Stirling Newberry: End The Cold War Economy

The recent decision announced by the Office of the Secretary of Defense to close US military bases, and the reactions of law makers, not merely Democrats but hard right figures like Senator Jim Thune of South Dakota and Senator Trent Lott of Mississippi, reminds us that the United States still has a war economy. But it also reminds us that that war economy is passing. It is not only base closings that tell us this, but seemingly unrelated announcements - for example, the use of bankruptcy by United Airlines to end its pension funds.

The era of mass mobilization warfare began in the 16th century in Europe, and would stumble its way from war to war, from the "New Model Army" of Cromwell in England, which would standardize training and uniforms, to the military science of Frederick the Great in the middle of the 18th century, to the French Revolution and Napoleon, which represented the peak of the purely nationalist-state's armed warfare. But in the middle of the 19th century, another factor began to be decisive in war, not merely physical mobilization of large bodies of loyal men, nor even control of trade, but the ability to mobilize the entire economic and industrial base of a nation. Nationalism, that force which had built the nation state, became joined with the power of controlling the internal forces of the economy. Thus was born "the market state," a state capable of levying internal income taxes, managing its own banking system, directing industry, and interconnecting itself with roads.

While sketches of this state had existed before, and it would take another 70 years before Nazi Germany would unleash the blitzkrieg onto the world, the Market State's first victory was that of the Union over the Confederacy. By measures of nationalism - internal unity, racial identity, sense of cultural mission, political ideology, esprit de corps - the Confederacy was superior. And that superiority showed through on the early battlefields of the conflict between the North and the South in America.

But over the years, the ability of the North to roll iron, design new kinds of ships and guns, re-equip armies, communicate, and move what they had mobilized allowed three commanders in particular to engage in a new kind of warfare. Once created, industrialized warfare advanced at breakneck speed. If the French Army of Napoleon, armed with classic 1756 French Muskets, had wandered onto the field of battle at Gettysburg in 1863, they would have been at some disadvantage, but nothing that morale, leadership and tactics could not have overcome. But if they had wandered onto the battlefield against Prussia at the battle of Sadowa, fought three years later to the day in 1866, they would have been faced with breech-loading weapons and an adversary trained to use them. In three short years, the very fabric of armed warfare had changed almost beyond recognition. And the pace would continue: at the opening of the American Civil War, ships were still made of wood, even warships, and yet 38 years later, America had armored cruisers that are recognizably modern in their design.

By the early 20th century, the market state had produced the ultimate expression of its existence: the battleship. A battleship is an object which requires not merely control over the economy but the ability to project logistical force around the world in the form of coaling stations and bases. Even being able to design such an object is beyond the work of a single individual. Battleships could only be built by the most advanced market states, and only afforded by the second tier. And they had a frighteningly fast generation time: the battleships that won the Russo-Japanese War in 1907 were being made obsolete even as they fought by a new British ship, the HMS Dreadnaught. The Dreadnaught would lead to an entire generation of warships that would fight only one major war, the First World War, and then be scrapped in favor of yet another new generation of warships that would be built only 20 years later. The result was a navy too expensive to use, and too valuable to risk in battle.

The cost broke the British empire, which could not afford to fuel and arm the battleships it had between the two world wars. The expense of keeping such a military in existence was beyond the capability of the gold standard economy. A new economy had to be born, and with it, a new kind of state: the information state.

The information state used process, method, and filing to supply analysis and modeling, which, in turn, became policy and reality. It produced, in ever greater waves, numbers on the economy, public mood and state of the state. It cultivated the ability to manipulate and match symbols that it called "intelligence" and measured by "IQ." It fought information warfare in the form of radar and espionage. And in 1945, it created the sketch of its ultimate weapon: The atomic bomb would, in the end, become the "deterrent force," composed of nuclear weapons and the means to deliver them and protect them.

This system required a still greater level of involvement in the economy, and it created the need for not merely temporary mobilization. Charles Evans Hughes said of World War I, "We put our constitution on the shelf and forgot about it." But the powers even of wartime Woodrow Wilson are puny compared to any president after World War II. In the early 1970s, Senator Church of Idaho compiled an extensive list of war powers and their uses. It reads like a dense Kafka novel.

The Cold War created the need to create consumer demand for objects that even the early versions of the market state could not afford: 747 jets, nuclear power plants with removable rods to get at the plutonium, the interstate highway system -all products of the need for a war that was more total than any imagined by von Clauswitz. Instead of "war being politics by other means," politics became war by other means. Eisenhower warned of "the military industrial complex." The solution to the expense was to build a war economy that produced goods that had civilian use, and thus became built into the cost of civilian life. It was not only taxes that supported the military, but virtually every activity, from paying for electricity to flying on board a jet aircraft.

But it was the armaments industry and the need for continual war that solved one of the problems of the market state. In the 1930s they called it "the Frontier problem." Simply put, money pools up in cities, people pour in from the broke countryside to work in cities, and the cities swell with population. Crime and the costs of cities soar, and the density produces a fragmented alienation which seems akin to madness. Franklin Delano Roosevelt, first as governor of New York, and then as President, fought to stop the drain on rural populations. Indeed, many rural areas had higher populations in the 1920s than they do today.

