Some sources divide the history of the United States military–industrial complex into three eras.
First era From 1797 to 1941, the U.S. government only relied on civilian industries while the country was actually at war. The government owned their own shipyards and weapons manufacturing facilities which they relied on through
World War I. With World War II came a massive shift in the way that the U.S. government armed the military. In World War II, the U.S. President
Franklin D. Roosevelt established the
War Production Board to coordinate civilian industries and shift them into wartime production. Arms production in the U.S. went from around one percent of annual
Gross domestic product (GDP) to 40 percent of GDP.
John Kenneth Galbraith said that he and others quoted Eisenhower's farewell address for the "flank protection it provided" when criticizing military power given Eisenhower's "impeccably conservative" reputation. Following Eisenhower's address, the term became a staple of American political and sociological discourse. Many
Vietnam War–era activists and polemicists, such as
Seymour Melman and
Noam Chomsky employed the concept in their criticism of U.S. foreign policy, while other academics and policymakers found it to be a useful analytical framework. Although the MIC was bound up in its origins with the bipolar international environment of the Cold War, some contended that the MIC might endure under different geopolitical conditions (for example,
George F. Kennan wrote in 1987 that "were the Soviet Union to sink tomorrow under the waters of the ocean, the American military–industrial complex would have to remain, substantially unchanged, until some other adversary could be invented."). The collapse of the Soviet Union and the resultant decrease in global military spending (the so-called '
peace dividend') did in fact lead to decreases in defense industrial output and consolidation among major arms producers, although global expenditures rose again following the
September 11 attacks and the ensuing "
War on terror", as well as the more recent increase in geopolitical tensions associated with strategic competition between the United States,
Russia, and
China. In 1993, the Pentagon urged defense contractors to consolidate due to the fall of communism and a shrinking defense budget. over Pentagon contracts. This represents a shift in defense strategy away from the procurement of more armaments and toward an increasing role of technologies like cloud computing and cybersecurity in military affairs. From 2019 to 2022,
venture capital funding for defense technologies doubled.
Spending concerns Concerns over the economic burden of defense feature prominently in ideas of
American decline.
Paul Kennedy said in
The Rise and Fall of the Great Powers that the debate over the proper level of defense spending is highly controversial in America and that the evidence doesn't point simply in one direction. According to
Seymour Melman, the U.S. military–industrial complex has had a large
opportunity cost to the detriment of civilian industry. Scholars such as Melman and
Lloyd J. Dumas hold that military spending consumes resources that could instead contribute to economic growth.
Proxmire William Proxmire was the chief advocate for the idea of the military-industrial complex as an unaccountable bureaucracy that wastes resources in order to turn a profit. He achieved prominence in this role in 1968 when he was featured on the front page of the
New York Times after giving a press conference where he named 23 defense contractors who he said were engaged in "shocking abuse". Proxmire was quoted as saying: "I think this is an excellent example of the military industrial complex at work, with the victim being... the taxpayer".
James Ledbetter said that Proxmire's attacks on the military-industrial complex were interpreted as a proxy for opposition to the
Vietnam War. Proxmire said that the
C-5A Galaxy jet was "one of the greatest fiscal disasters in the history of military contracting." He secured the testimony of
U.S. Air Force whistleblower
A. Ernest Fitzgerald before Congress. Fitzgerald testified in 1968 that
cost overruns on the C-5A would reach $2 billion (equivalent to $ billion in ) due to underestimation of costs, ineffective cost controls, and
perverse incentives inherent in the repricing formula of the contract. The Air Force responded by saying that the actual overrun was half what Fitzgerald claimed. Proxmire said the Air Force was concealing the full extent of the overrun and pressed the
Government Accountability Office to investigate the entire project.
Military subsidy theory A debate exists between two schools of thought concerning the effect of U.S. military spending on U.S. civilian industry. Eugene Gholz of
UT Austin said that Cold War military spending on aircraft, electronics, communications, and computers has been credited with indirect technological and financial benefits for the associated civilian industries. This contrasts with the idea that
military research threatens to
crowd out commercial innovation. Gholz said that the U.S. government intentionally overpaid for military aircraft to hide a subsidy to the commercial aircraft industry. He presents development of the military
Boeing KC-135 Stratotanker alongside the
Boeing 707 civilian jetliner as the canonical example of this idea. However, he said that the actual benefits that accrued to the Boeing 707 from the KC-135 program were minimal and that Boeing's image as an arms maker hampered commercial sales. He said that
Convair's involvement in military aircraft led it to make disastrous decisions on the commercial side of its business. Gholz concluded that military spending fails to explain the competitiveness of the American commercial aircraft industry. Some scholars say that it suggests the existence of a conspiracy.
David S. Rohde compares its use in U.S. politics by
liberals to that of the phrase
deep state by
conservatives. ==Russia==