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VOLTAIRE'S BASTARDS -- THE DICTATORSHIP OF REASON IN THE WEST

6. The Flowering of Armaments

We are living in the midst of a permanent wartime economy. The most important capital good produced in the West today is weaponry. The most important sector in international trade is not oil or automobiles or airplanes. It is armaments.

Many people imagine that this rearmament process was limited in time and place to the United States and to the eight years of the Reagan administration. In fact it began twenty years earlier and was a, generalized phenomenon. What's more, nothing in the current moves towards detente and demilitarization indicates that this will change. No production cutbacks or economic reorientations are even being considered which would have more  than a token effect on the system.

By any standards -- historic, economic, moral, or simply practical -- in a healthy economy arms would not occupy first place unless that society were at war. Even then, such prominence would be viewed as an aberration to be put up with no longer than events required.

This explosion in armaments production provides the perfect demonstration of how the rational system works. These enormous industries are the result of conscious policies. They have involved prolonged c0operation between most of the key modern elites -- politicians, bureaucrats, corporate managers, staff officers, scientists and economists. The creation of this arms-oriented economy 'has been perhaps the happiest moment in the life of the rational system. There has been a purity, a structural malleability, a cool, abstract intelligence about the whole thing which are unmuddied by the realities of uncontrollable populations and unpredictable economies.

It is precisely this abstraction which has made it impossible for the citizen to get a handle on the situation. Living as we do in a civilization that wallows in information, statistics mean nothing. They become the commas and semicolons of everyday speech. Since they are mostly used by technocrats to decorate their self-fulfilling arguments, the citizen has developed an unconscious defence. He shuts off his value-weighing perceptions the moment he hears a number. In such a situation; intellectual resistance is virtually impossible. Deafness is therefore a healthy reaction. Unfortunately, the discounting of all statistics means that even those capable of conveying a relative truth are lost.

For example, to say that annual international and national arms sales are worth some $900 billion has absolutely no impact. [1] First, the figure is obviously inaccurate. Accuracy at such levels is impossible. It does, however, offer an approximation. It indicates that arms sales are large, enormous, unimaginably big.

In fact, nobody, whether citizen or banker or minister, has any concrete idea of what $900 billion means. Money itself is an abstract idea. People are capable of imagining what small amounts might mean by simply comparing the figures to concrete equivalents. Some can imagine the real impact of far-higher numbers than other people can. Men in charge of large industrial concerns might be able to imagine accurately hundreds of millions of dollars. However, somewhere in the high hundreds of millions the phenomenon of understandable quantity ceases to exist.

Even Robert McNamara, who invented financial control systems for the car industry, the Defense Department and for Third World development, was unable to produce any method that could control the practical application of such figures. While in charge, he himself lost complete control of both defence and development finances. This is not to say that someone else might have done better. No banker or economist who worked on the creation of these systems was able to control their budgets. Cost overruns became, and continue to be, an inevitability whenever the figures rise above the levels of concrete imagination. However technically strict the budget control systems, everyone from the citizen to the controller has come to accept, on some unspoken level, that financial controls do not work.

The problem involved is not unlike imagining a physical exploit. Almost everyone can imagine what it is like to jump over a bar raised 1 meter high, because almost everyone has done it. Many of us can, imagine how we might jump 2.43 meters, which is the current world record, had fate only given us such things as longer legs and better muscles. We can even imagine jumping another meter or so higher. But 10 meters is not aft imaginable jump. It belongs to the world of comic books.

The American annual overall defence budget alone is more than $300 billion. What do all the world's defence budgets add up to? How many thousand billion? And even that figure would not include the defence-oriented or defence-reliant or defence-subsidized sectors of our economies. All estimates of military influence upon our industries are too low because the military programs are so deeply integrated into theoretically civil sectors that they cannot be separated out for honest calculation. In Sweden, for example, where fairly serious attempts are made to understand the phenomenon, it is felt that civil products with military applications are worth as much as purely military goods. We could, therefore, plausibly take the figures for national arms production around the world and simply double them. Needless to say, we have no idea what the immediate financial or structural effect would be if all of this direct and indirect Investment were removed, How many apparently unrelated programs or industries would suffer or abruptly collapse?

It should be remembered that while education, social services and highway construction together add up to less than 15 percent of the 1988 U.S. federal budget, defence's $312 billion represents 33 percent. Moreover, it is generally estimated that one-quarter of the U. S. gross domestic product (GOP) is militarily oriented.

Given the thirty-year-old French government policy of protecting and developing defence industries, the military-dependent percentage of their GOP is probably even higher. This integrated strategy has been aimed at creating an alternative to American weaponry, while using military investment to finance French civil high technology. What's more, they export 40 percent of their military production. This doesn't make them an exception among nations. Britain exports 33 percent. Looked at another way, more than half the capital goods exported by France are armaments. [2]

But even these official figures are too low. Many sales of arms or of parts are kept secret for security reasons. They appear in no statistics. And no prices attached to arms sales could be called "hard" prices. They are disguised by heavy subsidies and artificial inflations or deflations which are determined by a multitude of trade-offs justified by everything from foreign policy and international commerce considerations to local employment and national security.

A classic example during the sixties and seventies was the pricing of the Mirage fighter -- one of the most successful fighters ever built, if judged by the quantity sold. Among its attractions was a ridiculously low price. This was the result of endlessly variable calculations, which could include such factors as the deduction of the price of the jet engines. The French government would buy the engines from the  builder, SNECMA, a state corporation, at a generous price, which was not made public and which provided the company with healthy books. The government would then sell the engines to the theoretically private airplane manufacturer Dassault at any price that was felt appropriate to win foreign sales. Again, the price would not be made public. As a result Dassault could go into a specific international negotiation with a bewildering margin for manoeuvre. If selling the plane to a nation suited French foreign policy, Dassault could undercut any competitor.

What, then, was the real cost of the Mirage? What percentage of the GDP did it really represent? Did the company -- SNECMA or Dassault -- really make a profit on the sale? If in the annual calculations of French arms production, foreign sales, trade balance, inflation figures, productivity levels, and so on, a jet engine was priced at a hidden figure of one hundred francs, were any of those calculations accurate? Where are the dividing lines between foreign aid, foreign military aid, employment policies and industrial development? And even if you could answer all those questions, you would still not have dealt with the indirect question of the real price of a jet sold to a poor African country that produces uranium, the supply of which you want to control in order to feed your civil and military nuclear industry. France, after all, produces no uranium, but has the world's third largest nuclear arsenal, as well as using nuclear power plants to satisfy more than 50 percent of its energy needs.

American figures are as soft as the French but are arrived at in different ways. The Pentagon, for example, has a special program for the distribution of "surplus" weapons to allies, mainly in the Third World, which could not otherwise afford sophisticated attack helicopters. Only the minor costs of "refurbishing" and shipping these weapons actually show up in official calculations.

Forty percent of all U. S. scientists are employed on defence-related projects. Shortly before the end of the Soviet Union, NATO said that the Soviet figure continued to be 75 percent of all scientists, and that 40 percent of Soviet industry was given over to military production. A1987 Congressional Research Service report placed the Soviet Union first in weapon supplies to Third World countries ($60 billion from 1983 to 1986). SIPRI, the Swedish independent research institute, agreed with this. In the wake of the growing Soviet crisis, there is general agreement that the United States is now in first place. SIPRI puts the Soviets second, after the United States, in overall arms sales. [3] Washington maintains that SIPRI is an unfriendly source. At such levels the order isn't of great importance and the new official figures coming out of Moscow are probably about as accurate as Western figures on our own production.

Many experts think the real figures for arms sales are two, three, even four times higher .than the $900 billion arrived at by adding up available statistics. There isn't much point in attempting to digest or understand such numbers. Their very unimaginability should be taken as a general summary of the state of affairs. We have maintained, and despite all economic difficulties continue to maintain, historic highs for military spending in a world technically at peace.

