Adjusted for inflation, The United States defense budget has multiplied by sixty over the last century. This article reflects on the development of the Department of Defense and the early impacts of America’s permanent wartime economy.
Part I: Intent, Construction, and Development
Upon completion of his second term in 1961, President Dwight D. Eisenhower delivered a dark yet eloquent warning of the Department of Defense’s worrying relationship with the private sector:
“Our military organization today bears little relation to that known by any of my predecessors in peacetime, or indeed by the fighting men of World War II or Korea… In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist…We must never let the weight of this combination endanger our liberties or democratic processes…Only an alert and knowledgeable citizenry can compel the proper meshing of huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.”
Eisenhower’s Farewell Address foreshadows the seemingly contradicting roles of the United States throughout the remainder of the century as a beacon of liberty yet wielder of destruction. As the Cold War ensued, Eisenhower knew that the United States military would only expand to secure American interests abroad. Furthermore, he recognized the dangers of excessive military spending and feared this power being vested unto his successors. He claimed that “only an alert and knowledgeable citizenry” can regulate this awesome power; thus, he urged citizens to understand the military-industrial complex and monitor the government’s actions. However, to fully realize the initial intent, construction, and development of the Pentagon, one must first understand the defining events of its early conception, namely, the Great Depression, the Second World War, and the Korean War. Specifically, one must understand the solution which the United States implemented to address these unprecedented crises: federal spending. Throughout this essay, prices account for inflation and are be presented in USD as valued in the year 2000.
Throughout the 1930s, the globe faced the unprecedented economic crisis that would become known as the Great Depression. As a result, every powerful nation on Earth expanded its governmental reach to assist the failing economy in a system that Noam Chomsky describes as “a special form of economic arrangement with state coordination of unions and corporations.” In the United States, this took the form of the New Deal: a set of welfare policies that coordinated sectors of the US economy to address the rising unemployment and poverty rate. Federal spending rapidly increased in this period, though only once exceeded $10 billion in the 1930s. Although the New Deal assisted and inspired the struggling American workforce, it had a relatively small impact on the economy. By 1939, the Depression was approximately at the same point as in 1932.
However, the 1940s witnessed two momentous events; the Second World War and the creation of the Pentagon. Before 1941, the government relied solely on the private sector for weaponry only in times of war. There was no armaments industry; instead, companies such as Ford would quickly mobilize and begin temporarily creating products for the military. However, the Second World War began to change this dynamic. The United States gradually transitioned its Keynesian spending model from prioritizing social to military spending. In this timeframe, defense spending raised from $16.69 billion in 1940 to $716.24 billion in 1945, the highest point in the twentieth century when accounting for inflation (as the numbers presented do). This stimulus (among many other factors) enabled the United States to acquire over half of the world’s wealth by the war’s end. It also created the most expansive military in human history.
Following World War II, American defense spending rapidly declined from over $716 billion in 1945 to only $66 billion in 1948. The reason was likely America’s lack of necessity or justification for an even more powerful military. However, the post-Depression economy had become dependent on the stimulus of government funding. The widespread presumption was that the United States could return to the Depression without some sort of “Keynesian stimulus” to the economy, i.e., the government funneling massive amounts of public funds into certain industries. Therefore, Washington had to decide on whether to pursue military or social spending. They chose to increase military spending for two fundamental reasons.
Firstly, the United States economy faced a growing threat in the international rejection of free trade. Nations such as those affiliated with the Soviet Union increasingly rejected the presence of powerful American companies in their domestic industries – namely because corporations would utilize their workforce and resources while shipping profits overseas to the United States. Washington heavily considered this threat to American economic dominance as they decided to stimulate the economy through military (rather than social) spending. With an expansive and consistently updated national military, the United States government could effectively launch armed campaigns in foreign nations to protect and secure American interests.
Secondly, the wealthy nation hosted a demand for new technological products such as refrigerators, radios, and televisions. Through the Pentagon, public funds are handed over to private companies in high-tech industries for the research and development of military technology. However, many innovations funded by the Pentagon were further developed, tested, and marketed to be also sold privately to the public – thus generating enormous profits for private corporations, providing wealthier Americans with the products they desire, and, most importantly, stimulating the US economy. Even today, virtually all American industries that are internationally competitive have received some subsidy or aid from the United States government.
