of the 500 biggest US industrial corporations annually published by Fortune magazine." Throughout the 1960s and 1970s cases of overlapping between the Pentagon's top 100 contractors and the 100 biggest US industrial corporations fluctuated between 40 and 47. Since over recent years the share of nonindustrial enterprises and agencies among the Pentagon's top 100 contractors has grown perceptibly, overlapping has increased too. The higher the companies' level, the greater the overlapping. Of the top 50 companies listed in Fortune magazine, 27 are among the Pentagon's top 100. Meanwhile, the top 33 of the Pentagon's contractors (except for Fairchild Industries and Todd Shipyards) are among, the 200 biggest US industrial firms. Hence Richard Kaufman's remark about the "enormous attraction of military and militaryrelated contracts for the upper tiers of industry".^^8^^

__ALPHA_LVL2__ ON TOP OF THE WAR
BUSINESS HEAP

It is important to note that the composition of the private sector of the military-- industrial complex remains relatively constant. A comparison of the 1970 and the 1982 lists of the top 100 military contractors shows that 65 companies appear on both. The higher the status 87 of the company, the easier for it to keep its place. Of the upper 45 companies on the 1970 list, only three failed to make the 1982 roster. Rotation frequency is greatest among the companies manufacturing not weapons but products used on the civilian market---that is, the corporations outside the military-industrial complex. The core of the complex is especially stable.^ Since the 1960s Lockheed, United Technologies, McDonnell Douglas, General Dynamics and General Electric have invariably been among the top ten contractors of the Pentagon.

However, a look farther back shows that acute competition and changes in military requirements have realigned the composition of the war business elite. Some 30 years ago, during - the US aggression in Korea, General Motors was the biggest military contractor: it produced tanks and other conventional armaments. The aerospace boom of the 1950s and 1960s pushed other companies to the front ranks, and in the early 1980s General Motors was relegated to the 27th place.

Recently, General Dynamics has been gaining ground as one of the chief suppliers of the Pentagon. In 1976 and 1977 it was the seventh and eighth biggest military contractor, but in 1978 it emerged on top of the heap. That year General Dynamics contracts tripled and reached 4.2 billion dollars. In 1979 and 1980 the corporation remained the financial leader in military production. In 1981 it lost the lead because the US Navy complained about some of the submarines the company produced and delayed the signing of new contracts. But in 1982 General Dynamics was again on top, delivering 5.9 billion dollars' worth of products to the Pentagon. By 1985 it is expected to receive military contracts worth 7.5 billion dollars.^^10^^

88 099-11.jpg

W9fSF&&\ .*«. .
-' W3te - '
^»aK»4s«fa*flft«STr': "i»n* -^ .
-. -

__CAPTION__ Los Angeles class submarine 099-12.jpg __CAPTION__ F-16 fighter bomber [89] 099-13.jpg __CAPTION__ F-15 fighter-bombers on the1
assembly line

The success of General Dynamics is explained by its involvement in the biggest modern military programs. It is the chief contractor producing Ohio and Los Angeles-class missile-carrying nuclear submarines for the Navy, F-16 fighter planes for the Air Force and M-l Abrams tanks for the Army. Besides, GD manufactures Tomahawk long-range cruise missiles, Standard, Phalanx and Stinger tactical missiles and takes part in the MX ICBM program---one of the most expensive.^^11^^

McDonnell Douglas led in the value of military contracts from 1975 to 1977 and in 1981. In 1982 it lost this position to General Dynamics, but its contracts continue to grow---from 2.6 billion dollars in 1977 to 2.9 billion in 1978, to 3.2 billion in 1979 and to 5.6 billion in 1982. 90 099-14.jpg __CAPTION__ F-15 advertised Most contracts are connected with the production of F-15 fighter-bombers for the Air Force, F-18 fighter planes for the Navy, F/A-18 planes for both these services, modified DC-10 planes for the Rapid Deployment Corps and Harrier VTOL planes for the Marine Corps. The company also manufactures Harpoon antisubmarine missiles, Dragon antitank missiles, and Phantom and Skyhawk fighter planes.

United Technologies has been among the top 91 099-15.jpg __CAPTION__ Helicopter gunship made by Hughes
Aircraft three military contractors since 1977. In 1978 its contracts increased 51 percent compared to the previous year (by 815 million dollars) and in 1979 reached 2,554 million dollars (155 million dollars more than in 1978). The figure for 1980 was 3,026 million dollars, for 1981, 3,679 million, and for 1982, 4,070 million dollars. Its Pratt and Whitney division manufactures engines for F-14 (chief contractor Grumman), F-15 and F-16 fighter-bombers and AW ACS planes. The Sikorsky division produces Lamps-2 helicopters for the Navy, CH-53E helicopters for the Rapid Deployment Corps, as well as Blackhawk and antitank helicopters for the Army.

Hughes Aircraft expanded its contracts by 35 percent in 1978 compared to 1977 and moved up from the ninth to the eighth place in the group of the Pentagon's biggest contractors. In 1982 it was the seventh largest supplier of the Defense Department. The corporation's chief contracts are connected with Phoenix, TOW and Roland missiles, TRAM and FLIR electronic systems, laser and space weapons, 92 099-16.jpg __CAPTION__ Boeing-made air-launched cruise
missile reconnaissance equipment and combat helicopters. The darling of the CIA, Hughes Aircraft performs classified government assignments.

Between 1977 and 1981 Boeing's contracts kept near the 1.5-2.8 billion-dollar mark, setting it back from the fourth to the fifth place in 1981 and to the sixth in 1982. Its major contracts involve the production of AW ACS and modified B-52 planes. In early 1980 the Defense Department selected Boeing as the chief contracDepartment selected Boeing as the chief contractor for the ALCM-B air-launched cruise missile program. This boost is expected to expand its contracts considerably in the near future.

Litton Industries. In 1978 its military contracts value rose 167 percent compared to 1977, transferring it from the 16th to the sixth place on the list of the Pentagon's top 100 contractors. In 1981 Litton Industries held the llth and in 1982, the 15th place. A large part of its contract work is performed by the Ingalls Shipbuilding division which produces DD-963 and Aegis destroyers. Litton Industries also manufactures many sophisticated electronic systems indispensable for modern weaponry.

93 099-17.jpg __CAPTION__ AWACS reconnaissance aircraft

---/ \ I
r^^si^'W

099-18.jpg __CAPTION__ F/A-18 Hornet fighter and its
deadly weaponry [94] 099-19.jpg __CAPTION__ A Harpoon missile

Lockheed slipped from the second place in 1977 to the fifth in 1982. Nevertheless, the amount of its contracts kept increasing: by 30 percent in 1978 compared to 1977. In 1979 the value of its contracts was 1,797 million dollars---10 percent higher than in 1977. The figure for 1980 was 2,037 million, for 1981, 2,657 million, and for 1982, 3,498 million dollars. The bulk of the contracts are for TR-1 reconnaissance planes (a modification of the U-2), P-3C antisubmarine planes for the Navy, CX and C-5 transport planes for the Rapid Deployment Corps and Trident-I missiles.

Grumman. Since 1977 the values of its contracts have invariably exceeded 1.2 billion dollars: 1,364 million in 1979 and 1,900 million in 1982, making it the eleventh biggest military contractor. Grumman's chief products are F-14 fighter-bombers for the Navy, A-6 planes and EA-68 and EF-111 electronic warfare planes.

Raytheon moved from the llth place in 1977 to the ninth in 1982 (2,262 million dollars' 95 099-20.jpg __CAPTION__ A B-52 releases a cruise missile during
trials worth of contracts). Raytheon specializes in rocketry and produces surface-to-air and air-- toair Patriot, Sparrow and Sidewinder missiles.

Rockwell International and Northrop dropped out of the top ten military contractors. The amount of Rockwell's contracts decreased from 1,480 million dollars in 1977 to 890 million in 1978 to 684 million in 1979---less than half the 1977 figure. This was due mostly to the Carter administration decision to cancel the B-l contract. In 1981 Rockwell's military contracts were worth 1,125 million dollars. From the sixth place in 1977 the company dropped to the 15th in 1979. Rockwell's big hope is the MX program to which it is a contractor. Besides, on October 2, 1981 the Reagan administration decided to revive the plans to produce the B-l bomber. As a result, in 1982 the company moved to the eighth place and its contracts were worth 2,690 million dollars. Northrop's lag was explained primarily by the cancellation of several foreign arms deals. Northrop also expects much from the MX program 96 099-21.jpg __CAPTION__ Aegis class destroyer [97] 099-22.jpg __CAPTION__ C-5 military transport plane 099-23.jpg __CAPTION__ F-14 fighter-bomber [98] 099-24.jpg __CAPTION__ Sparrow missile 099-25.jpg __CAPTION__ A Fairchfld A-10 antitank plane __ALPHA_LVL0__ The End. [END] [100] Emacs-File-stamp: "/home/ysverdlov/leninist.biz/en/1985/WITB291/20100314/199.tx" Emacs-Time-stamp: "2010-03-18 17:21:11" __EMAIL__ webmaster@leninist.biz __OCR__ ABBYY 6 Professional (2010.03.18) __WHERE_PAGE_NUMBERS__ bottom __FOOTNOTE_MARKER_STYLE__ nil __ENDNOTE_MARKER_STYLE__ [0-9]+ for which it develops the homing system. Its best prospects, however, lie with the contract for the manufacture of the Stealth strategic bomber it was awarded in late 1981.^^12^^

__ALPHA_LVL2__ THE
MILITARYINDUSTRIAL COMPLEX:
FADING AWAY?

As noted earlier, the claim that militaryindustrial concerns were headed toward `` demilitarization'' was quite popular with bourgeois economists in the 1970s. US experts maintained that the allegedly considerable decrease in the dependence of the corporations on military production was ``eroding'' the military-industrial complex. The civilian production trends are supposed to completely defuse the problem of the military-industrial complex since, according to

199-1.jpg

B-l bomber

199-2.jpg

Aircraft carrier Midway with dozens of warplanes

Murray Weidenbaum, "if defense work were so widely distributed' that each firm only devoted 5 to 10 percent of its efforts to it, the concern over the `complex' probably never would have arisen.''^^13^^-

Let us consider data regarding the top 16 military-industrial concerns in the United

101

States. Let us take the amount of the contracts they received from the Pentagon from 1970 to 1978 and the share of these contracts in these companis' overall sales in the same period (see

199-3.jpg

General Electric products advertised

Table 2), and call the latter the degree of their involvement in military production. Let us then compare these figures to these firms' record in the 1960s and see whether these arms manufacturers have grown less dependent on military production to such a degree that, as Mr. Weidenbaum claims, "it must be recognized that the situation has changed.''^^14^^ The comparison does indicate a certain trend toward a lesser degree of involvement---but not significant enough to warrant any reference to an essential change. The Pentagon's two biggest contractors still depend more than 70 percent on military contracts. The degree of involvement in military production of General Dynamics, Grumman and Litton Industries has increased. Besides, in many cases this degree is much higher because the companies in question receive additional military contracts from NASA and the Energy

199-4.jpg

life

Sperry Rand advertises its products

Department. For example, in 1977 Rockwell International secured 1,011 million dollars' worth of contracts from NASA---in addition to the 1,480 million from the Pentagon.^^15^^

Table 2. Degree of Involvement in Military Production

1. Lockheed

15,654

83 57

2. McDonnell Dou-

glas

15,232

75 56

3. General Dyna-

mics

14,410

67 72

4. General Electric

11,844

19 10

5. United Tech-

nologies

11,181

57 34

6. Boeing

10,524

54 29

7. Grumman

9,408

67 89

8. Hughes Air-

craft

7,591

75 75

9. Rockwell In-

ternational

7,479

57 20

10. Litton In-

dustries

7,207

25 27

11. Raytheon

6,574

55 36

12. Northrop

5,374

61 60

13. Textron

4,401

36 22

14. Sperry Rand

4,219

35 18

15. Ling-Temco-

Vought

3,629

70 10

16. Martin-Marietta

2,698

62 25

Compiled from: Seymour Melman, Pentagon Capitalism. The Political Economy of War, McGraw-Hill, N.Y., 1970, pp. 77-78; Aviation Week and Space Technology, Nov. 25, 1974, p. 62; May 1, 1978; Oct. 22, 1979; Newsletter, Sept. 5, 1979.

Table 3

Top US De-

Primary

military

Dependence

fense Depart-

contracts

percentage

ment con-

($mln)

tractors

1977 1982

. 1977

1982

General

Dynamics

1,372

5,891

47 98

McDonnell

Douglas

2,574

5,630

71 78

United Tech-

nologies

1,587

4,208

29 36

General Elect-

ric

1,520

3,654

9 14

Lockheed

1,574

3,498

46 64

Boeing

1,579

3,239

36 37

Hughes Air-

craft

1,093

3,141

64 90

Rockwell In-

ternational

1,480

2,690

25 35

Raytheon

1,041

2,262

36 41

Martin-Marie-

tta

426

2,008

30 58

Sources: Newsletter, Sept. 5, 1979; Aviation Week and Space Technology, May 30, 1983, pp. 350-367; Fortune, May 2, 1983, pp. 228-237.

Here, three major points should be made.

First, the trend toward lesser involvement was present only in the first half of the 1970s, when the end of the Vietnam War and the improved US-Soviet relations temporarily dampened the growth of US military spending. Since 1977 the military-industrial concerns have expanded military production and their involvement has

again risen perceptibly. For example, this figure increased significantly for five out of the top ten military contractors in 1982 compared to 1978 (see Table 3). In 1983, the upsurge of militarism strengthened this trend.

Second, the drop in the degree of involvement was mostly due to expanded civilian production and not to a decrease in the value of military contracts.

Third, even if a given company produces mostly civilian goods, this does not rule out its considerable interest in military production as the surest way of profitable business.

__ALPHA_LVL2__ THE ARMS EXPORTERS

Despite the intention to cut arms exports announced by President Carter at the beginning of his term, arms sales to foreign countries continued to grow: in the 1960s, US arms deliveries averaged one billion dollars a year; in the late 1970s, ten billion dollars, and in 1983, some thirty billion dollars. A large share of these sales is transacted by 25 companies, most of them among the Pentagon's top 100 contractors (see Table 4).

In 1977, the total amount of the sales of US military goods and services abroad (11.2 billion dollars) was more than, double that of the export contracts the Defense Department awarded to private companies since training of personnel, military construction and some other forms of administrative and technical support are conducted directly by government agencies. For example, the US Army Corps of Engineers is engaged in a construction project in Saudi Arabia estimated at several billion dollars.

Significantly, the Pentagon's seven biggest

106

Table 4

Top 25 Recipients of US Defense Department Arms Export Contracts in 1977

Corporation

Value of contract ($ thousand)

1. Northrop

853,022

2. McDonnell Douglas

446,134

3. Lockheed

305,226

4. General Dynamics

303,322

5. Grumman

252,314

6. General Electric

220,956

7. Hughes Aircraft

156,092

8. Raytheon Co.

149,022

9. MI Ryung Construction

137,710

10. Litton Industries

120,941

11. You One Construction

106,429

12. United Technologies

87,102

13. Peterson Buflders

79,193

14. Saudi Tarmac and Saudi OS

77,247

15. Textron

73,540

16. Westinghouse Electric

70,986

17. Ford Motor

42,260

18. Harsco

39,698

19. Texas Instruments

34,554

20. American Telephone and Telegraph

26,773

21. Chamberlain Mfg

26,099

22. Singer

22,224

23. American Motors

22,805

24. Teledyne

21,241

25. Hercules

19,879

Total for the 25 companies

3,595,277

Total US Defense Department contracts

to private firms

4,449,536

Source: Newsletter, Dec. 18,1978.

Table 5

Dependence of Corporations on Foreign Arms Sales ($ mln)

Corporation

Year

•total

Defense

Foreign

Percen-

sales

Dept.

arms

tage of

contracts

con-

foreign

tracts

arms con-

tracts in

total

Defense

Dept.

contracts

1. Northrop 1977 1,601 1,047 853 81.5

1976 1,265 1,480 1,292 87.3

2.

McDonnell

Douglas

1977

3,

545

2,574

446

17.3

1976

3,544

2

,465

480

19.

5

3.

Lockheed

1977

3,

373 1

,573

305

19.

4 1976

3,

203 1

,510

139

9.2

4.

General

Dynamics

1977

2,

901 1

,371

303

22.

1 1976

2,

553 1

,073

46

4.3

5.

Grumman

1977

1,

564 1

,428

253

17.

7 1976

1,

523 982 304

31.

0

6.

General

Electric

1977

16,

519 1

,520

221

14.

5 1976

15,

697 1

,347

248

18.4

7.

Hughes

Aircraft

1977

1,

700 1

,093

156

14.

3 1976 910 174

19.

1

8.

Raytheon

1977

2,

818 1

,041

149

14.

3 1976

2,

463 784 219

28.

0

9.

Litton

Industries

1977

3,

443 609 121

19.

8 1976

3,

369 978 158

16.

4

Source: Newsletter, Dec. 18, 1978.

contractors are among the top 12 exporters of US weapons. Table 5 shows their dependence on foreign arms sales which account for an average of 25 to 30 percent of the total volume of contracts secured by the military-industrial corporations.

In the late 1970s and early 1980s Northrop was the biggest arms exporter, with sizable contracts from Saudi Arabia, Egypt, Indonesia, Sudan and Thailand. Recently, McDonnell Douglas has become increasingly dependent on foreign arms sales: in 1978 it received a 2.5 billion-dollar contract from Saudi Arabia for the delivery of 60 F-15 fighter-bombers. That same year 15 F-15s were offered to Israel for 431 million dollars and eight to Japan for 144 million. Throughout 1978 the company also received orders for its products from the FRG, Spain, Sweden and Australia totalling 3.7 billion dollars.

The Near and Middle East, and Western Europe are among the chief destination areas for US arms exports. Over the 1970s, Saudi Arabia purchased 35 billion dollars' worth of American military products; Iran spent 14 billion, and Israel, 11 billion dollars. Great Britain, the FRG and South Korea each bought some five billion dollars' worth, while Egypt, the Netherlands, Taiwan and Japan averaged three billion each.

A salient feature of US arms exports is a rise in the sales of the latest types of armaments--- F-14, F-15 and F-16 combat planes, Lance missiles, and tanks. In the early 1980s the Pentagon had about 56 billion dollars' worth of foreign orders for the delivery of almost 1,000 planes and helicopters, 150- naval vessels, 1,100 tanks, 4,200 armored personnel carriers and over 100,000 missiles of various types.^^16^^

Describing the arms exports policy of the Reagan administration, U.S. News and World Report noted on March 16, 1981 that Washingtpn was escalating foreign arms sales brushing aside the restrictions imposed by the former administration and that pragmatic and not moral considerations were expected to prevail. This implies still greater dependence of the military-industrial corporations on arms exports.

__ALPHA_LVL2__ MILITARY SUPERPROFITS

Spokesmen of the military-industrial complex claim that military production does not pay really well and explain involvement in it mostly by a patriotic commitment to strengthening the nation's defenses. Economists connected with the military-industrial complex maintain that "some increase in profits on defense contracts may be necessary to restore the financial health of the defense industry".^^17^^ The chief argument marshaled to support these assertions is the fact that the correlation between the profits and the value of the products sold (volume of sales), is, as a rule, the same or even lower in the biggest military-industrial firms compared to the commercial civilian sector. The correlation between the profits and sales volume is one of the several gauges offered by bourgeois statistics to measure the rate of profit and used widely by the Pentagon. "It is difficult, however," an American expert has remarked, "to find individuals in the business world who would make investments or evaluate companies on this measure of profit". *~^^8^^

There is a catch here. A contractor making wide use of government-owned factories and equipment and drawing "progress payments" invests comparatively little in military produc-

tion. For example, if a company receives one million dollars in profits from a ten-- milliondollar contract having spent only two million of its own capital, the profit-sales volume correlation would be ten percent, while the actual rate of profit from the capital advanced by the company would be 50 percent. The fallacy of the criterion used by the Pentagon was highlighted during the court inquiry into the affairs of North American (later renamed Rockwell International). The Department of the Air Force and the company maintained that the rate of profit, represented by the profit-sales ratio, was eight percent. The court, however, ruled that the firm's rate of profit on its own investment was 802 percent.

Facts prove that military production in the United States is much more profitable than civilian business. Let us compare the rates of profit on equity capital invested between, on the one hand, six military corporations (Lockheed, McDonnell Douglas, General Dynamics, Grumman, Northrop and Fairchild Industries) and, on the other, six civilian ones (Republic Steel, International Paper, National Steel, Levi Strauss, Associated Milk Producers and American Bakeries). The choice of companies highly dependent on military production (the first group) makes it possible to minimize the margin of error due to the fact that divisions of these corporations produce civilian goods too. Besides, reports, reference editions, and the press usually quote only overall profit figures, without singling out the part for which military contracts are responsible. Thus a company may profit greatly from military production while incurring losses in the civilian sector---with the financial report giving the mean figure.

In terms of sales volume, the two groups

were about equal from 1976 to 1978 (14,776 million and 15,344 million dollars respectively). However, Table 6 shows that the difference between military and civilian corporations in profit rates is, on the average, 57 percent.

An analysis of 146 military contracts conducted by the US General Accounting Office has put the return of equity capital invested at 56 percent.^^19^^ In the late 1970s this figure was about 14 percent for the 500 biggest industrial corporations in the United States.

Table 6

Average Percentage of ECI Returns for Military and Civilian Corporations

Type of corporations

1976 1977 1978

1976-1978 average

Military 16.0 17.4 16.0 16.5 Civilian 11.2 9.8 10.4 10.5

Advantage in military corporations' ECI returns, % 42

76 54 57

Calculated from: Fortune, May 1977-1979; Moody's Industrial Manual, 1977-1979.

Besides, the monopolies of the military-- industrial complex are able to draw not only direct but also indirect profits. Since arms prices are chiefly established in the course of direct negotiation, this field of competition is closed to most of the other private capital sources. Besides, the companies gp to great lengths to inflate production costs: the higher the estimated cost of the program the higher the con-

tract fees. "A new kind of enterprise has become characteristic of military industry," the US economist Seymour Melman notes in his book The Permanent War Economy. "This firm maximizes cost and maximizes subsidies from the state management.''^^20^^

Raising the salaries of top-level executives, expense accounts and other costs hard to monitor, the corporations of the military-industrial complex kill two birds with one stone. The larger the sums which are in fact part of the profits disguised as an element of production costs, the higher the officially declared costs. The disguised profits, made tax-deductible by various tricks, are wholly retained by the managers and owners of military-industrial corporations.

Contrived inflation of production costs is particularly easy when the so-called indirect costs are calculated. Unlike direct costs, indirect ones are not estimated in exact figures during the negotiations but are assessed as a percentage of the former---at 100, 150 or even 250 percent. A pricing director of a military corporation once remarked: "Time after time, I have found that the government contracting officer is much more interested in the indirect rate than he is in the amount of indirect costs or what is or is not included in the indirect costs accounts. I have been told: 'get your indirect rate down to 105 percent, and I don't care what you do with those costs.' "^^21^^ US researchers have concluded that had the military-industrial firms been motivated to cut down on indirect costs, they could be reduced by 25 to 35 percent without affecting efficiency.^^22^^

Considerable differences in profit rates between prime contractors and subcontractors and between major military concerns and smaller businesses are typical of the military indus-

113

try. For example, according to the US General Accounting Office, "prime contractors show a higher return on investment on military work than do companies that specialize in subcontracts. In part, the difference is accounted for by the fact that the prime contractors pass very little of the progress payments they receive from the government on to their subcontractors. Also, the subcontractors obtain very little in the way of government-owned facilities, whicl tend to be concentrated among the prime contractors.

``Large defense contractors show a higher profit rate on military work than do smaller companies.... Again, the latter receive very little government capital.''^^23^^

In other words, there is no single profit rate universal for the war industry. The big corporations, closely connected with the government military agencies and using government capital freely to their own advantage, reap superprofits. Progress payments, i.e., the working capital supplied to contractors by the government, are growing rapidly: from 1964 to 1970 they increased from three to ten billion dollars. Without these subsidies, the companies would have had to borrow and pay over one billion dollars in interest.

Military concerns often use governmentowned facilities to produce civilian goods. This enables them to make an additional profit on the civilian market. The overall high returns they receive are stable and guaranteed. As Richard Kaufman notes, "no large prime contractor has ever lost money on a contract with the Defense Department.''^^24^^ Military production is so lucrative because the war industry is highly monopolized and because there is only one customer. Hence the particularly accomplished

114

nature of monopoly in military productioncalled "bilateral monopoly" in the United States.^^25^^

Military superprofits are the privilege of only a handful of the biggest arms manufacturing corporations. The overwhelming majority of the companies involved in the arms business have no access to government funds, no close Pentagon connections and insufficient bargaining power. Their rates of profit differ little from those in any other commercial business. The bigger corporations of the military-industrial complex deprive the subcontractors of any opportunity to make an additional profit. And, when several giants work together, the share of each is in proportion to its strength.

Since the concentration of profit exceeds the concentration of contracts by 50 to 100 percent, the obvious conclusion is that the 50 biggest Defense Department contractors who are awarded some 60 percent of all the military contracts have cornered 80 or 80-odd percent of the total profits in the US military industry. The opportunity to make guaranteed and stable profits greater than in other industries helps the private sector of the military-- industrial complex to develop especially rapidly. The new militarist upsurge has made the war business even more lucrative: in 1980, Boeing's net (after tax) profits rose 18,8 percent compared to 1979 and reached 600,500,000 dollars; Tenneco hiked its profits 27 percent (to 726,000,000 dollars) and United Technologies, 20.8 percent (to 393,400,000 dollars).^^26^^

Anticipating a rise in profits, investors and speculators push the stock of military-industrial monopolies upward. .The following table showing the rise of the stock of America's eight biggest military concerns since the first half

of the 1970s highlights the scope of the profits derived from the arms race, spurred on by the Carter and especially the Reagan administrations.

Companies

Lowest point

Stock rates

Increase

of stock

in early

(times)

rate in the

1983

1970s

(dollars)

(dollars)

Boeing 2.6 41 16

General Dynamics 2.7 46 17

Grumman 7.2 54 7

Lockheed 2.7 104 38

McDonnell Douglas

7.6 53

7 Northrop

4.7 75

16 Rockwell International

9.0 52

6 United Technologies

10.3 69

7

Supported vigorously by the White House, the military-industrial complex is doing all it can to perpetuate the aggressive course which brings it profits.

Chapter Two

~^^1^^ Murray L. Weidenbaum, Op. cit, pp. 41, 43. In the 1960s Mr. Weidenbaum was an economist with Boeing and General Dynamics and an adviser with the National Aeronautics and Space Administration (NASA). Under President Nixon he became' assistant to the US Secretary of the Treasury; from 1974 he was professor at Washington University in St. Louis. With the advent of the new Republican administration Professor Weidenbaum was appointed to the important and influential

116

position of chairman of the Council of Economic Advisers. Retired in July 1982.

~^^2^^ Aviation Week and Space Technology, April 27, 1981 pp. 200-205.

* Aviation Week and Space Technology, May 30, 1983.

~^^4^^ The latter group even includes several non-- American oil companies, like British Petroleum or Italy's Agip.

~^^5^^ Richard F. Kaufman, Op. cit, p. 56.

~^^6^^ The New York Times, March 26, 1980.

~^^7^^ See J. Ronald Fox, Op. cit., p. 54; Fortune, May 7, 1979.

~^^8^^ Richard F. Kaufman, Op. cit, p. 58.

~^^9^^ Many American economists also acknowledge the stability that exists in the upper tiers of the militaryindustrial complex, but they explain it not by monopoly domination but by technological factors. "The low turnover among the leading military producers reflects the barriers to both entry into and exit from the defense market. Particularly in aerospace and electronics, entry is limited to those firms possessing the scientific and engineering skills required to design and manufacture modern weapons systems. Exit barriers may be inferred from the relatively unsuccessful attempts of these firms to penetrate civilian markets." (The Economic Consequences of Reduced Military Spending. Studies in International Development and Economics, Lexington Books, Massachusetts, Toronto, 1973, pp. 31-32.)

~^^10^^ Business Week, May 3, 1982, pp. 42, 43.

~^^1^^ * The cost estimates for the MX system are at least 33 billion dollars. Some experts believe that the figure may be 100 or 150 percent higher.

~^^12^^ Fortune, November 16, 1981, p. 15; Business Week, April 19, 1982, pp. 44-52.

~^^13^^ Murray L. Weidenbaum, Op. cit, p. 85.

~^^14^^ Ibid., p. 43.

~^^15^^ Aviation Week and Space Technology, May 1, 1978, p. 54.

~^^16^^ See Whence the Threat to Peace, Military Publishing House, Moscow, 1982, p. 52.

~^^17^^ Murray L. Weidenbaum, Op. cit., p. VII.

~^^18^^ J. Ronald Pox, Op. cit., p. 309.

~^^19^^ J. Ronald Fox, Op. cit., p. 315.

~^^20^^ Seymour Melman, The Permanent War Economy. American Capitalism in Decline, p. 21.

21 J. Ronald Fox, Op. cit, p.1326. ~^^22^^,/&id.,p. 329.

•" Murray L. Weidenbaum, Op. cit, p. 69.

~^^24^^ Richard P. Kaufman, Op. cit, p. 123.

~^^25^^ Murray L. Weidenbaum, Op. cit, p. 61.

~^^26^^ Pravda, April 18, 1981.

[118] __NUMERIC_LVL1__ Chapter Three __ALPHA_LVL1__ THE WEAPONS
TYCOONS __ALPHA_LVL2__ [introduction.]

The question of who profits most from the war business and who controls the biggest military-industrial corporations is difficult to answer. The monopolists go to great lengths to withhold information about their personal incomes and capital, especially arms manufacturers. Still, from time to time something does leak into the press.