The cutbacks initiated by Gorbachev and Reagan captured the world's imagination. Certainly they were a good thing. Certainly they were moves in the right direction. But the truth is that they were peanuts on the mountain of military equipment and expenditure. The good news was so minor that its historical significance rivaled that of the Kellogg- Briand Pact. As for the current manic joy over military budget cutbacks around the globe. it should be noted that only the annual growth levels are being reduced. The budgets themselves remain at their historic highs. Even if cut by a staggering amount -- say 25 percent -- they would still be way above historic wartime levels. However, they will not be severely cut. The results of the Gulf War will include a general rearming in the Islamic world and a reevaluation of weaponry in both the West and the splintered Soviet Union. That reevaluation will lead to the highly publicized retiring of some older weapons systems, both nuclear and conventionl. But it will also result in a wave of high-tech military modernization. The shattering of the twinned superpower status quo has created yet more optimism about serious cuts in arms production. However, it has also brought about an uncontrollable explosion in nationalism, which -- accompanied by unsatisfied racial rivalries -- is constantly fracturing nations into ever smaller units. This will probably produce an expanding, not a shrinking, weapons market.

Perhaps the unimaginable size of all this commerce and production explains why the politicians, the press and the public apply their moral indignation to flea-size military scandals which they can concretely imagine. The $20 to $30 million involved in the Iran- Contra arms affair must be seen in the light of an average new weapons contract, which would run around $300 to $400 million. Twenty million dollars in the arms business is so small an amount as to be invisible to the professionals. But the public loved Irangate because the sum involved was not only imaginable. it could even be picked apart with the tweezers of frustrated traditional moral indignation.

Meanwhile, every year. the Pentagon inexplicably loses -- simply loses -- about a billion dollars' worth of arms and equipment. [4] The budgets. the costs and the actual stocks are so large that they cannot be subjected to even the most sophisticated methods of accountancy. The numbers can be explained. They cannot, however, be reduced to a rational sequence. They are therefore so out of control that the loss of $1 billion is a mere statistical occurrence.

And so, while a nation looked under every mat, attempting to trace every penny of Irangate's $20 million, no one was held responsible for the loss of $1 billion. No one was fired. The admission of the loss produced a few mentions in a few papers and was promptly forgotten. Apart from incompetence and error the disappearance of $1 billion suggests a great leeway for fraud. given that the military is the single largest purchaser of goods and services in the United States.

At the same time as Irangate, the Pentagon Audit Committee was finishing a four-year investigation of corporate overcharging. They discovered that ninety-five contractors had lied about costs on 365 out of 774 contracts. The overcharge amounted to $788.9 million. Rockwell International Corporation on a single contract involving 340 bombs had overcharged by $7.4 million. While the nation agonized over Adnan Khashoggi's $12 million, federal investigators were finding it inexplicably difficult to bring themselves to lay contractor fraud charges in these 365 cases. [5]

The politicians who justify military expenditures claim that we are at peace. They talk of a peace bought through defence. Given their various political allegiances, they justify the costs in the name of Democracy, Capitalism, Socialism, Communism. the dictatorship of the proletariat or the struggle against the forces of colonialism. They also admit, with a shrug, that while defence budgets may be too high, they are also essential.

When out of power, those of the Left seize upon the arms business as a symbol of the military-industrial complex prophesied by that odd John and Jesus team -- the American Marxist intellectual C. Wright Mills and the conservative administrator Dwight D. Eisenhower. When in power, the Left adopts the attitude of the Right, which on this subject tends to say the same things whether in office or out. Thus governments of the Left and Right both lament the situation as the inescapable result of having had to face enemies who care nothing for their people and so spend vast amounts on weaponry. Western governments have had no choice, they argue, but to follow, suit. The various socialist governments of Britain, France and Germany have perfected this argument over the last three decades. Because of current events in the Soviet bloc, this rhetoric is now in limbo. It is already beginning to reemerge, however, in an appropriately amended form.

As for the great liberal centre, it remains relatively silent. Liberals know that much of the expansion in weapon production happened during their years in power. They know that they themselves applied the most rational modern methods available. The result was a rapid acceleration in arms spending. They feel that this must have been some terrible accident of history -- the coincidence of the Vietnam War with a growth in inflation, followed hard by the oil crisis, for example. And yet their rational methods should have been able to deal with these relatively limited problems.

Liberals also know what a disaster it is to appear naive. They dare not, therefore, speak out against arms production. And yet they, more than others, sense the real problem.

Arms production and sales have nothing to do with the existence of a military-industrial complex. That term implies a well-thought-out organization with an intent -- what the law would call forethought. But if the arms business is neither manageable nor accountable to its own experts, let alone to political figures, then it cannot be filled with forethought and intent.

The flowering of weaponry is the full expression of the genuine loss of purpose among the military, the administrators and the industrial elites of the West, all driven as much by their own confusion as by their unity of method. It is not surprising, therefore, that the politicians and the press, who feed off the elites in their search for subject matter, should have been unable to make more of the Iran affair than a trivial game of individual wrongdoing. They could have used this minute arms deal. as an opportunity to lay bare the way the American and most Western economies work on a day-to-day basis. Irangate was not an exception. It was a common transaction. One of thousands. But in order to take such an approach, people would have to accept that the selling of arms, for the first time in modern Western history, is no longer a marginal business.

***

For the last two decades the world has been overwhelmed by economic crisis and confusion. Our governments prefer to talk about periodic recessions while desperately attempting to unblock the economy with everything from tight to loose money, from high tariffs and massive foreign lending to low tariffs, inflated currencies and unrepayable domestic debt. Their most successful attempted solution, however, if measured in jobs created and products sold, has been the gradual conversion of our ailing half social democratic, half capitalistic societies from peacetime to wartime economics.

This situation is the result of a long Process which went into high speed during the early sixties, when a centre-left American government under Kennedy, a radical-conservative French government under de Gaulle and a socialist British government under Wilson each decided, for its own reasons, that the best way to finance indigenous weapons programs was to sell as many arms as possible abroad. It was all part of a new approach to government spending introduced by the first wave of apolitical technocrats. The underlying assumption was that a method which strengthened a nation's arms production would also increase its independence.

Charles de Gaulle was the first to start down this road. He came to power at the age of sixty-eight in an unstable political situation. In many ways the economy he inherited in 1958 was basically still in the nineteenth century. With his long-standing devotion to advanced military technology and his sense that he had only a limited time to work, de Gaulle set about modernizing military and civil France at breakneck speed.

A soldier with a vision, he had also suffered repeatedly at the hands of the sclerotic Napoleonic traditions of the army and its self-justifying general staff. He was also obliged to deal with an officer corps which had brought him to power and which therefore felt equally empowered to remove him.

Whatever he wanted to do to France as a whole, the military structure was the part he understood best. He therefore set about revolutionizing the entire economy through the military structure. This made far more sense than one might think. De Gaulle was convinced that the old army stood in the way of a new France. He believed, with the idealism of an eighteenth-century man of reason, that only a new technocratic officer class could drive out the mythology of the antidemocratic, antirepublican, antimechanized- arfare traditional officer corps.

He therefore promoted technical officers. The three principal generals of de Gaulle's years in office were all engineers -- Polytechnicians -- who immediately began to promote other technicians. Their percentage of the officer corps rose from twenty-five to fifty.

De Gaulle next started to feed credits through the army into the industrial sector. It was as a natural extension of this new military research and production that France began to sell arms abroad with greater aggressivity. Already in the late 1950s French foreign weapons sales were growing at 16 percent per year, while those of the rest of the world were at 10 percent. [6] This early growth was easy, given the tiny base from which the new government had begun.

In fact all appeared calm in the international arms market. The United States effortlessly dominated the scene by virtually giving away its weapons as a continuation of its Marshall Plan attitudes. Britain ran a comfortable second, thanks to the continued production of its war industries and to a virtual monopoly in its colonies and ex-colonies.

