The Military and the Market

Jennifer Mittelstadt, Mark R. Wilson

• Publisher: University of Pennsylvania Press
• Year: 2022
• ISBN:
  9781512823240
• Topic: History
• Subtopic: North American History
• Index: History

Throughout its history, the U.S. military has worked in close connection to market-based institutions and structures. It has run systems of free and unfree labor, taken over private sector firms, and both spurred and snuffed out economic development. It has created new markets—for consumer products, for sex work, and for new technologies. It has operated as a regulator of industries and firms and an arbitrator of labor practices. And in recent decades it has gone so far as to refashion itself from the inside, so as to become more similar to a for-profit corporation. The Military and the Market covers two centuries of history of the U.S. military's vast and varied economic operations, including its often tense relationships with capitalist markets. Collecting new scholarship at the intersection of the fields of military history, business history, policy history, and the history of capitalism, the nine chapters feature important new research on subjects ranging from Civil War soldier-entrepreneurs, to the business of the construction of housing and overseas bases for the Cold War, to the U.S. military's troubled relationships with markets for sex. The volume enriches scholars' understandings of the depth and complexity of military-market relations in U.S. history and offers today's military policymakers novel insights about the origins of current arrangements and how they might be reimagined. Contributors: Jessica L. Adler, Timothy Barker, Patrick Chung, Gretchen Heefner, Jennifer Mittelstadt, A. Junn Murphy, Kara Dixon Vuic, Sarah Jones Weicksel, Mark R. Wilson, Daniel Wirls.

Chapter 1

The Politics of US Military Privatizations, 1945–2000

Jennifer Mittelstadt and Mark R. Wilson

In the late summer of 1953, at the end of the Korean War, US Navy Secretary Robert B. Anderson issued his end-of-fiscal-year report. Anderson oversaw an organization with an annual budget of about $12 billion and that employed more than one million uniformed navy personnel and marines, along with nearly half a million civilians. “A random selection of the activities of the navy, in addition to the operation of its fleets and forces,” Anderson reported, “shows a scope and diversity touching on nearly every phase of human endeavor.” Far from being focused entirely on combat power, the navy also employed “some 2,500 people and $12 million each year to catalog supplies numbering some 1.3 million items, roughly ten times the number carried by the world’s largest retail organization. . . . Its lawyers handle more than 100,000 legal cases and legal opinions a year. . . . It runs a correspondence school with more than 150,000 navy and Marine students. . . . It is a rent-collecting landlord for more than 24,000 families. . . . It supervises more than 200 reserve industrial plants, including copper smelters, aircraft-engine facilities, and ammunition plants. . . . It cares for almost 18,000 patients a day in 29 hospitals. It owns four oil fields.”1

But even as he boasted of the navy’s immense, multidimensional operations, Secretary Anderson also hinted at pressures to limit those very same in-house capabilities. “One of the past year’s developments of greatest interest to the businessman,” Anderson reported, “was the trend toward getting the navy out of enterprises competing with private business. Early in 1953 the navy gave up the manufacture of clothing, and just before the end of the year it sharply curtailed the manufacture of paint.” More significant in dollar terms was the navy’s recent move in the direction of privatizing more of the production of warships, including aircraft carriers, submarines, and destroyers. “Since 1950,” Anderson explained, “approximately 90 percent of the navy’s new construction has been assigned to private shipyards.”2 As Anderson’s report suggested, the shift from public to private enterprise aimed to please political conservatives, including many business leaders and sympathetic elected officials. Those critics were in the midst of a forceful campaign to restructure the American military establishment in ways that would cut its vast in-house operations, from property to production to services, in favor of contracting out or sale to the private sector.

This routine report by a top Defense Department official composed during the early Cold War captured the US military and the market at the outset of a profound transformation. While the US military had for most of its history relied on both the profit-seeking private sector and the public sector for provisioning, weapons, research, and operational support, by the mid-twentieth century, the balance had shifted toward the public side. Not just during World War II, but in the years that followed, the military was the largest public entity in the nation. In the mid-1950s, the Department of Defense employed directly more than four million people, close to 80 percent of all the people working for the federal government. At the same time, another three million Americans worked for military contractors. Across the country, there was about $150 billion worth of defense-related investment, in properties such as factories and bases. This was more than the combined assets of the one hundred largest American corporations.3 But the military Leviathan of the early Cold War era would not last. In the second half of the twentieth century, many of its elements would be sold off and contracted out to the private sector. By the time Secretary Anderson penned his report, the military’s real estate holdings, production capacities, and service provision, from equipment maintenance to food production, all faced scrutiny from an increasingly vocal private sector that questioned the large public military holdings. And as Anderson’s assessment suggested, during the Cold War, all branches of the armed forces faced new pressures to transfer their public investments and services to private firms and other nongovernmental entities, large and small. Over time, these pressures caused a variety of important privatizations across the US defense sector, in a complex, punctuated process of transformation, extending across half a century.