The other difficulty is that corporations are controlled both by single individuals and by groups of people. In the latter case, the company in question is run by a clique of major proprietors often belonging to different groups of finance oligarchy. Besides, it is not always possible to identify the real owners of a company because they often hide behind untraceable fronts. Also, frequently large blocks of shares are concentrated in banking offices which manage property by proxy and in investment management offices, with management conducted indirectly, through various banks and other agencies. Rockwell International is an example of this ``joint'' type of management: it is owned and controlled simultaneously by the Morgans (through the Bankers' Trust Company), the Harrimans, the Du Fonts, the Mellons and some other members of finance oligarchy. One has

119

also to take into account the changes that occur in the sphere of control over the corporations. James Ling, the founder of the Ling-- TemcoVought conglomerate, was among the biggest US arms manufacturers in the 1960s. However, later, during one of the mergers, Ling lost control of his concern and is now no longer directly involved in military production.

Available information makes it possible to identify some of the individuals and finance groups controlling certain military corporations.

__ALPHA_LVL2__ THE BIGGEST ARMS
MANUFACTURER

Were a contest for the title of armaments czar to be held in the United States, the first nomination would go to Henry Crown, owner of General Dynamics, the Pentagon's biggest contractor, and one of the leaders of the Chicago finance oligarchy group.

However, American arms manufacturers shun publicity. In its article "Henry Crown: Chicago's Ubiquitous Capitalist,"Business Week wrote, "He even refuses, to his chauffer's dismay, to ride in an enormous Rolls-Royce his wife bought him a few years ago because it attracts too much attention. He prefers a long black limousine like many others in Chicago. He wants to be known as a great philanthropist.''^^1^^ In actual fact, Crown's charity contributions are peanuts compared to his capital. Besides, almost all his donations go to the Naval Academy in Annapolis and to finance military research at Stanford and Syracuse universities and the University of Illinois.^^2^^

The son of a businessman and speculator, Crown was famous as a past master at bribing

120

Chicago municipal officials in the late 1920s; the authorities extended lucrative contracts to his building materials company. Simultaneously, he succeeded in gaining a firm foothold in the city's major banking establishments. The Great Depression of the 1930s played into his hands by eliminating many of his competitors. His Material Service Corporation monopolized an important branch of the construction business in the Midwest. Business Week noted that "there is hardly a building in Chicago that does not contain Crown materials, nor are there many politicians during the past half century of the city's turbulent history who have not had dealings with him.''

Without seeing active service during World

Henry Crown

199-5.jpg 123

War II, Crown was nevertheless quickly made a colonel in the Army Corps of Engineers and then put in charge of army supplies in the Great Lakes district (his fellow financiers still call him Colonel). Arms manufacturers literally showered him with gifts and bonuses---which he, of course, paid back in kind. That was when Crown got the idea of setting up his own military business. According to the Current Biography magazine, "when the war ended, Crown found himself restive and ready for something more ambitious than Material Service Corporation could offer."3 In the latter half of the 1940s he acquired the controlling interest in the Chicago, Rock Island and Pacific Railroad Company, invested in sugarcane plantations and coalmines and speculated in real estate. The several weeks in which Crown bought and resold the lot which was to become the site of the United Nations headquarters brought him 600,000 dollars. Later he joined the Hilton Hotels Corporation as a major partner. But it was his purchase of the Empire State Building in 1952 which brought him nationwide fame. In 1961 Crown parted with the then tallest building in the world making a tidy profit and prompting Time magazine to describe the transaction as the ``crown'' of Crown's achievements.^^4^^

But Time was wrong. The real acme was the General Dynamics purchase. Under this name the company has operated since 1952. Its forerunner was the Electric Boat Company, a builder of submarines since the end of the 19th century. After World War II Electric Boat expanded into the rapidly growing aircraft construction industry. Its merger with Consolidated Valti, a large aircraft concern, gave birth to General Dynamics.

By the late 1950s General Dynamics already

122 199-6.jpg

Atlas-Centaur

was the Pentagon's biggest contractor, manufacturing Atlas intercontinental ballistic missiles, nuclear-powered 'submarines and other types of expensive weapons. In other words, it was what any ambitious operator---like Crown---

123

would covet. General Dynamics was controlled by members of different finance groups. The stock the biggest holders owned was small compared to the overall capital of the company. All this made it somewhat easier for an outsider to seize control of the corporation. In mid-1959 business sections of several papers reported that General Dynamics acquired the Chicago-based Material Service Corporation--- Crown's property. Soon it transpired that Crown ``sold'' his company in exchange for an 18-- percent block of General Dynamics shares and that this was the controlling interest, worth 120 million dollars. Several months later, in early 1960, Crown was ``elected'' director of General Dynamics. He became its executive chairman, that is, the boss of the firm.^^5^^

Under Crown, General Dynamics expanded its manufacture of the latest weapons systems. Nuclear-powered submarines and fighter-- bombers brought in million-dollar dividends. The already close ties with the Defense Department and other government agencies became even more stable. All of Crown's previous deals were dwarfed by this source of huge and guaranteed profits. Henry Crown arrived. He became a real tycoon whom even Theodore Dreiser's Frank Cowperwood could have envied. Evidently, the nickname "merchant of death" Crown earned did not bother him.

In April 1966 Crown surprised everyone by resigning his highlevel positions in General Dynamics and selling all his stock. There were all sorts of conjectures and rumors about this strange capitulation of the Colonel. But then the reasons for it were made clear. Soon after he had become the chief stockholder of General Dynamics, Crown had made some changes in the top echelons of the company. Frank Pace,

124

Defense Secretary under Harry S. Truman, was replaced by Roger Lewis, Undersecretary of the Air Force under Dwight Eisenhower, as President of General Dynamics. But, for Crown, this proved to be a mistake. A short while later, having secured the backing of a number of General Dynamics stockholders and top-level executives, Roger Lewis launched a vigorous effort to oust the company's chief owner. It appeared that Crown's resignation meant that now Lewis's coalition emerged on top. But this was not the case.

Crown beat only a temporary retreat. In those days the company encountered certain financial difficulties connected with the sales of Convair 880 and Convair 990 civilian planes. To retain contol over the corporation, the management decided to buy out Crown's block of shares with General Dynamics money. This made its financial situation even worse. The stocks began.to drop. Then Crown began to buy up the shares through •proxy buyers. By 1970 the Crown portfolio again accounted for 18 percent of all the General Dynamics stock; this time the controlling interest cost him half the sum he had received for it from the company. Crown was again in complete control of the corporation. The Lewis group was dismissed and replaced by a reliable Crown team.^^6^^

Since the early 1970s the highest administrative post in General Dynamics has been held by David Lewis (no relation to Roger Lewis), formerly president of McDonnell Douglas. At his request General Dynamics moved its headquarters from New York to St. Louis where he had lived and worked for many years. David Lewis is well known for his close connections with the Pentagon's top bureaucracy. After Lewis joined General Dynamics its contracts,

199-7.jpg

F-16 aircraft in NATO service in Brussels

profits and stock ratings have almost always been on the rise. Specifically, Lewis did much to secure lucrative contracts for the production of F-16 fighter planes and Trident nuclear submarines. He was among the candidates considered for the post of Undersecretary of Defense in the Reagan administration. Lewis is on the board of directors of the Bank of America, the biggest bank in California and in the entire capitalist world.^^7^^

Henry Crown's son Lester is a vice-president of General Dynamics and a member of its board of directors. He is also on the board of directors of Continental Illinois, Chicago's biggest bank, of TWA, of the Esmark Conglomerate and of several other companies.

Milton Falkoff, a director of General Dynamics, manages the Crowns' capital in the Henry Crown and Co. family partnership. A former Internal Revenue agent, he now specializes in protecting Crown's money from taxes.

Nathan Cummings, also a General Dynamics 126

director, is an old friend of Henry Crown, his ally in the power struggle for control of the corporation. Cummings, too, owns a sizable block of General Dynamics shares, but this New York financier's major interests lie elsewhere.

Albert Jenner, another member of the GD board of directors, is the senior partner in the law firm serving this and other companies owned by the Crowns. Jenner was senior adviser to the Warren Commission which investigated the assassination of President Kennedy.

The board of directors and the executive board of General Dynamics include many retired army officers, Pentagon officials and scientists engaged in military research. The company's payroll features 200-odd names of retired generals, admirals and other high-- ranking officers.

The foremost recipient of the Pentagon's contracts over the past few years, General Dynamics is escalating its expansion, buying up aerospace, electronics and other military-- oriented companies in the United States and abroad. Crown's latest acquisition is the Chrysler Defense Company, the manufacturer of the M-l tank. Crown bought it in the spring of 1982 by turning the financial difficulties of Chrysler Corporation to his advantage. As a result, General Dynamics achieved what no other company had ever done before---it became the biggest contractor not only to the Navy and the Air Force but also to the Army.

The article which appeared in Business Week in the mid-1970s (the one quoted above) described the Crowns' personal.wealth as one of the largest. This squarely puts them among the 20 wealthiest families in the United States together with the Morgan, Du Pont and Getty families.

12V

Business Week wrote about the Crowns: "The investments themselves are vast. Commercial real estate comprises countless properties in California, Arizona, New York, New Jersey, Florida and Jamaica.... The Crowns own several farms in Illinois, plus the 3,500-acre Bishop Ranch in Goleta, California, and 60-percent interest in Arizona's Farmers Investment Co.

``The coal interests---actually mineral rights to mines operated by Material Service---are in southern Illinois, making the Crowns the biggest shipper on the Illinois Central. The Crowns are also beginning to dabble in oil and gas development.

``The family holds 100 percent of Sioux City and New Orleans Barge Line and Lemont Shipyard, which repairs and builds barges. "^^8^^

This list, however, omits the Crowns' biggest investments-above all, their interest in General Dynamics with the current market value in excess of 300 million dollars. The block of shares of the Esmark concern (formerly the Swift and Co. canned meat trust) is estimated at about 30 million dollars. The share in Hilton Hotels which, on the initiative of Crown, added casinos and other entertainment centers in Las Vegas to its worldwide chain of hotels and administrative buildings, is worth some 25 million dollars, and in the St. Louis-San Francisco company, 16 million dollars. The Crowns are also among the chief owners of two huge banks ---First National of Chicago and Continental Illinois---which are the financial centers of the Chicago monopoly group. Chart 2 shows Crown's major investments. Part of the capital is also scattered among some 200 other companies and agencies. Crown's investments are expanding rapidly, nurtured in part by the high dividends from the GD stock.

128 199-8.jpg 1

,

St. Louis

San Francisco railroad transport 667

199-9.jpg

L_

Sioux City & New Orleans Barge Line water transport

Aetna Life & Casualty insurance

American Shipbuilding

shipbuilding 164

Standard Oil (Ohio) oil 2,855

1 --------- I^^1^^'

agricultural goods

J

as

Continental Illinois

34, 258

. a?

First Chicago

22,798

Vulcan Materials building materials.

543 199-10.jpg

Note: The. figures denote the amount of investment as of 1980 (in millions of dollars) and the percentage of shares controlled by Crown.

In order to evade taxes, Crown has set up about 40 "individual trusts," "family partnerships" and ``foundations'' and spread his capital among them. Foremost among these are Henry Crown and Co., the Crown Fund^^1^^ and RLJ (the latter named after Henry Crown's three sonsRobert, Lester, and John).

The function of the main investment bank which issues and distributes the stock of Gen-

9-349

129

eral Dynamics and several other companies owned by Crown is performed by Lazard freres et cie. GD is also connected with the Lehman Brothers banking firm. Both these New York banks own sizable blocks of GD shares and cooperate with each other and with the Rockefellers.

The Crowns play an important role in Midwestern politics. Former Mayor Richard Daley of Chicago, a died-in-the-wool reactionary, was especially close to them. On the national scene, the Crowns usually support Republican candidates. In 1972 Crown contributed 50,000 dollars to Richard Nixon's election fund and much more to Ronald Reagan's election campaign in 1980. Edward James Le Feyre, chief of the GD Washington office, once expressed the Crowns' credo in an interview to an American journalist when he said it was essential that people believed in the existence of a longterm threat.

And this is what a General Dynamics spokesman said about the militarist hysteria which swept the United States at the beginning of the 1.980s: "The world doesn't look very safe out there. That makes the prospects for the industry look very good.''^^9^^

In 1982 the US Air Force boosted its planned purchases of GD-produced F-16 fighter planes by 43 percent, and by the middle of the year their number rose to 1,985. "This will cover purchase of some three billion dollars in aircraft to be delivered between 1983 and 1987."10 This is the make Israel used in its pirate raid against the nuclear research center in Iraq and recently, to destroy Lebanese cities and to kill thousands of Lebanese and Palestinian civilians. Business Week wrote in the spring of 1982: "F-16 has also done a world of good for GD

130

profits. The Fort Worth Div., where the F-16 is produced is by far the company's most profitable division and was almost totally responsible for GD's 235 million-dollar pretax operating profit on government aerospace sales....

``Meanwhile, new markets continue to pop up for the standard F-16, 388 of which have now been sold to Belgium, Denmark, the Neth-

199-11.jpg

Building a tanker

131

erlands, and Norway. Israel has bought 75 and wants another 75; Egypt has ordered 40 and probably will double that number; and Korea, Pakistan, and Venezuela have orders pending for a combined total of 100....

``At the moment military aircraft are GD's big-ticket sales item. "l l

General Dynamics missile production also brings in handsome returns. The corporation is the prime contractor for the Navy's Standard and other tactical missiles, and for the Tomahawk cruise missile, the latest strategic weapon with improved range and some other characteristics. Over the coming five years the Navy intends to purchase at least 4,000 sea-launched Tomahawks, while the Air Force plans to acquire some 560 such ground-launched missiles. The basic design to which Tomahawks are built promises to blossom into an entire new family of missiles which could be launched from under water, from surface vessels and, from the ground. They will carry both conventional and nuclear warheads. According to a high-level Pentagon official, "cruise missiles could emerge as the most cost-effective method of delivering high-firepower weapons through the rest of the century. And no company is in a better position to profit from this than GD.''^^12^^

At the juncture of the 1970s and 1980s the concern's officially announced profit rate was 26 percent---about double the average of all major industrial companies in the United States. "Wall Street analysts already believe that by 1985 the company's earnings could more than double.''^^13^^

In its article "Fat on the Sacred Cow" published in 1982, Time magazine .said General Dynamics was the greediest of the Pentagon's customers. The company received from the

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government 1.2 billion dollars for each Trident submarine built- 50 percent over the planned budget. Overrun was also considerable in the production of 18 Los Angeles-class nuclear submarines. The Justice Department stepped in and ordered an investigation into "overrun claims." Government officials were more forthright and called it a rip-off. "We have permitted considerable abuse," Admiral Hyman Rickover said. In his testimony before Congress's Joint Economic Committee he attacked the Defense Department and said that "they will always protect private industry because that's where they came from and that's where they're going back to." The result was that soon after this outburst the Reagan administration forced Rickover into retirement. Meanwhile Navy Secretary John Lehman said the Navy contracted with General Dynamics to build six more Tridents "because the company had improved its controls on workmanship and materials.''^^14^^

It was noted at the 26th Congress of the CPSU that the Soviet Union had suggested a reciprocal ban on the development of the Trident naval missile system. However, the Congress stated, "The proposal was not accepted. As a result, the United States has built the new Ohio submarine armed with Trident-1 missiles, while an analogous system, the Typhoon, was built in our country. So, who has stood to gain?

"We are prepared to come to terms on limiting the deployment of the new submarines---the Ohio type by the USA, and similar ones by the USSR, "i^^5^^ Naturally, the owners of General Dynamics are against such talks: missile-carrying submarines pay them huge dividends.

Moreover, GD director Frank Wood often complains that the government slows down

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production. The company forces the country to adopt one armaments system after another--- if not right away, then after some time. For example, having initially failed to secure Air Force approval for the development of a new F-16 modification, General Dynamics still went ahead and spent tens of millions of dollars on its production. Eventually, the Pentagon was forced to sign the contract.^^16^^

The owners of General Dynamics are in the forefront of the enemies of peace.

__ALPHA_LVL2__ THE MISSOURI SPHYNX
OF THE MILITARY
INDUSTRY

In 1939 James McDonnell, aircraft designer and graduate of the Massachusetts Institute of Technology, founded an experimental aircraft business in St. Louis. From an obscure backwater company the name of McDonnell has become the symbol of prosperity, at least in the US business community.

McDonnell Douglas products are in great demand on the rapidly expanding military market. Having put billions of dollars in operationits own, borrowed, and government funds--- the company, one of the biggest military corporations of the United States, manufactures a broad range of modern military hardware: Tomahawk cruise missiles, F-15 supersonic fighter-bombers, Dragon antitank missiles, Harpoon naval missiles, Phantom, Skyhawk and F-18 fighter planes, surface-to-air, air-to-air, and air-to-surface missiles, etc. Jointly with other US and NATO monopolies, McDonnell Douglas develops space weaponry, thus contributing to the implementation of particularly

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dangerous plans to militarize outer space and turn it into a potential theater of operations. Specifically, this concerns the ASAT ( antisatellite) system, the initial modifications ready to be tested by the Air Force. These are missiles which, launched from F-15 high-altitude planes, are to be targeted against satellites in orbit. The US press reports that Washington's infatuation with the idea of an antimissile defense system is expected to bring tens of billions of dollars to military contractors like McDonnell Douglas, Martin-Marietta, Boeing, and Hughes Aircraft over the coming decade. McDonnell Douglas weapons sales to Israel, Saudi Arabia, Pakistan, Chile, South Africa and other countries run into billions of dollars.

The usual way to explain the success of McDonnell Douglas is to cite the company's "technological contribution" to the aerospace industry and the high quality of its products. But that is not quite the case. In May 1979 a DC-10 airliner (a McDonnell Douglas model) with 273 passengers on board crashed near Chicago. This was caused by defects in engine mounts, typical of many of these planes advertised as the world's safest airliners. DC-lOs had to be recalled. But DC-9s continued to fly. In September 1979 a section of one of these planes' fuselage broke off at an altitude of 10,000 meters. The pilot worked a veritable miracle and kept the plane from crashing. It turned put that tail sections were about to collapse in other DC-9s too. According to newspaper reports, McDonnell Douglas's F-15 Eagle fighter cannot be kept in the state of combat readiness most of the time due to frequent malfunctions in the on-board electronic guidance system. American pilots have even nicknamed it the Hangar Queen.

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Defects have long been found in McDonnell designs. New models have often either crashed or caught fire while in flight. An especially big scandal broke out over the Navy's Demon fighter planes in the mid-1950s. A total of 60 fight-

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James McDonnell with a model of an F-15 fighter-bomber

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ers were produced, but 12 accidents occurred during test flights, killing four pilots. It became obvious that not a single Demon could be used and that hundreds of millions of dollars in government funds had gone down the drain. After investigating the case, the Senate Armed Services Committee concluded that the fault lay in the purchasing system employed by the Department of the Navy. The inquiry also highlighted the role played by Rear-Admiral Lloyd Harrison who opposed termination of the McDonnell contracts. The day after he retired Harrison became a vice-president with McDonnell.^^17^^

In the early 1980s some 180 retired highranking army officers were on the company's payroll. In Washington, a special team of lobbyists is shuttling between the Pentagon, Capitol Hill and the White House. McDonnell agents are also active in behind-the-scenes dealings with many foreign governments. Of course, all this makes it easier to land military contracts. But that is only part of the picture.

McDonnell was taking his first steps as a businessman when a boom was beginning in the aircraft industry. New York tycoons were closely watching the promising new industry, and McDonnell noticed that. ``Hicks'' were usually wary of Wall Street. But McDonnell himself called on Lawrence Rockefeller and offered him a 20-percent interest in his company. At that time the Rockefellers' reputation was so stained by the dirty deals of Standard Oil that they preferred to expand their empire through "joint participation" while themselves remaining as inconspicuous as possible. With the Rockefellers' backing McDonnell's business blossomed. During World War II the company received many military contracts. Failures were

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either shifted onto the shoulders of subcontractors or written off at government expense. Besides, Chase Manhattan and other Rockefellercontrolled banks ensured the company's extreme financial maneuverability: already during the Cold War it was swallowing missile-- producing, electronics and aerospace enterprises by the dozen. In the late 1960s even Douglas Aircraft, a well-known California trust, capitulated before the Missouri Sphynx. McDonnell Douglas keeps gaining on many other military-industrial giants. For three years since 1975 the corporation was the biggest military contractor in the United States. It was later overtaken by General Dynamics. In 1981 McDonnell Douglas moved to the first place, but was again ousted by General Dynamics in 1982.

In an article entitled "Happy Days Are Here Again for Arms Makers" Fortune wrote: "McDonnell Douglas, the Pentagon's second largest supplier, is well placed for higher profits a few years out. The Navy and Air Force want as many as 2,000 of McDonnell's new FA-18 fighter-attack planes. The marines long for the company's Harrier vertical takeoff and landing jet for close-in air support. And Congress may rev up its enthusiasm for McDonnell's F-15 Air Force fighter."18

The flagpole in front of the company's headquarters in St. Louis flies a white flag with a big letter E in blue---the award from the Department of Commerce for the best export record. McDonnell Douglas supplies arms to over 20 countries. Large shipments are delivered to the Middle East. F-15 fighter-bombers were the main item of the 4.8 billion-dollar "package sale" of US hardware to Israel, Egypt, and Saudi Arabia in 1978. There was heated debate in Congress over the deal. The Rockefellers again

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came to the rescue: the press reported that they brought great pressure to bear on the Congressmen who opposed it. Now the Rockefellers protect their vast oil interests in the Middle East with the weapons they produce together with the McDonnells.

An important source of the corporation's profits is what the US military-industrial establishment describes as "gold plating." The story of McDonnell's F-18 Hornet Naval Aviation fighter plane is a case in point. Congress authorized its manufacture in 1975, when it was announced that each plane would cost 16 million dollars. The actual cost, however, was double that amount---32 million. McDonnell cited the improvements introduced into the radar and missile guidance equipment which turned the model into an all-weather plane. In 1978 the Navy confidentially told the Defense Department that it no longer wanted that expensive aircraft. Hornet was severely criticized in Congress too. Democrat Bruce Vento of Minnesota said in the House of Representatives that questionable programs with runaway costs should not be allowed to waste funds. However, the Pentagon defended the -corporation, alleging that "the Soviets are improving their own weapon capabilities".^^19^^

The McDonnell family remains the corporation's biggest stockholder. In the 1970s James McDonnell personally owned 2,142,145 sharessome eight percent of the total issued by the company. According to the International Business Yearbook, three members of the McDonnell family and the McDonnell Foundation together control 20 percent of the corporation's equity capital. Other sources put this figure at 25 percent. The market value of this block of shares was over 300 million dollars in the early 1980s.

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James McDonnell was chairman of the company's board of directors until his death in the early 1980s. He was replaced by his nephew Sanford McDonnell, a member of the Aerospace Industries Association. The founder's two sons are vice-presidents and members of the board of directors.

Aside from the McDonnells, the Rockefellers also hold positions of great influence within the company. The Rockefellers' Chase Manhattan and Chemical Bank of New York issue and take care of the McDonnell Douglas stock. Other Wall Street groups controlling considerable blocks of shares include the Morgan Guarantee Trust Company and Bankers Trust Company, the latter also owning about 20 percent of the stock.^^20^^ McDonnell Douglas has close connections to St. Louis financiers too. James McDonnell's brother William was for a long time president of the First National Bank of St. Louis; his son is currently one of its directors. One can also trace the McDonnellCrown connection: William McDonnell is chairman of the board of directors of the St. LouisSan Francisco railroad in which Henry Crown holds 17 percent of capital. If we recall that Crown invited David Lewis, former president of McDonnell, to the top management position in General Dynamics, one can infer that these contacts are even firmer.

__ALPHA_LVL2__ HOWARD HUGHES AND
HIS "HEIRS"

Howard Hughes (1906-1976) spent the last twenty years of his life as a recluse, almost totally isolated from the outside world, his yearning for privacy taking grotesque and even pathol-

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ogical forms. Nevertheless, he is perhaps the most famous of the American arms manufacturers.

In the prewar years Hughes the pilot set world speed records. Hughes the movie mogul financed many Hollywood hits. As a man who made a fortune valued at 2.5 billion dollars in a few decades, he was one of America's superrich.^^21^^ He beat all the previous records of speculation when he resold Transworld Airlines at a profit of 450 million dollars. He was known as the owner of the most fashionable fleshpots of Las Vegas. Journalists and authors had a field day describing this eccentric billionaire. Harold Robbins copied the main protagonist of his Carpetbaggers from Howard Hughes. There was a time when Fortune and Business Week wrote ecstatically about the revolt of Hughes's "young money" against the "old money" of Wall Street. Time and Newsweek competed in reporting'whatever news he made--- be that an exotic spree he went on with Saudi princes or an affair with an Italian movie star.

Coverage was scarcest of Hughes the arms manufacturer, although Hughes Aircraft is among the biggest US military corporations, producer of many latest weapons systems, including laser, space, and electronic devices. The company is also the biggest and most profitable business among all of Hughes's possessions, the object of intense power struggle among his "heirs.''

Like many other multimillionaires, Hughes was born in Texas. The foundation of his wealth was laid in the oil industry. Howard Hughes was not yet twenty when he inherited his father's company with the stock worth 15 million dollars. Hughes Topi manufactured equipment for the rapidly growing oil industry and held a patent for an auger for rock drilling, the invention

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of Hughes, Sr. When improved designs appeared later, his son went the whole hog to acquire all the patents. With the money coming in from the oil industry, Hughes began to invest in other industries too.

In the 1930s Hughes Aircraft, a new company, built its factory near Los Angeles, and Howard Hughes himself moved to California. In 1938 he performed a publicity stunt by circling the globe in his own plane. Still, up to the late 1940s Hughes Aircraft failed to attain any significant status in the aircraft industry. The attempts to build a huge 200-ton flying boat during World War II failed. True, repair of shot down aircraft and their resale to the Air Force proved profitable, but it all ended in a Congressional investigation and bribery charges. In 1948 the company's stock was worth only two million dollars.

After the war Hughes made it a rule to invite top brass to serve on the board of directors. Generals Ira Eaker and Harold George were among the first of these newcomers. Eaker was former deputy commander of the Air Force, while George had been chief of air transport staff during the war. The new managers branched out into the. booming industries of rocketry and electronics and secured profitable government contracts for the company. Hughes paid high salaries to the retired generals and let it be known that he was ready to use the many millions of dollars from his other enterprises to expand military production. Government contracts turned into a flood after Charles Thomas, Secretary of the Navy under Eisenhower, joined Hughes Aircraft. The company began to work almost exclusively for the Pentagon, supplying it with a broad range of military hardware---from reconnaissance satellites to helicopter gunships.

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The Korean and Vietnam Wars benefited Hughes Aircraft greatly. After joining the top 100 military contractors as late as the 1950s, it rose to the 15th place in the 1960s and is now seventh from the top, crowding Boeing and Lockheed.

Aside from the Pentagon, Hughes Aircraft collaborates with the CIA and other government agencies engaged in military activities. The company's contacts and contracts with NATO are also expanding.

At first Howard Hughes was the sole stockholder of Hughes Aircraft. This enabled him to completely conceal his sources and size of income from the public. In 1954 he transferred the stock to the Howard Hughes Medical Institute and appointed himself the institute's only trustee and manager: as a nonprofit organization, it was exempt from taxes, and the trustee could use the dividends as he saw fit.

Hughes Aircraft provided convenient cover to the agencies which needed it. The company's top executives were on especially friendly terms with leading figures in politics, the military and the intelligence communities. For example, contacts with Richard Nixon lasted throughout the latter's political career---up to and including the Watergate scandal in which Hughes's henchmen were directly involved.

Hughes's quirks, long a matter of record, came to include drug addiction. This is how Time magazine described his lifestyle in the 1970s: "...a total recluse living in a series of penthouse hideaways.... Hughes called the drugs 'my goodies.'

``During this period, Hughes was the largest private employer in Nevada and provided the cover for the CIA's ... operation, ... he was leading a totally disoriented life ... spent most of

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his waking hours watching thriller movies, going to the bathroom (for years he suffered from constipation) and toying with his food (he would often spend two hours nibbling on a single piece of chicken).''^^22^^

Howard Hughes died on April 5, 1976. Although he left no direct heirs, many people lay claims to his 2.5 billion-dollar fortune. The courts have rejected about 40 forgeries of his nonexistent will. "During his lifetime, he always played off both friends and enemies against one another and thus set the stage for the power struggle now under way.''^^23^^ Fortune magazine says he deliberately avoided disposing of his estate.^^24^^ The chief rivals in the struggle for Hughes's money are, on the one hand, his nephew William Lummis and on the other, a group of top-level managers of his enterprises led by Frank William Gay and Chester Davis.

In addition to Hughes Aircraft, Hughes's capital was invested in several companies controlled by the Summa Corporation whose sole owner he was. After the sale of Hughes Tool in 1972 Summa became the flagship of the other part of his empire which comprised real estate, casinos, hotels, airlines and aircraft factories. In 1982 Summa was 43rd on the list of the Pentagon's top contractors (see Table 1).

In the late 1970s Lummis managed to oust his rivals from the Summa board of directors. But Gay and Davis still control Hughes Aircraft. They manage the affairs of the Howard Hughes Medical Institute which controls all the 75,000 shares of Hughes Aircraft. Chester Davis is a former Wall Street lawyer who used to help Hughes in his long and bitter struggle against the Northeastern financiers. William Lummis, a lawyer from Houston, worked for Andrews, Kurth, Campbell and Jones com-

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party; he is now chairman of the board of directors and owner of Summa.

__ALPHA_LVL2__ CHARLES THORNTON
AND LITTON INDUSTRIES

Charles Thornton, a Texan, was one of the people Howard Hughes hired to manage his military business. During World War II Colonel Thornton was in charge of a large Air Force task force staffed by 2,800 officers. Roy Ash and Robert McNamara were also among the higher officers. The three got on together well and, continuing to act in concert after the war, helped one another push ahead.^^25^^ Roy Ash acquired an important position in the Bank of America, while Thornton and McNamara became directors with Ford. In 1948, after a falling-out with Ford's minions and lured by an offer of a higher salary and position made by Hughes, Thornton moved from Detroit to Los Angeles and became vice-president of Hughes Aircraft, later joined by Ash (who retained his Bank of America links). For about five years Thornton put his connections and expertise to use, loyally serving Hughes---and, of course, himself. In 1953, having saved about one million dollars, Thornton, at the age of forty, went into business on his own.