This situation exploded on February 6, 1961, when President Kennedy delivered a Special Message to Congress on America's general balance-of-payments crisis. The United States was three billion dollars on the wrong side. One of the central conclusions to which Kennedy -- that is, McNamara and the new Department of Defense technicians -- had come was that the United States could no longer afford to give away weapons. They had to be sold. More specifically, the United States had to sell many more weapons than it had been giving away. Kennedy presented this commercial reality in an idealistic package. He spoke of the need to defend democracy and the need for America's allies to undertake a drastic modernization of their military capabilities. The allies were to assume a greater burden in Western defence, but they were to do so with U.S. weapons, not their own. By buying in the United States, they would be compensating America for the heavy financial burden it bore as the defender of freedom. Kennedy was very specific. He went on to "urge the purchase of the new weapons and weapons systems by those of our allies who are financially capable of doing so." Rhetoric aside, the President was urging America's allies to subsidize the American economy by buying American arms. It was the perfect illustration of a phenomenon de Gaulle had described in his War Memoirs: "The United States approaches important matters with straightforward emotions which disguise complicated policies."

McNamara further confused the new policy with a backup explanation in the latest rational jargon. This official statement came in three parts, of which the first, although written in technocratic language, is well worth quoting:

1. To further the practice of co-operative logistics and standardization with our allies by integrating our supply systems to the maximum extent feasible and by helping to limit proliferation of different types of equipment. [7]

Like most of McNamara's policies, its real effect was the inverse of its announced or intended effect.

The frenzied proliferation of all weapons, including nuclear ones, over the last two decades, has its origins in this policy. The North Atlantic Council, the political arm of NATO, includes a committee -- called the Military Agency for Standardization -- to which each nation sends a representative. Its job is to discuss weapons and weapon systems with the idea of agreeing on a single standard for bullets, shells, rifles, tanks, fighters and so on. The theory is that all ammunition and parts should be interchangeable between the allies in times of crisis and that their common strategy is based upon a clear and practical understanding of the capabilities of one another's equipment. The unwritten principle is that this standardization will be reached through a trade-off between the various arms industries of the various allies. No one is to lose out by becoming a buyer who does not sell. If a Belgian rift=le is chosen, then the tank will be German and the plane American. The reality, however, was that the standardization committee had always been a door through which the United States could supply its allies. With the new Kennedy-McNamara policy, it became a door through which the United States sold its weapons.

Just enough non-American weapons had always been adopted under the standardization system to keep the allies happy. Occasionally European orders were part of specific NATO policy. The post-World War II rapid industrialization of northern Italy by Agnelli/Fiat was largely driven by military orders. The Impetus was a NATO conviction that prosperity would destroy the great power of the Communist party in that area, which it did. In general, however, cooperation, standardization and integration actually meant that the allies should buy American. What's more, the new sales policy came at the same time as America's new nuclear strategy of flexible response. One of the obvious consequences of this strategy, which the United States forced upon its allies, was that it required massive conventional rearmament by everyone. In other words Kennedy introduced a strategy requiring rearmament at the same time that he introduced a policy of selling weapons.

Finally the new arms commercialization policy was given a practical form. The Pentagon created the International Logistics Negotiations branch to look after selling weapons. Its first director, Henry Kuss, was the leading expert on arms supplies. He made no secret of what motor drove the policy. In a speech to a gathering of American arms manufacturers, he laid it out clearly:

From the military point of view we stand to lose all of the major international relationships paid for with grant aid money unless we can establish professional military relationships through the sales media.... The solution to the balance of payments deficit is principally in more trade. All other solutions merely temporize the problem. [8]

Thanks to his efforts, American arms sales rose sharply. But this aggressive approach also focused the minds of the allies, particularly the French. It was one of the three preliminary causes for French disenchantment with NATO. [9] Those who sat on the NATO standardization committee at that time remember the constant battles between Washington and Paris; the former expecting everyone to buy American, the latter insisting on French sales to the alliance equal to French purchases.

General Pierre Gallois, one of France's most original military thinkers, wrote that if Europe were to accept America's policy, it would become no more than "a producer of consumer products. As for the rest, why not save money and use whatever the Americans produce. On the commercial front there is nothing wrong with this division of labour except that it would turn Western Europe into an under-developed continent. We would have to slowly close our engineering schools, our laboratories, our research bodies and begin training our youth to be salesmen and to working solely under foreign license." [10]

Curiously enough, this ironic vision of a comfortable decline is not far from that being seriously recommended by most Western economists, who now believe it to be an absolute truth that nations should get out of industries which can be run cheaper by other nations. Thus the United States should get out of steel in favour of Asia. And Canada should get out of agriculture in favour of the United States. Had Europe believed such an idea in the early sixties, it would now be an economic wasteland instead of the largest economic force in the world.

The French refused this option in 1961 and set about redesigning their entire economy in order to compete on all fronts but, above all, in order to produce the latest weaponry. The Fifth National Plan emphasized six sectors which would theoretically secure independence and progress. All six reflected Ministry of Defence policies -- atomic energy, electronics, computers, aviation, rockets and satellites. In electronics, 50 percent of the products were for the military sector. The entire economy responded to this massive injection of R and D funds.  And the remarkable integration of the national elites made the whole idea of a military-industrial complex irrelevant. The military engineering school -- the Polytechnique -- produced the army's technicians as well as many of the senior bureaucrats and corporate leaders. There could not be a complex when there was only one elite, one source of financing, and no strong legal division between politics, defence, and industry. No time was spent on conflict-of-interest questions. There was only one interest.

An American aeronautics corporation might have two thousand of its eight thousand engineers devoted to such jobs as analysis and control. This was necessary because the company would have to justify (not explain) every detail of a project to its own government, argue the merits of the product, win over politicians and demonstrate the quality of its management methods, its control over subcontractors and its cost controls. And it would have to do the same with foreign governments for all international sales. A French corporation would have almost no one working in these areas. The technocrats in their own government would handle most of this through the Ministerial Delegation for Armaments.

Such elite integration was only a foreshadowing of that same unity in other Western countries. Elsewhere the official public barriers between government, industry and army maintained the fiction that there were real levers of control over armaments policy. However, the unity in approach of the technocrats in all three sectors meant that they could effortlessly develop policy across the lines, without reference to the control levers. The public niceties could all be dealt with after the fact. Legal and legislative approval of administrative action came to resemble a ribbon-cutting ceremony.

The French elites were not at all unconscious of the fact that their economy was being remodelled through military priorities. They believed that only the army could afford the kind of investments necessary to keep high-tech industries on the cutting edge of creativity.

This particular argument has become a great favourite in the late twentieth century. It is used everywhere on the globe when there is a need to justify military financing. The reality is that military investment is merely a facet of government investment. Whether these funds are earmarked for military or civilian Rand D is neither here nor there.

In any case, as early as the 1960s the French army was officially providing 30 percent of the nation's R and D investments. In reality, the percentage of total national Rand D devoted to the military sector was closer to 70 percent. [11] This same phenomenon was slower to take effect in the United States, thanks to the relatively healthy state of general industry before 1973. By 1980, however, 40 percent of American Rand D was for military programs. And by 1985 it represented 50 percent of university research. By 1988, 70 percent of government-supported R and D was military.

De Gaulle's point had been that only the- state can judge what research "is most useful to the public interest." [12] Political leaders around the world came to agree with this idea. They seemed to have little choice, because the situation they discovered on arriving in office consisted of a seamless web uniting R and D and military equipment. There did not appear to be any other way to do research. The only question, then, was to find ways to pay for both this research and the resulting "need" for new military equipment. The answer, quite simply, was to export. The sale of two hundred fighters abroad would finance the fifty planes needed for the nation's air force.

