Military-Industrial Complex

The end of World War II in 1945 was a harbinger for the birth of fraternal twins: the Cold War and the military-industrial complex. President Dwight D. Eisenhower's 1961 farewell address to the nation popularized the latter term for a phenomenon that consists primarily of three overlapping components. The defense industries are the first component and include primary contractors such as Lockheed and Boeing and thousands of other contractors and their subcontractors. The next element is the military, which can be the Pentagon, the Department of Defense (DOD), or a particular branch of the armed services such as the air force. The final significant part of the military-industrial complex consists of politicians: A partial list would consist of the federal executive and legislative branches, lobbyists, state governments, city councils, and chambers of commerce. Though a variant term, the political-military-industrial complex, is more accurate, Eisenhower's formulation is more commonly known. Other terminology that includes academics and health care is either a subset of one of the three major categories or foregrounds actors that are too peripheral to be considered at any length.

The defense industry and the armed forces grew in concert during World War II and throughout the beginning of the Cold War. The removal of price caps at the end of the war allowed the peacetime defense industry to exorbitantly increase postwar prices for major weapons systems that were only slightly more technologically advanced than were their World War II predecessors. During World War II, a B-29 Superfortress cost $639,000 to produce, nearly triple that of its predecessor, the B-17 Flying Fortress, but it obtained a significant increase in cruising speed, double the range, and more than triple the bomb load. The advanced new B-36 Peacemaker, originated in 1941 and first flown in 1946, had a range and cruising speed nearly identical to that of the B-29 and trebled the bomb load at a cost of $3,701,000—more than six times the cost of its predecessor.

Defense contracting is unique, since the DOD pays for much of the industry's research and development and because of a virtually guaranteed profit arising from the methods of contracting used by the military. The investment in federal funds for defense facilities is a significant distinction between defense contractors and their civilian counterparts. For instance, more than 10 years after World War II, and well after the end of the Korean War, federal funds paid four of every five dollars invested in manufacturing facilities used by the top eight aircraft companies. Even more significant is the fact that the defense industry repeatedly received contractual cost increases as the military added new requirements and capabilities while a weapon system was in production. This process not only slows production while testing and modifications are completed, it also means that previously finished parts and equipment have to be modified or scrapped, and then remade; either of which dramatically increases the individual unit cost. This rise in cost, tied with a decrease in actual numbers of airplanes purchased, has come to be known as the “defense death spiral.” As described by Chuck Spinney, a civilian Pentagon budget analyst, the Cold War mentality led to accepting a weapon system that essentially promised the moon with cost abjectly unimportant in comparison to the need to stay ahead of America's communist foes. In a 1995 report, the General Accounting Office commented on the next stage of the death spiral. The report speaks of a pattern in procurement programs that incorporates delays, redesigns, and other cost overruns that often dramatically escalate the cost before the weapon system is even in production.

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