This chapter tells the story of the decline of a “big government”–style, multicompetent US military in the twentieth century. The chapter describes resistance to the capacious public military that had been erected in preceding decades and tells the story of its dismantling and transfer to the private sector. This transformation was not a natural function of demobilization after World War II, or of natural cycles of alternation between public and private governance, or even purely pragmatic decisions based on sober assessments of costs and efficiencies. Rather, the transfer of public to private was the result of several specific new developments in the relationship between the American military and the market in the postwar period. We document a political movement to vivify private enterprise and reduce the ambit of federal government activity, particularly the military’s in-house ownership, production, and management. The modern movement against “government competition” with the private sector began in earnest in the 1930s, during the New Deal; it continued into the 1950s, and beyond, taking ever-sharper aim at the military, as it constituted the biggest, most expensive component of the American state. As this political agenda gained legislative and executive power, it was accompanied by, and encouraged, the growing intellectual and cultural power of promarket ideologies, which took root in the US military itself, and in the Department of Defense, from the 1960s forward. Although some military leaders were dubious about the alleged benefits of privatization, others enthusiastically championed them or, perhaps more commonly, remained ambivalent as they implemented outsourcing reforms pushed by Congress and the Pentagon that seemed to offer the services some pragmatic benefits, along with costs. Together, political, cultural, and intellectual movements contributed to a successful campaign to transfer public military functions to the private sector, to a degree unprecedented in US history.

This important transformation has seldom been given sufficient attention by scholars and students of the history of the US military and defense acquisition.4 To be sure, several parts of the story are well documented. For example, we have good accounts of the creation of the all-volunteer force (AVF) in the early 1970s, and the neoliberal economic thinking behind it. And both scholars and casual observers of twenty-first-century warfare and contracting are aware of the recent jump in the use of “private military companies” (i.e., mercenaries), such as Blackwater.5 However, on the whole, the scholarship to date has not documented the breadth and depth of the long-run privatization of the US military since World War II, nor explained the ideological and political forces behind that transformation.6

The US military’s transformation in the direction of privatization needs to be understood as part and parcel of a broader pattern of change in US and global political economy, many decades in the making. This chapter contributes to a growing scholarly conversation about the origins and development of neoliberalism, which is commonly defined as an ideology emphasizing the benefits of private property, entrepreneurial energy, free markets, deregulation, and free trade, while denigrating the competence of the public sector.7 To date, scholarly conversations about neoliberalism have said too little about the military. In our discussion of the US military in this chapter, we address two important broader questions about neoliberalism: one about periodization, and one about the nature of the state.

When exactly did neoliberalism emerge as a powerful force in politics and policymaking? Some accounts, while acknowledging that neoliberalism’s intellectual roots may run deep, emphasize a rather sudden rise of its political potency, in the 1970s and 1980s.8 But many historians are offering a more complex story of periodization, which points to earlier struggles and manifestations.9 Our chapter adds to this body of work by emphasizing a messier chronology of the rise of neoliberalism, and also suggesting that the US military’s transformations must be counted among its most important components. We relate a story of a long-run process of ideologically driven privatizations, which started long before the 1970s and was not uniform or linear, but uneven and punctuated. In particular, we describe two distinct waves of privatization in the military sphere. The first of these, in the field of weapons production, real estate, and some basic services, began to take place during the early Cold War and continued through the 1970s. After a perhaps unexpected lull during the Reagan years, a second shift toward outsourcing commenced in the early 1990s, this one focused on the fields of social welfare provision, logistics, and the many additional services performed by the military. In other words, we offer a complex account of periodization, which is not compatible with simple, compact narratives of neoliberalism’s ascent. This complicated history may be unwieldy, but it is more accurate; we see it as complementary to some of the best recent work on non-military subjects, which is similarly questioning narratives of a quick 1970s-80s neoliberal ascendance.

At the same time, our account departs slightly from some of the most sophisticated recent works on neoliberalism, in the area of our understanding of the recent transformations of the modern state. Some scholars have properly pointed out that neoliberalism in practice is not anti-statist, but rather requires positive state action, in favor of certain policies and interests, such as the creation of institutions of global trade, and the insulation of private interests from state intervention and democratic politics.10 We endorse this important point; our account of the US military’s recent history suggests the many ways in which privatization was achieved via new public policies, sometimes accompanied by the creation of new public authorities and entities. And yet, our understanding of the US military’s transformation makes us skeptical of suggestions that neoliberal states are not much different from their more regulatory-minded, mixed-economy style counterparts, in terms of raw public power and predilection for interventionism. Our account of the military’s transformations suggests a perhaps more conventional view of the later twentieth-century US state, in which state capacities were indeed hollowed out, altering the fundamental balance between public and private authority, and empowering an outsized corporate sector.

As this chapter shows, the post-1945 push to privatize the military met with frustrations and setbacks, but nonetheless was largely successful. The US military of the mid-twenty-first century is significantly smaller, and far more reliant on contractor support, than it was two generations ago. Like other, better-documented aspects of neoliberal reform, the transformation of the US military was sometimes presented by its advocates as an inevitable consequence of rational economic calculation, but in fact it more closely resembled a political campaign. Acknowledging this history is an essential starting point for anyone who seeks to understand the US military, both its recent past and its possible futures.

