SECTION 2 - DISARMAMENT AND THE ECONOMY
In this section we shall briefly examine some of the common features of the
studies that have been published dealing with one or another aspect of the
expected impact of disarmament on the American economy. Whether
disarmament is considered as a by-product of peace or as its precondition, its
effect on the national economy will in either case be the most immediately felt
of its consequences. The quasi-mensurable quality of economic manifestations
has given rise to more detailed speculation in this area than in any other.
General agreement prevails in respect to the more important economic problems
that general disarmament would raise. A short survey of these problems, rather
than a detailed critique of their comparative significance, is sufficient for our
purposes in this Report.
The first factor is that of size. The "world war industry," as one writer has aptly
called it, accounts for approximately a tenth of the output of the world's total
economy. Although this figure is subject to fluctuation, the causes of which are
themselves subject to regional variation, it tends to hold fairly steady. The
United States, as the world's richest nation, not only accounts for the largest
single share of this expense, currently upward of $60 billion a year, but also
"...has devoted a higher proportion [emphasis added] of its gross national
product to its military establishment than any other major free world nation.
This was true even before our increased expenditures in Southeast Asia." Plans
for economic conversion that minimize the economic magnitude of the problem
do so only by rationalizing, however persuasively, the maintenance of a
substantial residual military budget under some euphemized classification.
Conversion of military expenditures to other purposes entails a number of
difficulties. The most serious stems from the degree of rigid specialization that
characterizes modern war production, best exemplified in nuclear and missile
technology. This constituted no fundamental problem after World War II, nor
did the question of free-market consumer demand for "conventional" items of
consumption---those good and services consumers had already been
conditioned to require. Today's situation is qualitatively different in both
respects.
This inflexibility is geographical and occupational, as well as industrial, a fact
which has led most analysts of the economic impact of disarmament to focus
their attention on phased plans for the relocation of war industry personnel and
capital installations as much as on proposals for developing new patterns of
consumption. One serious flaw common to such plans is the kind called in the
In this section we shall briefly examine some of the common features of the
studies that have been published dealing with one or another aspect of the
expected impact of disarmament on the American economy. Whether
disarmament is considered as a by-product of peace or as its precondition, its
effect on the national economy will in either case be the most immediately felt
of its consequences. The quasi-mensurable quality of economic manifestations
has given rise to more detailed speculation in this area than in any other.
General agreement prevails in respect to the more important economic problems
that general disarmament would raise. A short survey of these problems, rather
than a detailed critique of their comparative significance, is sufficient for our
purposes in this Report.
The first factor is that of size. The "world war industry," as one writer has aptly
called it, accounts for approximately a tenth of the output of the world's total
economy. Although this figure is subject to fluctuation, the causes of which are
themselves subject to regional variation, it tends to hold fairly steady. The
United States, as the world's richest nation, not only accounts for the largest
single share of this expense, currently upward of $60 billion a year, but also
"...has devoted a higher proportion [emphasis added] of its gross national
product to its military establishment than any other major free world nation.
This was true even before our increased expenditures in Southeast Asia." Plans
for economic conversion that minimize the economic magnitude of the problem
do so only by rationalizing, however persuasively, the maintenance of a
substantial residual military budget under some euphemized classification.
Conversion of military expenditures to other purposes entails a number of
difficulties. The most serious stems from the degree of rigid specialization that
characterizes modern war production, best exemplified in nuclear and missile
technology. This constituted no fundamental problem after World War II, nor
did the question of free-market consumer demand for "conventional" items of
consumption---those good and services consumers had already been
conditioned to require. Today's situation is qualitatively different in both
respects.
This inflexibility is geographical and occupational, as well as industrial, a fact
which has led most analysts of the economic impact of disarmament to focus
their attention on phased plans for the relocation of war industry personnel and
capital installations as much as on proposals for developing new patterns of
consumption. One serious flaw common to such plans is the kind called in the