This economic-political-military truism -- that national independence could be accomplished through domestic arms production, provided it was financed through exports -- was to become a new religion in the Western world. Technocrats everywhere -- whether officers or administrators -- explained to their employers the remarkable benefits which this cycle would bring to the home economy. And what were perceived as the American and French successes seemed all the more attractive when compared to the British failure.

London had not turned its attention to a national arms policy fast enough and so had frittered away its postwar advantages, losing even most of its ex-colonial markets. By 1966 Harold Wilson and his Defence Minister Denis Healey had decided in desperation to join the race. Both men came from the left wing of the Labour party. And, in another reminder of the irrelevance of both ideology and militarism in what was happening, two of the three men central to the creation and running of the British Defence Sales organization were plucked from the automobile industry, just as in the United States, Robert McNamara had come to Defense from Detroit. The growth in the arms market was an industrial- administrative undertaking, not a military one. It had to do with the production and sale of  mechanized and computerized material. Most of the people involved were not thinking seriously about the nature of that material.

The new British Defence Sales group was able to stop the collapse of the U.K. markets and London held on to fourth place in the ever-expanding world market, By the late eighties, Britain was again rivalling France for third place.

But everyone else had caught on to the trend long before that. By the late sixties, the Swedes, the Swiss, the Belgians, the Germans and the Italians were travelling the world selling their arms. The end of colonialism meant the rise of new states. New states meant new armies in need of new weaponry. These young governments were eager to buy but short of cash. That turned out to be a simple technical problem. The same Western governments which sold them the weapons would finance their expenditures through aid programs or general bank loans or specific armament-financing agreements, all facilitated by subsidized low pricing.

In other words the sellers were not actually financing their own military needs through foreign sales, because they were also financing the buyers. According to their rational accounting system, a fighter sold abroad more or less paid for a fighter in the home air force. In reality the seller government was paying for both. The whole process was and is little more than an inflationary chain in which money, in the form of debt, must be printed to finance the production of nonproductive goods to be stored at home or in other countries.

After a decade of this overexcited world competition for markets, the general economic crisis of 1973 threw governments and businesses into a confusion from which they still have not emerged. None of them were clear as to what had happened, The technocrats could see that the growth machinery was seriously stalled for the first ,time since 1945. They flailed around blindly for remedies, all of which failed. Printing money. Not printing money. Heavy industrial investment. Hard-nosed refusals to invest in sick; heavy industries. No matter what they spent or didn't spend, taxed or didn't tax, the economic body wouldn't move.

The only sector which responded positively and promptly to government stimulation was the arms industry. Tax breaks aimed at a normal industrial sector or Rand D subsidies or depreciation benefits or any other support which lies within the competence or a government, may well encourage companies to produce. But that doesn't create consumers to buy. In times of economic troubles, consumers do not leap at products. They limit their expenses.

The arms industry, however, was and is a perfectly artificial business, not subject to real market conditions. Armaments are the ideal consumer product, because even the consumer is artificial. That is to say the consumer is a government, not an individual.

Moving the financial chips around in a circle suddenly took on a new importance. Paying countries to buy your weapons was a way to stimulate your own immobile economy. Ordering weapons at home for your own forces accomplished the same thing. The more weapons your own industry built for home or abroad. the more money you had to print. But this didn't look like classic inflationary economics. Governments were printing complex debt papers, not old-fashioned debt notes. Besides, patriotism was involved as well as export encouragement programs. International trade-offs could no longer be seen as expenditures. They were now stimulants.

The production of so many weapons has indeed kept men working in difficult times. Counting only directly related industries, some 400,000 jobs are now involved in the United States and 750,000 in Europe. But, curiously enough, as the socioeconomic role of building weapons has grown, the actual question of whether the selling producer is well defended has slipped into the background. The primary arguments surrounding most arms projects today relate to jobs, industrial structure, trade balances and technological development. The arms manufacturers have understood this and act accordingly.

In 1981, for example, Rockwell International sold Congress on the B-1B bomber by telling them that it would be composed of systems built in forty-eight of the American states, a remarkable bit of political-industrial economics. In 1986 in Britain Plessy justified its sale of six AR-3D radar systems to Iran for £240 million by stating: "This contract represents two years of work for 1,500 of our workers."  "The Iranians," they added, "have promised not to use this system against the Iraquis." No doubt they were buying it to track shooting stars. Caspar Weinberger, President Reagan's Secretary of Defense, at least knew how to be perfectly straightforward: "We must remember at least 350,000 jobs are at stake and will be lost if there are any drastic military cuts." All in all the building of weapons has become the most important source of make-work projects in the late twentieth century. Neoconservatives may condemn Franklin D. Roosevelt's WPA projects, but at least they kept the countryside clean and were reasonably cheap.

***

The idea that building weapons is a good way to create jobs and to earn foreign currency is so naive as to have a certain charm about it. Even to believe that military spending might help the economy is revolutionary. Throughout history, military spending has been considered a disaster for economies. The twentieth-century Western belief in the opposite is, in part, a curious offshoot of Keynesian economics, produced by the conviction that it took World War II to end the depression. One of the extra lunacies of current economics is that while Keynes is now considered bad, weapon production programs are still good.

In order to obscure this contradiction, economists came up with the theory of "the trickle- down effect." The investment, for example, of several billion dollars into a nongrowth area such as tanks, in the hope that there will be a trickle down of a hundred million dollars, into civil transport, is presented as an efficient form of industrial investment.

Those who defend this theory always cite a long list of successes. There is hardly a plane or a radio which is not derivative of something military. Fast trains. New metals. The entire nuclear energy sector. Digital electronics. Satellite communications. The list is endless. And there are no signs of a waning in the political conviction that this is the .right way to do research. During his first presidential campaign, George Bush went out of his way to reply to his opponents' complaint that 70 percent of federal support for Rand D goes to the defence establishment: "Critics ignore the importance of defense research to science and technology, manufacturing and trade -- expanding the frontiers of our knowledge - and contributing to our prosperity." [13]

The interesting question, however, is not whether this system works but whether any other system works better. Why can't governments make their investments directly in those civil sectors which they have been hoping might receive a few drops of new knowledge from military research? If civilian Rand D is what we are really after, then the trickle-down system is an astonishingly inefficient way of going about it.

None of this is to suggest that all weapons could simply disappear or even that they should. It is merely to point out that Western economic priorities have never been so back to front.

The new elites, whatever their particular professional training, share identical views on how things ought to be done. But their basic premise is wrong. It was not the building of weapons for World War II which ended the Great Depression. It was the need, after the war, to reconstruct a devastated Europe. So if we are really hoping to end our economic difficulties by military means, then we must get down to seriously blowing things up. The prolonged bombing of the Gulf War was a small start in that direction.

The truth is that the central role now held by weaponry in our economies has become a major barrier to real growth and therefore to recovery. The problem with arms -- if the human and moral questions are set aside -- is that they are not really capital goods. You cannot build or evolve or develop through armaments. You can only stockpile them. Or you can use them. Once only, in most cases. And only to destroy. But the economic motor of capital goods is supposed to be growth, not destruction. In short, whether stockpiled or used, weapons are the most extravagant of consumer goods.

***

There is nothing new about arms dealers and armament races. But the dealers were always tiny dots on the economic screen and the international arms business was scarcely larger. For example, the naval race leading up to World War I was thought to be cripplingly expensive. It consisted of a mere thirty-four British and Allied dreadnoughts against twenty German and Austrian ships of the same type.

Those expenditures caused enormous public debate. Shortly before the 1914 outbreak, the Liberal government in Britain almost tore itself to pieces over the division between the First Lord of the Admiralty Winston Churchill and Lloyd George, the Chancellor of the Exchequer. Churchill wanted an annual naval budget large enough to pay for more dreadnoughts and Lloyd George opposed him for social and economic reasons. The British drive to lessen their own financial burden had made them start pressuring their allies -- the dominions -- to build dreadnoughts of their own." The "Empire ships" would, of course, fall under the imperial command of the Admiralty. These pressures divided the various dominions. To oppose London's wish was to be soft on the Germans, ungrateful to the mother country and secretly republican. This argument had already played a role in destroying the Canadian government of Wilfrid Laurier in 1911 and it almost broke up the succeeding government of Robert Borden. The conviction of those in favour of the ships was that they would prevent war; of those against, that they would cause it.

