Monday, July 4, 2016

Federalist No. 8: Alexander Hamilton's Warning on the Military-Industrial Complex

Tucked away in the middle of Federalist No. 8 (paragraph 8, to be precise) lies an interesting observation about the nature of human society, that commercial relations themselves inevitably lead to the creation of a military-industrial complex. This point is an easy one to miss as it is not central to the Alexander Hamilton's overarching theme in the essay. Hamilton brings it in as a historical aside to answer an objection to his central argument, that history teaches us that the proximity of the newly independent states to each other will eventually lead to both internecine warfare between those same states and such a state of constant war will deprive Americans of their newly won freedoms.

Hamilton's main argument plays out in a very straightforward manner. Unless a nation has strong natural barriers to invasion by foreign powers, such as the islands of Great Britain which are physically separated from mainland Europe, the armies of modern nations are able to quickly penetrate and occupy the lands of their neighbors. This naturally leads to overtly martial policies such as standing armies. Once one nation keeps a standing army, neighboring countries then feel obligated to follow suit in case the first nation should use its army offensively. This eventually leads to militarization of the entire continent which, in turn, leads every nation into a constant crisis of security. This perpetual state of fear, in turn, leads to legislative bodies turning over more and more power to the chief executive (whether monarch or elected official) for the sake of expediency in keeping the nation safe in a time of imminent peril.

In making this argument, Hamilton entertains an objection that might be made by some of his interlocutors in the fight to ratify the Constitution, that a constant state of war and security threats might not lead to standing armies and fewer freedoms. There is, after all, the example of ancient Greece and its soldier-citizens. These city-states of ancient Greece, the Antifederalists would argue, not only existed in a state of more or less perpetual war but they also did so without keeping standing armies. Moreover, they were the very inventors of democracy and were the first culture to pursue the very sort of liberty upon which the new nation considered itself to be founded. So why did the city-states of ancient Greece not have standing armies?

Hamilton’s reply to this question is well worth considering. “The means of revenue, which have been so greatly multiplied by the increase of gold and silver and of the arts of industry, and the science of finance, which is the offspring of modern times, concurring with the habits of nations, have produced an entire revolution in the system of war, and have rendered disciplined armies, distinct from the body of the citizens, the inseparable companions of frequent hostility.” Prosperity (“the increase of gold and silver”) and industrial productivity (“the arts of industry”) along with the modern invention of “the science of finance” makes the modern world different in kind than the city-states of yesteryear. The marriage of industrial capacity with the mechanisms of modern finance, he argues, make for the inevitability of “disciplined armies” which are “distinct from the body of the citizens”. In other words, the historical progression of human society has brought the world to a point where a military-industrial complex is a natural outgrowth of society.

Hamilton did not drill down into the specifics, but anyone aware of his studies in the financial realm - his seminal Report of the Bank of England would be presented to Congress within two years of the US Constitution being ratified - and his admiration for the way that the Bank of England allowed the British Empire to fund its vast colonial enterprises can understand why he would be of this particular opinion. A truism that many people do not understand about wealth is that it is less about how wealth is measured not by one’s financial assets but by the assets one controls. 18th century Britain’s permanent debt magnified the financial power of Britain far beyond that of its adversaries giving it the ability to create its formidable standing navy and plow seemingly unlimited funds into the technological research and production of sophisticated weapons of warfare. And given the view of international relations as a war of all against all, creating exactly that sort of symbiosis between finance, industry, and the armed forces was a necessity for Britain to continue to exist.

In his day, Hamilton was hoping that the expanse of the Atlantic Ocean separating newly formed United States of America from its political adversaries to blunt the growth of the military industrial complex. His concern in Federalist 8 was more about a weak federal government hastening such a development because the various states would see each other as military rivals instead of being incorporated into a single union. Less than a hundred years later his concern would come to full fruition as the US Civil War pit north against south to drive earth shattering developments in warfare in a very short amount of time: the Gatling gun, the repeating rifle, submarines, aerial warfare by means of balloons, etc. Nothing drives military advancements as fast as an industrial base in a nation with a strong financial sector and close by enemies.

Two hundred years after the Civil War began Dwight Eisenhower addressed the military industrial complex in his famous 1961 speech. He was a bit off the mark in observing that such a “conjunction of an immense military establishment and a large arms industry is new in the American experience.” But he was certainly correct that “The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government.” He did not see its growth as a natural development like Hamilton but he did recognize an “imperative need for this development.” Like Hamilton, he was concerned that it would present a danger to American freedoms. He exhorted US citizens that “we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.”