The First Wave of Privatization

The enormous American military of the mid-twentieth century, with its substantial in-house real estate, commercial services, and industrial assets, had been built up over two centuries in which the United States military pursued a mixed-economy, public-private approach to defense acquisition and operations. This approach was far from revolutionary: it was also practiced by the military establishments of early modern Britain and France,11 as well in civilian governance in the early United States.12 From the Civil War onward through the World Wars, a diverse alliance of actors drove the growth of an increasingly public sector military, combining numerous interests and impulses, including concerns about meeting technical, long-term military production needs; military professionalism; regional boosterism, and populist and progressive advocacy of public sector transparency and suspicions of big business and war profiteering.13 Together these actors and impulses established a public development path that gathered support from local interests and Congressional representatives, and from ambitious military officers keen to expand their professional ambit.14 Public military capacities were buoyed by the proven military effectiveness of the government-owned facilities in arms production and in the test of combat during World War I and II.15 And to no small degree, new and continuing investments in the military’s in-house capacities were also promoted by wariness—among the American public, legislators, and military authorities—of corruption and profiteering that often seemed to taint the military’s purchases of goods and services from for-profit firms.

The growth of the public military did not take place without struggles over the proper scope of public versus private military functions. These debates dated back to the earliest years of the Republic and continued into the nineteenth century, with conflict occurring most often between specific interests and their allies in Congress and the military, such as private ship builders, laundry service providers, or the producers of firearms.16 During the twentieth century, the stakes of such contests grew enormously, however, as the capacity and funding of the military grew to unprecedented proportions. By the middle of the century, a growing movement of anti-statist business leaders and political allies targeted the military, which, whether measured in terms of number of dollars or number of properties and programs, loomed—in their eyes—as the single most wasteful, anti-capitalist component of the American state. Those anti-statist critics began pressing Congress and the executive to issue directives privatizing substantial parts of the big military, in an effort that had increasing success, over the course of the second half of the twentieth century. Meanwhile, many Department of Defense officials, along with some officers in the military services, themselves began to embrace methods of business management that stressed the advantages of outsourcing. These sensibilities—and not simply technological or geopolitical shifts—help to explain the transformation of the US military, during the latter part of the twentieth century, into a leaner, less multi-functional entity, for better and for worse.

The modern anti-statist assault on the military’s public property and functions began in earnest during the era of the New Deal, when new organizations such as the American Liberty League, as well as older business associations such as the National Association of Manufacturers (NAM) and the Chamber of Commerce, began to target the military’s commercial and industrial activities. In 1932, just before the election of Franklin D. Roosevelt and the Democratic landslide, the House of Representatives formed a special committee charged with investigating “government competition with private enterprise.” In its report issued in 1933, this body, acknowledging that it was formed in response to lobbying efforts by the NAM and the Chamber, examined a wide range of state operations, from prison enterprises to the Government Printing Office. But its central concern was the military. Poring over the federal government’s budgets and programs of the 1930s, the committee cited the military’s ownership of property, its productive capacities in weapons and materiel, and its undertaking of “commercial services,” services defined as not “inherently governmental,” which might be performed by the private sector. All of these features of the public military state, they argued, created “unfair competition” with the private sector.17

The political campaign for reining in the big military strengthened in the late 1940s and early 1950s, with the rise of domestic anticommunism and Republican gains in Congress.18 The most important mechanisms for its articulation were the Hoover Commissions of 1947 and 1953, led by former president Herbert Hoover, a fierce critic of the New Deal order. The Hoover Commissions aimed officially at “reorganization of the Executive” branch of government, touting, organizational reform and efficiency. But one of their practical aims centered on the Defense Department, and at eliminating the military’s commercial and industrial operations. The Hoover Commissions demanded that the Defense Department sell off many of its “commercial-industrial facilities” so as to reduce “government competition . . . with private enterprises.” They targeted an enormous array of military state activities: “shipbuilding and ship ...

Table of contents

• Cover
• Title Page
• Copyright Page
• Contents
• Introduction. The Military and the Market
• 1. The Politics of US Military Privatizations, 1945–2000
• 2. The World’s Biggest Landlord: How the Cold War Military Built Its Arsenal of Houses
• 3. Updating the Military Industrial Complex: The Evolution of the National Security Contracting Complex from the Cold War to the Forever War
• 4. “Make Up a Box to Send Me”: Consumer Culture and Camp Life in the American Civil War
• 5. A Girl in Every Port? The US Military and Prostitution in the Twentieth Century
• 6. Building the Bases of Empire: The US Army Corps of Engineers and Military Construction During the Early Cold War
• 7. Militarized Circuits: Kang Ki Dong, the US Military, and the Rise of Global High Tech
• 8. “Don’t Discuss Jobs Outside This Room”: Reconsidering Military Keynesianism in the 1970s
• 9. Mediating the Economic Impacts of Service: Race and Veterans’ Welfare after the War in Vietnam
• Conclusion
• Notes
• Contributors
• Index
• Acknowledgments