Thus, in 1947, President Truman signed the National Security Act of 1947, creating a unified military command and vastly expanding the nation’s armed forces. He cited the wasteful military spending before World War II and the danger of improvising in wartime as the reasons to establish a permanent wartime economy. This dynamic would ensure a steady expansion of the nation’s military, a consistent paycheck to those in the military and high tech industries, and technological innovation which could someday be sold privately to the public. Almost immediately, heated controversy arose over the creation of the Pentagon. Critics feared that the Department of Defense would establish a new tone of militarism in the United States and consolidate a dangerous amount of military power to the executive. Nevertheless, the Department of Defense was formally created in 1949, and wartime military spending continued. American military spending gradually increased to $268 billion in 1953 – coinciding with another major conflict that would forever change American foreign relations and military spending: the Korean War.
Upon the conclusion of World War II, the previously occupied Korean Peninsula was divided into two independent nations along the 38th parallel. This division, intended to be temporary, was problematic as the North was to be occupied by the Red Army and the South by the Americans. As tensions built between the Communist and capitalist worlds, the Korean Peninsula became the first of many terrains to host a US-Soviet proxy war. After the Northern forces (backed by Communist China) launched an invasion of the South, President Truman declared a United Nations military operation in the Korean Peninsula to defend interests in the region. However, in time, the war became offensive for the West as they became determined to unify the Korean Peninsula under capitalist leadership.
During the Korean War, the United States utilized a “Scorched Earth” policy in which the US dropped more bombs on Korea than have been shot in the entire Pacific theater throughout World War II. As a result, nearly 4 million Korean and Chinese individuals were killed, wounded, or missing, many of whom were civilians. Furthermore, the Korean War further advanced the consolidation of power unto the executive as President Truman had successfully launched a military campaign without Congressional approval. Most importantly, the Korean War reinforced the Cold War mentality that perceived Communist nations as direct threats to the United States. This widespread fear of the Soviets enabled the Pentagon to gradually increase military spending throughout the Cold War without taxpayers questioning the dynamic or advocating for more social (rather than military) spending.
In the year which Eisenhower delivered his Farewell Address (1961), the Pentagon had funneled over $221 billion into the military; considerably less than was annually spent during the Korean War, but still over twenty times more than the yearly average throughout the 1930s (when accounting for inflation). This number exponentially increased throughout the remainder of the century to fund military operations across the globe and residually develop military technology that could be modified and sold commercially. After nearly seventy years of spending no less than $200 billion annually on defense, the United States still holds global supremacy and the most significant military in human history. Residually, we now have the internet, computers, GPS, and other forms of high technology which have been developed from the military to be sold commercially.
However, these advances in American society have come at high financial and moral costs. Firstly, the tens of trillions of dollars spent on defense in the last century far exceed our military necessity. According to the Stockholm International Peace Research Institute Military Expenditure Database, the United States spent almost as much on its military in 2018 as the next eight largest-spending countries combined. Necessity is incredibly important when deciding our budget priorities as taxpayer money could otherwise be spent on social initiatives to redistribute wealth, advance healthcare and education, and further democratize American society. Furthermore, our expansive military has been utilized throughout the past century to perpetuate conflict across the globe. The sheer number of civilian casualties throughout World War II and the Korean War alone exemplify the incredible danger of excessive militarism practiced by powerful state-capitalist nations. Before only ten years after the Pentagon’s conception, American militarism had already been reflected in the nation’s foreign policy, economic functioning, domestic attitude, and governmental procedures.
Chomsky, Noam. “The Military-Industrial Complex.” Understanding Power:
The Indispensable Chomsky, The New Press, 2003, pp. 70-76.
Eisenhower, Dwight D. “Military-Industrial Complex Speech, “Farewell Address. 1961.
Green, John. “The Cold War in Asia: Crash Course US History #38,” PBS. 15 Nov. 2013.
Roser, Max, and Mohamed Nagdy. “Military Spending.” Our World in Data, 3 Aug. 2013
“SIPRI Military Expenditure Database.” Stockholm International Peace Research Institute,