The 1950s, the early 1960s and the 1980s were filled with identical rhetoric regarding the Cold War. But there is a fundamental difference between pre-1914 or pre-1939 and today. No period of peace has ever supported the levels of arms spending that we have experienced over the last thirty years. No period of peace has ever devoted to arms such high percentages of general economic activity.

And yet one thing has remained unchanged. Today's arms dealers are still the marginal, minor figures they always were. Adnan Khashoggi, despite his fame, was the least important person in the Iranian affair. Dealers do not make deals. They run after deals, attempting to insert themselves in order to pick up a few stray thousands or millions. They are the hyenas of an industry controlled by the governments, without whom no important arms sale can be made. No more than 5 percent of the arms trade is handled by the dealers and most of that is at the instigation of the purchasing or selling governments. [14] But the moment Khashoggi's name appeared in the Iran scandal, journalists and elected officials ran to point him out as a source of evil. Time magazine, arbiter of American popular mythology, put him on its cover with the title "Those Shadowy Arms Traders." Inside were complicated diagrams involving governments, presidents, ministers and generals; but always at the centre was Khashoggi. Again and again reference was made by every news body covering the scandal to Khashoggi's missing twelve million dollars. These days twelve million dollars will hardly buy you a tank.

It is the government's role as chief arms dealer which should always draw the eye. Perhaps people cannot focus on this because it blurs the immoral reputation of the arms business. In the past, believing that dealers were evil provided a cost-free vision of right and wrong which involved very little damage to the citizen's immediate self-interest. Nevertheless, this clarity did help people to measure the state of their nation's affairs.

Now, suddenly, such shadowy, immortal monsters as Basil Zaharoff, the most famous arms dealer of the early twentieth century, have been replaced by our own elected officials and our own honest employees -- the civil servants. What is the citizen to think? Politicians may be popular or unpopular. Honest or dishonest. Effective or ineffective. But the very nature of the democratic process makes it impossible to see them as the incarnation of evil. The politician cannot be evil unless the people believe themselves to be evil. As for the bureaucrats, who are the actual "dealers," their function as government employees frees them from the traditional controls of public moral responsibility.

Besides, the success of politicians and bureaucrats in selling arms abroad theoretically lightens the defence load on the taxpayer and helps the balance of payments." As for the moral question," Raymond Brown said, when he was head of the British government Defence Sales Department, "I just put it out of my mind." [15] His then French equivalent, the Ministerial Delegate for Armaments Hugues de l'Estoile, gave an even more standard reply to the same sort of question; "When I am criticized for being an arms dealer, I always think that when I sign a contract I can guarantee for instance 10,000 jobs over three years." [16] As for Henry Kuss, the American government dealer, he saw himself not as a seller of arms, but as a man charged with rationalization and coordination.

Arms production has become so much part of what is perceived as the national economic self-interest that to criticize it is to be unrealistic, idealistic, simplistic and so on. Commentators and public officials therefore practice a self-censorship which is as widespread on the Left as on the Right. In 1986 Britain squeezed out France for third place in the international arms sales race. Liberation, which is more or less the newspaper of the intelligent French Left, responded with a long, anguished analysis of what had gone wrong. They concluded that "a few people with a rather romantic view of the world have regretted that France's foreign policy is sometimes limited 'to that of an arms dealer. They forget that if we want to be powerful we must rely on our power; that is, our weapons -- those we possess and those we sell." [17] In 1987 France retook third place.

***

The degree to which foreign policy has been deformed and the law rendered irrelevant by systems management is more obvious in the arms sector than in any other. This often takes on comic proportions. During the early 1980s, the United States did everything it could to discourage the Europeans from building a new-generation fighter instead of buying an American machine. Washington claimed the American plane would be cheaper and better. Their arguments failed and in 1985 the Europeans started two consortia. The larger one included interests in Britain, Spain. Germany and Italy and had plans to build eight hundred fighters.

Washington's reaction was to try to push its way into that group. Not because it wanted to buy the fighter. There are already five separate American corporations working on versions of Washington's new generation plane. Eventually these five will have to fight each other. at great cost. for the American market. Washington Wanted into the European consortium simply as a way of getting more work for its own factories.

Governments are so desperate to create investment and employment through the building of arms that Washington would probably have participated in a Soviet fighter project if invited. Moscow would certainly have participated in an American project. The proof is that. although China and the West were still in indirect conflict on a series of fronts. and potentially in direct conflict on others. Western countries have showed no hesitation in signing military contracts with Beijing. In return for the few subsidized millions theoretically gained. we helped China become a serious competitor to Western weapons in the world market.

One of the characteristics of this curious market is that everyone is constantly accusing everyone else of unfair competition through artificial pricing. In 1987 the European Airbus consortium won a major contract in the United States. This was a serious defeat for Boeing-Lockheed-McDonnell Douglas on their home turf. Washington tried to break the deal by accusing the Europeans of reducing the civilian airliner's sale price through. hidden military investments. This accusation was sent in a diplomatic note. which is, after all. something more usually addressed to enemies than to allies. The senior partner in the consortium is France and its then prime minister, Jacques Chirac, replied immediately that if Washington touched the contract there would be a European embargo on all U.S. goods and, besides, "All American aeronautical constructors are financed by the Pentagon and NASA." [18] Washington backed down. Of course both sides were right.

In this century smaller wars have always been seen by large countries as testing grounds for new equipment and new tactics. Nowadays, in a world of heavy competition, producers examine every violent incident in the forty-odd wars currently being fought around the globe, in the hope that one of their own weapons will have sunk, shot down or blown up something built by their competition. 

The virtual destruction of the American frigate Stark in the Persian Gulf in 1987 and, before that, of the destroyer HMS Sheffield in the Falklands may have hurt U.S. and U.K. naval sales but helped those of the French Exocet missile. Such examples are used actively in sales campaigns. The world's press is fed with descriptions of these battles as an indirect way of praising the national weapon, The purpose and implications of the war being fought are irrelevant to this commercial activity.

The Gulf War was the most extensive equipment trial since World War II. On February 15, 1991, in the midst of the war, President Bush took time out to travel to the Patriot Missile factory in Andover, Massachusetts. There he gave what was billed as a major speech, which was beamed live around the globe. His central message to the assembled workers and to the world was that Patriots were "a triumph for American technology" and "essential for technological growth." He put this in the context of the need to push ahead with SDI. The sales pitch was reiterated on March 6 in his postwar State of the Union Address: "They did it using America's state-of-the-art technology. We saw the excellence embodied in the Patriot Missile and the patriots who made it work." In fact, negotiations to sell tens of billions of dollars worth of new arms to Middle Eastern allies were already underway. [19]

In this and other cases, the producer's own national interests may easily become irrelevant. For example, Canadian and' French state corporations were pushed to sell their nuclear reactors throughout the Third World. No politically responsible figure asked himself whether the inevitable resulting proliferation in nuclear weapons was really worth the few hundred million paid for the reactors. A more specific case was that of Henri Conze, chief arms salesman of the French government in the late 1980s. Times were so tough that Dassault, the French manufacturer of fighters, was obliged to layoff eight hundred men in 1987. Conze commented: "The future is very uncertain, but industrialists must not fall into depression. The markets do exist. [He was referring to the oil-producing nations.] The problem is when the clients will once again have the money to modernize their defences. Who can tell what the price of oil will be in a year?" [20]

In other words, a mature male of above-average intelligence, who is a senior civil servant, hopes that the price of oil will go back up SO that Middle Eastern governments will be able to buy yet more fighters. The effect of such a price hike on his own nation would be disastrous, since France, like most of Europe, imports all its hydrocarbons. This example merely indicates the frenzy into which the arms business has driven people.

