The Political Economy of Military Spending in the United States

Alex Mintz

• Publisher: Routledge
• Year: 2002
• eBook ISBN: 9781134903313
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

This is a timely collection of essays utilizing the political economy approach to military spending, primarily by the United States.

The articles deal specifically with the relationships between defense spending and:

(a) political-business cycles, public opinion and the US-Soviet relationship;

(b) military action - i.e. war;

(c) economic performance - the trade deficit, guns versus butter issues and fiscal policy.

CHAPTER 1

Introduction: Political Economy and National Security

Alex Mintz

In a recent report on the state of security studies, Joseph S.Nye and Sean Lynn-Jones argue (1988:25) that the division between the fields of national security and political economy is ‘one of the most serious problems within the discipline of political science.’ According to Nye and Lynn-Jones, scholars on each side of the divide have often ignored the work done on the other side. Barnett (1990:3) has similarly pointed out that too often ‘the study of national security has treated “high politics”, a state’s security relations vis-a-vis other states in the international system, [separately from] “low politics”, societal pressures and the domestic political economy.’ According to Barnett, most studies almost uniformly assume ‘that the domestic political economy and national security issues are separate and distinct spheres.’ In light of the current debate on the size of the defense budget and the “peace dividend”, it is particularly important to integrate the contributions of national security with those of political economy.

The state is situated within the domestic and global political economies, and its national security policy is typically shaped not only by security considerations, but also by domestic, political and economic factors. While several scholars have indeed shown that domestic societal forces are an important determinant of the state’s foreign economic policy, these insights have not been transferred to the security field (Barnett 1990:3–4; Brown and Korb 1982).

National security policy often extends beyond the superpowers’ rivalry, regional conflicts, deterrence, and arms control to include domestic political and economic issues (Nye and Lynn-Jones 1988). Work on defense spending has begun, therefore, to focus also on political economic determinants of military spending (see e.g. Cusack and Ward 1981; Griffin et al. 1982; Mintz and Hicks 1984; Nincic and Cusack 1979; Russett and Hanson 1975). This approach has recently been transferred to the analysis of defense spending of other countries, including several developing and newly industrialized countries (see Chan’s work 1988 on Taiwan; Agbese 1988 on Nigeria; and Park 1986 and Ward and Park 1989 on Korea).

Military spending policy often results from the interplay of political and economic factors (Mintz 1985, 1988 and Mintz and Ward 1989). As one contributor to this volume has noted (see Mayer, Chapter 2), political and economic factors often induce higher levels of defense spending than are ‘necessary’ for national security. A political economy perspective on defense spending is therefore introduced in this volume.

THREE PERSPECTIVES ON DEFENSE SPENDING

Two approaches have dominated the study of military spending since the early 1960s:

1. the arms race approach, based on the work of Richardson (1960), Ostrom (1977), Ward (1984), and Zinnes and Gillespie (1973);
2. the organizational politics/incremental approach (see Davis, Dempster, and Wildavsky 1966; Wildavsky 1964).

A third perspective is represented by the collection of articles included in this volume.

The arms race approach

Samuel Huntington (1958:41) defined an arms race as ‘a progressive competitive peace time increase in armament by two states or coalitions of states resulting from conflicting purposes or mutual fears.’ At the core of the arms race model is the idea that nations react to changes in the behavior of rival countries. Former Secretary of Defense Caspar W. Weinberger explained in one of his annual reports to Congress that the US attempts to determine the nature and extent of the threats to its vital national security interests, and to formulate its defense budget accordingly (US Department of Defense 1983:4).

