The American socialist Ed Sard is reported to have originated the concept of a “permanent arms economy” as a way to explain why America experienced a post–World War II boom, while World War I had been followed by recession. Sard concluded that the United States retained many of the characteristics of a war economy, including what today is called “the military-industrial complex.” Capitalism was shored up by continued military spending, he argued. Rooted in Marxism, Sard coupled keen political insight with badly flawed economics.
The concept was far better enunciated by the libertarian journalist and scholar Felix Morley (1894–1982). A war economy crippled capitalism in myriad ways, Morley argued, including the public’s increased dependency on government and increased skepticism toward free-market solutions; the system war truly promoted was socialism.
As an advocate of limited government, Morley believed the centralization of power during war and preparation for war was the core dynamic by which America had moved from a republic to an empire. In his essay “Felix Morley and the Commonwealthman Tradition: the Country-Party, Centralization, and the American Empire,” libertarian scholar Leonard Liggio rendered a sense of Morley’s analysis. Liggio paraphrased Morley: “The War of 1812 caused a national debt, a national bank, protective tariff and … strongly centraliz[ed] Supreme Court decisions. The Mexican War caused extension of slavery, military government and central administration of conquered territories. The Civil War greatly expanded civilian and military bureaucracy.”
The greatest centralization came with World War II which, in turn, flowed from Franklin Roosevelt’s “New Deal.” The term “New Deal” collectively describes an onslaught of sweeping social and political programs through which the government assumed massive control of the economy. Morley had a front-row seat from which he delivered his criticism.
World War II ended but the centralization did not. Morley explained why: America had reached a tipping point in the tension between Republic and Empire. He believed Americans almost instinctively “mistrust empire. Common sense tells us that the republic was never designed to run an empire. Imperialism requires centralization of power, and all the political institutions of our federal union were carefully planned to make that centralization difficult.”
By the end of World War II, however, Empire had gained the upper hand. “Unwittingly and unwillingly, the American people had accepted imperial burdens that strongly imply the passing of their Republic…. Soon, on a frontier stretching from Korea to Bavaria, an interventionist America was maintaining conscript troops, and pouring forth its substance, in a Herculean effort to ‘contain’ the very forces that our own ‘diplomacy’” had released.
To prepare “an interventionist America” for war, massive industries were created and funded by war-level defense spending. Intruding into the politics of other nations became policy, with greatly expanded surveillance of both foreign and domestic threats. All corners of society were politicized. Through regulation, taxes, and government funding, America slowly became a permanent war economy with preparation for war substituting for the reality of it. The constantly simmering conflict was called the Cold War.
Some advocates of Republic denied reality even to the threat. American Conservatism: An Encyclopedia, by Bruce Frohnen, Jeremy Beer, and Nelson O. Jeffrey noted, “The Cold War was the fault line…. Many of the libertarians at Human Events [a journal published by conservatives and libertarians], including Morley, tended not to see the Soviet Union as an immediate threat to America’s security interest and opposed arming for a showdown with Russia.” They did not quietly surrender to empire.
Freedom and Federalism, the true America
Morley’s book Freedom and Federalism (1959) is both a ringing defense of the federal system of government and an indictment of the centralizing power of war. The title of chapter 12 reflects how he believed the American Empire continued to expand: “The Need for an Enemy.” To make Americans go against their instincts and history, there had to be an enemy of which they were so horrified that freedom would be sacrificed for security.
The Soviet Union was perfect. Its economic and political system were antithetical to the American tradition. It had joined (albeit temporarily) with Hitler against the Allies, and it still challenged America for dominance around the globe. The Soviet Union was also militaristic and mighty enough to make American blood run cold.
Morley did not consider the Soviets to be either an immediate threat or a threat to the American mainland, but he knew it would be viewed as such. In his essay “American Republic or American Empire,” he sadly concluded,
We seem to have reached the stage, in our national evolution, where we have a vested interest in preparation for war. It has become necessary for us to have a powerful enemy. Soviet Russia is currently our target not only because its economic system is communistic and its political system tyrannical, but perhaps primarily because the Russian organism rivals ours in actual or latent physical power. Russia could revert to free enterprise, or restore an hereditary Czardom, tomorrow; and still our Secretary of State would be compelled to question her bona fides. Peaceful co-existence with Russia is impossible not simply because of Communist plotting but because our economy apparently needs the constant stimulus of a threat of large-scale war. That, I greatly fear, is the fact….
Economic pressures also created a felt need for an enemy:
- Both parties accepted the policy of “full employment,” largely because of union demands and New Deal work programs. If private jobs were not plentiful enough, then government would become a de facto employer with the military-industrial complex playing a pivotal role.
- Without a forced overproduction, a chain reaction would shake the economy. Morley used the automobile industry as an example: “Any protracted slowdown in automobile production will … threaten the employment both of steel workers and of salesmen. Then … clothing stores in Pittsburgh find they don’t need so many clerks, and advertising agencies in New York dispense with copy-writers. Grocery sales go down and newspapers fail to replace … reporters. There is no end of it….”
- Industries that rely on defense spending would have to close if it was cut off. Then “the retarding effects of a depression” would spread quickly as would the “stimulative consequences of inflation.”
- Defense spending is a way to reward cronies and for politicians to make a handsome profit, in a round-about manner.
Capitalistic societies experience a contraction after a war largely because of the suspension of military spending. But after World War II, America’s defense spending continued to soar. The reason: America avoided peace. The infusion of public money into military goods and services on “a gigantic scale” created the permanent war economy with its “spurious prosperity.”
Morley introduced an ominous note. He wrote, “Because of the tremendous vitality of our economy we have guns without abstaining from butter, and with a depreciation of the dollar rather less than might have been expected from so much unproductive spending.” The comment is ominous because the process cannot go on forever. Sooner or later, the vitality of the private sector will be drained beyond its ability to pay for both guns and butter. The dollar may lose resistance to depreciation; the price of goods will increase.
Today, the moment of reckoning seems to be “sooner,” not “later.” The rapid increase in military spending suggests the same. As the economy teeters, the war establishment will turn to its “go to” solution — ramping up the permanent war economy.
But, first, it needs an enemy.
This article was originally published in the October 2017 edition of Future of Freedom.