First he set up the Electro Dynamics Company and sold its stock profitably through New York's Lehman Brothers investment bank. Instead of expanding his own company, Thornton used the proceeds from the sale of the stock to acquire other firms. The first was Litton Industries, owned -by the Los Angeles industrialist Charles Litton whom Thornton knew since his days with Howard Hughes (Litton Indust-

10-349

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ries supplied Hughes Aircraft with electronic equipment). Thornton paid 1.7 million dollars for the company, left the name unchanged and, acting on behalf of Litton Industries, began to buy electronic firms---at first small and then bigger ones.

Together with Thornton, Roy Ash, Emmett Steel and several other managers also left Hughes. As managers of Litton Industries, they did much to help Thornton. Ash facilitated the receipt of big loans from the Bank of America. Steel was the liaison man between his friends in the Pentagon and Thornton, and was instrumental in securing the first important military contracts. While Thornton and Ash continue to collaborate to this day, relations with Steel went sour. In the mid-1960s Steel even sued Thornton and Ash, claiming that in 1953 they had promised him a large block of shares for services rendered but then went back on their word. Steel said that the services in question had been his efforts to lay the groundwork for the purchase of other companies. Litton, present at the trial, confirmed that Steel had wined and dined him and persuaded him to sell his company to Thornton. Among other services for which payment was due was arrangement for Thornton to meet Pentagon officials who awarded military contracts. The Los Angeles court ruled that the management of Litton Industries pay Steel 7.5 million dollars in damages.^^26^^

Since the early 1960s Thornton became active on the international scene, buying up companies in the electronics and other industries. One of them is Ingalls Shipbuilding, acquired in 1962, which manufactures nuclear-powered submarines.

In the United States Thornton is considered

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a pioneer of a new monopoly form---the conglomerate. While previously capitalists were striving to seize a definite economic sphere, today's entrepreneurs often direct their efforts at a variety of markets. The reason is obvious: it is virtually impossible to break through the monopolist barrier erected in most American industries. But the rapid scientific and technical advances and the technological revolution in the military sphere open many new areas for investment. Thornton had an eye on precisely that. Today Litton Industries is worth over three billion dollars; it owns factories and laboratories in 88 cities of 29 countries and employs over 90,000 wage and salary earners. Its chief products include nuclear-powered submarines, DD-963 and Aegis destroyers, communications systems and computers. Besides, Litton Industries is among the main suppliers of various electronic equipment for many types of naval vessels, missiles, aircraft and spacecraft.

While on the subject of the success of this military-industrial conglomerate, one might say a few words about Robert McNamara, an old friend of Thornton's. Prior to the 1960s McNamara was already on the top rung of the executive ladder in the Ford empire. In 1961 he left the presidency in the Ford Motor Company to become US Secretary of Defense, a post where he remained for seven years. Those were the years of the criminal escalation of the US aggression in Vietnam which took a toll of many thousands of lives. But it was high noon for Litton Industries which feasted on Pentagon contracts. Over these seven years its profits, capital and transactions increased almost 15 times over---a meteoric rise unprecedented in the history of American business. McNamara's assistants later became vice-presidents of Litton In-

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Robert McNamara

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dustries. McNamara himself, having served his term as Defense Secretary, was made president of the International Bank for Reconstruction and Development in 1968. Since then he has often helped the California company in its expansionist drive on the world capitalist scene.

The owner of 558,000 shares of Litton Industries (about six percent), Charles Thornton was chairman of its board of directors up to his death in the fall of 1981. Roy Ash, who served as the company's president for ma,ny years, was the second largest stockholder (226,000).

New York's Lehman Brothers Bank also controls a large block of Litton Industries shares (Thornton was among this bank's directors). Aside from that, the company maintains close links with the Bank of America. Its board of directors includes Roy Ash and, until his death in the late 1970s, included Henry Salvatori,

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who held the third biggest interest in Litton Industries (138,000 shares). In December 1968 Ash was appointed special adviser to the US President and later, chairman of the President's Advisory Council on Executive Organizations. He held several important government posts--- specifically, that of director of the Office of Management and Budget, until 1975. Today he is vice-president of the Los Angeles Olympic Organizing Committee. Ash took part in the 1980 campaign to nominate Republican candidates. He is also director of the Los Angeles World Affairs Council, a right-wing organization. Charles Thornton was a member of the Defense Industry Advisory Council; he was also on the board of directors of such big companies and banks as Cyprus Mines, TWA, United California Bank, and Western Bancorporation and took part in the financing of Radio Free Europe.^^27^^

__ALPHA_LVL2__ THOMAS JONES AND THE
"INVISIBLE BOMBER"

In late 1981 the US press reported that Northrop defeated Boeing and other competitors after a pitche'd and drawn-out battle to secure the Air Force contract for the development and manufacture of the plane which was to replace the B-l and become the main US strategic bomber in the 1990s.

Today, Northrop factories near Los Angeles are already working frantically on the first make of the new generation in US bombers. The secrecy surrounding Project Stealth---the bomber's codename---is comparable only to that of the Manhattan Project which produced the first atomic bomb. Experts maintain that this heavy long-range bomber equipped with nuclear

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missiles will have a delta-wing shape; its surface will be coated with a special substance which will make it undetectable to radar and therefore invulnerable.

A single experimental model will cost five billion dollars. In the late 1980s mass production of Stealth bombers will begin, and the program as a whole will bring at least 20 billion dollars' worth of contracts to the company. As a result, the current military boom in the United States will apparently affect the status of Northrop more than that of any other company: it may well end up as the Pentagon's biggest contractor. Thomas Jones, the owner of the Northrop Corporation, believes that already in the coming four to five years the company's sales will "triple compared to the 1982 figure of two billion dollars. Frank .Lynch, president of Northrop, says that "if the program goes, it could last for 25 years.''^^28^^ The Stealth announcement alone sent the company's stock up 24 percent.^^29^^

Jones's first successes were connected with the production of the F-5 fighter plane, a "sort of Volkswagen for emerging air forces," as the American press put it. By the beginning of 1982 Northrop sold a total of 2,333 such fighter planes---more than any other US fighters destined for export. Particularly big orders were placed by Saudi Arabia, Egypt, Indonesia, Sudan, and Thailand. However, things did not go smoothly all the time. In the mid-1970s the company's salesmen were caught in bribery cases in Saudi Arabia. A noisy scandal ensued in which the man in charge of Northrop was implicated personally too. "Some US executives who committed such sins lost their jobs. But Jones has clung tenaciously to his.''^^30^^

The bosses of Northrop have always invested

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heavily in politics. In 1974 it was reported that Jones secretly contributed 150,000 dollars of company money to the election campaign of his fellow Californian Richard Nixon. So far one can only guess how much the company donated to Ronald Reagan's election fund. It is a fact, however, that after Reagan's victory in 1980 Jones made a bold move by investing 200 million dollars in the production of the " invisible bomber," although at that time it looked like a gamble---it was not clear whether the project would be approved and, if it were, who would be awarded the contract. Some people say it was the biggest gamble of Jones's career. Others contend that there was no risk involved: Jones learned everything in advance from his friends in Washington. At any rate, recently Pentagon has been openly encouraging the corporations to expand their investments in military production; the current administration promises to reward this initiative with greater profits. Northrop bigwigs are confident that "the Stealth gamble is unquestionably worthwhile.''^^31^^

According to The Washington Post, Thomas Jones is close to President Reagan and the two meet frequently.^^32^^ Other friends of Northrop include such superhawks as Secretary of the Navy John Lehman,' Jr., Assistant Secretary of Defense for International Security Richard Perle and President Reagan's chief of staff Edwin Meese who, Ronald Brownstein and Nina Easton say in their book Reagan's Ruling Class, believes "you can change the world at the end of a gun.''

Some 20 percent of the Northrop stock is controlled by .the Los Angeles United California Bank and Security Pacific National Bank. Thomas Jones, chairman of Northrop, is on the

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boards of directors of many corporations and banks of the California group. Northrop is a client of O'Melveny and Mayers the group's chief legal firm; the stock is also managed by the Rockefellers' Chase Manhattan Bank and First National Bank of Chicago.

__ALPHA_LVL2__ THE OWNERS OF
LOCKHEED AND OTHER
MILITARY-INDUSTRIAL
CORPORATIONS

A detailed description of the leading groups of all the military-industrial corporations would take up too much space. Hence these brief passages on the owners and top executives of these companies.

The brothers Robert and Courtlandt Gross, Boston-born California residents, were chief proprietors of Lockheed since 1933. Robert Gross was chairman of this aerospace company until his death in 1961. He was replaced by his brother and, although the latter resigned that position in the late 1960s, his influence with the company remained essentially undiminished. However, as the company expanded, the percentage of the stock held by the Gross brothers grew smaller and is now no more than five percent.

Other important Lockheed stockholders are the Bank of America (the California group), Manufacturers' Hanover Trust (the New York group) and the United California Bank (the Los Angeles group); Lockheed also maintains close links with other big banking firms led by the Western Bancorporation.

Charles Ducommun, Robert Gross's son-- inlaw, was among those who helped Richard Ni-

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xon throughout his -political career. This paid off already during the Eisenhower-Nixon administration, when Charles Thomas, one of Lockheed's directors, was made Secretary of the Navy. In the early 1970s, when Lockheed was in difficult financial straits, the Nixon administration hurried to its aid and, despite opposition in Congress, succeeded in having a 250-million-dollar government loan to Lockheed approved. In that period the company was corrupting government officials in many foreign countries---with the connivance of top-level US administration figures. The Lockheed scandal which broke only after Richard Nixon's resignation is one of the reasons why the concern's chief proprietors no longer want to be represented on its board of directors or in the management. Roy Anderson, the current chairman of Lockheed and a former vice-president in charge of financial operations, is a proxy of the real owners. The same can be said about Lawrence Kitchen, president of Lockheed.^^33^^

The stock of United Technologies, an aerospace company, is manipulated by the City bank Corporation, a New York finance group. Four of the UT directors are from New York, including William Spencer, president of Citibank. The others are mostly from Connecticut where the UT headquarters is located. From the end of 1979 to the end of 1980 the post of United Technologies president was filled by Alexander Haig, formerly NATO's Supreme Allied Commander, Europe and later US State Secretary in the Reagan cabinet. Harry Gray, the current chairman of United Technologies, left a high management post in Litton Industries to join the company in 1971. He made United Technologies into an "aggressive, rapidly expanding conglomerate." Over the oast few years

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UT has acquired many smaller companies knd multiplied its capital many times over. From 1972 through 1979 its stock rose 315 percent.^^34^^

The Citibank group also controls Boeing. One of Citibank's directors managed Boeing's finances. Besides, there are industrialists from Seattle, the site of Boeing's major factories, on the board of directors. T. A. Wilson, the company's current chairman, and Malcolm Stamper, its president, are not the principal stockholders. The former is a career manager who has been with the corporation some 40 years; the latter used to work for General Motors which he left for Boeing in 1962. Y.E. Johnson of the Dallas finance group who served as mayor of Dallas from 1964 to 1971 was, in the 1930s, founder of Texas Instruments (TRAM and FLIR electronic systems for A-6 and A-7 planes, sonars for Tagos submarines, and HARM missiles). In the mid1970s Johnson held the controlling interest in the company (381,000 shares). P. Haggerty, formerly a Navy man and now director of Texas Instruments, also owns a large block of shares.

The Kaiser family of San Francisco has founded and controls the aerospace and electronic Kaiser Industries Corporation. In the mid1970s the family owned 8,740,246 shares. Edgar Kaiser, the son of Henry Kaiser, the company's founder, is chairman of Kaiser Industries and serves on the board of directors of the Bank of America. The corporation and the bank have long been close---as far back as the 1920s Henry Kaiser and Amadeo Giannini, Bank of America founder, agreed to work in concert to "free California from Wall Street domination." Edgar Kaiser, Jr., a director of Kaiser Industries, has been playing an increasingly active role in the company's affairs, too.

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The California multimillionaires James Packard and William Hewlett are founders of and major stockholders in the electronic HewlettPackard Corporation. Packard, chairman of the company, owns 6,327,326 and Hewlett, 6,376,634 shares. A total of about 30 million has been issued; therefore, each founder controls some 22 percent of the stock. These members of the California group are connected not only with the local banks but also with Morgan Stanley and Co. which sells Hewlett-Packard securities. James Packard was Undersecretary of Defense in the Nixon administration; he was a founder and cochairman of the Committee on the Present Danger.^^3^^~^^5^^

The Bechtel Corporation (military construction and atomic energy) is controlled by the Bechtel family of San Francisco. Stephen Bechtel, Jr., the man in charge of the company, is a grandson of William Bechtel who founded the firm in 1906. In the 1930s the Bechtels, jointly with the Kaisers, took part in the construction of Boulder Dam on the Colorado river. Later the Bechtels entered into an alliance with John McCpne, another California industrialist, who held important government posts after the war-Hie was head of the Atomic Energy Commission in 1958-1961 and director of the CIA in 1961-1965. For several years the company even changed its name to Bechtel-McCone. The higher McCone rose in his career as a government official, the bigger BechtePs government military contracts became. By the mid-1970s it was engaged in over 100 large construction projects in 29 countries and its annual turnover was two billion dollars. Over the past two decades Bechtel has recruited very many former highlevel government officials into its management. These include Robert Hollingsworth, former

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chief executive of the Atomic Energy Commission; Admiral John Dillon (retired) who used to be in charge of the Pentagon's military construction department; Parker Hart, former ambassador to Turkey and Saudi Arabia and now the company's special representative in the Middle East, South Asia, and North Africa; George Schultz, Secretary of Labor and of the Treasury under Richard Nixon; and Caspar Weinberger, Secretary of Health, Education and Welfare and director of the Office of Management and Budget in the Nixon administration. Schultz and Weinberger are very close associates of Ronald Reagan. Both were active in his election campaign and now hold top-level posts in his administration. Schultz resigned from the Bechtel presidency to replace Alexander Haig as Secretary of State; Weinberger, vice-president of Bechtel, became Secretary of Defense.

The Watson family is the biggest stockholder (three percent) in International Business Machines, the producer of computer and other electronic equipment for many types of modern armaments. Thomas Watson founded the company in 1914; in 1952 he turned the IBM presidency over to Thomas Watson, Jr. From 1961 to 1971 the latter was chairman of the corporation; then he gave up his functions as direct manager but remained chairman of the executive board until 1978. Many people serve simultaneously on the boards of directors of IBM, Morgan Guarantee Trust and the Rockefellers' Chase Manhattan and Chemical banks. Thomas Watson, Jr. served as director of NewYork-based Bankers' Trust for many years and was head of the influential Business Council. Politically, he is close to the Democratic Party. In the 1970s the IBM board of directors included Harold Brown and Cyrus Vance, Defense

156

and State secretaries in the Carter administration. In 1978 President Carter appointed Watson chairman of the advisory board of the US Arms Control and Disarmament Agency; from the summer of 1979 to the end of the Carter term he served as Ambassador to the Soviet Union.

In 1960 Henry Singleton of Texas founded Teledyne, Inc. (radio-electronic weapon components). Today he controls about five percent of the company's stock and is head of its board of directors and executive board. In the 1950s Singleton moved from Texas to Los Angeles and worked as an electronics engineer. In 1954 Thornton invited him to join Litton Industries as a vice-president, the post he held until I960. George Kozmetsky, currently a Teledyne director, was also a vice-president with Litton Industries simultaneously with Singleton. Prior to that, Kozmetsky had worked for Hughes Aircraft for several years. With its headquarters in Los Angeles, Teledyne is closely linked with the Bank of America, the Union Bank of Los Angeles and the Security Pacific National Bank of Los Angeles. Hayden, Stone, Inc., a New York firm, also sold Teledyne stock; its securities are managed, in addition to the Califomian banks, by the New York-based US Trust Company.

The California, Cleveland and New York finance groups jointly control TRW, a company manufacturing military telecommunications and aerospace equipment. TRW was born of the 1958 merger between Thompson Products of Cleveland and Ramo Wooldridge of Los Angeles and was named TRW in 1965. Simon Ramo, one of the chief proprietors, is the company's deputy chairman and deputy head of the executive board. In the 1930s he was a manager with General Electric; in the 1940s and 1950s

157

he worked for Hughes Aircraft. Now he is one of the directors of the Los Angeles World Affairs Council. Four 6f the TRW directors are from Los Angeles and five, from Cleveland. TRW securities are handled by banks in New York (including Morgan Guarantee Trust and Chase Manhattan), Cleveland and California. Ramo was Ronald Reagan's adviser during the transfer of power and the shaping of the new Washington administration from November 1980 through January 1981. After that Ramo became a Consultant of the President's Science Advisory Committee.

In 1928 the Chicago industrialist Paul Galvin founded Galvin Manufacturing, renamed Motorola in 1947 (military electronic equipment). Galvin is chairman of the board of directors and head of the executive board. The company's stock was floated by Halsey, Stuart and Co, a Chicago banking firm. Other leading Chicago banks---Harris Trust and Savings Bank and Continental Illinois---register the stock and manage Galvin securities. In 1961 Goldman, Sachs and Co, a New York investment bank, also took part in handling the company's stock--- which indicated a certain degree of influence exercised with Galvin by the Northeast financiers.

Paul Galvin is active in politics, supporting the right wing of the Republican Party. He served as chairman of the American Security Council, an extreme right-wing organization designed to mobilize business for the Cold War. Galvin accompanied Senator Charles Percy on his trip to the Soviet Union in November 1980. The senator, top, represents the Chicago financial and military-industrial community. Prior to 1966 he was in charge of Bell and Howell Co., a large military electronics firm; then he

158

' A COMPANY CAUCD

TRW

TRW advertises its wares

left his post of chairman to concentrate more on his political career which made him a prominent figure in the Republican Party. Sharon Lee, the senator's daughter by his first wife, is married to John Rockefeller, the best-known member of that family's fourth generation.

159

These brief remarks about the proprietors of military-industrial concerns lead one to conclude that:

First, within the US monopoly bourgeoisie there is a group of military-industrial tycoons for whom arms manufacture is the major---or a major---source of profit.

Second, aside from the close intertwining with the Defense Department and the involve-ment in the same major programs, many military-industrial concerns are interlinked through their banks and managers.

Third, a large part of the corporations comprising the military-industrial complex is controlled by California groups with close connections to the current leaders of the Republican administration.

Chapter Three

~^^1^^ Business Week, December 22, 1975, p. 30.

~^^2^^ Current Biography Yearbook 197.2, the H. W. Wilson Company, N. Y., 1973, p. 95.

^^3^^ Ibid., p. 93. ~^^4^^/6zd.,p. 94.

~^^5^^ Business Week, December 22, 1975, p. 31; Current Biography Yearbook 1972, pp. 92-95.

~^^6^^ Business Week, December 22, 1975, p. 34.

~^^7^^ Business Week, May 3, 1976, p. 86.

~^^8^^ Business Week, December 22, 1975, p. .31.

~^^9^^ Newsweek, February 4, 1980, p. 39.

~^^10^^ Business Week, May 3,1982, p. 43.

~^^11^^ Ibid, pp. 42-46.

^^12^^ Ibid.

~^^13^^ Ibid., p. 46.

'~^^14^^ Time, February 22, 1982, p. 38.

~^^15^^ Documents and Resolutions. The 26th Congress of the CPSU, pp. 38-39.

~^^16^^ Fortune, November 2, 1981, p. 16.

160

~^^17^^ See Victor Perlo, The Empire of High Finance, International Publishers, N.Y., 1957, p. 158.

~^^18^^ Fortune, January 26, 1981, p. 55.

~^^19^^ Time, February 22, 1982, p. 38.

~^^20^^ International Business Yearbook 1977/78, London, 1977, p. 653.

~^^21^^ Time, October 3, 1977. ~^^22^^/bid., pp. 42, 43.

~^^23^^ Ibid., p. 43.

~^^24^^ Fortune, October 9, 1978, p. 127.

~^^25^^ American politicians and businessmen have dubbed this group the Whiz Kids, each a success story on a national scale.

~^^2^^J! Newsweek, May 3,1965, p. 58.

~^^27^^ Current Biography Yearbook 1970, p. 416.

~^^28^^ Business Week, April 19, 1982, p. 47.

~^^29^^ Fortune, November 16, 1981, p. 15.

~^^30^^ Business Week, April 19, 1982, p. 56.

~^^31^^ Ibid, p. 47.

~^^32^^ The Washington Post, August 7, 1982, p. A10; October 5, 1982, p. A14.

~^^33^^ See Moody's Industrial Manual 1980, Vol. 2, p. 4916.

~^^34^^ Fortune, September 22,1980, p. 97.

~^^35^^ See Moody's Industrial Manual 1979, p. 1769.

11-349

[161] __NUMERIC_LVL1__ Chapter Four __ALPHA_LVL1__ ALL THE PENTAGON'S
MEN

Monopoly capitalism ... is, by virtue of its fundamental economic traits, distinguished by a minimum fondness for peace and freedom, and by a maximum and universal development of militarism.^^1^^

__ALPHA_LVL2__ ``THE BIGGEST
ORGANIZATION"

The Pentagon, the nickname of the US Defense Department, has become a symbol of militarism.^ To describe it as a part of the statemonopoly system, let us first of all turn to the size of its budget, property and personnel. Table 7 contains US statistics on American military spending since 1940. The Defense Department accounts for most of these expenditures (98 percent in the early 1980s).^^3^^

The Pentagon indeed dwarfs all other government and private agencies and organizations. No other Federal agency has ever received such astronomical sums from the national treasury--- not only during World War II but also in the postwar years. By 1986 another 1,500 billion dollars will be added to the two trillion already spent for military purposes from 1950 to 1980.^^4^^ Secret Pentagon statistics which have leaked into the US press indicate that the United States plans to boost its military spending to two trillion dollars from 1985 to 1989. Encouraged by the President, top Pentagon officials demand that this already fantastic sum be increased by another 200 or 300 billion dollars.

162

The Pentagon's appropriations have almost never dropped below 25 percent, and sometimes even exceeded 60 percent of the Federal budget. Until 1973 no government agency had ever challenged the Pentagon's primacy in terms of budgetary allocations.^^5^^ Annual subsidies to the Defense Department are much greater than the combined annual sales of General Motors and Exxon, the two biggest corporations in the United States and in the capitalist world as a whole. There are only nine nations whose gross national product is greater than the Pentagon budget.

Table 7

The US Military Budget (1940-1985) (in $ mln)

Fiscal

Military

Federal

Percen-

GNP

Percentage

year

spending

budget

tage of

in military

military

spending

spending

in GNP

in Federal

budget

1940

1.5

9.1

16

100.6

1.5

1941

6.0

13.3

45

125.8

4.8

1942

23.9

34.0

70

159.1

15.0

1943

63.2

79.4

80

192.5

32.8

1944

76.7

95.0

80

211.4

36.3

1945

81.2

98.4

83

213.6

38.0

1946

43.2

60.4

71

•210.7

20.5

1947

14.4

39.0

37

234.3

6.2

1948

11.8

33.0

36

259.4

4.5

1949

13.0

. 39.5

33

258.1

5.0

1950

13.1

39.6

33

284.6

4.6

1951

22.5

44.0

51

329.0

6.8

163 1952

44.1

65.4

67

342.0

12.9

1953

50.5

74.2

68

365.4

13.8

1954

47.0

67.8

69

363.1

12.9

1955

40.7

64.6

63

397.5

10.2

1956

40.7

66.5

61

419.2

9.7

1957

43.4

69.4

62

442.8

9.8

1958

44.2

71.9

62

444.2

10.0

1959

46.6

92.1

51

482.1

9.7

1960

45.7

92.2

49

503.8

9.1

1961

47.5

97.8

48

520.1

9.2

1962

51.1

106.8

48

560.3

9.2

1963

62.8

111.3

47

589.2

9.0

1964

54.2

118.6

46

628.7

8.7

1965

50.2

118.4

42

676.3

7.4

1966

56.8

134.6

41

721.2

7.8

1967

70.0

158.3

45

793.9

8.8

1968

80.5

178.8

45

865.0

9.3

1969

81.2

184.5,

44

931.4

8.7

1970

77.8

197.9

39

976.5

8.0

1971

76.4

212.7

36

998.5

7.7

1972

78.0

231.9

34

1,171-1

6.7

1973

76.0

246.5

31

1,307.0

5.8

1974

78.6

258.4

29

1,413.0

5.6

1975

86.6

324.6

27

1,516.0

5.7

1976

90.0

366.5

25

1,640.1

5.5

1977

97.5

400.5

25

1,864.1

5.2

1978

105.2

448.4

24

2,083.8

5.1

1979

117.7

491.0

24

2,353.3

5.0

1980

134.0

576.1

24

2,567.5

5.2

1981

160.0

657.2

24

2,858.6

5.6

1982

187.5*

725.3*

'26

3,082.4*

6.1

1983

221.0*

7.57.6*

29

3,433.6*

6.4

1984

253.0*

805,9*

31

3,791.9*

6.7

1985

292.0*

868.5*

34

4,163.5*

7.0

* Estimated.

Compiled from: The Budget of the United States Government. Fiscal Years 1960-1982, Executive Office of the President, Office of Management, Washington.

Comparing the Pentagon to other government agencies and specifically, to the State Department, the US researcher Adam Yarmolinsky wrote: "As the military establishment has grown the relative strength of the State Department and the Pentagon has shifted. Defense is now usually dominant. The most obvious and perhaps the most important difference between the Department of Defense and the Department of State is one of size. Expenditure for defense is now running at a rate some twenty times the rate for all other international activities, including foreign aid and the US Information Agency.... only the Defense Department (and through it, the White House) has effective immediate voice communications throughout the world. United States ambassadors abroad have to ask for rides in their military attaches aircraft, and State Department officials at home have to ask for rides in their Pentagon colleagues official automobiles.''^^6^^

Obviously, one has to take into account not only the scale of the military appropriations but also the way they are spent. Most of them are used to finance military programs. For example, in the early 1980s less than one-third of the Pentagon's budget went to pay for the needs of the armed forces personnel; the balance was poured into military programs---chiefly into purchases of goods and services from the militaryindustrial corporations. The Defense Department itself, with over 300,000 people employed at its enterprises, produces goods and services worth some six billion dollars. Throughout the postwar period the expansion of military programs has accounted for most of the increase in Federal purchases. Not accompanied by a similar increase in purchases, the parallel growth of the government's civilian spending was caused by the rising

165

costs of maintaining a managerial apparatus, of making specific payments and detailing funds to states and local government bodies. For example, in 1983 military purchases made up over two-thirds of all the purchases of goods and services by the Federal Government. Thus the military establishment is the biggest customer of private industries. This is where the firmest links between them are forged.

Military contracts and purchases involve the use of sophisticated technologies and the employment of a great mass of skilled experts, engineers and workers. About one-third of all the scientists and engineers in the United States are connected with work on military programs. In some states and areas of the nation employment and income largely depend on and are shaped by military outlays.

Of all the government (and nongovernment) agencies, the Pentagon is the biggest holder of property. It owns millions of acres of land which house bases, barracks, air fields, ranges, training centers and other installations. This is how Murray Weidenbaum described the situation in the early 1970s in his book The Economics of Peacetime Defense: "The scale of physical resources used by the military establishment is so staggering that it is difficult to comprehend its magnitude. The Department of Defense owns 51 billion dollars worth of land and buildings and 172 billion dollars in supplies and equipment, mainly weapons. The holdings of individual corporations, however large and diversified, pale in comparison: Standard Oil of New Jersey reports ownership of 20 billion dollars in land, plant and equipment; General Motors reports 14 billion dollars; and US Steel a paltry 9 billion dollars.... The Department of Defense holds more physical assets than all of the other depart-

166

ments and agencies of the federal government combined.... The military is our number-one landholder.''^^7^^

The US Defense Department is staffed by over three million people---more than employed by any other of the nation's agencies. The Pentagon accounts for almost 40 percent of all the government-employed civil servants. If we add to that the armed forces' personnel, the share of the Defense Department rises to over twothirds of the Federal state apparatus.

With some two million workers in the military industry, the Department of Defense is also the biggest employer. Add to this the figures representing the armed forces' personnel and the number of civilian employees, and the result will show that almost seven percent of all the Americans producing goods and services are connected with the Pentagon.

Defense Department leaders like to think that their establishment is the world's "biggest organization.''

Let us now take a look at who controls this militarist Leviathan.

__ALPHA_LVL2__ THE PENTAGON
HIERARCHY:
THE TOP RUNGS

The elite directing the operations of the United States' huge and complex war machine is not homogeneous.

Top-level army officers form one part of it. Currently serving with the armed forces are some 2,000 generals and admirals. Some of them are in charge of various elements of the Army, the Air Force and the Navy, of the network of political and economic connections, and of information and propaganda. The top rung of

167

the military-bureaucratic ladder is occupied by the Joint Chiefs of Staff, each leading an arm or a service. While the chairman of the JCS and the chiefs themselves are appointed by the President, they are all career soldiers. Most of the current members of this group were active in the Korean and/or the Vietnam wars. The chiefs of staff, their deputies and aides are, among other things, the people who largely determine the requirements in this or that type of weapon.

In terms of their social background, the people comprising the top cadre of the US military caste are flesh and blood of the propertied classes. The graduates of the prestigious military academies---like the Navy's in Annapolis and the Army's in West Point---are, as a rule, members of the bourgeoisie. Promotion comes much swifter to them than to other officers. Virtually all the generals and admirals who served on the Joint Chiefs of Staff in the 1970s are children of industrialists, landholders, career army officers and civil servants. And now a few words about some of them.

Admiral James Holloway III was Chief of Naval Operations from 1974 to 1978. His father was an admiral too. James Holloway III graduated from the Annapolis Naval Academy and the National War College. In the 1950s he fought in Korea, and in the 1960s was commander of the USS Enterprise, a nuclear aircraft carrier, and of the entire 7th Fleet. Subsequently appointed Deputy Chief of Naval Operations, he fought in Vietnam under Admiral Elmo Zumwalt, his fellow-cadet at Annapolis. After his term of service as Chief of Naval Operations expired, Zumwalt recommended Holloway as his replacement.^^8^^ For four years, up to 1978, Holloway was in charge of all the naval operations of the

168

United States. Then he retired.