Bruce Russett and Harvey Starr (1989:322–30) identified four distinct periods in the US–USSR arms race in the post-World War II era: 1945–50— the period of US nuclear monopoly; 1951–57—the period of US nuclear dominance; 1958–66—US preponderance; 1967 to the late 1980s—the period of essential equivalence. George Rathjens (1975) noted several examples of the superpower arms race: US over-reaction to uncertainty at the time of the so-called ‘missile gap’ in 1960 led to the massive growth of the US missile forces during the succeeding decade; the scale of this deployment may have led, in turn, to the large Soviet buildup in strategic offensive forces and the deployment of a limited anti-ballistic missile (ABM) system surrounding Moscow. The United States responded to the possible nationwide extension of the Moscow ABM system (and the deployment of a Soviet anti-aircraft system) by equipping US Minuteman III and Poseidon missiles with multiple reentry vehicle (MIRV) warheads. The corresponding Soviet reaction to the counter-force threat posed by the MIRVs was the development of land mobile inter-continental ballistic missiles (ICBMs) and the development and deployment of Soviet MIRVs (on SS-18 and SS-19 ICBMS and on SS-20 intermediate-range missiles). Western reports indicated that, during the 1970s, the Soviets were engaged in a massive military buildup: whereas US military strength declined by about 20 percent during that period, the Soviets increased the level of funding of their programs by about 50 percent. According to Pentagon officials, the Reagan buildup was intended to arrest the relative decline in US military power in the 1970s and the apparent change in the superpower military balance. In reaction to US developments of air-, ground-, and sea-launched cruise missiles, the Soviets announced emplacement of their own cruise missiles.

Ward (1984) noted that the United States reduces defense spending in reaction to decreases in the level of international tension. The collapse of the Warsaw Pact and easing of tensions between East and West, have indeed led to proposed cuts in US troops and budgets (Mintz and Huang 1990).

In contrast to the examples supporting the arms race thesis, many studies suggest that arms races provide only a relatively weak explanation of US military spending policies (see, for example, Cusack and Ward 1981; Fischer and Crecine 1979; Gillespie et al 1977; Griffin et al 1982). Gillespie et al (1977:237) showed that US military expenditures are not well explained by Soviet spending levels but are rather the product of incremental processes.

Incrementalism

National security priorities and goals are reflected in the Department of Defense (DoD) budget—a complex document comprising more than 5,000 line items (Brown and Korb 1982:583). The scope of this budget is thus too vast for the small number of actors involved in the budgeting process to handle coherently. Because of the budget’s complexity, the time constraints imposed on budget reviewers, and the technical expertise required from them, the budget is almost never reviewed as a whole every year. Instead, budgetary desicions in the DoD take the form of ‘marginal adjustments to an existing allocation pattern’ (Crecine 1971:218; Stromberg 1970).

The defense budgeting process is a multistage process involving such key players as the services, the President, Congress, and the Department of Defense. According to Crecine (1971), these organizations tend to follow established procedures, emphasizing regularity over time. This regularity is best preserved by a routinized sequence of desicions, the pursuit of standard operating procedures, and some simple decision rules, such as the use of incremental calculations.

According to the incremental model, budgetary policy makers rely heavily on the record of past expenditures, with only marginal adjustments of previous appropriations. Budgetary calculations proceed from the previous year’s base, while policy makers focus only on a narrow range of increases or decreases which are supposed to be distributed fairly among various programs (Wildavsky 1964).

DoD policy makers often pursue incremental policies (Allison 1982). Incrementalism preserves regularity in DoD budgeting and reflects political, economic, and national security related pressures to increase the budget as well as the potential costs associated with reducing spending levels drastically. Allison (1982) has noted that some of the most important weapon development desicions were likewise made in increments. For example, the 1965 decision to deploy MIRVs on Poseidon and Minuteman systems clearly stemmed from the 1964 decision to advance development and engineering of MIRV systems.

Ostrom (1977) compared a Davis, Dempster and Wildavsky-type organizational politics/incremental model of the US defense spending process with a Richardson-type arms race model, and found that neither provides an accurate explanation of US defense spending. Ostrom (1978), Majeski (1983), and Ostrom and Marra (1986) have integrated the arms race and organizational politics models by developing and testing ‘reactive linkage’ models of defense spending.

