Production d'armes et puissance des nations (review)

Production d'armes et puissance des nations. By Renaud Bellais. Paris and Montréal: Éditions L'Harmattan, 1999. Pp. 221. Fr 130.

In 1987-88 the money spent in defense budgets on this planet exceeded one trillion dollars. Since the collapse of the Soviet Empire and the end of the cold war, this figure has begun to shrink, but it remains high and has revived a debate on the usefulness of military spending for national economies and technological development. The two classical poles of the debate are represented by Werner Sombart, with his view of the positive impetus of war to the development of capitalism, and John Ulric Nef, who argued that war and military spending have had a negative effect on the economy and technological dynamism. Reynaud Bellais, the author of the work reviewed here, is an economist at a research center studying industrial restructuring and innovation in the university at Dunkerque, and he believes that this debate has been informed more by moral than economic considerations. By looking at the problem from a purely economic viewpoint, he is led to the paradoxical conclusion that spending on the military, and particularly military research and development, requires a separate analysis that falls outside the domain of classical liberal economic theory.

For soldiers, unlike businessmen, national security is more important than profit; reliability and performance are more important than cost. Consequently they are willing to pay a premium for technologies that would, initially at least, not be viable in a free market. The attitude of the military toward technology is, in the author's word, "schizophrenic." On the one hand, they have an evolutionary view of technology that favors continual small improvements of their weaponry that lead to Mary Kaldor's "baroque arsenal," which falls behind civilian developments in the same fields; on the other hand, in times of crisis or when there is a perception that they may be badly lagging potential enemies, the military is more willing than its civilian counterparts to engage in revolutionary research. Both attitudes are costly to the taxpayer and lead to defense industries that differ fundamentally in their business practices and research policies from other enterprises in the national economy. Modern defense industries effectively receive a "rent" in economic terms from complaisant soldiers and politicians with deep pockets who need to keep them healthy for the noneconomic reasons of national security. At the same time, these industries build up research and development capital that is proportionately greater than that of civilian industries, which play by the usual economic rules and think in more immediate terms of profits and shareholders.

For Bellais, the view that military research and spending is beneficial to the civilian economy because of its "spinoffs" is too simplistic. In the short term there is little evidence to support it. In the long term the evidence is much stronger. But even here it depends on conditions favoring the integration of this research into the civilian economy. Only economic crises spur civilian industry to dip into the rich store of military research. It is also in periods of cutbacks and shrinking budgets that defense industries think of converting their know-how to civilian purposes, but then they are hampered by structures and attitudes that are dysfunctional in the civilian market place. Only now are Americans benefiting from military investment in computers and electronics of the 1940s and 1950s, and this is because of the economic stagnation of the 1970s and 1980s that goaded civilian companies to profit from it. In the post-cold war world, when their own industries have gone into decline, defense contractors are looking to follow their lead.

In the last part of the book, Bellais discusses possible passageways from the rich sector of defense research to the civilian market, and he concludes with an interesting thought. In an era of globalization, with the intense pressures of competition pushing for short-term profits and fostering a reluctance to...