Understanding Power: the indispensable Chomsky (16 page)

In fact, that danger has been very openly discussed in the business literature in the United States for forty or fifty years.
  ¹
Business leaders know perfectly well what every economist knows: that spending for civilian purposes is maybe even
more
efficient,
more
profitable than spending for military purposes. And they also know that there are any number of ways to have the population subsidize high-technology industry besides through the Pentagon system—business knows that perfectly well, and it also knows the reasons against it. They remain what they always were.

If you take an economics course, they’ll teach you, correctly, that if the government spends
n
dollars to stimulate the economy, it doesn’t really matter what it’s spent on: they can build jet planes, they can bury it in the sand and get people to dig for it, they can build roads and houses, they can do all sorts of things—in terms of stimulating the economy, the economic effects are not all that different.
  ²
In fact, it’s perfectly likely that military spending is actually a
less
efficient stimulus than social spending, for all kinds of reasons. But the problem is, spending for civilian purposes has negative side effects. For one thing, it interferes with managerial prerogatives. The money that’s funneled through the Pentagon system is just a straight gift to the corporate manager, it’s like saying, “I’ll buy anything you produce, and I’ll pay for the research and development, and if you can make any profits, fine.” From the point of view of the corporate manager, that’s optimal. But if the government started producing anything that business might be able to sell directly to the commercial market, then it would be interfering with corporate profit-making. Production of waste—of expensive, useless machinery—is not an interference: nobody else is going to produce B-2 bombers, right? So that’s one point.

The other point, which is probably even more serious from the perspective of private power, is that social spending increases the danger of democracy—it threatens to increase popular involvement in decision-making. For example, if the government gets involved, say around here, in building hospitals and schools and roads and things like that, people are going to get interested in it, and they’ll want to have a say in it—because it affects them, and is related to their lives. On the other hand, if the government says, “We’re going to build a Stealth Bomber,” nobody has any opinions. People
care
about where there’s going to be a school or a hospital, but they don’t care about what kind of jet plane you build—because they don’t have the foggiest idea about that. And since one of the main purposes of social policy is to keep the population passive, people with power are going to want to eliminate anything that tends to encourage the population to get involved in planning—because popular involvement threatens the monopoly of power by business, and it also stimulates popular organizations, and mobilizes people, and probably would lead to redistribution of profits, and so on.

M
AN
: How about just reducing taxes, instead of sending all this money into the military-industrial complex?

You can’t reduce taxes much—because what else is going to keep the economy going? Remember, it’s been known since the Great Depression that anything like free-market capitalism is a total disaster: it can’t work. Therefore every country in the world that has a successful economy is somewhere close to fascism—that is, with massive government intervention in the economy to coordinate it and protect it from hostile forces such as too much competition. I mean, there just is no other way to do it really: if you pulled that rug out from under private enterprise, we’d go right back into the Depression again. That’s why every industrial economy has a massive state sector—and the way our massive state sector works in the United States is mainly through the military system.

I mean, I.B.M. isn’t going to pay the costs of research and development—why should they? They want the taxpayer to pay them, say by funding a N.A.S.A. program, or the next model of fighter jet. And if they can’t sell everything they produce in the commercial market, they want the taxpayer to buy it, in the form of a missile launching system or something. If there are some profits to be made, fine, they’ll be happy to make the profits—but they always want the public subsidies to keep flowing. And that’s exactly how it’s worked in general in the United States for the past fifty years.

So for example, in the 1950s computers were not marketable, they just weren’t good enough to sell in the market—so taxpayers paid 100 percent of the costs of developing them, through the military system (along with 85 percent of research and development for electronics generally, in fact). By the 1960s, computers began to be marketable—and they were handed over to the private corporations so they could make the profits from them; still, about 50 percent of the costs of computer development were paid by the American taxpayer in the 1960s.
  ³
In the 1980s, there was a big new “fifth-generation” computer project—they were developing new fancy software, new types of computers, and so on—and the development of all of that was extremely expensive. So therefore it went straight back to the taxpayer to foot the bills again—that’s what S.D.I, [the Strategic Defense Initiative] was about, “Star Wars.” Star Wars is basically a technique for subsidizing high-technology industry. Nobody believes that it’s a defense system—I mean, maybe
Reagan
believes it, but nobody whose head is screwed on believes that Star Wars is a military system. It’s simply a way to subsidize the development of the next generation of high technology—fancy software, complicated computer systems, fifth-generation computers, lasers, and so on.
  ⁴
And if anything marketable comes out of all that, okay, then the taxpayer will be put aside as usual, and it’ll go to the corporations to make the profits off it.

In fact, just take a look at the parts of the American economy that are competitive internationally: it’s agriculture, which gets massive state subsidies; the cutting edge of high-tech industry, which is paid for by the Pentagon; and the pharmaceutical industry, which is heavily subsidized through public science funding—those are the parts of the economy that function competitively. And the same thing is true of every other country in the world: the successful economies are the ones that have a big government sector. I mean, capitalism is fine for the Third World—we love
them
to be inefficient. But we’re not going to accept it. And what’s more, this has been true since the beginnings of the industrial revolution: there is not a single economy in history that developed without extensive state intervention, like high protectionist tariffs and subsidies and so on. In fact, all the things we
prevent
the Third World from doing have been the
prerequisites
for development everywhere else—I think that’s without exception. So to return to your question, there just is no way to cut taxes very much without the entire economy collapsing.

The Permanent War Economy

M
AN
: I’m a little surprised to hear you say that the Pentagon is so important to our economy
.

