Military-Industrial Complex

In his 1961 farewell address, President Dwight D. Eisenhower warned of the dangers of the military-industrial complex. While arguing for its necessity, he also stated that we must guard against its potential dangers to our democratic processes and liberties. This was not the first use of the term military-industrial complex. Charles Trevelyan of the United Kingdom first used it in 1914, but with Eisenhower's warning it became part of general political discourse. The military-industrial complex refers to the combination of two powerful entities in U.S. society. The first is the military establishment. The federal government spends billions of dollars annually keeping millions of men and women working to ensure national security. Since World War II, a permanent arms industry has complemented this military establishment. With this massive private industrial might symbioti-cally working with the government's military in times of war or peace, the U.S. government no longer needs to rely on a private sector conversion to military production every time war breaks out.

The pattern of U.S. military spending changed significantly in the middle of the 20th century. Prior to the Second World War, peacetime military spending as a percentage of gross domestic product (GDP) was generally less than 1 percent. During war it rose considerably—for WWI it rose to 7 percent—but still remained at fairly low levels. This all changed with the onset of WWII. From 1943 to 1945, annual military spending increased to more than 37 percent of GDP—the war dominated the economy. After the war there was a significant cutback in military spending to average levels of 5 percent of GDP. With the Korean War, these levels rose again to about 14 percent. They remained above 10 percent for the rest of the 1950s after the cessation of hostilities in Korea—peacetime military spending was at higher levels than earlier wartime levels. This maintaining of high levels of military spending—even during peacetime—marked the advent of the U.S. military-industrial complex of which President Eisenhower spoke.

These massive amounts of military spending fueled the private military-industrial sector. The federal government was now spending large amounts of money on arms production even in relatively peaceful times. Private entities, such as Lockheed Martin, Raytheon, and Northrop Grumman, were able to grow into large companies that were mostly dependent on government contracts for their survival. The relationship of these companies and the U.S. government is the essence of the military-industrial complex.

Since the 1950s, the ratio of U.S. military spending to GDP has declined considerably. During the Vietnam War this ratio was about 9 percent. Then in the 1970s it further declined to about 5 percent. President Ronald Reagan built it back up to about 6 percent in the 1980s, and then it fell to 3 percent by 2000. With the war in Iraq, it has inched back up to its current level of 4 percent.

Based on this more limited role that military spending now has in the United States, some argue that the military-industrial complex no longer exists. This would be an exaggeration. It is true that the military colossus is not quite what it was in the 1950s, but it is still a powerful presence in the U.S. and world economies. First, ratios of military spending to GDP at levels of 3—4 percent are still much higher than they were pre-World War II. Second, the absolute level of military spending is very high—the U.S. government spent more than $540 billion for national defense in 2006. Third, relative to the rest of the world, the United States spends far more on the military. The United States contributes more than half of the approximately $1 trillion spent worldwide annually on the military. In fact, the U.S. government's military budget is more than the next 14 countries combined—it is nearly 7 times that of China, the second largest spender. Simply put, the United States still devotes an enormous amount of resources to military purposes; with arms being manufactured by private firms, the military-industrial complex remains a powerful force in the economy and society.

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