General David Jones, Chairman of the Joint Chiefs of Staff under Carter and Reagan, is a former aviation cadet and graduate of the National War College. He directed 29 bombing raids against civilian targets in North Korea and countless missions in Vietnam. In the 1970s Jones held highly responsible posts in the Pentagon: Deputy Air Force Chief of Staff, Commander of American Air Forces in Europe, and Air Force Chief of Staff.^^9^^

Alexander Haig's career is also typical. Before his appointment as President Reagan's Secretary of State he was seen as one of the more outstanding figures in the US military establishment. The son of a prosperous lawyer from Philadelphia, Haig enrolled at West Point with the help of a rich uncle. After graduation, Alexander

199-14.jpg

Alexander Haig in Vietnam 169

Haig served with the US army of occupation in Japan. While in Japan he married the daughter of a general---a senior aide to Commanding General of the US Army Forces in the Far East---and was soon made a staff officer. He became a close friend of such influential Pentagon officials as Fritz Kraemer and Joseph Califano (the latter was subsequently a member of the Carter cabinet). At one point Haig was an aide to the then Defense Secretary Robert McNamara. In 1966 he commanded a battalion which performed punitive missions in Vietnam. From 1969 to 1970 Haig served as an assistant to Henry Kissinger, then the President's adviser on national security. In the first half of 1973 Alexander Haig became Deputy Chief of Staff of the Army, then White House Chief of Staff and then, from 1974 to 1979, NATO's Supreme Allied Commander, Europe. After returning from Brussels to the United States, Haig delivered a series of lectures on the "Soviet military

199-15.jpg

United Technologies president Alexander Haig receives a present from the Connecticut branch of the US Air Force Association

170

threat," while simultaneously planning to seek the Republican Presidential nomination,However, after weighing his chances, he accepted the invitation from the owners of United Technologies and became president of this aerospace military concern in late 1979. A year later he was offered the post of State Secretary.^^10^^

Another part of the Pentagon elite is made up by the secretaries of individual services, their deputies and assistants. This group is led by the US Secretary of Defense. These are civilian officials and their appointment is endorsed by the President. He also endorses the appointment of the Chiefs of Staff and the chairman of the JCS. The Chiefs of Staff report to the secretaries of their services and the JCS chairman, to the Secretary of Defense. All this is supposed to ensure civilian control over the military and to prevent the latter from acquiring excessive influence/In actual fact, civilian leaders work, as a rule, hand in glove with the top brass, and civilian control over the military departments has long become an empty word due to the operation of several f actors.11

Most civilian leaders hold their posts for a relatively short time---for an average of three to four years. They come and go together with the changing administrations. Meanwhile, military officials holding army ranks usually serve with the Pentagon for long periods and comprise a more stable group in the Defense Department. Consequently, the assessments and viewpoints of the military prove to be more stable and influential.

Aside from that, army officers serving with the Pentagon are promoted by their superior officers, not by civilian leaders. Besides, appointed civilian officials often have poor knowledge of the tasks entrusted to them. Aware of that,

171

they deal very cautiously and loyally with the military they are supposed to "control." Their pre-Pentagon careers did not supply them with the necessary experience, but what brought them there was their close links to the leaders of the administration which came to power. For example, prior to his appointment as Secretary of the Navy in January 1981, John Lehman was president of Abington, a corporation providing consultative services, and an adviser to Ronald Reagan during his 1980 election campaign. Bern Orr, the new Secretary of the Air Force, was director of a California finance agency from 1970 to 1975, in close contact with Ronald Reagan, while John Marsh, the new Secretary of the Army, advised Reagan on legal matters.

Bureaucratic considerations prompt the civilian leaders of the Pentagon to share the views of the military. The prestige and the size of remuneration of the civilian officials largely depend on the size of the agency or department they run. Here, their interests coincide with those of the military. That is why the civilian elite of the Pentagon usually acts as a champion of the military before Congress and the public. Very frequently, these civilians are the mouthpieces of the military and the arms manufacturers, expressing their -demands and finding pretexts for increases in the military budget and for the arms buildup. John Lehman, the Navy Secretary mentioned above, said in March 1981 that the United States should no longer honor the SALT-I Treaty, that it should escalate the arms race and considerably increase the number of surface vessels, submarines and aircraft carriers.12 According to J. Ronald Fox, a competent expert on the Pentagon ways and moves, "an Assistant Secretary considers himself as the chief spokesman for his service's program or his own

172

area of responsibility. The military services expect an Assistant Secretary to champion their programs before Congress and to obtain as much financial support as possible. If an Assistant Secretary frequently fails to obtain the level of funding requested, he will lose the support of senior military officers. He will then find it almost impossible to gain access to important information known to military personnel. (Within the Pentagon, the withholding of information is probably the most effective weapon in any official's arsenal.)

``Even the Secretary of Defense may subscribe to the point of view that civilian appointees are spokesmen for the military.... The Chiefs see the Secretary as the 'defender of Defense.' They expect him to protect their services from the onslaughts of those who want to reduce defense spending drastically.''^^13^^

And finally---last but not least---the pressure the military contractors exert on civilian leaders, demanding to keep up military production and spending. Those elements of the Pentagon which deal particularly with arms contracts and purchases deserve a closer scrutiny.

__ALPHA_LVL2__ THE MECHANICS OF
ARMS PURCHASES

The three Assistants to the Defense Secretary provide overall direction over arms procurement. Each takes part in all the main stages of the process, but it is the Assistant on Installations and Logistics who, it appears, plays the foremost role. Largely, he is the one who names the terms and the executors of the contract, the quantity of each type .of weapons to be purchased. He is head of the group which deals with signing the contract and with monitoring the imple-

mentation of the programs. Each service Secretary also has three assistants. In other words, the group of general purchasers consists of 12 members. The responsibility for this or that program is shared by the three assistant secretaries of each service and the three Assistant Defense Secretaries.

The rivalry among the three services is expressed in that each department wants bigger and more expensive programs. Problems of controlling production costs of a weapon system are relegated to the background. True, the officials responsible for arms procurement often publicly state the need to economize on military programs, but most of them actually resist it. This discrepancy between word and deed results mostly from the constant pressure the arms manufacturers bring to bear on the Pentagon officials: "Every Assistant Secretary ... wants to acquire the weapons and equipment needed by the services, on schedule and for the lowest reasonable cost. At the same time, each is directed to build and/or maintain an industrial base that will meet tomorrow's uncertain defense needs. Lowering contractor costs means reducing the number of employees in a contractor's plant. This supports the first objective but endangers the second. Indeed, during periods of declining defense spending, defense contractors constantly visited Pentagon officials to plead for additional business, on the grounds that the capability of their plants was vital to the needs of national defense. Some military officers supported this convention, as did Senators and Congressmen within whose districts employment was being affected.''^^14^^

Here the interests of the arms manufacturers coincide to an especially great degree with those of the bureaucrats in charge of research and de-

174

velopment of weapons systems. They display particular zeal in pushing new programs through and vigorously submit petitions on their funding to the office of the Defense Secretary and to Congress. Although they are also officially responsible for the economic efficiency of the programs, such questions are much less important to them than the issue of advancing military technologies.

Bourgeois researchers often explain this ``lavish'' spending of the taxpayers' dollars by the great scale of the programs themselves.

``Since research and development officials work every day with programs that cost hundreds of millions, or even billions, of dollars, they sometimes become insensitive to smaller sums of money. During a meeting called to discuss a major contract change in a system under development, several staff members asked the briefer whether the new feature was worth the cost---approximately 200 million dollars. An Assistant Secretary for Research and Development was obviously disturbed at the implied opposition to the proposal. In an outburst of exasperation he snapped: 'Hell, we spill 100 to 200 million dollars per year. That amount of money is peanuts compared to the size of the program....'

``In another situation a meeting had been called to discuss a major new development program. The briefer reported that all prospective contractors had agreed to implement a relatively new cost control technique supported by an Assistant Secretary of Defense. To this, an Assistant Secretary for Research and Development retorted: 'That's a shame!' When questioned later, he commented that budgets, performance measures, and periodic cost estimates were 'all activities that the comptrol-

<3i2w»ahttsafes |»?| staffers' fc"{

199-16.jpg

William Parry

lers and procurement people are trying to use to limit research arid development activities.' "15 But this is only part of the reason.

The most important thing is that more than other top-level Pentagon officials, Assistant Secretaries for Research and Development are connected with the arms producing corporations. Most of them come to the Pentagon from important posts in private laboratories and companies specializing in military research and production. After serving their term with the Defense Department, they usually return where they came from. An analysis of the careers of 100 high-level officials working in the office of the Assistant Defense Secretary for Research and Development from 1958 to 1970 has shown that after leaving the Pentagon, 30 percent of them went to work for one of its top 100 contractors; of these, more than half simply returned to the positions they had held before becoming civil servants. Naturally, this is typical of other groups of Pentagon officials too, but not to such an extent. Of 124 Pentagon officials who held the posts of secretaries, undersecretaries and assistant secretaries during the same period, only ten (eight percent) left their posts af-

ter completing their term of office for jobs with one of the top 100 military contractors.^^16^^

In its March 1980 issue Fortune magazine ran a feature on William Perry, Undersecretary of Defense for Research and Engineering under President Carter. The post is the third most important in the Pentagon hierarchy. Working under Perry were 350 officials responsible for elaborating arms procurement policy and controlling the implementation of 1,500 militaryindustrial and research programs. Besides, Perry supervised all exports of US military technologies and coordination of military R and D between the United States and NATO, During his first three years in office Perry, "prodded by worriers over Soviet intentions," helped the Pentagon secure "a record 16.5 billion dollars for research and engineering ... and an additional 40.5 billion to procure weapons." According to Perry, the United States' arsenal "must be adequate for a limited engagement in the Persian Gulf, a major land battle in Europe, or a fullscale nuclear war." In planning the development of space weapons, he was "pushing hard on laser technology." Convinced that the Russians could increase the number of missiles and warheads, Perry insisted adamantly on speeding up work on the MX and Trident-II missile programs. He maintained that the already unprecedented US military budget should be increased by adding "as much as 30 billion dollars to the cost of countering the USSR's nuclear threat.".Fortune reported proudly that "all the key weapons that will appear in the 1980s---from the cruise missile and giant cargo-carrying aircraft for the Rapid Deployment Forces to the Army's XM-1 battle tank and a host of `smart' weapons---will carry his imprint.''^^17^^ William Perry secured his post with the help of Harold Brown, Carter's Defense

12-349

199-17.jpg

Harold Brown

Secretary and former director of IBM who, as Air Force Secretary under Lyndon Johnson, had supported the bombing of North Vietnam.

Prior to his 1977 Pentagon appointment Perry was known as the founder and owner of Electromagnetic Systems Laboratories, a California electronics company specializing in military production and employing over 1,000 industrial and office workers. Soon after Perry's arrival in Washington his company stock jumped up 235 points.^^18^^ With the advent of the Reagan administration he left the Pentagon and returned tt> the California firm.

__ALPHA_LVL2__ THE BUREAUCRATIC
COLOSSUS

US researchers often link the favorable opportunities open to Pentagon higher echelons for acting in the interests of the military-industrial corporations to the size of the Defense Department and to the fact that, like in any other bureaucracy, it is very difficult in the Pentagon to evaluate the efficiency of management: the criterion of commercial return---the main yardstick of private enterprise---is inapplicable here.

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In any large organization top managers cannot be constantly in contact with a host of information sources, and the Pentagon is no exception, says a former Assistant Secretary of the Army. Big corporations solve this problem by setting up semiautpnomous branches whose presidents are responsible for profits, losses and other indicators of efficiency. But a similar course would run into several snags in the Pentagon: the diversity and complexity of work, no indicators of cost effectiveness, and unreliable criteria of efficiency. Besides, the size and duration of major research and production programs enable bureaucrats to offer deliberatly optimistic forecasts as to the duration, cost and quality of production. According to one program manager, "There is simply no need to lie, one only has to be optimistic.''^^19^^ Partly, that is true. But it is important to stress another factor as well: here we deal not with some abstract bureaucracy but with a bureaucracy under state-- monopoly capitalism, a bureaucracy constantly supported by the military-industrial monopolies with which it is in a state of symbiosis.

The development of this self-perpetuating union has endowed the Pentagon with rare immunity to any innovation which might endanger its ability to manipulate huge financial resources fed into it via the Federal budget. Besides, the Pentagon bureaucratic establishment resorts to all kinds of tricks and clannish mutual support. For example, should obvious flaws in management be discovered in some Pentagon department and its leaders are forced to admit them, they persuade their colleagues not to make the information about these mistakes public because- that might attract unwelcome Congressional or public attention. Pentagon top brass jointly resist the introduction of new,

~^^12^^* 179

more rational management systems because they are perfectly aware of the danger this might pose to their interests. According to J. Ronald Fox, "Pentagon officials do not usually discuss the need for basic changes in the defense procurement system during their terms of office, or even later. Sometimes they do not want 'to endanger subsequent career development by making enemies of private contractors. Nor do they wish to offend career Government personnel who have become pesonal friends. One former Assistant Secretary, for example, ^vas privy to several intelligence reports on United States weapon capability. These analyses suggested that several of the development programs within his service were unnecessary. But he did not make any public statements because, in his words, 'the Chief (of Staff) has taken a strong position on the need for these items, and this means that the service has to fall in line behind him.' He believed that a public statement would not change priorities and, furthermore, would endanger his friendships with many of his former Pentagon colleagues.''^^20^^

James Packard, owner of Hewlett-Packard, once said, while he was Undersecretary of Defense under President Nixon: "Let's face it---the fact that there has been bad management of many defense programs in the past. We spend billions of the taxpayers' dollars, sometimes we spend it badly. Part of this is due to basic uncertainties in the defense business. Some uncertainties will always exist. However most of it has been due to bad management, both in the Department of Defense and in the defense industry.... The most frustrating thing is that we know how we ought to manage ... and we refuse to change.''^^21^^

Inflated program costs are the rule, since

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this is how the military-industrial complex realizes its power in economic terms-through the appropriation of military superprofits. If the need to cut down the costs of military programs does arise, it is usually met by reducing the number of the weapons systems produced. It is rare for improvements in production or in management to be even considered as an alternative.

The Pentagon's career army officers make a special contribution to inflated military expenditures and to the arms race. Citing the need to minimize the possibility of defeat in international conflicts, the top brass clamor for the greatest possible expansion of military programs and for sacrificing economic considerations to the nation's "supreme interests." As J. Ronald Fox points out, "each believes that national safety depends on acquiring more and more armed forces and more and more advanced weapons, and that total preparedness for all-out conflict is the only sane policy.''^^22^^ He also offers this quotation from Admiral Thomas Moorer, formerly chairman of the Joint Chiefs of Staff: "The threat is there and we get paid to tell Americans it is there. If we get caught with insufficient forces we're also blamed for saying a threat exists. It all boils down to whether or not the US is going to protect and maintain its interests as world power.''^^23^^

The military have no motives to cut down military spending or use the appropriations more efficiently. On the contrary, the typical trend is toward constantly increasing purchases of new weapons systems and other materiel. The American press, reports that opposition to the development of new weapons systems may ruin an army man's career: promotion depends on the degree of campaigning for more purchases.

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In early 1982 Time magazine noted that in the age of rapid technological development, one way of getting ahead in the armed forces was to take care of a weapons system and see it through. Career-minded officers often join forces with the contractors, persuading the Pentagon and others that their project simply has to be implemented. Here, the temptation to deliberately downplay the costs is present from the very start. According to Army Undersecretary James Ambrose, "it almost seems an institutional phenomenon that projects start with gross underestimates by both Government and the contractor.''^^24^^

__ALPHA_LVL2__ THE MILITARIST
TRIANGLE

There are, of course, many facets to the relations between government-appointed civilian officials and the Pentagon's military leaders. On the one hand, rivalries are often present. On the other, the community of bureaucratic interests and close links to the same arms manufacturers bind them together. Formally, top-ranking officers are subordinate to the Department's civilian leadership. In actual fact, however, the situation is somewhat different. Civilians value the atmosphere of trust existing between them and the top brass: the latter have the necessary information and extensive professional expertise and consequently, better connections in big business. Again, J. Ronald Fox: "After hearing repeated references to so-called civilian leadership in the Pentagon, one Assistant Secretary voiced his surprise at the amount of effort expended by senior civilians to win and retain the allegiance of the Chiefs of Staff and their military assistants. Another Assistant Secretary commented:

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'If you start asking probing questions around here, the sources of information soon begin to dry up.' The attitude of the career personnel seems to be, 'what's the matter, don't you trust us?' On most issues, when a general or admiral tells a Secretary or Assistant Secretary that the military staff does not wish to change a particular course of action, the pronouncement is not usually challenged. One Assistant Secretary observed: 'The difficult part of the current military/civilian appointee relationship is that the civilians have to play a humoring role and a soft role, selecting very carefully those points to challenge. To challenge too many points is to cut off your sources of information.' "^^25^^

While doing all-they can to strengthen this or that service as much as possible, the top brass also hide behind the protective screen of the civilians, officially, their superiors, from criticism leveled at the military. They often say that they do not shape but only execute national policy. Sometimes even more hypocritical voices are heard; one example was provided by General Thomas Power, formerly commander of strategic aviation: "Let us look at the Pentagon. At the top is a large group of civilians appointed by the President and the Secretary of Defense. These men are in complete charge of all military operations.... I do not think it is widely understood that there is not a single military man in this country who has any authority to do anything given to him by law by the people of this country. The authority is held entirely by civilians and is only delegated to the military at their discretion.... Keep this in mind when inclined to make a fuss about too much military influence.''^^26^^

Ackowledging that the Pentagon is dominated by the military and that so-called civilian control

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is fictitious, American researchers sometimes conclude that the establishment of actual civilian control could make the Defense Department function properly. "The system for dividing responsibility and authority between civilian appointees and military officers in the Pentagon seriously hampers the weapons acquisition process," J. R. Fox notes. "...Civilian control of defense activities must become a working reality.... To achieve a more appropriate balance of power, personnel assignments and promotions---military and civil service---must be directed by civilian appointees rather than Chiefs of Staff.''^^27^^

It nevertheless appears that one should hardly overestimate the importance of a possible transfer of authority to civilians.

The fact is that all groups of the Pentagon leadership are within the sphere of influence of the biggest arms manufacturers. Managers of military-industrial corporations meet regularly both with high-ranking military officers and with Pentagon civilians. Again a quotation from J. Ronald Fox's book: "An Assistant Secretary may see representatives from the 10 to 20 largest contractors for his service every few months. Pleasantries are exchanged, the visitor mentions his company's progress on various programs. Sometimes a low-key sales talk is delivered: the service should buy additional quantities of a weapon system or should undertake a new development program.... Sometimes the contractor mentions problems his company is having with Defense Department contract administrators....

``Senior defense officials are on the regular guest lists for industry cocktail parties in Washington. Here they discuss development and production problems informally with senior repre-

sentatives of major contractors. When the companies have complains about program administration, they voice them at the highest level of the Pentagon.''^^28^^

J. Ronald Fox describes another interesting detail in his book: when a senior Pentagon official visits a military factory, the governmentappointed contract administrator at the factory is present at all official meetings with the contractor's senior managers. But by the end of the visit the Pentagon official is usually invited to meet with the company's top executives in private. Contract administrators are not happy with this arrangement because they realize that they are the subject of conversations at such meetings. And, although the Pentagon officials take time out to listen to the contract administrators' version of any disputed question, "the exclusiveness of these private discussions suggests to field personnel that senior defense officials are more sympathetic to industry executives than to those responsible for protecting Government interests in the field.''^^29^^

There is no doubt that the relations between top Pentagon officials and senior managers of military-industrial corporations should be described above all as relations between allies. And here, mutual attraction is not a consequence of random likes or dislikes but an objective manifestation of state-monopoly relations.

There are considerable contradictions and friction within this alliance. For this reason some people in the United States speak of "partnership of Government and industry," while others point to ``rivalries'' between two sides with partly common and partly opposing interests. Occasionally the Pentagon does chide this or that company for cost overruns. In 1982, for example, the Army came into conflict with

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General Richard Ellis prefers General Dynamics products

Hughes Aircraft over the AH-64 helicopter. In 1978 the cost was estimated at 7.4 million dollars but later it more than doubled and reached 18.26 million. The company claimed that this was the result of the numerous changes the Army had been demanding throughout the nine years of- the helicopter's development---for example, a laser-guided antitank missile instead of the originally planned wireguided armament, and an additional computeriz-

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ed guidance system for night-time operation. "For every feud, however," Time magazine says, "there is many a friendship between Pentagon and producer, and most disputes end up amicably---with the Government agreeing to pay most of the cost increases.''^^30^^

As noted earlier, of great importance as bonds between the Pentagon's military-bureaucratic elite and the top executives of military-- industrial corporations are special state-- monopoly organizations officially designed to maintain close ties between the military industry and military government agencies. One of these is the Association of the United States Army. Norman Augustine, its current president, was Undersecretary of the Army; after completing his term of office in the Pentagon he became vice-- president of Martin Marietta Aerospace, a post he held until 1980. The Association's board of

Norman

R. Augustine

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trustees is headed by John W. Dixon, chairman of the board and president of E-Systems, Inc., a rapidly growing Texas-based military firm.^^31^^

``Each of the services has its own link with its major industrial suppliers," Adam Yarmolinsky writes, "through a kind of alumni association---the Association of the United States Army, the Navy League, the Marine Corps League, and the Air Force Association. These associations relate retired military personnel to the more active elements in the Reserves, with financial support from major defense contractors. Each association, not surprisingly, takes a generally expansionist view of its alma mater....

``The military establishment, then, is no simple pyramid of power. But its base is more than broad enough to accomodate a good deal of internal bureacuratic conflict without diminishing significantly its overall impact on American society.''^^32^^

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Admiral Thomas Hayward, Chief of Staff of the US Navy

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Over 700 industrialists attended a Los Angeles symposium held under the auspices of the Air Force Association

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US top brass at a reception given by the Association of the US Navy .

The growing role state-monopoly bureaucracy plays in bourgeois society is no accident. It is a law of the development of imperialism and state-monopoly capitalism. "Imperialism--- the era of bank capital, the era of gigantic capitalist monopolies, of the development of monopoly capitalism into state-monopoly capitalism," Lenin noted, "has clearly shown an extraordinary strengthening of the 'state machine' and an unprecedented growth in its bureaucratic and military apparatus.''^^33^^ In the United States, this trend became especially pronounced after World War II. As the United States turned into the mainstay of reaction and militarism, a huge military bureaucracy took shape. Commanding an arsenal of nuclear missiles capable of extinguishing life on Earth several times over, this bureaucracy has spread its tentacles to the remotest corners of the globe. All this has inevitably changed the status of those who control the means of armed violence---the US military elite. As things developed, the inexorable forces motivating the militarists themselves, as well as their vested interests raised the Pentagon even higher. Contributing greatly to the growth of these internal factors were the increasingly firm links cementing the union between the military and the leaders of the military-industrial corporations.

Chapter Four

~^^1^^ V. I. Lenin, Collected Works, Vol. 28, p. 239.

~^^2^^ The nickname derives from the pentagonal shape of the US Defense Department headquarters---a sprawling, fortress-like structure consisting of five concentric pentagons, each five stories high. Built on the bank of the

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Potomac during World War II, the Pentagon is said to have been designed to produce a mind-boggling impression of brute unfeeling strength. Each of the Pentagon's five wings could easily house the Capitol, the second largest administrative building in the United States. The area the Pentagon occupies is over 33.5 acres. Its military and civilian personnel totals 26.000, with maintenance workers alone numbering 1,000.

~^^3^^ The US military budget is the sum total of the annual allocations and expenditures (budget authorities and outlays) in the "national defense" category of the Federal budget. This category includes the spendings incurred by the Defense Department, the cost of developing and manufacturing nuclear weapons by the Energy Department, as well as the costs of other military programs. Certain types of essentially military expenditures of other Federal agencies (five to ten billion dollars) do not appear under this heading. ``Outlays'' and "budget authorities" differ not only in size but also in their economic content and functions performed. ``Outlays'' reflect the actual payments made by Defense Department agencies for military goods and services. "Budget authorities" refer, first and foremost, to the overall amount each given agency is authorized to receive from the Federal budget for paying its military and civilian personnel and contractors. The obligations themselves are financed gradually, sometimes over several years.

~^^4^^ Time, March 16, 1981, p. 20.

~^^5^^ Beginning in 1973 the budget of the Department of Health, Education and Welfare began to somewhat exceed that of the Defense Departement. President Reagan, however, restored financial primacy to the Pentagon.

~^^6^^ Adam Yarmolinsky, Op. cit., pp. 32-33.

~^^7^^ Murray L. Weidenbaum, Op. cit., p. 26.

~^^8^^ See Lawrence J. Korb, The Joint Chiefs of Staff, Indiana University Press, Bloomington and London, 1976, p. 188.

~^^9^^ Ibid., p. 187.

J5 Time, March 16, 1981, pp. 16,17.

American researchers single out yet another group comprising the Pentagon elite: the "career civil servants" who hold high-level positions in the office of the Defense Secretary, of the secretaries of the services, of their

191

aides and chiefs of staff. Their ranks, codenamed GS-16, GS-17 and GS-18, are equal to those of generals and admirals.

~^^12^^ Time, March 16, 1981, p. 13.

~^^13^^ J. Ronald Fox,.Op. cit., p. 75.

~^^14^^ J. Ronald Fox, Op. cit, pp. 74-75.

~^^15^^ Ibid, pp. 76-77.

~^^16^^ See Report of the Blue Ribbon Panel to the President and the Secretary of Defense on the Department of Defense, July 1, 1970, p. 187.

~^^17^^ The term ``smart'' weapons applies, among other things, to the various rapidly emerging self-homing missiles and bombs. The American press maintains that they will revolutionize combat tactics and "enable NATO to secure a balance of forces.''

~^^18^^ Fortune, March 10, 1980, pp. 60, 66.

~^^19^^ J. Ronald Fox, Op. cit, p. 90.

~^^20^^ Ibid., pp. 91-92.

~^^21^^ Ibid., pp. 81,'70. ~^^22^^/6id,p. 82.

~^^23^^ Ibid.

~^^24^^ Time, February 22, 1982, p. 38.

~^^25^^ J. Ronald Fox, Op. cit, pp. 82-83.

~^^26^^ Ibid., p. 83.

~^^27^^ Ibid., p. 92. ~^^28^^/&zd,pp. 84-85. ~^^29^^/&zd.,p. 85.

~^^30^^ Time, February 22, 1982, p. 38.

~^^31^^ Army, August 1980, p. 69.

~^^32^^ Adam Yarmolinsky, Op. cit, p. 21.

~^^33^^ V. I. Lenin, Collected Works, Vol. 25, p. 415.

[192] __NUMERIC_LVL1__ Chapter Five __ALPHA_LVL1__ THE POLITICAL
ELEMENTS OF THE
MILITARY--
INDUSTRIAL COMPLEX __ALPHA_LVL2__ [introduction.]

The upper crust of the arms-manufacturing concerns and the career militar officers make up the core of the military-industrial complex--- the complex in the narrow sense. Pursuing its selfish objectives and consolidating its power and influence in the United States, this group creates numerous allies for itself---or sometimes finds them ready and waiting. Taken together, they represent the military-industrial complex in a broader sense.

__ALPHA_LVL2__ WASHINGTON
OFFICIALDOM

High-level figures in politics and government are the most important political element of the complex. They are those who largely shape the view of the international situation, domestic and foreign policy and, consequently, determine the scope and nature of war preparations. This explains the generous "investments in politics" the military-industrial quarters make to ensure ``understanding'' with the government apparatus.

In his book The Economy of Death the US political scientist Richard Barnet traces the po-

13-349

193

litical connections of several military contractors which grew especially fast in the 1960s. One of these is the Brown and Root Company of Texas. The Brown brothers from Houston were the first to finance the political career of Lyndon Johnson. During his presidency the company was awarded lucrative government contracts for the construction of military bases in South Vietnam. Between 1962 and 1967 the military contracts of Texas firms increased 350 percent.^^1^^ James Ling of Dallas, the owner of Ling-Temco-Vought, Inc., also contributed heavily to the Johnson and Humphrey campaign. While that team was in office, Ling's firm turned into a giant of the US military industry.^^2^^

Richard Nixon's Republican administration accorded most-favored treatment to California military contractors. The California high finance group led by the Bank of America was the power behind Richard Nixon's first steps as a politician. From the latter half of the 1940s on, the owners of Lockheed Aircarft and Hughes Aircraft made sizable contributions to the Nixon election funds.^^3^^ In the early 1970s Lockheed was facing bankruptcy, and the Nixon administration hastened to baft it out with a 250 milliondollar loan. In those years and later, not without the connivance of the Republican administration the company conducted a series of largescale corrupt transactions. Exposed after Nixon's resignation, the "Lockheed Affair" was essentially the Watergate of the business community.^^4^^ Hughes Aircraft also received favors from the Nixon administration.

Many members of the Carter cabinet were pure products of the military-industrial complex. Defense Secretary Harold Brown was a former director of IBM and important Pentagon

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official. Joseph Califano, Health, Education and Welfare Secretary, used to be President Johnson's legal adviser and an advocate of the Vietnam War. Prior to his appointment as Transportation Secretary, Brockman Adams was referred to as Boeing's ambassador to Congress. Zbigniew Brzezinski, a superhawk, was President Carter's national security adviser. The post of Energy Secretary went to James Schlesinger, former Secretary of Defense, champion of the nuclear arms race and one of the behind-the-scenes architects of the political and lobbyist organizations of the military-industrial complex (more about this later).

Still, the current administration has even closer ties with the complex. Like Richard Nixon, Ronald Reagan owes his political career largely to the California plutocracy.

