What role does defence spending play in a capitalist economy: what would be the costs and “disadvantages” of disarmament? These questions are discussed by Michael Artis in this second article in the series, what’s wrong with capitalism?
the chief aim of this article is to provide an assessment of the economic problems and opportunities which a disarmament agreement would present to Britain. Nevertheless, a good deal will be said, in the course of the analysis, of the role which defence production plays in the American economy, since both the possibility and the ultimate success of a disarmament agreement depend crucially on American reactions.
Popular thinking on this subject is fraught with contradictions, of which one of the most acute is undoubtedly the conflict between the view that defence is a “burden” and a cause of inflation, and the view that production for defence is essential to the maintenance of full employment. The political implications of this second view have been noted in the local politics of California and the South of England alike; Clive Jenkins, in his recent study Jets and Jobs (published by UDC, 6d.) drew particular attention to an incident in the last General Election. He writes:
In Ian Mikardo’s General Election campaign in Reading an active Labour Party member took reprints from a piece I wrote for Tribune entitled Jobs and Bombs into the Aldermaston Atomic Weapon Centre, had it discussed in the Shop Stewards’ Committee and pinned to the notice board. The Labour candidate in the neighbouring constituency felt it necessary to produce a special leaflet for the atomic plant employees. Why? Because in teabreak discussions throughout the Centre, workers were arguing with anxiety about their employment prospects if bomb manufacture were suspended.
There are other, less obvious arguments about the role of defence production which will be encountered later, but it is sufficient at this stage to try to get a clearer view of its ‘Keynesian’ role.
There are, immediately, two aspects to this role: the first might be called the “general” or national Keynesian role, where production for defence is a guarantor of full employment in the whole economy. The second is a more limited and localised role, where defence production, or the particular way in which it is carried on, is designed to bolster the fortunes of a declining industry or a particular depressed area.