It is hardly surprising, therefore, that the fear, as Liberation put it, of appearing "rather romantic" simply pushes those who do criticize the current lunacy to concentrate on the sensational and the marginal: dealers with Jacuzzis in their jumbo jets, the psychiatric problems of colonels, which official said what to a president of the United States at what time of which day in what room. In reality, even the traditional key questions -- who lied, what law was broken, who knew -- are now irrelevant. In the arms business, everyone lies and usually does so in "the national interest."  After all, they are public servants or are subsidized by public servants. The laws are almost always broken, most often by those who make them or who are paid to uphold them.

It is hardly surprising that decent men should be pushed to such tactics. First, there is the sense of economic imperative. Second, there is the conviction that these operations are all taking place as part of a larger national plan, with technocrats of all sorts justifying everything, from the weapon itself to the need of the potential buyer. Third, the operations take place within cocoons of secrecy which encourage men to give way to childish fantasies of how the world can be made to work.

In 1987, for example, $22.4 billion were requested in the American defense budget for "Black Programs" shielded from public scrutiny by withholding the name or the function or the cost or all three. [21] If the official tactics of senior government employees involve the hiding of real costs, of real prices, of indirect subsidies, of real foreign policy considerations, it is only another very small step for them to become involved in unofficial kickbacks and sales to forbidden countries. Such things as falsified end-user permits and invisible money in numbered accounts are the characteristics not of illegal but of legal arms dealing. This "airport fiction" side to the business makes an endless list of dubious activities acceptable, when common sense should tell the participants that they are not.

That was how Britain came to ship $50 million worth of tank parts to Iran in contravention of its own public policy. A regulation forbade the sale of "lethal" equipment to Iran or Iraq if it would significantly help either side. Those who wrote the regulation then set about manipulating it. Are spare parts lethal? Are they significant?

Even Sweden, with its strict law forbidding arms exports to "zones of conflict" found in 1986 that senior officials had been doing just that for ten years. Hundreds of millions of dollars' worth of weapons had been sent to Iran. When an investigation began, a senior officer jumped in front of a train -- or was pushed. No one is quite certain which.

Martin Ardbo, former president of the Nobel subsidiary which did the exporting, confessed: "We thought we lived under a system of double morality. They [the government and the War Equipment Inspectorate] wanted us to do it like this." Like everyone else involved, Ardbo thought that by breaking the law he was serving his country. [22]

***

Our elites believe these social distortions to be of passing importance, compared to the strategic self-reliance financed by foreign arms sales. The truth is the exact opposite. Each foreign sale of arms imposes new limitations on the seller's foreign policy.

For a start there are the enormous costs involved in tooling up -- not simply to build a weapon but to build in the quantities and according to the intricate variables, required for international markets. These costs lock the seller in. He must go on selling to payoff his investment and to keep his work force employed. Such things as foreign policy objections to clients inevitably become less important. The financing of the weapons production system itself becomes a foreign policy imperative.

But the seller's hands are tied by more than the need to sell. Weapons systems need spare parts and ammunition. The producer guarantees. himself a long-term income in this way, because spare parts and ammunition are like interest on a deposit. Unfortunately, they also create a long-term commitment to the buyer. The refusal at any time to supply spare parts would destroy a country's reputation.

If it came in the middle of a war, it could cause the client to lose. Uninvolved nations all over the world would take note that the seller was unreliable. The more specific the moral or political reasons for not selling, the more catastrophic the effect would be for the supplier in the international marketplace. This was one of the justifications used by the Nobel employees in the Swedish arms scandal. They said that to cut off arms to Iran would damage Sweden's reputation as a reliable supplier. They were probably right. An arms sale is therefore a foreign policy commitment. The more aggressive the international sales campaign, the more commercial success will deform foreign policy.

As for the sophisticated weapons systems Western producers want for themselves, these are so expensive that most must be built by vast international consortia. This can create stronger alliances. But no one could suggest that it does anything for national independence.

Finally, with each passing year, more countries set up or expand indigenous arms production and enter the international competition. It is now a buyer's market and so winning a large contract depends on the promise of general military support for the buyer or of financial support in areas unrelated to defence. In fact the seller is more likely to end up bolstering his client's foreign policy than strengthening his own.

As for the attempts by suppliers to influence their clients' foreign or internal policies. these have invariably been a disaster. In 1958. for example. France adopted the Belgian FN rifle as part of NATO's standardization program. The FN used the American 7.62 bullet. At a difficult moment in the Algerian War, America used its disapproval of colonial wars as a reason for cutting off the supply of bullets. The French were convinced that the real reason was Washington's interest in the gas fields discovered in southern Algeria. This incident helped push France towards withdrawal from NATO and into active concentration on domestic arms production.

The rapid decline of British international sales from second to fourth place began with Harold Wilson's imposition of an arms embargo on South Africa in 1964. France immediately took its place and sold. among other things, sixty-four Mirage fighters, seventy-five helicopters. and several nuclear plants. Less than two years later, Wilson created the Defence Sales Organization to stabilize plummeting sales. Black African states had been frightened off as much as anyone else by the British application of principles to commerce. But with the new Sales Organization in place. Britain began to compete amorally alongside everyone else and soon had won back international respect. As for France, it had to keep its mouth more or less shut on the subject of apartheid until the late 1980s. when its last arms commitment to South Africa was completed.

In 1967 France cut off arms to Israel in an attempt to stop the Six-Day War. Israel immediately changed and diversified suppliers, then concentrated on domestic arms production. After General Augusto Pinochet's coup, the West gradually cut off military supplies. Chile now has an important arms industry. In other words, in each case the client immediately changes suppliers; then, chastened by such a crisis of dependency, sets about building his own arms industry; then begins selling his own weapons abroad. Thus the net result of pressuring a client has been to create yet another competitor.

In 1960 only a few Third World countries were serious arms producers. Today, twenty- seven of them are out there competing. From 1950 to 1972 an average 86 percent of major weapon systems sold to the Third World came from the United States, the Soviet Union, France and Britain. Today eleven Third World countries sell fighter aircraft for export. Nine sell naval ships. Twenty-two have ballistic missile programs. Six of them are already selling nuclear-capable missiles. China sells three models, Israel two, Brazil three, India four. [23] Beating unemployment and balancing trade figures through arms exports has become a serious economic policy in Argentina, Brazil, China, Egypt, India, Indonesia, Israel, Mexico, North and South Korea, the Philippines and Taiwan, to name only the most successful.

Brazil, for example, sells half the world's armoured fighting vehicles. It makes more money from arms than from coffee. Its military exports are worth more than its total defence budget. The Brazilians would argue that their weapons policy has been a great success because their government created an armaments industry without having any need for weapons at home. It has taken the original U.S.-France-U.K. theory of foreign sales to finance domestic needs one step further.

A number of Third World countries are now selling arms just to make money, in the absence of any domestic needs. Pakistan has forty thousand people devoted to the arms industry; its largest pool of technicians and skilled workers. [24] This approach allows developing countries to beat the developed world at its own game.

That they should have converted so easily to Western industrial methods in this particular area at first seems surprising. The explanation may be that their elites were and continue to be trained in the West. Just as an earlier generation of colonials was trained, for example, in Marxism in Paris and London, which it then tried to apply at home, so those trained from the sixties on learned the same methodology as Western technocrats. The most important component in these new elites has been the soldier. These military men returned home with three obsessions: industrialization, rational management and high-tech weaponry. There have been military governments throughout the, third World, and even when they relinquish the presidencies to civilians, they leave army officers behind in key administrative posts.

