Workers World, Vol. 19, No. 47
December 5 – It is a rare occasion indeed when a luminary of the capitalist establishment steps forward and allows us a peek into the inner workings and problems between the military-industrial complex and the bourgeois state. Such a rare opportunity was afforded when the Wall Street Journal on Nov. 25 published a quarter of a page by the chairman and chief executive of the Northrop Corporation, Thomas V. Jones.
It is not one of those articles one would readily anticipate in this organ of high finance and industry, which almost always attacks the administration in power for not serving big business well enough.
Jones’ article, on the contrary, is something in the nature of a critique of the relations between the defense industry and government. Rather than go over the tedious road of lambasting the government bureaucracy for “inefficiency” and “red tape” and lack of “sensitivity” to the interests of the industry, he takes a rather extraordinary view of the relations between the government and the defense industry. His article is in the nature of ruling class self-criticism.
This of course is generally done only in times of impending crisis. And then, to lend it credibility, the so-called criticism is done by someone actually from the establishment itself.
The relationship between the defense industry and the capitalist state is a most sensitive and delicate matter. Hence Jones, who represents a sort of medium-sized corporation in the military-industrial complex, tries to deal with the matter by the use of euphemism and light, gentle touches on the crucial issue troubling them.
“The most serious flaw,” he says, “that has developed in the relationship between the government and the defense industry is an insufficient respect for the binding nature of the contract.”
Just what is he saying here? By the most serious flaw, he means that an acute contradiction in the relationship between the military-industrial complex and the capitalist sate has become extremely aggravated.
It manifests itself in the form of a breach of the holy of holies – respect for the nature of a binding contract. The defense industrialists do not abide by the contract they sign with the government! Further, he says, “the sanctity of the contract between the government and the manufacturer must be understood and believed in by both sides.” But they don’t do it!
This may seem like a repetition of the commonplace knowledge that the government and the industrialists don’t abide by the rules that they themselves make. But actually what is involved here goes far beyond a commonplace criticism against either the industry or the government. What is involved is not a mere violation of individual contracts.
It takes a long, tedious and complicated process for a military appropriations bill to go through. First come endless committee hearings, then a vote in both houses of Congress, next a conference committee works out a compromise bill that can be accepted by the full Congress, and finally it will be signed by the President. But when contracts are finally awarded, “both sides,” Jones says, meaning the industry and the government, go on to “make changes in the program before the ink had dried on the contract, without defining the scope of those changes and negotiating their effect on the terms of the contract.”
In other words, if the money is appropriated for a certain military program, be it the neutron bomb, the ABM, the B-1, or the Trident submarine, the government and the prime defense contractor, on their own, continually make such substantial changes in the terms and even in the ultimate product produced as to make it ultimately almost unrecognizable!
This in turn results in what has become an everyday word in the industry – monumental “cost overruns.” Trying to be as inoffensive as he can, Jones avoids giving specific examples which literally stare one in the face, examples too well known not to be mentioned. Such an example, for instance, is the Trident submarine cost overrun which is now calculated to be over $400 million. Nor does he mention another illuminating example of what he means by cost overruns: the contract between the Air Force and the industry for the production of the C-5 transport plane, which had a cost overrun of $2 billion! These are merely some of the more publicized of the many, many examples which pile up day by day and keep ballooning.
This enormous waste is to be very much distinguished from the waste in military expenditures in previous historical epochs. A measure of its extent is given by Jones himself when he says that “during the last 10 years, excessive costs have wiped out as much as 30 percent of the aircraft, ships, tanks, and other major weapons that the Department of Defense had planned to acquire.” He says that “seven key aircraft programs, which were originally planned to provide 3,200 aircraft, will actually only deliver 2,200 aircraft.” And that “the U.S. taxpayer will pay 25 percent more than originally planned and get a thousand fewer aircraft in the armed forces.”
But since the Pentagon says it actually needs 3,200 aircraft, then 1,000 that were not produced will have to be produced under the terms of the new costs!