There’s hardly an element of advanced-technology industry in the United States that’s
not
tied into the Pentagon system—which includes N.A.S.A., the Department of Energy [which produces nuclear weapons], that whole apparatus. In fact, that’s basically what the Pentagon’s
for
, and that’s also why its budget always stays pretty much the same. I mean, the Pentagon budget is higher in real terms than it was under Nixon—and to the extent that it’s declined in recent years, it’s in fact had the effect of what they call “harming the economy.” For instance, the Pentagon budget started to decline in 1986, and in 1987 real wages started to fall off for skilled workers, in other words for the college-educated. Before that they’d been declining for unskilled workers, and they started to go down for the college-educated a year after the Pentagon budget began to drop off a bit. And the reason is, college-educated people are engineers, and skilled workers, and managers and so on, and they’re very dependent on the whole Pentagon system for jobs—so even a slight decline in military spending immediately showed up in real wage levels for that sector of the population.
  ⁵

Actually, if you look back at the debates which went on in the late 1940s when the Pentagon system was first being set up, they’re very revealing. You have to examine the whole development against the background of what had just happened. There was this huge Depression in the 1930s, worldwide, and at that point everyone understood that capitalism was dead. I mean, whatever lingering beliefs people had had about it, and they weren’t very much before, they were gone at that point—because the whole capitalist system had just gone into a tailspin: there was no way to save it the way it was going. Well, every one of the rich countries hit upon more or less the same method of getting out. They did it independently, but they more or less hit on the same method—namely, state spending, public spending of some kind, what’s called “Keynesian stimulation.” And that did finally get countries out of the Depression. In the Fascist countries, it worked very well—they got out pretty fast. And in fact, every country became sort of fascist; again, “fascism” doesn’t mean gas chambers, it means a special form of economic arrangement with state coordination of unions and corporations and a big role for big business. And this point about everyone being fascist was made by mainstream Veblenite-type economists [i.e. after the American economist Veblen] right at the time, actually—they said, everybody’s fascist, the only question is what form the fascism takes: it takes different forms depending on the country’s cultural patterns.
  ⁶

Well, in the United States, the form that fascism took at first was the New Deal [legislative programs enacted in the 1930s to combat the Depression]. But the New Deal was too small, it didn’t really have much effect—in 1939, the Depression was still approximately what it had been in 1932. Then came the Second World War, and at that point we became
really
fascist: we had a totalitarian society basically, with a command economy, wage and price controls, allocations of materials, all done straight from Washington. And the people who were running it were mostly corporate executives, who were called to the capital to direct the economy during the war effort. And they got the point: this worked. So the U.S. economy prospered during the war, industrial production almost quadrupled, and we were finally out of the Depression.
  ⁷

Alright, then the war ended: now what happens? Well, everybody expected that we were going to go right back into the Depression—because nothing fundamental had changed, the only thing that had changed was that we’d had this big period of government stimulation of the economy during the war. So the question was, what happens now? Well, there
was
pent-up consumer demand—a lot of people had made money and wanted to buy refrigerators and stuff. But by about 1947 and ’48, that was beginning to tail off, and it looked like we were going to go back into another recession. And if you go back and read the economists, people like Paul Samuelson and others in the business press, at that point they were saying that advanced industry, high-technology industry, “cannot survive in a competitive, unsubsidized free-enterprise economy”—that’s just hopeless.
  ⁸
They figured we were heading right back to the Depression, but now they knew the answer: government stimulation. And by then they even had a theory for it, Keynes; before that they’d just done it by instinct.

So at that point, there was general agreement among business and elite planners in the United States that there would have to be massive government funneling of public funds into the economy, the only question was how to do it. Then came kind of an interesting … it wasn’t really a
debate
, because it was settled before it was started, but the issue was at least raised: should the government pursue military spending or social spending? Well, it was quickly made very clear in those discussions that the route that government spending was going to have to take was military. And that was not for reasons of economic efficiency, nothing of the sort—it was just for straight power reasons, like the ones I mentioned: military spending doesn’t redistribute wealth, it’s not democratizing, it doesn’t create popular constituencies or encourage people to get involved in decision-making.
  ⁹
It’s just a straight gift to the corporate manager, period. It’s a cushion for managerial decisions that says, “No matter what you do, you’ve got a cushion down there”—and it doesn’t have to be a big portion of total revenues, like maybe it’s a few percent, but it’s a very important cushion.
  ¹⁰

And the public is not supposed to know about it. So as the first Secretary of the Air Force, Stuart Symington, put the matter very plainly back in 1948, he said: “The word to use
is
not ‘subsidy,’ the word to use is ‘security.’ ”
  ¹¹
In other words, if you want to make sure that the government can finance the electronics industry, and the aircraft industry, and computers, and metallurgy, machine tools, chemicals, and so on and so forth, and you don’t want the general public trying to have a say in any of it, you have to maintain a pretense of constant security threats—and they can be Russia, they can be Libya, they can be Grenada, Cuba, whatever’s around.

Well, that’s what the Pentagon system is about: it’s a system for ensuring a particular form of domination and control. And that system has worked for the purposes for which it was designed—not to give people better lives, but to “make the economy healthy,” in the standard sense of the phrase: namely, ensuring corporate profits. And that it does, very effectively. So you see, the United States has a major stake in the arms race: it’s needed for domestic control, for controlling the empire, for keeping the economy running. And it’s going to be very hard to get around that; I actually think that’s one of the toughest things for a popular movement to change, because changing the commitment to the Pentagon system will affect the whole economy and the way it’s run. It’s a lot harder than, say, getting out of Vietnam. That was a peripheral issue for the system of power. This is a central issue.