Between 1950 and the beginning of the world economic crisis in 1973, the GDP of developing countries grew at 5 percent per year. Their arms budgets grew at 7 percent and their arms import budgets at 8 percent. [25] The 1973 crisis crippled their GDP growth. But the military influence within their governments insisted on a maintenance of arms budget growth, This was yet another factor driving them into domestic and export arms production. From the beginning they understood their chief competitive advantage -- cheap labour. To this they could add the absence of domestic political interference in export policies. These advantages are even more striking today, so Third World producers will no doubt continue to expand, proliferating weapons and reducing still further the influence of the main Western producers.

***

The list of the economic, foreign policy and military disadvantages to the current arms- selling race is almost endless. Secrecy, for example, has always been a factor in assuring a nation's defence. If you had a good weapon, you denied knowledge of it to your enemy, That has gone out the window along with the idea of supplying only your true allies. Today the desperate need to beat the competition by vaunting your products and selling to all buyers has made a nonsense of strategic weapons development.

Defence department experts in all countries would deny this. They would point out that they maintain careful lists of strategic goods and monitor the countries to which sale of these goods is banned. But these lists are unenforced and unenforceable. They are public relations blather, Most of the contraventions go unnoticed or unannounced. Those that do become public scandals are usually examined with outrageous hypocrisy.

In 1983, for example, a Japanese corporation sold the Russians four American-built computer-controlled machine tools to make ship propellers. These tools were on the American strategic ban list, The Director of U.S. government arms sales protested violently, He claimed that Soviet submarines would now be undetectable, A billion dollars would therefore have to be spent in the United States on new detection systems, "When you strip it all away," he lamented, "these people did terrible damage for the sake of making just one more sale." [26]

But if these tools were so strategically important, what were they doing in the hands of a Japanese corporation in the first place? The reality is that in the second half of the 1980s, five thousand machine tools from the Western strategic materials list were sold illegally by various nationalities to the Soviet Union. On top of that America's European partners in COCOM, the NATO-related control arm for strategic goods, want the list cut right back or simply done away with.

Beyond the fantasy of the strategic lists, the situation is even more out of control. For example, Israel has long been selling 35 percent of its military exports to South Africa, Other major clients include Taiwan, Pinochet's Chile, and Iran, Anastasio Somoza's Nicaragua was an important purchaser. In 1983 Brazil sold planes to Nicaragua, thus endangering the Contadora regional peace initiative it had just signed, Vickers of Britain and FMC of the United States have developed an armoured personnel carrier with the Chinese, who immediately set about selling it to Iran. Iran, of course, is on the U.S. and U.K. embargo list. China also sold bombers to both Iran and Iraq, just as France actively sold arms to both India and Pakistan during their last war. China has recently moved into fourth place in the selling of arms to the Third World.

The Iran-Iraq war provided the clearest illustration of foreign policy standards in the age of armaments economics. Almost everyone condemned the war. But fifty nations sold arms to one side or the other. Twenty-eight of the fifty -- including Brazil and China -- sold heavily to both. Soviet ground-to-ground missiles were popular with the two armies. Iran, owner of American F-14 fighters, and desperate for spare parts, negotiated with Hanoi to buy the stockpile of planes abandoned in Vietnam by the Americans. The idea was to cannibalize them. Iran did. manage to keep ten of its F-14s in the air. The parts must have come from Hanoi, Chile or a U.S. ally. As for Iraq, its main suppliers (for some $50 billion) were the Soviet Union, France, Brazil, South Africa and China. [27]

Elsewhere, Poland and Rumania were selling ammunition to the Nicaraguan Contras, who paid these Communist suppliers with their American aid dollars. And, in a transaction so well-rounded that all participants must have felt free from any link between belief and action, the Chinese government sold $7 million worth of surface-to-air missiles and small arms to the Nicaraguan Contras between 1984 and 1985. This Contra purchase was financed by the government of Taiwan. [28]

All these lists and combinations and transactions fly in the face of common sense. They make nonsense of the idea of foreign policy.

***

One thing is clear. Our frenzy to save our economies by selling arms has backfired. Not only do we lend such large amounts to purchasers that all real benefit is removed, we also make bad loans. Most of the borrowing countries cannot even meet the interest payments.

Worse still, government financing for Western military industries is so favourable that our industrialists are hard put to choose nonmilitary goods. In France the government was guaranteeing loans up to 85 percent of the contract at an interest rate of less than 7 percent, when commercial rates were permanently over 10. In the United States, the Foreign Military Sales Program will give credits on 100 percent of the contract at 3 percent interest, reimbursable in thirty years.

And yet the result of too many weapons in too many places is a curious feeling in most Western countries that they are inadequately defended. They have been too busy arming both their actual enemies and all possible future enemies.

Since 1950 the flow of arms to -- or more recently, within -- the Third World has increased at an average rate of about 10 percent per year. In the case of nations who are potential clients but who are technically bankrupt, weaponry is one of the last budget areas subjected to economic restraint. Apparently the IMF doesn't push them to stop buying arms until every other program has been reduced to tattered remains. Poland, for example, a country which can't afford paper to print books, has celebrated its return to democracy by ordering fighters from the United States.

We are now caught in the midst of great economic and moral confusion. Public officials, appointed or elected, of the Left or of the Right, are terrified to speak out against a sector which, according to universally accepted dogma, stands between us and economic collapse. Many of them believe arms production to be a weight tied around our necks. But this is an heretical and therefore secret belief. As a result armaments dominate our economies in a silent, sullen manner, without the public knowing quite what to think.

The standard excuse for an unfortunate action is its necessity. Unfortunately the necessity in question is usually the result of earlier conscious actions. The action is, therefore, not a necessity but an inadvertently chosen result. In public affairs, this embarrassing fact is usually obscured behind the declarative phenomenon raison d'etat, which voids the idea of responsible government.

And so, as if in a squirrel cage, we keep going around and around, using the same solutions to economic problems with the same results. In the last decade, we have been spared major resource supply problems. Oil prices have moved in our favour. In many countries the level of government services has been reduced and the welfare state partially dismantled. And yet the unemployment rate in Europe rose from 5.8 percent in 1980 to over 11 percent in 1987. Then it began to drop, but very slowly. Unemployment also fell in the United States, but that was largely due to the replacement of full-time employment, offering job security and social protections, by part-time employment based on unsecured labour. More often than not these new jobs involve working at or below the official poverty line. By the end of the 1980s, general unemployment figures were on their way back up throughout the West.

It cannot be proved that this economic state is even partly caused by a reliance on arms production. But it can be established, easily and clearly, that arms production is now the central motor controlling both the speed and the direction of Western R and D, as well as industrial production, high-technology production and employment creation programs.

A glance at the U.S. Commerce Department's figures on orders to American factories shows that month after month the movement is determined by success or failure in the arms business. November 1986, for example, was a good month in American industry, with an increase of 4.1 percent. However, without the military equipment orders, it would have been only 1.3 percent. April 1987 was a bad month. Orders increased only 0.2 percent. Nevertheless, without the military orders they would have declined 0.2 percent. Month after month, the experienced eye darts straight to the military figures to see how the whole economy is doing.

In that context the Strategic Defense Initiative (SDI) takes on an industrial rather than a military hue. Even the President's and the Secretary of Defense's launching of the program didn't sound particularly convincing on the military front. Instead they stuck to listless repetitions of old cliches drawn from centuries of nationalistic vocabulary -- "Our activities in space, partially in response to Soviet actions, are predicated on the fact that we must have free access and use of space," Caspar Weinberger said. [29] Pitt the Younger might have sent the same warning to Napoleon: "Our activities on the seas, partially in response to the Emperor of France's actions, are predicated on the fact that we must have freeaccess and use of the seas." Or, indeed, so might Winston Churchill on the same subject in 1914, or Woodrow Wilson on the same subject in 1917. Or Palmerston in 1854 might have thus addressed the Russian czar: "Our activities in the Bosporus, partially in response to Imperial Russia's actions, are predicated on the fact that we must have free access and use of the Bosporus." Or perhaps Britain addressing the Dowager Empress over access to China in the 1890s. Or the Roman Senate addressing Carthage over access to grain in North Africa. Or, indeed, anyone you like, because Weinbergers formula is the eternal standard justification for military action dictated by economic interests.