Ronald Reagan, was born into the family of an Illinois shoe salesman on February 6, 1911. In 1933 he graduated from college and became a sports newscaster. His movie career began in Hollywood in 1937. During World War II Reagan worked with the Motion Picture Department of the Air Force. Then returned to Hollywood and, in 1954, joined the General Electric Theater (the company financed shows extolling the capitalist system) as the TV host and guest perfpmer at General Electric enterprises. The Nation once asked whether Reagan was simply a mouthpiece for GE. Reagan himself and Lemuel Boulware, vice-president of the corporation, as well as its other spokesmen, claimed that the management never put words into the star's mouth. Labor relations and public relations experts, however, questioned that: a corporation would hardly pay an actor 125,000 dollars a year and send him to perform before the workers without instructing him in any

195

way. Reagan discussed the political slant directly with the GE leading executives. While working for General Electric, Ronald Reagan told reporters the Communists threatened to splash sulphuric acid in his face and that, he maintained, made him a fighter for ideas who would never stop fighting. According to the US press, right-wing Republican leaders and the financiers and industrialists behind them noticed Reagan's performance in the GE Theater and began to support him. After that, The Nation wrote, Reagan began to collaborate with the American right wing. He starred in two long anticommunist movies by a far right California producer and toured the nation making speeches. In 1964 Reagan was active in the Barry Goldwater presidential election campaign. In 1965 Reagan's name featured high on the list of the gubernatorial contenders in California, the biggest state in terms of population and of the military contracts received. He entered the national political scene in 1966, when he defeated Edmund Brown and became Governor of California. On the eve of the election Ramparts magazine wrote that the Bank of America and its friends were powerful enough to hand the governorship to the man of their choice; the question was who they would choose. Incidentally, the Bank of America is one of the leading sources of financing for the Hollywood motion picture industry. It has financed virtually half the 50 films in which Reagan played cowboys, adventurers, gangsters and playboys. The financial and executive committee in the Reagan for Governor campaign was chaired by Henry Salvatori, co-owner and director of Litton Industries and the Bank of America and a hidebound reactionary. In 1970 Reagan was reelected Governor of Califonia. Since 1968 he had made three at-

196

tempts to run for President on the Republican ticket. The third time he made it.

The New York Times Magazine had this to say about the 40th US President in November 1980: "Not since the 1960 campaign of John F. Kennedy has an American Presidential candidate ridden into office sounding so loud an alarm that the United States has fallen perilously behind the Soviet Union in the Arms Competition.... To hear Reagan tell it, Communism is the implacable foe.''

On Ronald Reagan's insistence, the US Senate approved a bill on military spending for fiscal 1983/1984 totaling an unprecedented 252 billion dollars. This record-breaking military budget became the epitome of America's imperial ambitions. Under the current administration, the share of military spending in the US budget has increased by 50 percent and will reach 36 percent by 1985. Once again, the plan is to use the military budget as a symbol of the United States' global role.

Other key offices in Washington's political hierarchy were also handed to militarists. Describing Alexander Haig, US Secretary of State up to mid-1982, Time magazine wrote in March 1981: "A rapid expansion of American military might is fundamental to the foreign policy that Reagan and Haig are shaping.... Haig is a man of simple, clear ideas. His world view can be summed up in a phrase: the Russians are coming.... What he is saying today essentially is what he said as NATO commander....''

Haig's successor George Schultz has just as close connections with the militarist establishment. Previously, he was president of the San Francisco-based Bechtel Corporation, a military construction company, and, in the administration of his fellow Californian Richard Nixon,

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he was head of the Treasury and the Department of Labor. Shultz was among the founders of the Committee on the Present Danger, the most representative and well-known political organization of the military-industrial complex.

When Caspar Weinberger was director of the Office of Management and Budget under Richard Nixon, his strict economizing and reductions of the funds earmarked for social needs earned him the nickname of Cap the Knife. As Secretary of Defense under Reagan, he now does his utmost to increase the military budget. " 'Cap the Knife' should be known henceforth as 'Cap the Shovel,' " Newsweek quipped in its issue of March 16,1981.

A Harvard graduate, Weinberger was a lawyer in San Francisco before World War II. In the 1940s he served as an intelligence officer under

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Caspar - Weinberger

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right-wing General Douglas MacArthur. From 1952 to 1958 Weinberger was a member of the state legislature of California; in 1968 and 1969 he was in charge of the state's finances under Governor Reagan. In the first half of the 1970s he served as assistant director and then director of the Office of Management and Budget, an adviser to Richard Nixon and Secretary of Health, Education and Welfare. From 1975 Weinberger was chief legal adviser and vice-- president of Bechtel. According to The Christian Science Monitor, Weinberger's invariable support for greater military appropriations endeared him to the Pentagon brass. He criticized the Carter

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Caspar Weinberger and Joint Chiefs of Staff chairman David Jones are getting a record peacetime arms buildup program passed by Congress

199 Emacs-File-stamp: "/home/ysverdlov/leninist.biz/en/1985/WITB291/20100314/291.tx" Emacs-Time-stamp: "2010-03-18 17:21:16" __EMAIL__ webmaster@leninist.biz __OCR__ ABBYY 6 Professional (2010.03.18) __WHERE_PAGE_NUMBERS__ bottom __FOOTNOTE_MARKER_STYLE__ nil __ENDNOTE_MARKER_STYLE__ [0-9]+ administration for "dragging its feet" in the development and implementation of many military programs "in the face of the Soviet military threat." Upon assuming his position as Defense Secretary, Caspar Weinberger said he would do everything in his power to ensure full combat readiness of the US Armed Forces for any mission; he added that a strong and resolute United States was the best guarantee of peace. Speaking before the Senate Armed Services Committee in March 1981 he described his extravagant plans for military buildup as "the second half of the Administration's program to revitalize America" and called for readjusting the national budget and channeling the alleged excess in funds earmarked for social needs to the military.^^5^^ Over the two years that followed, Weinberger has not only implemented many of these plans but also charted a new escalation of militarism. His 1982 and 1983 directives envisage a more than 80-percent increase in spending for each armed service to 1989. The plan details steps to prepare for an `` effective'' and ``protracted'' nuclear war. Besides, there is a new focus on chemical arms and the development of ``exotic'' weapons using directed energy (lasers, particle beams and microwaves). Under the 1983 directive the Air Force was to develop a space program "to permit decision on an on-orbit demonstration" of laser weapons. The Navy was directed to conduct a "lethality demonstration program.''^^6^^

Richard Allen, the first head of the National Security Council. under President Reagan, was previously on the Committee of the Present Danger executive. Like other national security advisers, Allen submitted a daily summary of world events to the President. One of Allen's assistants was Major General Robert Schweitzer,

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a Vietman veteran. He worked for the Joint Chiefs of Staff.

David Stockman, a man on the far right of politics, is Director of the Office of Management and Budget. Under the program he has proposed the United States is to cut down on health, education and welfare spendings, to reduce what Stockman calls "social fat" while increasing the Pentagon's budget. Art Buchwald has quipped in the Los Angeles Times that Stockman, on advice from Uncle Ronny, is axing all the cherry trees in Washington except those growing around the Pentagon. Before joining the Reagan cabinet Stockman was a Representative for Michigan.

The appointment of William Casey, a career intelligence officer and a businessman, as Director of the CIA, was described in the US press as an "integral part of the fresh upsurge in America's military power.''

CIA Director William Casey

291-1.jpg 201

Commerce Secretary Malcolm Baldridge was previously director of the military-industrial Bendix Corporation. Attorney General William Smith was director in several California companies, a well-known West Coast Lawyer and a close friend of Ronald Reagan. James Beggs, currently head of the National Aeronautics and Space Administration, was a General Dynamics vice-president. Le Monde has remarked that these days you cannot help running into Californians in Washington. The American press describes the Reagan cabinet as a narrow circle of millionaires, mostly comprising conservative Californians who have not only been close, to Reagan for many years but also ``adjusted'' his political career. The Nation, a liberal magazine, wrote in January 1981: "Let there be no illusions about the nature of the new Government of the United States.... The signs are as clear as they could be that we are about to have a Goyernment that will hide a regressive and repressive domestic policy behind an aggressive and adventurous foreign policy.''^^7^^ This forecast has proven true. Never before has the military-industrial complex had such consistent and reliable champions of its interests in Washington's corridors of power. Key positions in the Reagan administration are held by people either directly connected with military-- industrial corporations, or indirectly interested in maintaning ``special'' relations with them, or holding far right militarist views.

__ALPHA_LVL2__ HELPERS ON CAPITOL
HILL

The United States Congress---"the nation's highest legislative body---plays an important role as a political and government sphere with which

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the monopolies and the Pentagon collaborate.

Although a stronger executive power at the expense of a weaker legislature is a trend typical of state-monopoly capitalism in general and of its American version in particular, Congress remains a strong political force and a vital component of the state mechanism. A collective institution of bourgeois class representation, it functions, on the one hand, as a mediator and go-- between for various capitalist groups and on the other, as an instrument for keeping the public from ruling the nation. Describing different forms of parliamentary representation, Karl Marx once said that "the oligarchy does not perpetuate itself by retaining power permanently in the same hand, but by dropping it with one hand in order to catch it again with the other, and so on." 8 Different groups within the US state-monopoly elite are jockeying for influence with Congress.

Formally, the Constitution of the United States endows Congress with considerable powers in the making of military decisions and in controlling the activities of the military institutions in general. Only Capitol Hill has the right to declare war and determine the structure and size of the armed forces, as well as the amount of the arms and equipment to be produced. Before the Defense Department can spend the funds earmarked for research and development of a weapon system, Congress should approve the implementation of individual programs and allocate funds to finance each of the programs approved.

This calls for two separate legislative acts. In the annual bill on military programs Congress announces which of the new programs proposed by the Defense Department will be initiated and which of the programs already being developed will be continued. In the defense spending bill,

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Congress extends "budget authorization" to the Defense Department to spend funds or conclude contracts in accordance with the military programs bill.

Congress discharges its major constitutional duties through standing committees (17 Senate committees, 21 House committees and 9 joint committees). Federal Departments submit their budgetary requests to the Appropriation Committees and House and Senate subcommittees, including those on defense spending. The Defense Department submits its financial requests to four committees: the Senate and House Armed Services Committees and Appropriations Committees. The former two prepare the approval of military programs. Members of these committees are supposed to possess special knowledge in military matters, be familiar with arms procurement and production, and be able to evaluate the budgetary needs of the Defense Department. The Appropriations Committees are supposed to adjust the requests from all the Federal agencies to the actual tax revenue. Each appropriations subcommittee is to study the relevant programs so as to ensure the best possible use of Federal funds; the subcommittees on defense spending are to both understand national defense requirements and analyze programs under way and the current financial requests of military agencies. After the appropriate subcommittee reports on the state of affairs to the Appropriations Committee, the latter compares all the national requirements and draws up the budget. In actual fact however, most bills prepared by the military appropriations subcommittees are passed by the House and the Senate unchanged, and for the following reason.

As Congress discusses budgetary questions, each Federal agency presents and defends its

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own financial requirements. Each government agency tries to persuade Congress to earmark certain funds for the coming fiscal year.

The Defense Department prepares three different budgets simultaneously---for the current fiscal year, for the coming fiscal year and for the subsequent two. This means that several years elapse between the point at which the services determine their arms requirements and the actual delivery of these weapons. This makes it easier for the military-industrial quarters to ensure the biggest possible programs by invoking the potential future rise in enemy capabilities.

Requests for programs prepared by various military agencies are considered and adjusted by the armed services secretaries before they reach the office of the Defense Secretary.

In the course of this ``clearing'' process different competitive requests are evaluated and some projects are reduced or canceled. Since the funds allocated by Congress are always limited to some extent, military agencies often underestimate their annual budgetary requests on individual programs so as to ensure adoption and funding of as many programs as possible. This "foot in the door" technique has proven highly efficient for inflating the budget. The record shows that once a program is approved, Congress can almost invariably be talked into implementing it irrespective of how much its actual cost and quality differ from the estimates.^^9^^

Securing Congressional approval of militarist programs is easy because the interests of the Pentagon-monopoly alliance and of the top legislators coincide. Many Congressmen in whose electoral districts and states military projects are already functioning or are under construction try to have them expanded and to pro-

vide these plants with contracts. The goal is to increase employment and incomes in areas on which their reelection depends.^^10^^ Taking these interests into account, the Pentagon and the arms manufacturers often deliberately plan the geography of military production to humor the more influential congressmen. "The Pentagon," Adam Yarmolinsky remarks, "takes a 'carrot and stick' approach to Congress. The biggest contract awards have tended over the years to go to districts of key members of the military committees, who in turn usually vote for the Pentagon's program.''^^11^^

In his book Arms, Money, and Politics Julius Duscha, a US historian, quotes this statement by Senator Gaylord Nelson: "I am questioning ... what is" apparently an established tradition, perhaps a national attitude, which holds that a bill to spend billions of dollars for the machinery of war must be rushed through the House and the Senate in a matter of hours, while a treaty to advance the cause of peace, or a program to help the underdeveloped nations of the world, or a bill to guarantee the rights of all our citizens, or a bill to advance the interests of the poor must be scrutinized and debated and amended and thrashed over for weeks and perhaps months.Hl~^^2^^

That is the reason why the Pentagon often receives even more than it asks for. For example, in 1970 Representative Mendel Rivers of South Carolina persuaded the House Armed Services Committee, of which he was chairman, to add another billion dollars to the budget the Penta-

§on asked for to expand naval shipbuilding. In outh Carolina, 35 percent of the gainfully employed population have jobs either in the military industry or at military installations. The city of Charleston, Rivers' own district,

206

is militarized to an even greater degree. Located here are Lockheed, United Technologies and McDonnell Douglas factories, an Air Force base, a Navy storage depot, a submarine base, a training center for missile experts, an Army depot and two naval hospitals. Some people have said that should a single military project be added to this area, it would sink under the weight. Rivers' congressional election campaign slogan was "Rivers Delivers." Many congressmen have themselves acquired sizable blocks of shares of military-industrial corporations. For example, Senator Charles Percy, his personal assets worth six million dollars, is one of the major owners of Bell and Howell. Barry Goldwater and Henry Jackson, well-known congressional hawks, are also co-owners of military companies.

Predictably, as soon as the Reagan administration announced, in October 1981, the biggest buildup program for the US strategic nuclear forces,*^^3^^ many congressmen began feverish work to have the contracts for the new armaments awarded to their districts and states.

The Pentagon-monopoly alliance exerts pressure on congressmen through military lobbies. Adam Yarmolinsky quotes a high administration official with experience in lobbying for the Defense Department. He said that "most defense lobbying was done as a joint Pentagon-- industry venture after the Pentagon had approved a weapons system and wanted to sell it to Congress. He said the Pentagon had Congress organized like a 'Marine Corps landing,' with generals, admirals and top civilians 'always ready to run up to the Hill whenever a problem develops.' "14 The military lobby is one of the most powerful pressure groups in Washington. It includes the Pentagon's registered and unregistered lobby-

207

ists---officially, the Defense Department pays an annual four million dollars for the services of about 340 of them---and also agents of arms manufacturers, referred to as Washington representatives of the corporations. For example, Rockwell International keeps a permanent staff of 125 such people shuttling between the Pentagon, Congress and the White House.^^15^^ Lobbyists of this sort are Edward Le Fevre (General Dynamics), James Trautman (General Electric), Ben Eaton (Ling-Temco-Vought) and Kenneth McGregor (United Technologies).

Besides, virtually all of the about 60 staff members and so-called advisers of the House and Senate Armed Services Committees are direct agents of the military-industrial complex. As military technologies become more complicated, the importance of these people increases. Business Week estimated on March 27, 1978 that in recent years they "have come to exert enormous leverage on the congressmen who serve on the defense committees of both houses" and turned into "a relatively new and terribly important part of the Washington decisionmaking community." The Director of Personnel of the Armed Services Committee in the Senate is Francis Sullivan and in the House of Representatives, John Ford. They admit themselves that they "make a very conscious effort to keep a low profile." Staff members of the Defense Spending Subcommittees are equally modest, to the point of anonymity---they do not even submit their biographical sketches to the directory of congressional staff members. Still, some names have found their way into print: for example, Larry Smith, champion of General Dynamics and fervent advocate of the cruise missile and the F-lll bomber which, he maintains, could "penetrate the Soviet heartland" better

208

than Rockwell International's B-l; Richard Perle who represents Boeing and firmly opposes the SALT-II Treaty; H. Jones, the MX missile promoter; and Don Lynch, a Navy lobbyist.

Drew Pearson and Jack Anderson, wellknown American jounalists, wrote in their book The Case Against Congress that "today the way to a defense contract is still greased occasionally by a mixture of booze, blondes and bribes."16 There are, however, other, just as effective ways of swaying the lawmakers. Arms manufacturers can open or close military factories in a congressman's district or state; they can also finance an election campaign to support or destroy him. During campaigns, they can provide or bar access to the broadcasting stations they own. As a result, many congressmen who go to great lengths attacking waste, say, of paper clips, often defend the most absurd and useless types of weapons. For example, Senator John Tower (Rep., Texas), currently chairman of the Senate Armed Services Committee, has persuaded the National Guard Association to support the production of the clearly obsolete A-7 attack aircraft. The plane, designed in the 1950s, is produced by General Dynamics in Texas. In 1977- 1978 alone, Tower received over 10,000 dollars from the contractors. The congressmen corrupted by the military-industrial complex also include Senators Warren Magnuson (Dem., Wash.), chairman of the Appropriations Committee, and Henry Jackson, member of the Armed Services Committee (Dem., Wash.) (the two have been nicknamed Senators from the State of Boeing); Senator Howard Cannon (Dem., Nev.), vigorous supporter of the multibillion-dollar program for the production of the MX ICBM system; Senator Sam Nunn (Dem., Ga.), member of the Armed Services Committee; Represent-

14-349

,.,,,.

ative Bob Wilson (Rep., Cal.); Senator Strom Thurmond (Rep., S.C.), a retired general; and Representative Mendel Davis (Dem., S.C.). All these and many other clients of military concerns use a variety of techniques to foment militarism and chauvinism. Recently they have managed to make Congress increasingly often take the initiative in boosting military spending. This group of Capitol Hill hawks is currently led by John Tower who shares views on major issues with the leaders of the other elements of the military-industrial complex.

Acknowledging that Congress plays a `` limited'' role in military decision-making, US researchers note that it acts "inconsistently and infrequently" to resist the interference of the Pentagon-monopoly alliance in the shaping of national policy. Adam Yarmolinsky believes that "the role of the Congress in the budgetary process for the military establishment is limited primarily by the complexity of the process itself, as well as by the fear of being charged with neglect of the nation's defenses, and by the concern of individual Congressmen and Senators with the welfare of their states and districts.''^^17^^ The lawmakers themselves sometimes explain their passivity by claiming that the military are the best experts in their field.

Some American authors describe the way the Armed Services and Appropriations Committees work. The picture is that the congressmen and senators serving on these committees seldom bother to read the files compiled and prepared for them by congressional staff members. Besides, the lawgivers often fail to understand what the issue is about. Since they have to evaluate questions they do not understand, they rely on superficial impressions from talks with Pentagon officials, on advice from lobbyists

210 291-2.jpg

John Tower (left) and Caspar Weinberger both want US military spending to go up abruptly

291-3.jpg

David Jones, Caspar Weinberger and John Tower

and recommendations of the staff. To make their task easier and to appear knowledgeable at committee hearings, congressional staff members ask the Pentagon to prepare questions in advance, to be read out by congressmen or senators during hearings. Pentagon officials encourage this, since it facilitates approval of all their budgetary requests. Naturally, these questions raise no controversial points. Also, congressional staff members usually ask Pentagon officials to supply the answers in advance. At Armed Services Committees hearings confusion sometimes results when committee members read out both the questions and the answers by mistake.^^18^^

I have already noted that the mainstays of the Pentagon and the military-industrial corporations are those senators and congressmen whose states and districts include military facto-

ries. The military interests have developed a series of techniques to push the desired programs through Congress. For example, they deliberately classify information or supply such detailed data that it is impossible to process them in six months. As a rule, facts supporting the demands for greater military spending are doctored specially.

Here is a quotation from the administrator of a large-scale Pentagon program: "If we told the truth to the Congress, we would never get our programs approved. So we have to understate the costs and overstate the performance.... Our military bias is to get as much as we can get....''^^19^^

__ALPHA_LVL2__ BEHIND THE FRONT OF
CIVIC ORGANIZATIONS

Political organizations of the extreme right also influence the development of the militaryindustrial complex. They see it as an important source of funds. At the same time, the Pentagon-monopoly alliance uses the extreme right to exert powerful influence on Washington politicians and fabricates the "public opinion" it needs. Virtually all the elements of the motley crowd of the political far right---from the pronazi John Birch Society to the fledgling `` neoconservative'' groups---are satellites of the military-industrial complex, some of them bound especially closely to it.

The oldest of these is the American Security Council, founded in 1955, at the height of the Cold War, by a group of top arms manufacturers and their executives, among them Robert Biron, vice-president of General Dynamics, and Robert Galvin, owner of Motorola. In the 1970s the

Council's membership comprised 1,700 companies. New members who have joined in subsequent years have been mostly individuals. The governing body includes eight retired generals, six admirals and the nuclear physicist Edward Teller, the father of the US hydrogen bomb.. The man in charge is John Fisher, a former FBI agent. The chief objective of the Council is to "mobilize American business in conditions of a continuing Cold War" and "compare the military power of the United States and the USSR.''

The American Security Council conducts militarist propaganda using 500 radio and television stations and publishing instigative anticommunist features in eleven US, Latin American and Spanish national newspapers.

In recent years, a new vigorous and representative political organization of the militaryindustrial complex has emerged---the Committee on the Present Danger, brainchild of James Schlesinger. In the spring of 1975, while he was Secretary of Defense, he advised Eugene Rostow, Undersecretary of State in the Johnson administration, to set up an organization of this sort. On November 9, 1976, a few days after the presidential elections, The Washington Post reported that "a group of former high-level government executives have banded together to sound the alarm to the American public about what they consider dangerous Soviet policies.... The groups-called the Committee on the Present Danger---will challenge President-elect Jimmy Carter and anybody else who tries to cut the US defense budget next year." In its very first political statement, made in January 1977, the CPD let loose an ideological broadside against detente, calling for an aggressive policy to check the "Soviet drive for dominance based upon an un-

214

paralleled military buildup." The Committee asserted that "for the United States to be free, secure and influential, higher levels of spending are now required for our ready land, sea and air forces, our strategic deterrent, and, above all, the continuing modernization of those forces through research and development.''^^20^^

And now about the leaders of this "civic organization," established to "sound the alarm" and "awaken America to communist expansionism and the growing Soviet military threat." The first CPD cochairmen were James Packard, multimillionaire owner of Hewlett-Packard and Deputy Secretary of Defense under President Nixon, and Henry Fowler, Secretary of the Treasury in the Johnson administration, with close ties to the Goldman, Sachs and Lehman Brothers banks of New York which serve many of America's biggest military corporations. Other CPD leaders were Paul Nitze, former Deputy Secretary of Defense; Dean Rusk, former Secretary of State; William Colby, ex-Director of the CIA; Maxwell Taylor, Elmo Zumwalt, Matthew Ridgway and Lyman Lemnitzer, all diehard militarists; as well as Richard Allen and Richard Pipes, reactionary experts in international politics and Soviet affairs. Eugene Rostpw has remained chairman of the CPD executive committee. James Schlesinger, however, decided against putting his name on the CPD membership rolls, so as not to risk his chances of serving with the Carter administration.^^21^^

From its very first days, the CPD has engaged in Cold War propaganda and acted as the chief element of organized opposition to detente: it has come out against the SALT-II Treaty, plans for mutual East-West reductions of armed forces in Europe, expanded US-Soviet trade, attempts to settle the Mideast conflict, etc.

The CPD leadership presented the then newly elected President Carter with a list of 53 hardliners to be appointed to important posts in the Departments of State and Defense. The move failed, and the Committee switched its attention to Congress which was to approve the new appointments. Working through Senators Henry Jackson and Daniel Patrick Moynihan, the Committee succeeded in blocking the endorsement of John F. Kennedy's assistant Theodore Sorensen as Director of the CIA and in delaying the appointment of Paul Warnke as head of the Arms Control and Disarmament Agency. On August 13, 1977 The Washington Post reported an "unannounced meeting" between eight CPD members and President Carter at which the President's "bid for support from a blue-ribbon committee promoting a firm stance against the Russians collapsed when he began arguing that defense spending cannot go up because public opinion is against it. 'No, no, no,' Paul Nitze was overheard murmuring.''

In the fall of 1979 some CPD leaders, including Nitze, spoke before the Senate Armed Services Committee and opposed the ratification of the SALT-II Treaty signed in Vienna, claiming that it would shift military power to the disadvantage of the United States, that the treaty was ``unverifiable'' and would favor the Soviet Union.

The Committee on the Present Danger has published several studies on military and political topics. One of them, entitled "Defense Strategy and Funding for the 1980's," appeared in May 1980. The press reported that the powers behind it were, above all, Nitze and Rostow. Leonard Sullivan, ex-chief of the systems analysis department in the Pentagon, also contributed to its preparation. The study essentially

argued in favor of adjusting President Carter's five-year plan of military buildup by adding, in the first half of the 1980s, another 266 billion dollars to the already record level of planned military spending---that is, increasing it by some 53 billion dollars annually over the next few years.^^22^^ On January 26, 1981 Fortune noted that the war preparations program of the Reagan administration appeared to stem directly from -those CPD recommendations. That is hardly surprising: after all, several dozen members of the CPD now hold high-level positions in the current administration.

Today, the most influential of these former CPD members is, naturally, Ronald Reagan himself. Other decision-makers in military and foreign policy matters who used to serve on the Committe are William Casey, Jeane Kirkpatrick, Eugene Rostow, Fred Ikle, John Lehman and Richard Perle. I have already explained about Casey. Jeane Kirkpatrick is the US Ambassador to the United Nations. Paul Nitze was appointed US representative at the Soviet-American talks on medium-range nuclear armaments in Europe. Eugene Rostow, one of the architects of the escalation of the US aggression in Vietnam, headed the Arms Control and Disarmament Agency from April 1981 -to the end of 1982. Kenneth Adelman, who has now replaced him as director of the Agency, is also a member of the Committee on the Present Danger. Fred Ikle was made Deputy Secretary of Defense for Policy Planning. Richard Perle, Senator Henry Jackson's aide, is now Assistant Secretary of Defense for International Security; John Lehman is Secretary of the Navy and Richard Pipes^^23^^, a well-known Cold Warrior, the chief specialist in Soviet affairs on the staff of the National Security Council.

In August 1978 John Fisher, President of the American Security Council, founded another organization, the Coalition for Peace Through Strength, whose professed goal is the attainment of military superiority over the Soviet Union. This "bipartisan group" of 148 congressmen, many generals, admirals and arms manufacturers immediately attacked detente. In the fall of 1979 Fisher declared proudly that the Coalition had already spent over ten million dollars on propaganda against the SALT-II Treaty.

Conservative Caucus, a subsidiary of the Coalition, has branches in all the states and numbers some 300,000 members nationwide. In late 1979 Conservative Caucus National Director Howard Phillips reported that his organization was through with the campaign to defeat SALTII which had started in May. Over that period he had mailed over .4.5 million letters urging Americans to exert pressure on their congressmen so that they should vote against the treaty. Hundreds of specially prepared speakers, about 100 local newspapers, over 160 radio stations and scores of television stations joined the campaign. Signatures were collected under a petition against SALT II.

Another lobbyist organization of this type is the National Conservative Political Action Committee, led by Terry Dolan. Its budget runs into millions of dollars, mostly contributed by military corporations. The salient feature of the Committee's operation is that it attacks its own enemies more than it supports those of whose views it approves.^^24^^ The attacks are spearheaded against those senators and representatives who vote the "wrong way" in Congress on questions of interest to this organization. A broad array of techniques is used against the targets: discrediting items broadcast over the radio and on tel-

evision, posters, leaflets and the like. For example, during the discussion of the SALT II ratification in congressional committees in the summer of 1979, Conservative Action issued a poster which showed Senator George McGovern (Dem., S.D.), a supporter of positive US-Soviet relations, handing a Soviet officer a box full of missiles labeled "SALT II". The caption read: "McGovern sells out the US ... again! If McGovern wins, you lose.''^^25^^ In 1980 the Committee spent 1.2 million dollars on a campaign against McGovern and four more senators---Frank Church, Alan Cranston, Birch Bayh and John Culver. Only Cranston was reelected. Dolan also selected targets for 1982---among them, Edward Kennedy and such unlikely liberals as Senator Donald Riegle (Dem., Mien.), Senator Howard Metzenbaum (Dem. O.), Representative Robert Stafford (R., Vt.), Representative John Chafee (R., R.I.) and Representative Lowell P. Weicker (R., Conn.). However, the rise of the antiwar movement in the United States made the results more modest.

Dolan himself has stated that each politician is judged by his attitude to military spending.

The Committee for the Survival of a Free Congress (CSFC) and the American Conservative Union have also become vigorously promilitarist recently. The CSFC, led by Paul Weyrich, a pillar of the "New Right", was busy, among other things, recruiting opponents of SALT II and blackmailing congressmen who tended to support it. On July, 8, 1979 The Washington Post wrote, referring to CSFC leaders and to Richard Viguerie and Morton Blackwell, publishers of The New Right Report: "There are sofne people who would like to substitute a blackjack for a persuasive argument to kill the treaty. Their threat to the senators

219

who must weigh this decision is, quite literally: Vote right or we will knock you out.''

The size of the funds available to the American Conservative Union can be deduced from the fact that it paid 400,000 dollars to have an instigative film entitled "Soviet Might, American Myth: the U.S. in Retreat" shown on American television in late 1978. Starring in the film were Senator Barry Goldwater, the darling of the military-industrial complex, and retired Admiral Thomas Moorer, ex-chairman of the Joint Chiefs of Staff.^^26^^

There are also many regional promilitarist organizations of the military-industrial complex in the United States, the Los Angeles World Affairs Council and the New York-based National Center of Strategic Information foremost among them. The Los Angeles Council is led by such major arms manufacturers as Roy Ash and Henry Singleton. The Information Center was organized by Frank Barnett, a hidebound anticommunist and advocate of "strong defense," in the early 1960s.