This development is an altogether new phenomenon, altogether uncharacteristic of the earlier stage of capitalism and its military problems of procurement and manufacturing. It also has no precedent in the ancient feudal or slave holding modes of production where military equipment and procurement were also a problem. Liberal apologists for capitalism seek to erase or obliterate the difference between the problems which plague earlier systems of class exploitation and those of the present monopoly stage.
The difference is fundamental. Mismanagement, corruption, waste, inefficiency, favoritism, nepotism, bribery, and conflicts of interest between individuals and the state as such characterized all the stages in the development of the various modes of production based upon exploitation and so the purchase of military equipment and its procurement were also problems. Especially severe in the capitalist stage of development, these have become downright grotesque in recent years as the huge sums involved in the Lockheed scandal and others revealed.
But by and large, corruption, bribery, and so on, are not really the great impediment to the functioning of the capitalist system they are thought to be, even in the monopoly stage. On the contrary, bribery and corruption often smooth the way for huge sales, that is, they smooth the process of the realization of surplus value and in that sense are functional for the capitalist system. Of course, when the ruling class is forced to publicize this, they do risk popular upheavals within the system and the wrath especially of the masses.
But bribery and corruption, even on the Lockheed scale, run merely into the millions – five, ten, twenty, maybe even a hundred million. It is altogether different with cost overruns. They run into the billions and, unlike bribery and corruption, do not smooth the way for the realization of surplus value but on the contrary are self-propelling, built-in destabilizers which generate such a magnitude of inflation as to lead to explosive developments within the system and retard the productive forces.
In the ordinary course of capitalist business enterprise, a contract between corporation A and corporation B, not withstanding the prevalence of fraud, bribery, mismanagement, and corruption, nevertheless must be abided by. The function of the capitalist judicial system is to see to it that there is “honor among thieves.” Thus, in a general way, with the qualifications mentioned above, contracts are entered into and performed and obligations carried out.
Thus, if corporation A orders a crane to be built and delivered weighing 30 tons and costing $100,000, it is anticipated that upon completion of the building of the crane and its delivery on time, it will weigh 30 tons, cost $100,000, and be in accordance with the specifications ordered. The capitalist courts are there to see to it that, in spite of the qualifications made above, the deal is carried out.
But it is otherwise in the relationship between the military-industrial complex (the prime defense contractors) and the capitalist government. As stated earlier, no sooner has the ink dried on the contract than the parties to it – the government and the defense contractor – seek to alter it beyond recognition. The result is an utterly uncontrollable ballooning of the costs and an enormous swelling of the government budget.
Of course, there are laws which often compel prime contractors to renegotiate the contracts when the cost overruns lead to unbelievably flagrant violations. But the renegotiations are then usually carried out by the same people who negotiated the original contract.
The process described above is not the result of mismanagement, nepotism, mere corruption, or the much-cited conflict of interest. It is the result of the “natural” operation of the law of capitalist accumulation in the period of monopoly state capitalism, when the capitalist state is so thoroughly fused with industry and finance as to make it impossible for the law of value of the pre-monopolist period to operate in the old way, except in a thoroughly distorted manner. It means driving the malady that plagues it deeper into the system.
That explains the impossibility of ridding the system of inflation, extortionate price increases, and the decay of industries which are less favored than the military-industrial complex. These moreover used to be the backbone of urban development and technological progress, resulting in lower, not higher, prices.
Bourgeois liberal critics of the Pentagon and the military-industrial complex do not view the current disease plaguing capitalist militarism as endemic to the contemporary imperialist epoch. It would seem to many of them that the cost overruns are just a gargantuan modern rerun of the old-time practice of selling the government faulty rifles, cannons that would not fire or millions of rounds of ammunition that never arrived because of fraud. They fail to see that the cost overruns are an utterly new phenomenon that grows out of a specific relationship between the huge transnational corporations and the capitalist state they are fused with, giving the former free reign and leading inevitably to one of those spontaneous economic catastrophes or political adventures of a military character which, in either case, is beyond the control of the capitalists themselves.
Last updated: 11 May 2026