What the Secretary of Defense really meant was that ad hoc military spending was not having a sufficient impact to get the economy turning without the government relying on a lot of paper to heat up the machinery. And this flood of bonds and junk bonds was even trickier to control. And arms sales were lagging because of new competition from new producers. What was needed was a vast, new industrial strategy -- so sophisticated that most of the new producers would be eliminated -- to get the United States in particular and the West in general on the move again. Needless to say, that strategy would revolve around military questions, It would be a new version of the Kennedy-McNamara military- ndustrial initiative of 1961. In 1993 the new Clinton administration tried to strengthen the impression that it was getting a handle on the arms budget by dropping the term SDI -- identified with Reagan and the grandiose idea. They reverted to the program's original, boring, bureaucratic name -- Ballistic Missile Defense Organization. This was less likely to attract public attention. The actual budget remained unchanged, Indeed, the revised U.S.-France-U.K. sales pitch, based upon the Gulf War experience, is that lesser arms from lesser countries are a waste of money. Only the leading edge of technology can win.

And yet, when Western economists look at Japan with envy and incomprehension, searching to understand that country's continued economic success, they come up with every answer except the most obvious - the absence of a dominant arms industry. This is not to suggest any particular Japanese wisdom. They were simply kept out of the business by the rules set after World War II. Later, in order to avoid ever slipping back into militarism, they legally limited their defence expenditure to 1 percent of GNP.

This rule has protected the Japanese from the mesmerizing logic of military-inspired R and D, military-directed industrial capacity and military sales export policies. One cannot automatically put their economic success down to this escape, but they are the only developed nation both to have consistently avoided the economic crisis and to have avoided military-based economics. At the very least this is one of the explanations for their success.

The current pressure the West is putting on Japan to assume a greater defence burden and, for that matter, to take part in SDI shows how little we have thought about the role of the arms industry. It isn't really clear why we want Japan involved, if the business is as profitable as we claim. The subconscious implication is that involvement will weaken the Japanese economy in the same way that ours has been weakened. What better way to deal with Japan's economic strength than to draw it into a self-destructive syndrome? On the other hand, given the effectiveness of Japanese production, we will soon be beaten at our own game. What would the West do with its enormous industrial commitment to the export of weapons if everyone started clamouring for Japanese tanks and fighters?

***

Our reliance upon military economics began as a conscious attempt by technocrats to treat the burden of military expense in the same way that we treat any commercial economic problem -- that is, in terms of profit and loss. This approach, they felt, would also strengthen our foreign policies and reinforce our national independence.

But the central theme was economic. Modern weaponry, they argued, was too expensive to be viably produced for the needs of a single nation. It followed that we had to produce more and sell the surplus abroad. As General Michel Fourquet wrote, when head of French military sales, we must "admit as the basic rule that its industries can only live by exporting." [30] The emphasis is his.

Three decades later our respective independences have not been reinforced. Our foreign policies have been distorted. And we are mired in an economic crisis which itself is now two decades old. Many explanations are given for our persistent problems. But can we  avoid asking whether those industries, which have come to dominate our economies over the same period, are not at least partially responsible? Certainly arms production has been given enormous financial and economic support -- more than enough to make any viable industry a success. And thirty years is a long trial period for any economic proposition.

If part of the responsibility fur our economic confusion lies with the weapons industry, is the reason perhaps that arms are not capital goods? They cannot act as an economic motor to drive a fully rounded economy if there are no real costs, no real buyers, and no real return on investment in the form of civil infrastructure. As for singing the praises of the trickle-down effect, this borders on the ridiculous. Why should we tie our industrial investment and development to a method which is both inefficient and reliant upon luck? It is a sign of how flawed the rational system is that we have accepted with docility an economic development strategy which by comparison makes a roll of the dice on the tables of Monte Carlo look like a sure thing. Nevertheless, this system has taken on the form of a squirrel cage. And no one seems to remember how we got in or know how to get us out.

Weapons cannot be transformed into banal economic material because they are not banal economic material. The defence of a nation is one of the few sacred duties of a society, along with such things as the maintenance of justice. You do not sell justice. You do not sell legislative seats. You do not sell off the presidency or the prime ministership. You do not sell officers' commissions. You do not sell the interests of your country. All of these things are basic to the modern democratic state. It goes without saying, therefore, that you do not sell your own defence.

Weapons are an integral part of a nation's defence. Every important strategist from Sun Tzu on makes clear that the best defence is the avoidance of war through superior leadership. Failing that, it is the lighting of a fast war with as little physical damage as possible. The wise nation or alliance, therefore, keeps its weapons to itself in order to maintain whatever advantages they may offer. It refrains absolutely from arming anyone else.

This armed circumspection helps a nation to avoid the sort of large, destructive wars which go on and on. Those are the conflicts which cause great confusion and dangerous instability in the international military balance.

What, then, of the argument that modern weapons are too expensive to be viable unless there are large production runs? And don't large production runs dictate the need to export? The logic is tempting, but only the most narrowly focused creative accountancy has made weapons appear to be a source of profit. Even in the model case of the old Mirage fighter, if you added in the real costs of R and D, of subsidies, of foreign loans, of industrial investment, of foreign policy initiatives, and of training. you would find that a colossal loss had been made. Wheels, however, had been spun. Money had moved around the world. Men had worked and fighters been produced.

For contemporary economists and administrators, the spinning of wheels may well provide the illusion of economic development. However, the sensible thing to do would be to remove weapons production from the economic sector and put it back where most of It used to be -- in the public domain. Until 1914 the history of weaponry was dominated by royal and state arsenals and shipyards. In that context weapons can be treated with the financial disinterest they deserve. They are the unfortunate tools of statehood and the state should assume straightforward responsibility for them. The taxpayer is paying now anyway. So why not eliminate the enormous extra costs created by pretending that arms are capital goods produced in the marketplace for buyers?

The alienation of Western citizenries from their own defence has been one of the most confusing public dramas of the last quarter century. Why did the democracies abruptly decide that they were no longer capable of assuming the costs of their own defence? What had so radically changed in the history of nations? Or in economic principles?

Nothing fundamental had changed. However, a crowd of fresh and clever technocrats had arrived in the American public service from such places as the automobile industry at the same time that a new generation of technocrats took over key positions in France. Their confidence in their new administrative methods had made them believe they could turn weapons into capital goods and make a profit for the government out of national defence.

There is nothing so tempting as alchemy. Every man would like to believe that he has the talent to make gold out of base metal. And the rational approach does result in a sort of alchemy. Weapons are declared to be capital goods. An economic structure is built in order to solidify what is no more than an assertion. The economy is then run as though weapons had changed their fundamental character. It hardly seems to matter that the economy doesn't respond to this new truth. The system is complete and therefore from within seems able to survive any failure. We now have enormous infrastructures dependent on continued weapons sales and so, in the face of continuing economic difficulties, our elites go on repeating all the while that their system works: sales make jobs, sales earn foreign exchange, sales justify Rand D, sales pay for weapons at home, sales are a proof of foreign influence. None of this is true, but it doesn't matter. Our elites are convinced that it must be true.

This is modern rhetoric in action. The rise of an armaments-dependent economy demonstrates with clarity how reason at its most sophisticated tends to work. The historic and intellectual evolution from Machiavelli, Bacon, Loyola and Richelieu through to McNamara is perfectly integrated. The resulting elite, which answers rather than asks questions and depends on systems, is at its most impressive. Secrecy, raison d'etat, the marriage between reason and nationalism, between amorality and the disappearance of personal responsibility -- all of these typically rational characteristics are present. In the absence of common sense mechanisms, we are unable to imagine how we might go about changing the situation.

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