In recent years all the above-mentioned political institutions of the military-industrial complex have begun to act in a much more coordinated manner, and personal ties between their leaders have become'closer. For example, Frank Barnett is a member of the Committee on the Present Danger, while its leader Eugene Rostow is also a member of the National Center of Strategic Information. Edward Teller is on the governing bodies of the American Security Council and the Committee on the Present Danger. John Fisher is a founder of the American Security Council and the Coalition for Peace Through Strength. The American press reports that such groups, often comprising the same people as members, have one thing in common:

they maintain financial, ideological or other ties with the Pentagon and the arms manufacturers.

__ALPHA_LVL2__ THE THINK TANKS
OF THE
MILITARY-INDUSTRIAL COMPLEX

The great number of scientists who deal with military problems in universities and specialized research organizations are also allies of the military-industrial complex.^^27^^ After World War II numerous research centers serving the government and the private industry sprang up in the United States---the so-called "brain trusts" or "think tanks". Many of them are linked directly with and work on assignments from the Pentagon-monopoly alliance and its political elements. Experts and scientists from these think tanks often join the staff of the White House and other government agencies. Relatively independent, this group has a say in the shaping of policy and is interlinked intimately with the other elements of the military-industrial complex.

A typical example of such a think tank is the RAND Corporation. It was created soon after World War II, when the Air Force signed a contract with Douglas Aircraft stipulating the setting up of a research branch and the employClient of experts from universities and private companies. In 1948 the RAND Corporation became an independent entity, some of the funds coming from the Ford Foundation. Initially, RAND was to improve the combat capabilities of the US Air Force. Then it began to do work for other services, for NASA and the State Department. In the early 1980s its annual budget was about 25 million dollars. Some

1,000 of its staff study a broad range of political, strategic, engineering and other technical problems, especially those in rocketry and space research. RAND played an important part in the shaping of US foreign and military policy in the 1950s. During the US aggression in Vietnam it dealt closely with its various aspects. According to Paul Dickson, an expert on think tanks, RAND's "degree of involvement has made it more a participant of the war than a scholarly observer.''^^2^^" James Schlesinger, a cabinet member in several US administrations, is a former RAND department head. Fred Ikle, who held a similar post with the corporation, became, in the 1970s, director of the Arms Control and Disarmament Agency and then a member of the Committee on the Present Danger. In the early 1980s he joined many of his former RAND colleagues in the group of President Reagan's chief foreign policy advisers and became Deputy Defense Secretary for Policy Planning. Several RAND graduates have set up new research centers which function as important scientific and political elements of the military-industrial complex. For example, in 1961 Herman Kahn founded the Hudson Institute, specializing in military and political issues. Both RAND and Hudson experts are well-known hardliners.

Lately, the Center for Strategic and International Studies at Georgetown University in Washington, D.C. has been gaining in influence. It was created in 1962 by David Abshire, a West Point graduate, and retired Admiral Arleigh Burke. Richard Allen, until recently the President's national security adviser, helped Burke organize the Center and then worked for it up to 1966. From its very first days, the Center has acquired an anticommunist reputation. In 1975 its director Ray Cline published a report arguing

that the US-Soviet alignment of forces had changed in favor of the Soviet Union and proposing urgent steps to set things right again. A former deputy director of the CIA, Cline now advises President Reagan on US-Chinese relations. Edward Luttwak, also on the staff of the Center, used to criticize the Carter administration for making a ``fetish'' of the SALT II talks. The Georgetown Center supported the adoption of the B-I bomber. James Schlesinger, while head of one of the Center's groups, urged a stronger US military presence in the Persian Gulf to protect US vital interests there at any cost. William French Smith, a member of the Center's Advisory Board since 1978, was Ronald Reagan's Attorney General until his resignation in early 1984. Jean Kirkpatrick, the US Ambassador to the United Nations, has also worked for the Center. So has Chester Crocker, formerly director of the Center's African department, and currently Assistant State Secretary for African Affairs.^^29^^

Another collaborator with the military-- industrial complex and the current Republican administration is the American Enterprise Institute for Public Policy Research (AEI). Working with it are both researchers from American universities and former statesmen, such as Gerald Ford, former Defense Secretary Melvin Laird, former Treasury Secretary William Simon who directed Ronald Reagan's election campaign, and George Bush, previously Director of the CIA and now US Vice-President. The sort of publications produced by the AEI is exemplified by the book Grand Strategy for the 1980's I mentioned earlier. Murray Weidenbaum, a prominent economist and champion of the military-industrial complex.who became chairman of Council of Economic Advisers under

225

Reagan, also was on the AEI staff until recently.

Another supplier of ideas to the Reagan administration is the Heritage Foundation, established with financial support from Ronald Reagan's crony Joseph Coors of Colorado. After Reagan's election the Fund published a lengthy report on the policy a conservative government should pursue. The Fund's governing body includes William Simon and Frank Shakespeare, the latter a member of the Reagan team in the transition period. The Fund has also submitted a report to the new administration urging the strengthening of the CIA. William Casey, the new CIA Director, listens readily to advice from the Heritage Foundation.^^3^^ ° ,

Also connected closely with the militarist quarters are two more influential organizations--- the Hoover Institute on War, Revolution and Peace at Stanford University and the San Francisco Institute for Contemporary Studies. The former is one of the oldest think tanks in the United States, established to "prove the essential pefniciousness of Karl Marx's theory" in 1919. Many people working for this center were active in the election campaign of Ronald Reagan, a long-time collaborator with the Hoover Institute. As to the San Francisco Institute for Contemporary Studies, it is known as a source of even more bellicose ideas. Edwin Meese, today the chief adviser to President Reagan, was on its board of directors. Others from this institute have also joined the White House staff.

* * *

The political elements of the military-- industrial complex collaborate with one another; the same people often serve on several of these organizations at the same time. For example,

Richard Allen, President Reagan's former national security adviser, was a leading expert of the Georgetown University Center for Strategic and International Studies from 1962 to 1966. From 1966 to 1979 he worked with the Hoover Institute and has lately become an adviser of the US Strategic Institute. Under President Nixon, Allen was first the senior staff member of the National Security Council and then a member of the President's Commission on International Trade. Allen has been on the executive body of the Committee on the Present Danger since its inception.

Chapter Five

~^^1^^ See Richard J. Barnet, The Economy of Death, pp. 122, 123.

~^^2^^ Curiously, after Johnson's withdrawal, James Ling's affairs began a downward slide. In the 1970s he lost all control of his military-industrial giant. Today the company, still named after Ling, is controlled by a totally different group of tycoons (Fortune, May 7, 1979 p. 48).

^^6^^ See William Costello, The Facts About Nixon, The Viking Press, N.Y., 1960, pp. 38, 39.

~^^4^^ See David Boulton, TheLockheedPapers, Jonathan Cape, Ltd., London, 1978.

5 Time, March 16, 1981, p. 20.

~^^6^^ The New York Times, March 22, 1983.

~^^7^^ The Nation, January 3-10,1981, p. 3.

~^^8^^ Karl Marx, Frederick Engels, Collected Works, Vol. 14, Progress Publishers, Moscow, 1980, p. 338.

~^^9^^ "To win approval of major weapons systems, insiders charge, the Pentagon routinely underestimates costs, knowing that Congress won't kill a half-finished program. A classic ease may be the B-I bomber. Initially, the Pentagon put the price of 100 planes at 19.7 billion dollars. But according to the Congressional Budget Office ... the true cost would be closer to 40 billion...

225

If Rockwell International, the B-I chief builder, repeats the usual pattern of cost overruns and delays, the B-I program could cost 100 billion dollars in the out-years." (Newsweek, March 22, 1982, p. 36.)

~^^10^^ This is the way Newsweek commented on the resistence in Congress to any reduction of the military budget planned by the Reagan administration: "...If you make cuts in some congressman's district, you've made a life-time enemy..-.. It's a perennial problem---and a no-win kind of game." Budgeting naturally gravitates toward increased costs, "political waste, fraud and abuse," according to a dispirited aide of the President. "The prickly politics of closing military bases are just part of the problem. Many defense decisions are made behind the scenes, where the conspiracy among congressmen, Pentagon officers and -military contractors often results in 'something for everyone' solution." (Ibid.) p. 36.)

Adam Yarmolinsky, Op. cit, p. 41.

~^^12^^ Julius Duscha, Arms, Money and Politics, Ives Washburn, Inc., N.Y., 1965, p. 2.

~^^13^^ The program envisages fast construction and deployment of, among other things, 100 B-I bombers, Trident missile-carrying nuclear-powered submarines, cruise and MX missiles, and is therefore additional proof of Washington's schemes to undermine detente. The US press has described it as "massive strengthening of military power.''

*-* Adam Yarmolinsky, Op. cit, p. 42.

~^^15^^ Fortune, November 2, 1981, p. 108.

~^^16^^ Drew Pearson, Jack Anderson, The Case Against Congress, Simon and Schuster, N.Y., 1968, p. 334.

~^^1^^' Adam Yarmolinsky, Op. cit., p. 47.

~^^18^^ J. Ronald Fox's book tells this story: "...A Congressman ... caused some consternation when he returned to a hearing after having several cocktails at lunch. He was usually able to read reasonably well from the text prepared in advance by the Pentagon, as long as he kept his eyes on the script. On this day, however, he felt particularly confident and departed from his text. He asked a rambling question about an item in the budget and glanced only occasionally at the prepared question. A young major who served as a Pentagon back-up witness was giving testimony. He tried to recall which

226

of the prepared questions was being referred to by the Congressman... Ftu«lly, the Congressman asked, 'What's the matter, Major, don't you know the answer to the question?' The major gazed thoughtfully at him for a moment and then replied, 'Sir, I believe I know the answer, but I am not sure I understand the question.' " (J. Ronald Fox, Op. cit., pp. 131-32.)

~^^19^^ Ibid., p. 138.

~^^20^^ The New York Times, January 11,1977.

~^^21^^ James Schlesinger was appointed Energy Secretary in the Carter cabinet. CPD leaders tried, without success, to have him appointed Defense Secretary or State Secretary.

~^^22^^ Sea Power, June 1980, pp. 20, 21.

~^^23^^ Resigned in 1983.

~^^24^^ Nevertheless, in 1980 the Committee spent two million dollars supporting Ronald Reagan's election cam-

~^^25^^ The Washington Post, July 8, 1979.

~^^26^^ U.S. News and World Report, April 2, 1979, p. 36.

~^^27^^ Naturally, not all scientists and employees of military research organizations toe the line of the militaryindustrial complex. This is borne out by frequent protests from the academic community against militarism and the aggressive foreign policy. Those advocating arms limitation include former government advisers on military and technological issues---Jerome Wiesner, Herbert York, George Kistiakowsky and others.

~^^28^^Paul Dickson, Think Tanks, Atheneum, N.Y., 1972, p. 67.

~^^29^^ USA: Economy, Politics, Ideology, No. 4, 1981, pp. 112-14.

~^^30^^ Ibid., p. 116.

[227] __NUMERIC_LVL1__ Chapter Six __ALPHA_LVL1__ BILLIONS DOWN THE
DRAIN __ALPHA_LVL2__ [introduction.]

In an attempt to justify their aggressive stance, both the military-industrial complex itself and its ideologists cite, in addition to the "Soviet threat" myth, the allegedly negative social and economic consequences of a renunciation of the arms race, of a reduction, let alone cessation, of military production. The `` beneficial'' impact of militarist moves is extolled, and they are presented as prime movers of scientific and technological progress, as economic incentives and factors contributing to social stability.

__ALPHA_LVL2__ THE ARMS RACE AND
UNEMPLOYMENT

A frequent argument to defend militarist preparations is the claim that a reduction of military production is fraught with greater unemployment. The management of Rockwell International fought for the renewal of the B-I contract canceled by President Carter and stressed repeatedly that many jobs depended on the bomber's production.i John Lehman, the current Secretary of the Navy, claims that "every billion dollars we cut from the budget means 40,000 fewer jobs in the industrial base.''^^2^^

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But military spending is the least effective way of ensuring employment. Even by Pentagon estimates, from 1961 to 1973, when reductions in several military programs cost 82,000 people their jobs, the funds thus saved created 162,000 new jobs in the civilian sector.^^3^^ According to the Coalition for a New Foreign and Military Policy which comprises over 40 US civic organizations, in the first half of the 1970s the channeling of funds into military production meant an annual loss of over 900,000 jobs, and in the latter half, of 1.3 to 1.45 million jobs.^^4^^

A group of economists from Michigan have calculated that every billion dollars invested in the arms race creates 35,000 jobs, while the same amount invested in civilian industries can create 150,000 jobs for unskilled workers or 100,000 jobs in the teaching profession or 76,000 in urban communications, or 50,000 in the building of schools. Similar figures were cited by the US Bureau of Labor Statistics in 1976. Marion Anderson, director of Employment Research Associates, has concluded that one billion dollars invested in missiles creates 14,000 jobs but, invested in, say, hospitals, it would mean 48,000 jobs.^^5^^

Significantly, there was virtually no unemloyment in the FRG before the upsurge in the arms race. In. the United States, as militarist hysteria mounted, unemployment increased from seven to more than ten percent from 1979 to 1983 and, according to clearly underestimated official figures, left more than 12 million people jobless in early 1984---a record over the past 40 years. The situation is similar in Great Britain, Where military expenditures reached eight billion pounds in the early 1980s, a figure representing only a slightly lower

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percentage of the GNP compared to the United States. The number of ``redundant'' workers in the British Isles is growing and has already passed the three-million mark. From 1977 to 1982 British military spending increased annually by 4.5 percent in real terms. This means mass layoffs, no jobs for school graduates, and sharp cuts in government allocations for social programs.

A study made by Chase Econometrics Associates, a research firm, in the latter half of the 1970s into the possible impact of the B-I bomber project on the economy has shown that lower taxes and a housing construction program conducted on a commensurate scale could create more jobs within a decade than the production of the bomber. "Spending on weapons generally produces fewer jobs than many other kinds of Government expenditure," The New York Times wrote on November 19, 1978. However, "during the economic slowdown in the 1970s, politicians scrambled to lure defense contracts into their districts, despite evidence that a number of public spending alternatives, including many of the kinds of social programs the Administration has decided to curb, would produce more work.''

In the mid-1970s the US economist Bezdek studied economic development forecasts for the period of up to 1980 in conditions of full employment. Comparing the consequences of a 30-percent cut in the military budget accompanied by an equal increase of spending in education, health, welfare and environmental protection to the possible consequences of a 30-- percent rise in the military budget accompanied by an equal cut in social spending, he reached the conclusion that in the former case production and employment would increase 2.1 per-

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cent over the projected basic level, while in the latter case they would be reduced by 1.3 percent. The reason is that military spending is channeled mostly into capital-intensive industries where a relatively small number of jobs is created.

In its March 16, 1981 issue U.S. News and World Report published an interview with the US economist Wassily Leontief in connection with the war preparations program proposed by the Reagan administration. Asked if a new infusion of military money would help to reduce unemployment, Leontief replied: "Judging by past experiences, a torrent of defense outlays provides a short-term rise in employment.

``Once the government decides to spend billions more on defense, it's a sure-fire market. It produces an immediate boom for specific branches of the economy: electronics, shipbuilding, the airframe industry-^hat sort of thing. To an extent, national output will go up because we have a great deal of idle capacity.

``N.B.! But, in the long run, this boom usually turns into a dangerous bust when all the arms have been built. The military industry has a terrible time shifting into the private market. Normally, millions of defense workers must be laid off, and when this happens, the civilian economy will not have expanded enough to absorb all the jobless people.

``Most of the American defense industry is located around the nation's outer rim---in California, Texas, the Southwest and the eastern Atlantic states. There will certainly be a shortterm boom in these areas....

``The heartland of the economy---Illinois, Ohio, Pennsylvania, Kansas-Trill actually be paying for the prosperity elsewhere with cutbacks in other kinds of spending. Oh, Chrysler

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Corporation may hire some more workers to build tanks. But, at the very least, the heartland region of the economy is destined to suffer a slight recession. The shift is quite painful because it is not just theoretical. Growing employment in San Francisco and Dallas means increasing joblessness in Cleveland and Chicago.''^^6^^

In addition, current trends in the changing structure of military spending make their impact on employment increasingly adverse. In the next few years, expenditures on the armed forces personnel will grow at a much slower rate than funds spent on arms procurement and R & D. For example, in 1981-1985, the United States plans to increase the expenditure on arms purchases and research three times as fast as the payments to the personnel. As a result, the share of the funds spent on regular servicemen is to diminish from 23 to 16 percent.^^7^^ In 1983 the Reagan administration increased arms procurement by 36 percent compared to 1982, raising the total worth from 66 billion to 90 billion dollars. This means 42 percent more for Army aircraft, 48 percent more for Air Force missiles, and 12 percent more for Navy shipbuilding.^^8^^ President Reagan's military buildup program provides for an increased share of allocations or the development of extremely sophisticated and costly weapons systems and the so-called communication systems capable of surviving even a nuclear war. It takes skilled workers and experts to produce heavy bombers, MX missiles and computer devices. On the whole however, the manufacture of sophisticated weapons systems requires fewer jobs than the production of ammunition, uniforms or trucks. Thus, if new jobs are created at all, they will go to, first and foremost, scientists, technicians and skilled workers. Unskilled workers,

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especially women and Blacks, will only suffer from Reagan's "military boom.''

Also, the arms race aggravates the employment problem as it generally slows down economic growth rates (more about this later).

Besides, the machinery of state-monopoly economic regulation facilitates the conversion of military production to peaceful uses. Numerous studies demonstrate that if disarmament proceeds according to a plan, the arising temporary difficulties can be overcome. For example, at the 1975 national conference on reduced military spending held in Chicago researchers advanced a "peace budget" proposal as an alternative to a militarized economy. This budget stipulated a reduction of the armed forces strength by one million men and of military spending, by a total of over 80 billion dollars. Simultaneously, a steep rise in budgetary expenditures for various civilian programs was envisaged. The authors concluded that as a result, the overall employment level in the United States would increase by 4.8 million jobs. Several realistic possibilities of switching research and development programs from military to peaceful problems were set forth by the United Nations Secretariat as early as 1972.

__ALPHA_LVL2__ THE TAX BURDEN OF
MILITARISM

The growth of militarism is connected with the redistribution of national income resulting from the use of the national budget for military purposes. Since tax revenues make up the bulk of the' budget, rising militarism usually means higher taxes. While taxes swallowed one-sixth of the American worker's wages on

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the eve of World War II, by the late 1970s the figure increased to one-third. According to estimates made in the early 1980s, if this upward trend continues, the average American will have to pay up to 50 cents in taxes per every dollar he earns by the end of the century.

Aside from the increase of the direct income tax, indirect taxes are also rising. Special surcharges, the proceeds from which go into the national budget, are built into the prices of virtually all consumer goods. Lenin noted that indirect "taxation affecting articles of mass consumption is distinguished by its extreme injustice. The entire burden is placed on the shoulders of the poor, while it creates a privilege for the rich. The poorer a man is, the greater the share of his income that goes to the state in the form of indirect taxes.''^^9^^

Militarism is shifting the weight of its burden increasingly onto the shoulders of workers. While 40 years ago the bourgeoisie paid 55 percent of the Federal taxes and the workers 45 percent, in the early 1980s, 70 percent of all US tax revenues comes from workers' pockets.

In the Stockholm town hall there is a picture of a miserable-looking little man bending low to support the large frame of an ancient ruler of the city on his back. No one knows who the small man really is, although people joke sometimes that he is the Swedish taxpayer. Business Week wrote once that a replica should be installed in the United States as the Unknown Taxpayer Monument. One might add that in this case the large figure would symbolize the US military-industrial complex.

Indeed, while the credit side of the US national budget is made up mostly of the tax revenues coming from workers, the debit side represents increasing spending to satisfy the unsa-

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tiable---militarism. While there are no obstacles at all to outlays for new types of weapons like cruise missiles or Trident submarines, expenditures on social security, health care, housing construction, law enforcement, education and other social needs shrink inexorably.

This trend is especially pronounced in the Reagan administration's economic policy with its abrupt drop in social and other civilian spending and the equally steep rise in new military expenditures. "Reagan is a reverse Robin Hood, robbing the poor and giving to the rich," Congressman Gus Savage said. Critics of the escalating military spending stress that an end to the Pentagon's waste could save up to ten billion dollars a year. Expectedly, the American Conservative Union and three other lobbyist organizations of the military-- industrial complex immediately came out in support of Reagan's economic program and announced they would raise four million dollars for a campaign against the congressmen opposing it.

A reduction in military expenditures and their conversion to peaceful uses could help solve many problems long troubling American society. Karl Marx noted that in purely economic terms, to spend money on military needs was for a nation to throw part of its capital down the drain. In 1982 alone the United States cast down the drain some 235 billion dollars, and it intends to more than double this sum by 1986. One should also remember that actual military spending is usually much greater than the officially announced figures. Many aspects of these expenditures are carefully disguised as ordinary layouts of civilian agencies. For example, allocations for the development of neutron weapons were concealed in the budget of the Energy Department

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under the heading of "public works." No wonder the US military budget is sometimes compared to an iceberg with only the tip showing.

An American journalist has calculated that the chain of dollar bills to the sum spent on "national defense" in fiscal 1980 could circle the globe 600 times. But he neglected to estimate how many millions of people who go hungry around the world, including the United States, could buy food with this money. Meanwhile, experts maintain that it would take a mere eight billion dollars to supply food to the developing countries where most of the population is starving; 22 billion dollars a year would be enough to eradicate hunger, illiteracy and the more dangerous diseases worldwide.

The resolute struggle of American workers for their vital interests does erect serious obstacles to a further tightening of the tax screw. In other words, taxation has certain political and economic limits beyond which it becomes socially dangerous to the bourgeoisie. Some representatives and ideologists of the military-- industrial complex complain about that too. Former Defense Secretary James Schlesinger wrote in his book The Political Economy of National Security: "We cannot impose artificial limits on military expenditures.... The proper level of expenditures should be determined, and then the sources of funds found, rather than permitting expenditures to be determined by premonitions of taxpayer resistance.''^^10^^ But there was no reason for Schlesinger to sound the alarm. The bourgeoisie has long found a way: government expenditures increase faster than national income, and loans are used to fill the gap. Karl Marx said that the "loans enable the government to meet extraordinary expenses, without the tax-payers feeling it immediately,

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but they necessitate, as a consequence, increased taxes.''^^11^^ In Marx's lifetime, bourgeois governments resorted to loans only in emergencies. Today things are different. As a result of chronic balance-of-payments deficits, by 1984 the US national debt exceeded one trillion dollars.

The national debt, rapidly growing due to militarism, is a heavy burden not only on the current but also on the future generations of working people. The national debt means taxes on an instalment plan. In the long run, the debt is serviced by tax revenues. Just as the current generation is paying for earlier military adventures, future generations will have to pay for part of today's US military expenditures.

The US economist W. Adams has analyzed the economic consequences of the B-I project and concluded that California, home of Rockwell International, the prime contractor, would receive over 50 percent of all the funds earmarked for research and development. Only six states---California, Arizona, Oklahoma, Washington, Vermont and Ohio-^would receive more in contract revenue than their residents paid out in income taxes to fund the program.^^12^^

The rule is that growing military spending means higher taxes. When the rule is violated-Tvhen greater military expenditures are not accompanied by higher taxes---the economy as a whole and the position of working people in particular are dealt blows from other directions. In this case, one either cuts down sharply on civilian social programs or pays the price of higher inflation, greater deficit of the Federal budget and graver economic crises; the likeliest possibility is that society will have to suffer from both types of this fallout.

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During the escalation of the US aggression in Vietnam, President Johnson increased the military budget while keeping the taxes unchanged; this sent inflation soaring and later led to stagflation. The deficit of the national budget increased sharply too.

The Reagan administration has gone even farther. The Reagan program combines a sizable hike in military spending (the growth index is three times the • Vietnam War figure) not only with a freeze but also with a considerable cutback on taxes (a reduction of 23 percent over three years). According to neoconservative and monetarist economic aides of President Reagan, while creating the impression of concern for the interests of workers,13 reduced taxes should stimulate a spurt in economic activity, which, in turn, should bring in new tax revenues (the "economy of supply" theory in contrast to the Keynesian "economy of demand" doctrine).

Under the pretext of fighting stagflation and the Federal budget deficit, President Reagan started an onslaught on the civilian social programs which working people secured after resolute struggle for their vital interests. He also raised interest rates.

By early 1984 it became clear that Reagan's economic policy had failed. His promises to curb inflation and eliminate the Federal budget deficit had not materialized. In February 1981 he announced that in 1983 there would still be a modest deficit of 23 billion dollars, but by 1984 the budget would be balanced out and, in 1985, would show a surplus of seven billion dollars and in 1986, of 30 billion dollars. However, the 1982 budget showed a deficit of over 100 billion. The 1983 budget had a deficit of over 200 billion---nine times the figure pre238

dieted by Reagan. If the present trends continue, the deficit can reach 300 billion dollars by 1985.

US experts forecast that in the near future the United States' national debt may reach 1,200 billion dollars and, given the White House trend toward higher interest rates, interest payments on this huge sum will be 100 billion; "It may be that the nation has arrived at a new spot on the economic map where the old remedies---or what we thought were remedies---have lost their power," says The New York Times Magazine and adds: "...The economy becomes like a missile on a downward trajectory. It needs no further outside forces to propel it toward a crash. Its own inertia is sufficient." The magazine quotes an economist who says that "expecting tax cuts to bail us out of a depression after we've seen what they've done so far is like expecting that after one gunshot wound to the abdomen, the patient can be cured by a second gunshot wound to the abdomen.''^^14^^

Thus the collapse of Reagan's ``experiment'' bears out the need to raise taxes because of rising military spending: he who violates the rule fails in the other economic spheres too. US researchers prefer to call the profound economic crisis of 1982 a depression. But a different name does not change the heart of the matter. The blows are particularly painful to the interests of the US working class and other working people. Since 1981 the Reagan administration has already cut spending for social programs by 60 billion dollars; further cutbacks at the expense of the needy are planned to the tune of another 30 billion dollars. The ax would fall, first, and foremost, on food stamps, baby foods, and the like.

The curtailment of industrial production has

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generated a huge wave of bankruptcies. The vortex has sucked in not only many thousands of small and medium businesses but also several big corporations. In 1982 alone, over 20,000 companies declared themselves insolvent.^^15^^ This figure is unprecedented even for the Great Depression of the 1930s.

Denouncing the dangerous trend toward separating the discussion of economic and defense problems, Newsweek wrote on June 14, 1982: "Britain's experience indicates that tax cuts and defense increases cannot be done simultaneously, even by a regime dedicated to conservative orthodoxy. The Tory government has managed to hold down its budget deficit and expand defense spending in real terms only by substantially boosting taxes in the past year. There is now even more readiness to postpone any tax cut. As one banker puts it, 'There is no supply-side notion in Britain that says the taxpayer shouldn't have to pay for the defense buildup.'"

__ALPHA_LVL2__ ``GUNS OVER BUTTER
EQUALS INFLATION"

The arms race generates many other adverse socio-economic phenomena top. For example, the inflationary rise in prices is linked directly with efforts to offset the budget deficit which arises regularly because of the need to pay for war preparations, with the issue of additional paper money and with the fact that circulation channels are overflowing with these bills. In the capitalist world, inflation and prices have risen to unprecedented levels in recent years. Unlike previous periods, this rise has continued even during economic crises and has been dubbed

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stagflation. True, many bourgeois economists claim that inflation and price rises result from the increase in nominal wages; deliberately confusing cause and effect, they suggest that this condition be cured by a wage freeze. Here one might note that inflation worsens the position of the masses even if the nominal wage growth rate keeps up with the rising prices: as a result of the nominal increase, previously untaxed wages become taxable, and real income diminishes.

On November 19, 1978 The New York Times wrote in an article entitled "Guns Over Butter Equals Inflation": "Balanced against these visible and politically potent beneficiaries of the defense budget are more subtle and hidden costs to the economy as a whole. Virtually all economists agree, for example, that military spending tends to be inflationary. This is because it puts money into the hands of workers without expanding the supply of goods they can buy---the consumer market for missiles and the like being somewhat limited---thereby driving up the prices of goods like autos and refrigerators and machine tools... Military contractors ... produce a cost-push effect that feeds inflationary pressure throughout the rest of the economy.''

Another incentive to inflationary trends is that, due to several reasons, including the distinctive system of military contracts and price-setting, prices for military products grow faster than those for consumer goods. Since they are usually unafraid of cost overruns, military corporations do nothing to reduce production costs. They push prices of raw materials and payments to skilled workers and experts upward. This, in turn, contributes to the inflationary trends in the economy.

Their monopoly in the production of this or that type of weapon and their symbiosis with

,16-349

_,

government procurement bodies make the corporations of the military-industrial complex practically immune to competition. If they manufacture a product of poor quality, the military department concerned often accepts it "as is," and all improvements are made at government expense. The companies care nothing about using the equipment efficiently since the customers pay for the losses. Hence the steady rise in the actual prices of planes, tanks, vessels and the like under the pretext of improvements and ``unforeseen'' developments. Frequently, the improvements make the weapons produced more complex and more costly but not more effective.

``The inflationary pressures of Pentagon procurement," Time magazine says, "are perhaps the most worrisome element of the big Reagan buildup.... Because the Pentagon in effect is able to pay whatever is necessary to obtain a product or service, it forces up prices for civilian industries that compete for the same resources.''^^16^^ James Capra, senior economist of the New York Federal Reserve Bank, says that "demand from the buildup will mean a higher inflation rate for the next few years, than would be the case without it.''^^17^^

Charles Schultze, former chairman of the President's Council .of Economic Advisers, estimates that 20 billion dollars spent on, say, social security or unemployment compensation would make up less than one percent of the US GNP. The same amount channeled into arms procurement would represent some "20% of the output of the defense contractors, creating priceboosting jolts that would be magnified many times over as they rippled out into the general economy.''^^18^^

In a 1982 economic report to the President

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Murray Weidenbaum, the then chairman of the Council of Economic Advisers, in fact acknowledged that inflation threatened to rise even higher. He said, however, that thorough planning, good organization of production and carefully drawn up cost estimates could dampen the effect. But in the sphere of military spending, these measures usually prove ineffective.