The political economy of military spending

A third approach to the study of defense spending is presented in this volume. It integrates the fields of national security and political economy. Political economy has a variety of meanings. Gilpin (1987) has noted that classical economists used it to mean what today is called economics. Frieden and Lake (1987) define it as ‘the study of the interplay of economics and politics.’ Downs (1957) and Frey (1978) see it as the application of the rational choice approach of formal economics, to human behavior (Gilpin 1987:8). Alt and Chrystal (1983) see the fundamental questions of political economy as involving the role of the government in the economy. And Gilpin (1987:9) uses the term to indicate ‘a set of questions…generated by the interaction of the state and the market as the embodiment of politics and economics in the modern world.’

Frieden and Lake (1987:1) argue that, for some, political economy ‘refers primarily to the study of the political basis of economic actions, the ways in which government policies affect market operations. For others, the principal preoccupation is the economic basis of political action, the ways in which economic forces mold government policies.’

Many political economists divide the political economy field into unit-level domestic political economy and system-level international political economy (see Alt and Chrystal 1983; Katzenstein 1976; Krasner 1985; Strange 1970; Wendt and Barnett 1989; to name just a few).

Three intellectual perspectives dominate the study of political economy (Gilpin 1987: Ch. 2; Frieden and Lake 1987: Ch. 1): liberalism, Marxism, and realism.

Liberals claimed that economic wellbeing is best served by allowing ‘free and unrestricted exchange between individuals in both the domestic and international economies.’ For liberals, then, governments must only provide ‘for the defense of the country, protect property rights and prevent unfair collusions or concentrations of power within the market’ (Frieden and Lake 1987:6–7).

Central to the liberal perspective are the assumptions that individuals are the dominant actors in the political economy; individuals are rational, utilitymaximizing players; and individuals maximize utility by exchanging goods with other individuals (Frieden and Lake 1987). The role of the government is limited to managing the market.

Marxists obviously use class-based explanations of economic activity. For Marxists, ‘the nature of politics and the fundamental cleavages within and between societies are rooted in economics.’ Classes are the principal actors within the political economy, and ‘act to maximize the economic wellbeing of the class as a whole’ (Frieden and Lake 1987:8–9). The basis of the capitalist economy is the exploitation of labor by capital and the relationship between capitalists and workers is zero-sum and conflictual (Frieden and Lake 1987; Gilpin 1987).

Realists argue, in contrast, that ‘in the pursuit of power, nation-states shape the international economy to best serve their desired interests’ (Frieden and Lake 1987:11). Realists assume that nation-states are the most important actors in the political economy (Keohane and Nye 1977). Nation-states are rational and power maximizers (Frieden and Lake 1987). They use force as an instrument of foreign policy, and politics is conflictual. Realist political economy ‘is therefore primarily concerned with how changes in the distribution of power in the international system affect the global political economy’ (ibid.). Thus, while, for realists, politics determines economics, for Marxists, economics determines politics, and, for liberals, economics and politics are autonomous spheres. Whereas the unit of analysis of Marxists is generally classes, the one for liberals is individuals, and the one for realists is the nation-state.

Three theories of international political economy have gained considerable influence in recent years (Gilpin 1987:66–80):

1. the theory of the dual economy (Averitt 1968; Bowring 1986; Mintz and Russett 1992);
2. the theory of the modern world system (Fran...

Table of contents

• COVER PAGE
• TITLE PAGE
• COPYRIGHT PAGE
• NOTES ON THE CONTRIBUTORS
• CHAPTER 1: INTRODUCTION: POLITICAL ECONOMY AND NATIONAL SECURITY
• PART I: CYCLES IN MILITARY SPENDING
• PART II: THE POLITICAL ECONOMY OF MILITARY SPENDING AND MILITARY ACTION
• PART III: DEFENSE SPENDING AND ECONOMIC PERFORMANCE
• PART IV: ISSUES IN DEFENSE SPENDING
• APPENDIX: THE POLITICAL ECONOMY OF DEFENSE SPENDING DATA SET