The military, by producing bases all over the country and a constant flow of demand that was not "relief" or "charity," but yet produced many jobs for a small amount for each job, became the crutch of the Keynesian economy, even though economists like John Kenneth Galbraith fought against it. The war economy needed a secure supply chain, which meant that it had to locate its industrial base in the core nations of the Western alliance. This created not only a military constituency for what Eisenhower called the "armaments industry," but a civilian one as well. It meant that labor was in short supply, because factories of many types could only be located inside of the West’s political control, and disruptions were very costly because of the cost of the capital. To a great extent the gains made by workers during this time were rent that they charged corporations for doing business in a limited sphere of the free democracies. This includes not only direct defense industries, but the indirect industries as well - for example, airlines.

With the end of the Cold War, a change in the attitude of economic elites came. Exemplified by Francis Fukayama's The End of History and Phillip Bobbitt's The Shield of Achilles, two vastly important bad books, this attitude can be summed up as "labor is now very cheap, we should slash the cost of it." The war economy is history, as the Rumsfeldian "smaller lighter military" shows. The new state cannot afford the kind of mass mobilization that was the hallmark of the 20th century, because instead it must pile ever greater amounts of money into a life or death struggle over the control of economic information. Thus there is pressure on pensions, health care, social security and the rest of the "safety net." They were created for many reasons, but the wealthy agreed to them to buy peace. Without the pressure of external war, that urgency has faded from their minds.

There are, therefore, two roads. We may hold onto ever-fading scraps of the war economy, with fewer and fewer people inside and more and more people outside, or we may chose a path that was put aside some 70 years ago, and create the peace economy. It is a larger change than most people imagine: Europe, while it does not have as large a war economy, depends on the ability to sell to the United States, which is busy producing international security as its major export. Not only will America have to change, but so too will the world.

This should not be confused with pure pacifism and disbanding the armed forces. It is a dangerous world, and there are dangers ahead. But the security of the United States and Europe is less and less protected by aircraft carriers, and more and more protected by the web of economics. It is always a mistake to believe that economics, alone, will prevent states from going to war; but it is equally a mistake to believe that war can indefinitely support economies. Military demand corrupts everything it touches, not merely jet planes and nuclear power plants, but other technologies as well. Consider where research into fuel cells, light vehicles, sustainable energy and other technologies key to any peace economy would be if the engineering talent were not being spent on "the joint strike fighter."

It is more, however, than simply shifting money. Money is not infinitely fungible. The excuse for the war economy is the instability of the world, and rising threats. It is failed states that create those rising threats, and therefore the great task of the peace economy is to end the era of failed states, semi-states and dictatorial states. Not by falsely claiming credit for every plebiscite, but instead by a thoroughgoing development of an economy that can hold the world at an affluent standard of living with the resources -both supply and sink - that are available.

Why now and not before? Because before, there was a great ideological conflict, and individuals placed their faith in systems, rather than in peoples. What was seen as important was whether there was a "capitalist" or "communist" system, even if many of the allies of both sides were, in fact, neither. It is also now because of the hard limits of the current economy. War economies are prodigal of resources - energy, people and materials - in ways that peace economies cannot be. It is also now for another reason still: before, the war economy held itself out as the symbol of strength and nationalism, those icons of another age. To be militarized was to be strong. But now with more and more people being pushed out into the cold, pensions taken and bases closed, there is finally a political moment where an economy devoted to raising the world to affluent standards in a sustainable manner is a vision that can be presented to the body politic.

To do this will require a Department of Democracy: a department with the skills, mission and resources required to bring modern standards of education, health, economics, organization, and communication to states around the world. That we cannot do this is easily shown by the wreckage of Iraq. Even with all of the resources of the richest nation on earth, "all of Iraq is a combat zone," according to a recent Defense Department memo. The Defense Department is not the organization for this mission, nor does it have the capacity to become the organization for this mission. Nations are either growing or decaying, and nation-growing must become our focus.

It will also require an overhaul of the international institutions created in the wake of the Second World War - the United Nations, the International Monetary Fund and the World Bank. These institutions were created for purposes that no longer exist: some of these purposes were noble, others less so; some of their actions laudable, others less so. But all of them were shaped by a world that does not exist any longer.

The alternative is to spend more and more of our national effort watching states like North Korea, Pakistan, Iran and others gain access to the weapons of the information state, and begin to leverage those weapons in geopolitical struggles. The alternative is to spend more and more of scarce resources on a military instrument that is not delivering the security we require, and that other nations require. This is not a utopian vision, it is a pragmatic one, based on the cost of an aircraft carrier versus the protection it affords.

It was Edmund Burke who called for "peace in its usual haunts, not peace by means of war" in response to the troubles then growing between England and its colonies. In a sense, America has treated much of the world with the same colonial hauteur over the last five decades. And just as Burke called for peace and liberty in that day and age, it is time again to let the colonies go, and to realize that it is prosperity and affluence, and not military influence, that will best bind nations to a free world based on open societies.

Stirling Newberry is an internet business and strategy consultant, with experience in international telecom, consumer marketing, e-commerce and forensic database analysis. He has acted as an advisor to Democratic political campaigns and organizations and is the the co-founder, along with Christopher Lydon, Jay Rosen and Matt Stoller, of BopNews, as well as being the military affairs editor of The Agonist.

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