Military–Industrial Complex

The term military–industrial complex describes the inter-locking institutional relationships among weapons manufac-turers and the military and intelligence services. The phrase was first used by Pres. Dwight D. Eisenhower in his farewell address to the country on January 17, 1961. Eisenhower sounded a note of warning about what he identified as the increasing ties between the military and industrial sectors.

In a free market, producers respond to the demands of consumers. When asked why they make weapon systems, whether tanks, planes, atomic bombs, or computer software, companies reply that they are simply responding to the defense needs as determined by an elected government. In a market with few suppliers and a single buyer that pays for these purchases with taxpayers' money, however, a number of questions arise. Are the goods and services provided by these companies a good value for money? Are they even needed?

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These charts illustrate the economic effect of military business on the country's leading military contractors in the years surrounding Pres. Eisenhower' scoining of the term military–industrial complex.

Military contractors actively lobby Congress and the Pentagon to pay for their research and develop-ment and to purchase their products. In 1999, 15 com-panies obtained 44 percent of all Department of Defense (DoD) appropriations for weapon systems. Two com-panies received 20 percent of all contract dollars; for many defense companies, the DoD is their only cus-tomer. Many top officers and military analysts build lucrative careers in those companies that supply the military, then use their con-tacts to sell the government expensive and sometimes faulty weapons systems. Occasionally, government officials jump back and forth between the public and pri-vate sectors. Such blurring of the distinction between the two sectors raises questions about individual companies gaining undue influence over government policy decisions. The same pattern has held true for Democratic and Republican administra-tions in the post–World War II period.