The US researcher Alexander Taylor III warned that "in budgeting the nation's defense dollars ... the President and Congress must consider not only the national security but < also a fragile economy and an industrial base that has been ravaged by inflation and neglect. It will require both sensitivity and restraint to prevent the requirements of defense from tipping the national budget, as well as the economy, in a direction that could prove ruinous.''^^19^^

Over the next few years, the arms race may produce even more detrimental inflationary consequences by creating bottlenecks in several military industries. The aerospace industry and microelectronics were using up their full capacities already in 1982-1983. By the end of the 1980s, and given a continued military buildup, the shortage of this or that strategic raw material will, in all probability, aggravate the inflationary effects of the ``boom'' in military spending.

To fight inflation, the Reagan administration raises interest rates. But this is the least effective means of curbing runaway inflation. Meanwhile, unemployment is growing and economic crises are worsening because high interest rates force potential investors to shy away from loans and refuse to expand production.

Discussing the possibility of another Great Depression, ffewsweek wrote on March 8,1982: "Many warn that the economy is in its weak-

16*

243 291-4.jpg

A Daily World cartoon shows how consumer goods prices go up along with the rising military spending

est state since World War II---and that unless current fiscal and monetary policies are changed, serious damage might rapidly occur.''

Fast-growing military spending inevitably caused inflation in the past too. In 1950 and 1951, during the US aggression in Korea, the consumer price index rose from less than one percent to 7.9 percent a year. I have already mentioned that the growth in military spending caused by the aggression in Vietnam particularly exacerbated inflation. The current escalation of militarist preparations against the background of galloping inflation may cause an inflationary tidal wave. According to The New York Times Magazine, "in today's world of almost continuous inflation, a slight breeze of economic demand produces a hurricane of rising prices.''^^20^^

Today, militarism is not the only cause of inflation. But military spending represents the most parasitic kind of waste of production resources which boosts the costs of essential goods. Besides, higher military spending means higher prices. Adjustment for these price rises in further increases of military spending (so that it would stay ahead of inflation) stimulates another, even greater subsequent price hike.

__ALPHA_LVL2__ THE ENEMY WHO CAN
DEVASTATE THE
ECONOMY

With its huge superprofits, the military-- industrial complex can afford handouts to the wage and salary earners employed in military industries. They are paid more than those working in the civilian sector. And so, making its position more secure by creating a workers' aristocracy, the military-industrial complex tries to

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split the working class and integrate it into its system. Some workers swallow the bait and begin to believe in the Keynesian utopia of "prosperity through armament.''^^21^^ However, more and more industrial and office workers are shaking off this illusion. In the fall of 1979 the United States' biggest labor unions voted for the ratification of the SALT-II Treaty and then forced the AFL-CIO Executive to adopt a decision along these lines. In their statements they said that SALT-II would make it possible to save some 30 billion dollars on armaments in the course of a decade, and the amount saved could be used to meet the urgent needs of workers. In the spring of 1982 the AFL-CIO Executive demanded that the US Senate ratify the SALT-II Treaty without delay. The resolution stressed that the ratification should be followed up by negotiations in earnest aimed at nuclear arms control and reduction. AFL-CIO has recently admitted that workers' incomes after taxes have dropped by 14.3 percent compared to the 1977 level.

A comparison of US and Japanese economic performance offers a clear picture of how the arms race affects the economy. For a long time after 1945, Japan's military spending amounted to less than one percent of its QNP, while in the United States, according to official sources, the figure was five to twelve percent. During that period, Japan's national income grew seven times faster than that of the United States. Great Britain, whose postwar military spending was quite high, finally dropped behind many other nations in terms of production growth rates. Meanwhile, the French economy developed faster in the 1960s and 1970s, when the share of military expenditures in the GNP diminished compared to the 1950s.

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Washington is bringing increasing pressure to bear on Japan, the FRG and some other West European countries, demanding that they step up their military expenditures. Many Western economists believe that the Americans are pursuing a twofold aim: to make these countries more dependent on the United States in military and political matters, and to weaken them as competitors in trade.

Soviet researchers have calculated that even in the United States, the wealthiest imperialist country, the arms race reduces the living standards of working people by about one-third of their possible level.^^22^^ The arms race hampers civilian production. True, greater military procurement does expand military production capacities. Those extolling the virtues of the war business use this fact to ``prove'' that military spending is ``productive'' and "socially useful." But a fallacy remains a fallacy. Civilian requirements can be met only by using the spare capacities of the military industry, and they become spare only through cuts in military spending. To be expanded, the capacities which can essentially be used for civilian production do not have to be created for military production to begin with. As a rule, military products cannot be used either in personal consumption or as a means of production. They contribute nothing to the reproduction process. As the Soviet researcher Stanislav Menshikov says, "growing military spending increases the capacity of the military industry but limits the growth of the civilian industrial capacity.''^^23^^

Military consumption wastes the resources taken out of the productive sphere. Seymour Melman estimates that between 1946 and 1973 the cost of the facilities and buildings which could have been but were not built in the

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United States due to excessive military spending was about, 660 billion dollars, or 45 percent of basic capital investments. Draining the civilian economy of production resources, the militaryindustrial complex dooms to degradation entire industries which lose in competition with foreign industrial companies. This applies to such previously powerful giants as the steel and auto industries. The United States' huge postwar military outlays caused a drop in research and development into such important problems as reduced production costs and greater labor productivity in the manufacturing industry, research being switched to the development of extremely sophisticated weapons systems and space programs. Since one-third of all engineers and scientists in the United States are connected, in one way or another, with work for the military, the accumulation of a great store of military technological expertise goes hand-in-hand with a sharp slowdown of the technological progress rates in the civilian sector.

I have pointed out earlier that military corporations regularly inflate their production costs. And, with their monopoly in this or that type of weapons, they are exempt from competition concerning both prices and technology.

The arms race has been hitting developing countries especially hard in recent years. These nations' military expenditures have multiplied many times over, most of the increase due to the imports of costly armaments from imperialist countries, above all the United States, Great Britain and France. The FRG and Japan have also lately increased the number of arms export transactions. Today, developing countries account for about 75 percent of the world's arms imports. In the period from 1970 to!979 the cost of the planes, missiles, armored person-

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nel carriers and naval vessels supplied to developing countries was 30 percent higher than the cost of all the military deliveries to the developing world over the two preceding decades (1950- 1970).24

Between 1975 and 1979 developing countries spent a total of 316. billion dollars on armaments. These nations' share in global military spending rose from 19 percent in 1971 to 25 percent in 1980. In the Middle East, where military expenditures are growing fastest, they were greater than in Europe in per capita terms; Saudi Arabia has surpassed Britain and become the world's sixth biggest military spender.^^25^^

Military expenditures weigh heavily on working people in developing countries with their weak economies. To maintain and arm one serviceman in the Middle East and Africa, it takes the equivalent of the annual average per capita income of 13 people; in South Asia, of 17 people.

Militarization impedes social and economic development in scores of countries. One soldier in the Middle East eats up the equivalent of the sum spent on the education, health care and social security of 346 civilians. The figure for Africa is 364; for the Far East, 145; for South Asia, 767.^^26^^ Aside from the fact that the army diverts a sizable share of technically trained national personnel from the civilian economy where they are needed badly, the training of military personnel, usually abroad, costs a lot too---on the average, 50,000 to 60,000 dollars per person per year.^^2^^~^^7^^

Washington's moves to spur up the arms race adversely affect the socialist economies too: they would much rather spend money on peaceful production than on defense.

However, the plans of US and other imperialists to "wear down" the Soviet Union by forc-

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ing it to undertake costly military programs have fallen through. In 1982 several extracts of a NATO study of the arms race's financial aspects were made public. The main conclusion is that the Soviet Union is able to keep up with the speed of the arms race set by the United States without reducing its economic growth rates.

This opinion was echoed by Paul Warnke, former director of the US Arms Control and Disarmament Agency, when, in an interview to Der Spiegel, he denounced the arms race and said: "I think the administration is clinging to the delusion that continuous additions to the American nuclear arsenal will some day force the Soviets to realize that they cannot keep pace with us and will have to abandon the race.... The Soviets are capable of keeping up with us for as long as they deem it necessary.''^^28^^

In this connection many experts ask how long the United States and its West European allies can maintain the pace they set for the arms race. Hermann Bohle, the Brussels correspondent of Wehrtechnik magazine, holds that economic difficulties cannot be overcome without a sizable cut in armaments. Today, politicians in the White House only debate how great the US national debt could become without wrecking the national economy, Bohle says and adds: "' Rearmament,' one of the chief causes of the growing US deficits and inflation, to fight which interest rates are raised, brings entrenched unemployment and economic stagnation.''^^29^^

I have already indicated that in 1981 the US national debt exceeded one trillion dollars---and that without taking into account the debts of individual states and cities. This sum is 50 percent higher than the annual national income of the United States. In other words, already in

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1980 the United States used up all the revenue expected in 1981 and 1982.^^30^^

The Washington policy of raising interest rates adversely affects other Western economies too. West German, British and Italian monopolies invest billions which could have been used in their national economies in American banks at high interest rates; capital always flows to where profits are greatest. The current US administration channels the influx of European capital above all into the arms race. The West German press notes that "the luring of great capital from Western Europe with the help of higher US interest rates will, even if these high interest payments return home, finally lead only to an aggravation of the economic crisis, including that in the Federal Republic. First, because the interest returns are from unproductive investment---that is, it does not produce goods having a real consumer value. Second, because the dependence on the US financial policy raises interest rates in Western Europe itself. Inflation and unemployment are growing, and so is the number of bankruptcies. And third, the billions transferred to the United States could have been used to invigorate economic activity here. We are short of much credit capital at acceptable rates while it is flowing into the US arms race.''^^31^^

Forcing West Europeans to buy American military technology, the United States is making its allies cut back on social, educational and cultural programs. US Defense Secretary Caspar Weinberger has repeatedly advised the United States' NATO allies in Western Europe to increase their budgets by an annual figure of seven, not three percent. West Europeans were given to understand that if they were short of cash to finance the arms race, American

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finance capital could help them out by providing loans at 15-, 20- and 30-percent annual interest rates.

West German journalists have dubbed the arms race "social disarmament." Jonathan Gray, an analyst for Sanford C. Bernstein and Company, has likened the current American economic policy to a destroyer dropping depth charges: "No one knows how much damage has been done until the debris floats to the surface.''^^32^^

Gus Hall, General Secretary of the Communist Party USA, says that "these massive expenditures distort all phases of life-H;he economy, the financial structure, the social and political fabric of life. The military budget now takes increasingly bigger bites out of funds designated for social programs. As a result, inflation spirals out of control and taxes keep rising. Military expenditures have now emerged as the big factor in forcing a declining standard of living and overall deterioration in the quality of life.''^^33^^

The negative impact of military spending on the economy has become so obvious that even bourgeois economists have been increasingly critical of militarization. Wassily Leontief, John Kenneth Galbraith, Arthur Burns and others have repeatedly explained the real costs of military outlays. In the spring of 1981 Professor Leontief said: "Huge jumps in military spending will mean higher inflation, a worsening balance-of-payments gap, a drain on productive investment, soaring interest rates, increasing taxes, a debased currency and, in the long term, more unemployment. Reagan proposes to leap across-^rather than bridge---the nation's economic gap. What worries me is that, if you jump even five inches short, you face economic

calamity. It is a very great gamble.... Enormous new military outlays will concentrate our scarce capital even further in this special defense area. That will starve the rest of the economy of the investment it desperately requires to remain competitive in the tightening worldwide market.... Probably, the upward pressures on prices will accelerate because the private sector will be producing fewer consumer goods and there will be a far greater amount of money in circulation to buy them.... Reagan hopes our gross national product will expand so much that we will be able to pay for higher defense spending without raising taxes. This is not likely to happen. In fact, I personally guarantee that it will not happen." Wassily Leontief anticipates that the consumer-goods industries will be hit hardest: "Reagan probably will try to counteract inflationary pressures with higher interest rates. This means the cost of consumer products goes up.

``Construction costs and home mortgages, clearly, will move higher, and this may compound the recession in the nation's building industry. There's really no easy way out. If we have what amounts to a war budget---and the Federal Reserve Board keeps interest rates steady or lowers them---the inflationary pressures could be staggering.''^^34^^ Today it is clear that many of Leontief's forecasts were perfectly accurate. As to those who defend the arms race, now they preach economic virtues of militarization in a much more cautious and indirect way than in the first postwar years.^^35^^

Naturally, a reduction in military spending cannot curfe all the ills of US capitalism. But it could improve the nation's economic position considerably.

Chapter Six

~^^1^^ Fortune, November 2, 1981, p. 108.

~^^2^^ Newsweek, March 22, 1982, p. 36.

~^^3^^ See Current Economic Problems and Contradictions. Nauka Publishers, Moscow, 1978.

*Pravda, April 13,1981.

~^^5^^ Time, March 22, 1982, p. 37.

~^^6^^ U.S. News and World Report, March 16, 1981, p. 26

~^^7^^ See Common Security. A Programme for Disarmament, p. 75.

^^8^^ Time, February 22, 1982, p. 37.

~^^9^^ V. I. Lenin, Collected Works, Vol. 3, 1977, p. 336.

~^^10^^ James R. Schlesinger, The Political Economy of National Security, Praeger, N.Y., I960, pp. 267, 268.

~^^11^^ Karl Marx, Capital, Vol. I, pp. 707-08.

~^^12^^ The New York Times, November 19, 1978.

~^^13^^ In actual fact, tax reductions play into the hands of the corporations because what the population gains from lower taxes it loses due to cuts in social spending.

~^^14^^ The New York Times Magazine, February 28, 1982, pp. 35-39.

~^^15^^ USA: Economy, Politics, Ideology, No. 1, 1983, p. 50.

~^^16^^ Time, March 22, 1982, pp. 37, 38.

~^^17^^ Ibid.

~^^18^^ Ibid.

~^^19^^ Ibid.

~^^20^^ The New York Times Magazine, February 28, 1982, p. 44.

~^^21^^ At the height of the Vietnam War, workers in some West Coast military plants sported lapel buttons reading, ``Don't Bite the War That Feeds You." In Groton, Connecticut, where business depends on the General Dynamics shipyards, children wear T-shirts saying "My Dad Builds Tridents.''

~^^22^^ USA: Economy, Politics, Ideology, No. 6, 1978, p. 17.

~^^23^^ S. M. Menshikov, Inflation and the Crisis of Economic Regulation, Mysl Publishers, Moscow, 1979, p. 121 (in Russian).

~^^24^^ See World Armaments and Disarmament. SIPRI

254

Yearbook, 1980., Taylor and Francis, Ltd., London, 1980, p. 61.

~^^25^^ See Common Security. A Programme for Disarmament, pp. 88-89.

~^^26^^ Asia and Africa Today, No. 5, 1978, p. 26 (in Russian).

~^^27^^ See S. Lyndenberg, Weapons for the World, N.Y., 1977, p. 22.

~^^28^^ Die Tat, April 23,1982, p. 9.

~^^29^^ Ibid.

~^^30^^ The downward plunge of the US financial policy is illustrated by the following figures: the US national debt was 380 billion dollars in 1970, more than 540 billion in 1975, 780 billion in 1978 and almost 900 billion in 1980. Since 1981, it has exceeded one trillion dollars.

~^^31^^ Die Tat, April 23, 1982, p. 9.

~^^32^^ Newsweek, March 8, 1982, p. 47.

~^^33^^ Political Affairs, June 1980, pp. 3-4.

~^^34^^ U.S. News and World Report, March 16, 19.81, p. 26.

~^^35^^ In 1949, for example Sumner Slitcher, a US author, wrote: "[The Cold War] increases the demand for goods, helps sustain a high level of employment, accelerates technological progress and thus helps the country to raise its standard of living.... We may thank the Russians for helping make capitalism in the United States work better than ever." (Quoted in John Kenneth Galbraith's Economics and the Public Purpose, p. 151.) In recent years, such statements have become increasingly rare.

[255] __NUMERIC_LVL1__ Chapter Seven __ALPHA_LVL1__ WHAT AGGRAVATE
THE THREAT __ALPHA_LVL2__ THE INFLUENCE OF THE
MILITARY-INDUSTRIAL
COMPLEX: DEGREE AND
LIMITS

In discussing the place the military-industrial complex holds in the imperialist system, the degree and the limits of the influence it exerts, Western experts often turn to the share of military spending in the Gross National Product. Over the past decade this figure has fluctuated between five to eight percent; the share of military products in the GNP has been even lower, since a part of the military expenditures goes to maintain the armed forces. Hence the conclusion that the influence of the military-industrial complex is negligible: the tail cannot wag the dog.

First of all, here one cannot completely ignore the political side of this highly important phenomenon, the militarist functions of the military-industrial complex which place it in a special position in the social system. The influence of the military-industrial complex increases substantially because war- preparations are in line with the overall strategic interests of the US imperialist bourgeoisie. Militarism is inherent in the very class and exploiter nature of the capitalist system; the increased aggressiveness of imperialism stems from the requirements of the monopoly bourgeoisie which sees armed force both as a means of protecting its social

system and a tool of its expansionist schemes. In the early 20th century, militarism was inseparable from the imperialist struggle for colonies, markets, sources of raw materials and new areas for capital investment. Today, militarism is spearheaded against the world's revolutionary forces.

Add to that the considerable weight of the military-industrial complex in the state-- monopoly system. It is an established fact that the more developed forms of this system in the United States include redistribution of the national income through the national budget: some 45 percent of the former is manipulated annually in this way. Military uses consume 25 percent of Federal spending; by 1985 the figure will reach 33 percent. This means that the military-industrial complex controls a substantial share of the national income and the national budget and manipulates them in its own interests. The weight of the military-industrial complex is especially great in the Federal contract system for purchases of goods and services, the heart of US state-monopoly capitalism. Military agencies account for over two-thirds of all Federal procurement. Besides, there is the huge property of military agencies. Finally, such Federal agencies as the Energy Department and NASA essentially form a part of the military-industrial complex.

The strong position and influence of the military-industrial complex are also due to a great extent to the fact that the complex is "built into" the mechanism of monopoly capital domination and intertwined closely with high finance. Although the composition and structure of the complex are different from those of monopoly capital and its financial oligarchy, they increasingly sprout elements which they

17-349

'

Turnabout In Defense Spending

Defense Outlays as Portion of Ail Federal Spending

291-5.jpg

This U.S. News & World Report diagram shows the rising percentage of military outlays in the US Federal spending on 1981-1984

share. If one takes the top 100 industrial corporations in the United States and the top 100 military contractors, 42 companies will appear on both lists (in the past their number was fewer). And if one takes the 60 wealthiest Americans (the core of high finance) and the 60 most prominent representatives of the military-- industrial complex, about 15 names will be duplicated here too.

The relationship between the military-- industrial complex and high finance can be illustrated by the example of the Rockefellers who control over 100 billion dollars in capital in scores of different industries (the Rockefellers' personal property is worth some ten billion dollars).

The family has stopped at nothing to add to and defend its wealth.

In setting up his oil trust, John D. Rockefeller I (grandfather of today's brothers) often hired criminals to blow up the installations of stubborn competitors. John D. Rockefeller II (their father) was well known for his brutal reprisals against strikers. Today, the Rockefeller empire owes most of its power to the foreign investments of its transnational corporations. For example, 80 percent of Rockefeller-- controlled Exxon, the biggest company in the capitalist world, comes from its branches in the Near and Middle East, and Latin America. There is more oil there and labor is cheaper than in the United States. It is only that national liberation chops off the transnational' tentacles---and so the instincts T>f greed and self-- preservation come into play. Incidentally, the events referred to in the United States as the "Iranian crisis" stemmed directly from the Rockefellers' counterrevolutionary scheme brought off with CIA help 30 years ago. At that time the Iranian people elected a government which nationalized the country's oil deposits. But the Rockefellers and the CIA overthrew the government of Mossadegh and replaced htm with the Shah. Supported by SAWAK, his CIA-trained secret police, the Shah denationalized the oil industry. For 25 years the Rockefeller dynasty actually directed and took part in one of the most brutal campaigns of murder and torture against antiimperialist progressive Iranians.

Adding fuel to the Cold War in the late 1950s, the Rockefeller Foundation prepared a long-term political program for the US government stressing that the nuclear arms race should be stepped up. The US political community described the program as a plan of increased

military spending for 1958-1970.

The Rockefeller Brothers' policy report " International Security: The Military Aspect" said, among other things, that "the above deficiencies in our strategic positions can be removed only by substantially increased defense expenditures. These increases will run into billions of dollars and must rise substantially in each of the next few years.''^^1^^

In 1973, at John D. Rockefeller's initiative, the so-called Trilateral Commission was formed ---K political organization of international high finance with a clear-cut aggressive objective: to unite the three regional power centers of international capitalism, the United States, Western Europe and Japan, against both the socialist world and developing countries. The first chairman of the commission was Zbigniew Brzezinski, subsequently President Carter's national security adviser.

The Rockefeller family has a hand in arms manufacture too. They are sponsors of Martin Marietta, a prosperous company and one of the major contractors for MX and Pershing-2 missiles, the latter already being deployed in Western Europe. Laurance S. Rockefeller holds large blocks of shares in McDonnell Douglas and several other military corporations. But, although the Rockefellers' large investments in the military industry bear out their militarism and some elements of their finance group belong or are allied to the military-industrial complex, the family's interests comprise a much broader range than those of the complex itself.

Americans used to say that US policy "smells of oil," referring to the powerful sway the Rockefeller clan held over Washington policy and over the ~oil industry. The phrase is largely applicable today too. The Rockefellers' parti-

cular involvement in the shaping of the US Middle East policy is rooted above all in Exxon's huge investments there. For example, in 1978 the Rockefellers worked hard to push through Congress arms sales to several Mideast countries; no doubt, their foremost concern was to protect their property. But that was not the only reason. The chief item of the package deal, the F-15 fighter-bomber, was produced by McDonnell Douglas.

The symbiosis between the military-- industrial complex and high finance offers additional explanation of why the influence wielded by the complex is out of proportion to the share of military output in the GNP: to attain its objectives and implement its plans, the complex uses its ramified connections among finance and industrial monopolies. And, while for the Rockefellers, Morgans, Du Fonts and Mellons the arms business is merely one of the investment spheres, and not the most important one at that, it has become the major, or a major, source of capital accumulation for a large group of the monopoly' bourgeoisie, especially in the Southwestern United States.

The Southwestern groups have long vied for a place in the sun in American politics. In 1964 they backed Senator Barry Goldwater, the extreme right-wing Presidential candidate. On July 18, 1964 Drew Pearson wrote in The Washington Post: "...The economic power of the Nation has shifted, and along with it has shifted the political power.... Today, the Bank of America in California, not the Chase Manhattan Bank in New York, is the biggest bank in the world.

``Likewise Texas---with its missile and electronics industry...^carries a terrific economic punch. New banks, new industry have sprung up all over the West and Southwest." Since then

261

the West and the Southwest have consolidated their positions still more. The state of California alone accounts for over 20 percent of all the military contracts and about 50 percent of all the space contracts. The emergence of new high finance groups introduces an additional element of aggressiveness and adventurism into American politics. The French press has noted that in the struggle over whether military expenditures should be kept up or reduced Eastern and Western business interests clash: the Western States, especially California with its well-- developed electronics, profit more from military contracts than the Eastern states with their more traditional industries.

The range of factors contributing to greater influence wielded by the military-industrial complex can be classified, with certain reservations, as follows:

1. The aggravation of the overall crisis of capitalism and the worsening of its position on the world scene. This prompts high finance to rely on armed force increasingly often. Aggressive imperialist interests respond with frenzied war preparations to their social setbacks, the loss of colonies, the advances of world socialism and the growing influence of the communist parties in bourgeois countries. Military budgets grow larger, new weapons systems appear, military bases spring up. Imperialism hopes that these "positions of strength" will preserve its ability to dictate to other nations.

2. The state-monopoly essence of the military-industrial complex which places it at the heart of the modern capitalist system. Initially, the mechanism of state-monopoly capitalism took shape in the military sector of the economy during World War I. Today this machinery proliferates with particular vigor in that

282

same sector; the reason is the very nature of military production, oriented exclusively toward the government market.

3. The scientific and technological revolution which, in an imperialist country, occurs first and foremost in the military sphere. The military-- industrial complex uses the most advanced technologies, the leading research centers and laboratories, the best-skilled scientists, technicians, designers and workers. Besides, the scientific and technological revolution cements the bonds between the various components of the complex. On the one hand, the government becomes increasingly involved in the manufacture of the more complex types of weapons; on the other, individual monopolies can no longer cope alone with the production of modern weapons. For example, the Tomahawk cruise missile^ program is a joint project of McDonnell Douglas, Boeing, General Dynamics and William Research. All this further consolidates the military-industrial complex.

4. The secrecy in the military sphere which enables the military-industrial complex to hide many aspects of its operation both from the public and from rival groups of the bourgeoisie.

5. Heightened imperialist propaganda stressing the "Soviet military threat" and skillfully fomenting chauvinist and militarist sentiments.

6. The military-industrial complex becomes more influential as the role of the military-state bureaucracy grows. The latter is an objective imperialist and state-monopoly capitalist trend which particularly intensified in the United States after World War II (see Chapter Four).

At the same time, powerful factors exist which work against the growing influence of the military-industrial complex---above all, the strengthening of world socialism, the steady and per-

sistent Soviet policy of peaceful qoexistence, detente and disarmament, and the ever more vigorous efforts of other peace forces. Then there are the realities of today which turn a war involving nuclear missiles into suicide for the one who launches it, and the growing understanding among the more realistic imperialist ruling quarters that the arms race whipped up by the military-industrial complex serves to bring this suicidal outcome closer.

There is also the competition of the monopoly groups not part of the military-industrial complex; this struggle hampers its growth quite tangibly. And finally, there is the exacerbation of domestic social and economic problems ( inflation, unemployment, the energy crisis, etc.) in the United States and other imperialist countries, as well as the fact that more people understand that these ills and growing military spending are interrelated.

All these and many other factors which differ in nature, scope, strength and direction affect the evolution of the military-industrial complex to a noticeable degree.

In the first half of the 1970s, the strengthening of world socialism, the crisis of the United States' aggressive foreign policy, as well as detente slowed down the uncontrolled growth of the military-industrial complex typical of the postwar years. The share of military spending in the Federal budget decreased, and the absolute size of military outlays changed little: 80.3 billion dollars in 1970, 77.4 billion in 1971, 78.3 billion in 1972, 76.4 billion in 1973, and 81 billion in 1974. The share of military output in the Gross National Product became somewhat smaller too. Many companies known earlier as military contractors with narrow specialization, such as Litton Industries, displayed a trend to-

284

ward diversification. The percentage of civilian R & D outlays also increased to a certain degree. However, in the mid-1970s the military-- industrial complex regained its earlier growth rate. From 1975 on, military spending has showed an increase in constant prices. Tlie advent of the Reagan administration which has launched a record program of peacetime military buildup produced a new incentive for the growth of the complex. While over the entire 35-year postwar period (from 1946 to 1980) the United States has spent two trillion dollars on military uses, it plans to spend as much from 1983 to 1987. Naturally, one has to make adjustments for inflation which has recently risen to unprecedented levels. But even if one converts the figures into constant prices-4;he way the Pentagon does, with its technique of underrating military spending---the US military budget has grown more than 20 percent from 1976 to 1981. The Reagan administration wants military spending to increase at an annual rate of nine percent in real terms.^^2^^

__ALPHA_LVL2__ THE
MILITARY-INDUSTRIAL COMPLEX
GOES INTERNATIONAL

In recent years, military-industrial complexes in different imperialist countries have become more interrelated and internationalized. Despite the continuing and exacerbating tensions among imperialist countries, despite the intense rivalry among monopolies and their groups, trends toward integration are growing stronger in the sphere of military production. Militaryindustrial complexes become internationalized under the aegis of the US complex which tries to bind the efforts of its NATO partners still

266

closer together in order to secure military superiority over the socialist countries.

Integration is evident in the exports of weapons, in their standardization, in the exchanges of military technologies and the military-- industrial cooperative effort.

Specifically, a broad program has been drawn up to standardize either whole systems and makes of weapons or their more important components such as engines, electronic systems, ammunition and fuel.

Since the late 1970s a clear trend has emerged toward joint development and use of integrated systems which make possible the creation and determine the mode of operation of whole sets of armaments designed to tackle similar tasks. One example is the Airborne Warning and Control System (AWACS) developed in the United States. Its appearance in Western Europe means not only a restructuring of the groundbased air defense systems but also the installation of the equipment in question on board fighters. Under US pressure, NATO's European members agreed, in late 1978, to purchase the system and manufacture some of its components at home. The plan is to ensure virtually complete integration and consequently, interdependence of air defense systems in the NATO countries by the mid-1980s.

In 1978 the United States, Canada, the FRG, Great Britain, Denmark, the Netherlands, Italy, Norway and Belgium signed an agreement on joint financing and use of the American NAVSTAR satellite system which will enable them to pinpoint the position of surface vessels, submarines and planes, including nuclear-- capable ones. The agreement stipulates that the other NATO countries should not develop similar systems.

American engines and West German 120-mm cannons are mounted on US XM-1 and West German Leopard tanks. Parts of the West European modification of the US F-16 plane are manufactured in Belgium, Denmark, the Netherlands and. Norway. This cooperative effort has both technological and political consequeces: it is a channel through which the economies which previously did not produce armaments are hooked up to the NATO military machine; these countries develop their own militaryindustrial complexes with all the political effects this entails. For example, in the early 1980s Belgium already had some 25 large arms manufacturers and 150 more companies specializing in the production of military equipment; Faforique Nationale had turned into one of the biggest military producers in Western Europe.

The trend toward the internationalization of the military-industrial complex within the NATO framework manifests itself not only in the exports of goods but also in the exports of capital by the military-industrial corporations and in the establishment of increasingly firm financial links with foreign arms manufacturers. Boeing controls ten percent of West Germany's Messerschmitt-Bolkow-Blohm stock; United Technologies has a 27-percent interest in Fokker of the Netherlands; Lockheed, a 20-percent interest in Aeronautica Macchi of Italy; Northrop controls 20 percent of Fokker and 24 of Spanish Casa; Pratt and Whitney, 10 percent of French Snecma. The military-industrial complexes of the biggest imperialist powers export their capital not only to NATO countries or to Europe alone. In the late 1970s it was decided to set up an American arms-manufacturing center in Saudi Arabia and a British one in Egypt.^^3^^

Agreements on licensing and cooperation are

important elements in the system of international relations maintained by military-industrial complexes. One of the causes behind the rapid development of such intermonopoly agreements is the fact that modern weapon types are becoming progressively more sophisticated and costly; this is an additional incentive for pooling financial and R & D resources so as to develop and produce armaments jointly. Another contributing factor is the exacerbation of competition on the world capitalist armaments market: license" and cooperation agreements usually make it easier for monopolies to infiltrate foreign markets.

Having licensed the use of an invention, the military corporation concerned not only receives a fee over a long period but also controls the technological side of the production. As a rule, license agreements are supplemented by additional deliveries of equipment and raw materials and by extra management services. Licensing frequently makes it easier to gain control of the operation of foreign companies through acquisition of their stock.

US corporations are second to none in the number of agreements concluded on military licenses. In the latter half of the 1970s the US

fovernment annually approved the sales of over 00 military licenses abroad. US arms manufacturers signed about 100 big license agreements with Japanese companies alone, and in the early 1980s more than 50 percent of all the weapons produced in Japan were manufactured under these licenses. American aerospace corporations have concluded some 70 license agreements with Italian, over 60 with British and over 30 with West German firms. US companies have also sold-many shipbuilding and radioelectronics licenses to other NATO countries

288

and to Japan.^^4^^

The US military-industrial complex also leads in cooperative agreements on arms manufacture. These include the agreements with a consortium of West European companies on the manufacture of F-16 fighter-bombers; with Italian companies on the production of the M-109 self-- propelled howitzer, the M-113 armored personnel carrier and the Sidewinder missile; with Spanish firms, of the Escort-class destroyer; and with Japanese manufacturers, of the F-15 fighter-bomber. Under the already completed international cooperative programs, Western Europe and Canada have produced US Starfighter, Phantom and Tiger combat planes, many types of self-propelled armored vehicles, helicopters, missiles and electronic equipment.

Aside from the overall trend toward internationalization of imperialist military-industrial complexes, there is the increased military-- industrial integration in Western Europe: European military corporations are trying to strengthen their hand in the competition with their more powerful American rivals. West European Tornado, Alpha Jet and Jaguar planes, various types of helicopters, Gepard self-propelled antiaircraft weapons and several naval systems are being produced on a bilateral or multilateral basis. Aircraft engines are designed and manufactured jointly by British, French, Italian and West German companies; helicopters, by French, West German, Italian, British and Dutch firms.

An independent European Programme Group which comprises NATO members, including France, has been set up to support West European arms manufacturers. NATO Review singles out two main reasons for its establishment: the need to pool financial resources for the development of new weapons systems and the fear of

greater domination of US mpnoplies in arms manufacture. The strengthening of the West European ``factor'' in relations with the United States is among the chief objectives of the group.

An important feature of the current stage in the internationalization of the NATO nations' military-industrial complexes is that US monopolies increase their involvement in joint military research and production programs. The type of cooperation in which one country (usually the United States) is fully responsible for the development and production of one type in a family of weapons with similar purposes is becoming especially typical. For example, the United States has earmarked 250 million dollars for the development of a heavy antitank missile, while a consortium of West European companies is spending about the same amount to produce a medium missile of this type. Roland and Patriot air defense missile systems developed, respectively, in Western Europe and the United States, are another example. After an item is developed, it is either purchased or produced under license by other members of the bloc. West European countries are especially active in this type of cooperation because they.hope it will help them to make the US military-industrial complex give way.

One of the consequences of this increased interdependence of the West European militaryindustrial complexes and of their integration with their US counterpart is that those quarters in Western Europe which are interested in the arms race and oppose improvements in the international climate are becoming stronger. The giant transnational military monopolies which are very active in politics working against the easing of international tensions include Boeing,

McDonnell Douglas, United Technologies, Northrop and General Electric in the United States and Messerschmitt-Bolkow-Blohm, Fokker, Rolls-Royce, Snecma, Westland, British Aerospace, Aeritalia and Augusta in Western Europe. In 1977 Le Monde diplomatique wrote that the transfers were "not only of the items themselves but also of the very system of relations associated today with the term ' military-industrial complex.' Entering into association with foreign countries to manufacture armaments, big arms manufacturers inevitably reproduce abroad the same pattern of political, military and economic collusion which has become a salient feature of American society.''^^5^^ In other words, the internationalization of military production contributes to the growth of military-industrial complexes in all the participating countries. And European NATO members are clearly striving to form a joint military-- industrial complex which could become more or less equal to its American counterpart and rival.

Integration does not ease interimperialist contradictions or the very acute competition both among and within the different nodes of the military, business. The struggle among US, West German, French and British monopolies for armor contracts has prevented the development of a standard NATO tank. West European attempts to gain a foothold on the American armaments market run into stubborn resistance by the US monopolies.

One result of this internationalization is that the US military-industrial complex conies to dominate its less powerful West European counterparts arid constantly forces different countries to adopt the types of weapons serving the global ends of US strategists. An aggressive element is being introduced into the national stra-

tegies of West European NATO countries. Under the Italian Constitution, its military doctrine renounces aggressive wars and provides only for the defense of Italian soil. However, by bribing high-level government officials, Lockheed has managed to make the country acquire 14 C-130 Hercules long-range military cargo planes. Unusable within Italy's borders, these planes will be employed to discharge the country's obligations to NATO ( the way General Fanali, Chief of Staff of the Italian Air Force, has put it)---in other words, in operations outside the national territory and consequently, in violation of the Constitution. The constitutional basis of the military doctrine is being undermined in Japan too. The weapons US military corporations export there possess performance characteristics which surpass the needs of self-defense to such an extent that this plays into the hands of Japan's militarists and revenge-seekers and builds up tensions in East Asia and the Pacific! The decision to lift all restrictions on naval shipbuilding in the FRG is also rooted in the desire to use the West German Navy "outside the NATO scope of operations" ki emergencies, says Der Spiegel. Specifically, West German naval vessels have already taken part in exercises in the Caribbean.

The US military-industrial complex uses, similar techniques in relation to neutral countries too.

For example, the permission to produce 30 percent of the parts locally has prompted Switzerland to update its Air Force fleet by purchasing 72 Tiger planes. Counting on lavish subcontracts, several Swedish companies advocate the rearmament of the Swedish Air Force with F-16 fighters produced by General Dynamics. In Austria, Austrian People's Party and Liberal

Party of Austria military experts have come out for purchases of missiles in NATO countries---in violation of the government treaty.^^6^^

The trend toward the internationalization of the military-industrial complex is largely explained by the fact that interimperialist contradictions recede to the background compared with the overall strategic interests of high finance which presents a united front working, against world socialism and the national liberation movement. The Soviet researcher Ivan lyanov says that "with the establishment of military blocs in which the anticommunism and neocolonialism common for the monopoly bourgeoisie are stronger than the interimperialist contradictions, the erstwhile and far from absolute isolation of the national military-- industrial complexes is being eroded, and the complexes intertwine internationally. "^^7^^

The Reagan administration has contributed greatly to the strengthening of the ties binding together different military-industrial complexes. Under strong pressure from the Pentagon, the long-term (up to 1993) program of NATO arms buildup is being implemented. The program envisages about 100 projects for new types and systems of weapons, including missiles, planes, naval vessels and tanks. Many of the projects will be part of international programs, largely dominated by US military corporations. To expand the* military-industrial ties, NATO has formed, at the Pentagon's initiative, a special industrial group to establish direct contacts among arms-manufacturing monopolies-^ essentially, to function as an international cartel agency. The US government also encourages forms of cooperation such as the establisment of international consortia, the conclusion of agreements on joint arms manufacture - and the

18-349

extension of licenses and export credits.

West Eurogroup governments are also active in the internationalization of the military-- industrial complex. The following phrase has recently become typical of Eurogroup communiques: "The Eurogroup Governments fully support recent decisions by the independent European Programme Group to intensify efforts to ensure closer and balanced cooperation in the defence equipment field both within Europe and with North America.''^^8^^

The Pentagon and the military agencies of the other NATO countries hold that to encourage the international ties of the military-industrial complexes means to cement NATO ties. Describing the problems and prospects of greater unity in NATO, Defense Minister Hans Apel of the FRG said: "The numerous tasks arising from the security policy in the general political, economic, development assistance and military fields can be carried out even less in the future by the countries acting alone than has been the case in the past.''^^9^^

Pentagon generals are especially zealous in bolstering NATO ties. Aside from their frantic anti-Sovietism and political pressure on the allies, they seek to achieve that goal by repeatedly urging, at NATO meetings, greater cooperation in various military industries, especially with regard to exchanges in military technologies and cooperative projects.

To sum up, today the military-industrial complexes of the NATO countries are merging into an international alliance of the more reactionary political and militarist interests and military-industrial monopolies. Since continued arms race is the goal of this alliance, its existence is incompatible with mankind's striving for peace and universal security,

274 __ALPHA_LVL2__ THE GENERATOR OF
MILITARISM

It is very difficult to say precisely how the military-industrial complex influences US imperalist foreign policy today. It is hard to determine the degree to which distinctive goals of the military-industrial complex shape Washington's political moves. The term " American reactionaries" is much broader than the military-industrial complex, although the latter is among the chief representatives of the former. Haroldson Hunt has never owned a military factory or held a position in the Pentagon, but that fascist billionaire was justly called the "most dangerous man in America.''

At first glance, the military-industrial complex displays certain conflicting aspects. For example, -some top executives of military-- industrial companies took part in the establishment of trade and other economic relations with socialist countries. But that should not surprise anyone. Like all businessmen, military industrialists are essentially pragmatics. When USSoviet relations became warmer, the more flexible among them decided to expand East-West cooperation---at the same time working hard to prevent any cuts in US military spending, blocking arms limitation moves and opposing military detente. James Packard was one of such Janus-faced figures.

Sometimes Pentagon generals or civilian officials begin to oppose the arms race and militarism. One such ``defector'' (in the eyes of the military-industrial complex) was Daniel Ellsberg, a former Pentagon employee who made a sensation in 1971 by publishing the famous Pentagon Papers in The New York Times. This cost Ellsberg his career as a government offi-

~^^18^^* 275

cial. He also advocated limitation of nuclear armaments. In April 1981 California-based Inquiry magazine published an interview with EUsberg in which he denounced Washington's aggressive strategy. He said forthrightly that the US war preparations were for "attacks on Soviet military capabilities---air bases, missile launching sites," etc. Retired Admiral Gene Laroque is also an active opponent of militarism. Specifically, he urges not to extend the arms race into outer space since, he holds, a war in space will inevitably turn into a nuclear war on earth. But people like EUsberg and Laroque are few and far between; despite them, the military-industrial complex makes imperialism increasingly aggressive.

I have already noted that the military-- industrial complex launched a frontal attack against detente in about the mid-1970s, when old promilitarist political organizations were strengthened and new ones set up. That was also the time when so-called political action committees began to mushroom. These were lobbyist organizations of various military corporations which raised funds under the slogan: "Get into politics or get out of business."10 Noting the further increase in the influence of business interests in Washington, bourgeois observers stressed that those who were connected with the military industry were becoming especially powerful. For example, arms manufacturers have been gaining new seats at the Businessmen Round Table, one of the most vigorous lobbyist organizations of US monopoly capital. The military-industrial complex focused its efforts on wrecking the SALT talks. It succeeded in delaying the signing of the SALT-II Treaty by several years. But even that was not enough. The complex decided that the ratifi-

276

cation of the Treaty in the Senate should be prevented and that this would deal a mortal blow to detente. Threatening to bury the Treaty, the military-industrial establishment first made President Carter agree to numerous concessions, and then gradually forced Washington to completely toe its line.

Analyzing the first 100 days of the Reagan administration, The Washington Post wrote on April 26, 1981: "That secretary of defense, Caspar W. Weinberger, has won a reputation in these 100 days as something of a loose cannon on the deck of Ronald Reagan's ship of state. In his first days in office Weinberger came out for American bases in the Middle East---before establishing that any Mideast country wanted them---and for revival of the neutron weapon in Europe, before learning that Europe wasn't interested.... More recently he has alarmed Western Europe with his rhetorical repudiation of any kind of detente with the Soviet Union.... Reagan, Haig, Weinberger and the others have made it clear that this administration opposes Soviet expansionism. They have made a staunch anti-Soviet position the centerpiece of their rhetorical policy. But this has not been translated yet into concrete terms, exqept for a request for an enormous increase in defense spending.''

Time has shown that the close ties connecting the current Washington administration with the military-industrial complex manifest themselves not only in militarist rhetoric but also in extremely dangerous political moves aimed at wrecking detente and whipping up the arms race.

The biggest program of military buildup proposed by the Republican administration in early May 1981 passed the first test easily: the Senate Armed Services Committee approved

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virtually all the President's financial requests for armaments, with John Tower, the committee's chairman, making it clear that he speeded up the procedure to avoid cuts in defense spending. All the costly programs the new administration included in the military budget were endorsed, including the production of MX missiles, B-l bombers, F-16 and F-18 fighters and M-l tanks, as well as the demothballing of the battleship New Jersey.

Increases in military outlays are closely connected with the intensification of the arms race and the mass production of the latest types of armaments. From the early 1980s, the American press has been paying still greater attention to more efficient military production, often describing with cynical relish all kinds of military novelties, like ``smart'' missiles with improved independent guidance systems, Stealth ``invisible'' planes, etc. The so-called Strategic Program for the 1980s deserves special mention. It is based on further buildup of the strategic nuclear capability and envisages the deployment of 100 new MX ICBMs, a first-strike weapon. Each missile is to have ten MIRV warheads 600 kilotons each. In other words, the deployment of 100 missiles will mean an addition of 1,000 warheads and thus upset the existing strategic parity between the Soviet Union and the United States.

Another component of the Strategic Program is Trident-2 SLBM, with the range 50 percent greater and the accuracy several times higher than the currently deployed Trident-1. The plan is to have a total of 20 Trident-2 submarines with 24 missiles on board each.

Besides, the Pentagon intends to produce 100 new B-1B strategic bombers, each carrying up to 30 nuclear cruise missiles. There is also the

278

provision to equip 270 other, currently operative strategic bombers with such missiles and begin the installation of Tomahawk nuclear cruise missiles on 150 nuclear-powered submarines and surface vessels.^^11^^

Steps are being taken to accelerate the manifacture of neutron weapons. Genetic consequences of neutron radiation even in small amounts will bring all kinds of grave diseases to many generations of those who will manage to survive. Caspar Weinberger is a very zealous sponsor of space-based laser weapons, advocating the creation of a whole fleet of combat orbiting satellites. Other backers include Lockheed, United Technologies, TRW and Rockwell International, the companies involved in the development and manufacture of various components of the new weapons. Spokesmen of these companies have told several government officials and congressmen that their firms could pool their efforts to create space-based laser weapons. Malcolm Wallop, a Republican Senator, is promoting the space weapons program in the Senate. The US Air Force has established a special space command to direct such programs. Retired General Daniel Graham, formerly director of the Defense Intelligence Agency and President Reagan's national security adviser during the past election campaign, wrote in the spring of 1981 that space-based laser weapons were necessary to seize commanding heights in space while the US-Soviet military parity still existed.^^12^^ In July 1982 Ronald Reagan announced a program to militarize outer space. He issued a directive orienting the US space effort in the coming decade toward creating and placing in orbit new weapon systems. The US brass plan to earmark some six billion dollars for the development of spacebase laser weapons in 1984-

279

1985. The Pentagon has already booked onethird of the future Shuttle flights.

The militarists are also stepping up the production of chemical weapons. In May 1981 State Secretary Haig and Defense Secretary Weinberger made a special appeal to the Senate urging a boost in their manufacture. Under pressure from the administration the Senate followed the example of the House and voted 50 against 48 in favor of a bill to allocate an additional 20 million dollars for equipping a factory at Pine Bluff, Arkansas, which is to produce artillery shells charged with nerve gas.^^13^^ Acting against the will of the peace forces who fought to have these and other chemical weapons banned, the US ruling quarters took yet another step toward the implementation of their sinister plans.

Binary chemical weapons are recent newcomers. On instructions from the Reagan administration to considerably expand work on chemical weapons, the Pentagon plans to increase the number of chemical weapons to a total of five million units. The overall cost would be four billion dollars.^^14^^

Aside from the record-breaking military buildup, the Republican administration has also removed all restrictions on arms exports. According to one senior government official, they "will no longer be regarded essentially as something evil that has to be curbed". Having noted that under Reagan Washington was beginning to treat arms sales like any other trade transaction, U.S. News and World Report had this to say about the new administration's first steps in this direction: "In Latin America, the President has approved the shipment of 25 million dollars' worth of helicopters, heavy vehicles, machine-guns and other weaponry to bolster El Salvador's regime in its battle with

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leftist rebels....

``South Korea will be permitted to purchase at least 36 of the supersonic F-16 fighters it has been vainly seeking since 1977....

``Friendly Mideast nations will also benefit from the change. Despite Israeli objections, the administration has agreed to increase both the firepower and striking range of Saudi Arabia's US-made F-15 planes. The Saudis are the United States' biggest oil suppliers.

``US officials intend to placate Israel with additional deliveries of sophisticated aircraft, possibly other weapons. "l~^^5^^

Having started the deployment of Pershing-2 and cruise missiles in Western Europe in late 1983, Washington wrecked the Geneva talks and plunged the world into a new round of the arms race fraught with unpredictable consequences. The deployment of the US missiles on European soil increases not European security but the tangible danger that the United States would bring catastrophe to the nations of Europe.

Force is being used more blatantly and broadly to suppress revolutionary movements. The latest indication was the armed banditry committed in Grenada. This aggression was a logical product and an element of the "positions of strength" policy aimed at securing world domination for the United States. The heads of government of the Council for Mutual Economic Assistance member-states have noted in their statement that "steps are being taken to exacerbate the political confrontation still further. The military-industrial complex is gaining ground, and war hysteria is being stepped up.''^^16^^

Naturally, it would be wrong to claim that the current US administration is a puppet of

19-349

the military-industrial complex. It is the figurehead of a larger coalition of the American bourgeoisie, with the military-industrial complex only one part of it.Today Washington's political course is shaped not only by the military-- industrial complex but also by a much more intricate range of forces. Still, facts show that the interests of the military-industrial complex meet with complete understanding among those who shape and implement US policies today.

The struggle against American militarism and the growing influence of the military-industrial complex is increasingly turning into a broad, nationwide democratic movement aimed against one of the more reactionary and dangerous products of the capitalist system. Only the eradication of state-monopoly capitalism can fully rid American society of this malignant tumor. According to Gus Hall, General Secretary of the Communist Party USA, the billions of dollars "taken from workers' pay checks each year go into the bottomless duffelbags of the Pentagon as extortion payments to the military-industrial complex, as give-away gifts to big business....

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American women protest against nuclear war

This is an inevitable tendency-4n fact it is the very essence of state-monopoly capitalism. It is like the growth of fungus on a dying tree.''^^17^^

But, even in a bourgeois system, certain limitation of the influence of the military-- industrial complex is possible. The antimilitarist movement which swept the United States at the juncture of the 1960s and 1970s impeded the growth of the complex in the first half of the past decade. Some researchers believe that nationalization of the military industry could play a positive role in this respect. John Kenneth Galbraith has proposed this in several of his books. But, the famous economist concedes, the owners of military-industrial corporations would be refunded the value of their stock in full and "this change is one of form rather than substance.''^^18^^ But even this thoroughly bourgeois version of nationalization was dismissed out of hand by America's rulers and their ideological armorbearers. That was understandable: on the one hand, the military business is a source of profits (although to different degrees) for the main groups of high finance; on the other hand, nationalization of- military-industrial corporations may set a ``dangerous'' example to other sectors of the US economy. Here one might note in passing that neither such nationalization plans nor the negative response to them on the part of the ruling elite are anything new.^^19^^

In an era which offers no alternative to peaceful coexistence the very logic of world developments demands that peace be strengthened. In the final analysis, a revival of the policy of confrontation and runaway arms race threatens high finance arid other prime movers of the militaryindustrial complex. Americans increasingly realize the connection between the worsening of domestic social and economic problems and the

growing military expenditures.

It would be natural to expect the realities of the nuclear age to somewhat dampen the militarist zeal of the imperialist oligarchy---there is no acceptable alternative to detente and arms limitation. As Gus Hall said at the 26th Congress of the CPSU, "The fires under the cauldron of world imperialism are being stoked by the predatory profiteering warlords.... As insane as it is, in the warped minds of some representatives of US imperialism what is worse than nuclear war is the successful construction of real socialism, the continuing victories of national liberation and the advances in the working-class struggles throughout the world.''^^20^^

People all over the world refuse to bow to imperialist pressure. The Soviet Union, the rest of the socialist community and other peace forces which have become more influential in recent years are working to improve international relations. The more realistic quarters in the West are also turning increasingly against militarism.

This trend was especially widespread in the United States at the juncture of the 1960s and 1970s, when the antiwar movement assumed unprecedented scope. There was vigorous opposition to the Pentagon's requests in Congress; national newspapers and periodicals published articles against the sway of the military. Influential members of the ruling class said openly that uncontrolled arms buildup was dangerous and military superiority over the Soviet Union was a pipe dream. For example, Richard Goodwin, formerly special assistant counsel to President Kennedy, told congressmen: "In 552 B.C., King Croesus of Lydia asked the Delphic Oracle, 'Shall Croesus send an army against the Persians?' The reply came that if he should send an army against the Persians he would destroy a

great empire. Croesus attacked, and his own empire fell.

``Our own oracles, the computers of the Pentagon, yield the same message. But this time there is no ambiguity.

``We can destroy an adversary, but we are defenseless. Thus, safety now depends on preventing conflict and not on winning it.''^^21^^

In the late 1970s this idea was echoed by George Kennan, former US ambassador to the USSR, in his book The Cloud of Danger and in his other statements. In May 1981, he criticized the militarist course of the Reagan administration and urged it to move toward strategic arms limitation. Kennan said that while previously dreams of ``victory'' had been able to delude, now the use of nuclear weapons would be a catastrophe for all, that the only way out was to break the vicious circle. Former Secretary of State Cyrus Vance also denounces the Republican administration's aggressive foreign policy. In June 1981 he said on television that the administration had failed to work out a positive approach to the strategic arms limitation talks. He said that the Soviet Union was prepared to seize every opportunity to begin the talks while the Reagan administration had done nothing toward that end. Sometimes even highlevel Pentagon, officials come out against the arms race.

The attitudes to the social and economic consequences of militarism are also becoming increasingly critical.

The policy of confrontation and attempts to achieve military superiority over the Soviet Union have failed in the past. So will Washington's bid to "regain global military superiority" today. It merely heightens the danger to all mankind---and to the United States too.

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An antiwar rally in Washington

The protest movement against the arms buildup and confrontation with the Soviet Union began to rapidly gain momentun from early 1982. In June coast-to-coast demonstrations and rallies were held demanding an end to the dangerous policy of the White House. All the strata of American society joined the movement---workers, farmers, businessmen, doctors, scholars, civic and religious leaders, prominent political figures and statesmen. Significantly, some members of the US ruling elite who began their careers as supporters of a tough policy vis-a-vis the USSR have recently begun to criticize the course of the Reagan administration. In the spring of 1982, together with

a group of well-known politicians, former Defense Secretary Robert McNamara published an article in Foreign Affairs, an influential periodical, offering a convincing critical analysis and rejection of the ``first-strike'' concept, the cornerstone of the US strategic doctrine. Former Vice-President Walter Mondale supported this view.

The 1982 peace movement in America reached its peak on June 12, when a huge demonstration over one million people was held in New York, the site of the Second special session of the UN General Assembly on disarmament. Almost 500,000 Americans took part in the march on Washington held on August 27, 1983 to protest against the runaway arms race. The demonstrators called on all nations to do everything in their power to avert the nuclear catastrophe to which the current Washington administration is pushing humanity.

It is clear why the military-industrial complex opposes detente and arms limitation: its power and privileged status in modern bourgeois society depend on militarism and international conflicts. But surely, even those who make up this complex realize that the arms race is now a "race to oblivion." They could hardly be naive enough to hope to survive a nuclear holocaust. It looks like the military-industrial barons' rabid hatred of socialism, their "arrogance of power" have triumphed over elementary common sense. But that is not the only reason. They do strive for superprofits and therefore take risks. In his Capital Karl Marx quoted a British historian who said that a chance to make a profit of 50 percent made capital positively audacious, 100 percent would make it ready to trample on all human laws, and at 300 percent there was no crime at which it would scruple, even at the

risk of its owner being hanged. And today no crime is graver than the efforts of the US military-industrial complex to wreck detente and boost the arms race.

Chapter Seven

~^^1^^ Super-State. Readings in the Military-Industrial Complex, p. 10.

a USA: Economy, Politics, Ideology, No. 3, 1981, pp. 122-27.

~^^3^^ Kommunist, No. 15, 1979, p. 123.

~^^4^^ See Issues Concerning the Transfers of the United States Defense Manufacturing Technology. Coproduction, Manufacturing Licenses, and Technical Assistance Agreements, U.S. Government Printing Office, Washington, D.C., 1977, p. 27.

~^^5^^ Le Monde diplomatique, February 1977, p. 4.

~^^6^^ USA: Economy, Politics, Ideology, No. 12,1981, p. 15

~^^7^^ I. D. Ivanov, International Monopolies in Imperialist Foreign Policy, MO Publishers, Moscow, 1981, p. 23 (in Russian).

~^^8^^ NATO Review, February 1981, p. 30.

~^^9^^ Ibid., p. 1.

~^^10^^ Financial Times, October 24,1978.

~^^11^^ See Whence the Threat to Peace, p. 34.

~^^12^^ The Washington Post, May 11, 1981. ~^^13^^Prauda, May 31, 1981.

*^^4^^ See Whence the Threat to Peace, p. 48. ~^^15^^ U.S. News and World Report, March 16, 1981, p. 35.

l| Pravda, October 21, 1983.

~^^17^^ Political Affairs, December 1978, p. 2.

~^^18^^ John Kenneth Galbraith, Economics and the Public Purpose, p. 28.

~^^19^^ As early as the mid-1930s the British Labour Party proposed banning the operation of private military-- industrial companies. As it was being debated in Parliament, John Simon, the then Foreign Minister and a "good friend of private industry," attacked the proposal citing, predictably, "national security interests,"

and asking a proponent of nationalization whether he thought that government-run brothels were a good thing and private ones were bad.

~^^2^^° The Words of Friends, Progress Publishers, Moscow, 1982, p. 282.

~^^21^^ American Militarism 1970, The Viking Press, N.Y., 1969, p. 15.

[289] __ALPHA_LVL1__ CONCLUSION

There is an American motion picture about a good extraterrestrial who saves San Francisco when a gang of bad guys decided to strike the city with a nuclear missile. The alien simply rises into the air and deflects the missile, sending it into a desert.

Powerful forces in America keep up their saber-rattling and pore over the scenarios of all kinds of wars---global and limited, lightning and protracted. The arms race and the mounting fears can really touch off a nuclear catastrophe. And it would be naive to think that the conflict will be limited. There will be no good extraterrestrial to prevent the calamity.

The "devil's breed," the clan of US militaryindustrial tycoons, is relentlessly spurring up the arms race. With the advent of the Reagan administration it has become more powerful than ever before. The military-industrial complex has infiltrated Washington's corridors of power and refuses to share its privileges with anyone. "President Jimmy Carter's Georgia mafia never acquired such extensive control over the levers of power as Mr. Reagan's California connection," says Financial Times. The US military-industrial cqmplex is understand-.

290

ably euphoric. "The future has never looked rosier for Grumman," exults Bierwirth, the head of Grumman. "General Dynamics' prospects have never been brighter," says David Lewis, the company's chairman. "Northrop's future seems bright in the coming US defense build up," writes Business Week.

An analysis of the military-industrial complex leads one to conclude that its core is the military-state-monopoly group. This term unlike the definiton "military-industrial," points to the monopoly nature of those forces in the military business which increasingly generate powerful impulses fraught with dangerous consequences. Besides, the phrase "military-- industrial complex" is often confusing because it frequently refers only to the military business, while there are also the government forces allied with military-industrial capital. Nevertheless, Marxists have accepted the term " military-industrial complex" because it is very widespread and familiar.

Karl Marx studied the mechanics of the bourgeois mode of production taking Britain as an example. That was the era of free competition capitalism, and Britain was the world's industrial workshop. Karl Marx noted that the laws he had discovered did or would apply to other capitalist countries as well, that a better developed country merely showed a less developed one the future which awaits it.

The United States claims to be the leader of the modern capitalist world. Nowhere else has the military-industrial complex developed as much. At the same time, I would like to reiterate that it is by no means unique. Today the US military-industrial complex reflects the major trends in the evolution of military-industrial complexes in other imperialist countries.

The military-industrial complex reproduces itself on an extended scale not because man is an essentially bloodthirsty creature (as some bourgeois authors would have us believe) but because the system based on exploitation and violence has reached a dead end. It threatens to take all our civilization to the grave with it.

The question of the military-industrial complex is not a merely academic issue. To curb the forces of war, to limit the arms race is the most important and urgent of all of today's global problems. "We must explain the real situation to the people," Lenin wrote, and show them how "the war is hatched....''^^1^^ Knowledge of the military-industrial complex aids in the struggle to preserve world peace.

Time is not on the side of the military-- industrial complex. The militarist orgy of imperialism encounters unprecedentedly powerful and massive resistance throughout the world. The human instinct of self-preservation supports the tireless peace drive of the forces of reason and socialism. The Warsaw Treaty countries believe that no matter how complicated the world situation, it is possible to overcome the current dangerous trend in international relations. The forces of peace are stronger than the forces of war. The important thing is to work in a concerted and purposeful way.

Conclusion

~^^1^^ V. I. Lenin, Collected Works, Vol. 33,1976, p. 447.

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