by Christian Sorensen
Writer, Dandelion Salad
January 21, 2021
Capitalism—the system by which a relatively tiny group owns the means of production and enriches themselves through hoarding the workers’ surplus value, transforming the natural world into goods and services—is inherently destructive, exploitative, and polluting. Capital is concentrated in very few hands. The richest one percent own half of the world’s wealth (Frank, CNBC, 14 Nov 2017), and the three wealthiest humans in the United States own more wealth than the bottom fifty percent of the population of the country (Kirsch, Forbes, 9 Nov 2017). This trend of the rich getting richer only accelerated during the COVID-19 pandemic. Billionaire wealth skyrocketed while the masses suffered.
The United States of America is an oligarchy, not a democracy (Gilens & Page, Perspectives on Politics, 2014, pp. 564-581). An oligarchy is a government in which a small group exercises control, especially for corrupt and selfish purposes. Corruption, the inducement of dishonest and destructive behavior for professional or financial gain, is the defining trait of large corporations’ conduct with the federal government. No law or regulation can compete with such corrupting tendencies of capitalism. The theoretical physicist Albert Einstein expressed this problem well in the May 1949 issue of Monthly Review:
“Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of the smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.”
This is the environment in which the war industry operates. U.S. government serves corporate interest. And corporations, by design, strive to maximize profit. U.S. law is written for and manipulated by the U.S. ruling class. Far from constraining the military or industry, U.S. legal code abets war and war profiteering.
The U.S. ruling class deploys the military for three reasons: to forcibly open up countries to foreign investment, to ensure the free flow of natural resources from the global south into the hands of multinational corporations, and because war is profit. The third of these reasons, the profitable nature of war, is often overlooked. But this profitable nature of war is what propels the military-industrial-congressional complex.
The military-industrial-congressional complex (MIC) is an insulated authority consisting of the U.S. military establishment, headquartered in the Pentagon; the war industry, the corporations that market and sell goods and services to the U.S. military establishment and allied capitalist regimes; and Capitol Hill, the elected representatives who fund the military and pass legislation abetting the permanent warfare state.
The U.S. financial industry, including investment banks and private equity firms, is an insatiable force seeking profit via military activity. Investment banks hold the majority of shares in nearly every major war corporation. (The notable exceptions are Sierra Nevada Corporation and General Atomics, two private corporations run by billionaires: Fatih & Eren Ozmen and the Blue Brothers, respectively.) The other way that U.S. finance dominates the war industry is by outright owning war corporations.
By design, the military-industrial-congressional triangle is completely insulated from the U.S. public, particularly from the people aware of class struggle and the profitable nature of war. The tiny sliver within the MIC that possesses a shred of empathy is co-opted and coerced over time to judge military activity in terms of numbers (dollars spent, weapons purchased, bases active, troops deployed) instead of clear soldierly goals.
One study has found that at least one in five CEOs displays “clinically significant levels of psychopathic traits,” as reported by the Telegraph (Pearlman, 13 Sep 2016). The percentage is certainly higher among war industry executives. When trying to determine the extent of an executive’s derangement, weigh their deceit, pretentious misrepresentations, manipulative operations, pomposity, lies, phony charm, and inability to feel remorse. This behavior is seen clearly in how CEOs craftily shirk accountability. When public outrage spiked after the House of Saud, a major customer of the U.S. war industry, murdered Washington Post columnist Jamal Khashoggi, Lockheed Martin’s CEO claimed, “We do business through the U.S. government… We take their lead on what we sell to 70 countries… It’s a matter of following the government’s lead” (Zillman, Fortune, 6 Nov 2018). The CEO of Raytheon International, John Harris, weaseled in a similar manner, saying, “Our role is not to make policy, our role is to comply with it” (Turak, CNBC, 16 Feb 2019). In his October 2018 earnings call, Raytheon CEO Thomas Kennedy also said his war corporation would follow D.C.’s lead, affirming, “I’m pretty confident that we will weather this complexity.” The head of the war industry pressure group NDIA urged Capitol Hill to not overreact (Reinhard, et al., Washington Post. 21 Nov 2018).
The troops—the average soldier, sailor, airman, and Marine—are not part of the MIC. The troops are seen as vessels to use the war industry’s goods and services. The only uniformed military personnel who are part of the MIC are the highest-ranking generals and admirals. The troops themselves enlist in the U.S. Armed Forces largely for economic reasons (though it can be comfortable for them to couch their participation in traditionally patriotic terms), as the military uniform offers one of the few well-paying jobs remaining in an economy that Wall Street and D.C. have systematically gutted using neoliberal economic policies. Neoliberal economic policies decrease government monitoring and regulation of corporate activity; allow free movement of corporate goods and services across borders; cut spending on healthcare, education, and public infrastructure; export and automate jobs; and sell off such government assets and services as schools, transportation, and utilities. Both capitalist political factions, the Republican and Democratic parties, abide by and promote such policies. The U.S. war industry thrives in D.C.’s embrace of neoliberalism.
Calling themselves “defense contractors,” war corporations do more than design and pitch products. They also fabricate, test, qualify, assemble, market, inspect, package, deliver, sustain, maintain, upgrade, monitor, and redesign products. Additionally, war corporations regularly bill their military customers for such services as configuration management, contractor logistics services, data, documentation, engineering, incidental materials, integration, logistics, management, non-recurring production costs, operational security, parts, revitalization, spares, support equipment, technical services, and training.
Though headquartered in Virginia, California, and other parts of the United States, war corporations have no loyalty to the nation. They are loyal to the almighty dollar, Euro, riyal, or any currency that comes their way. The top U.S. war corporations are:
- Lockheed Martin
- Raytheon Technologies
- Boeing “Defense, Space, and Security”
- General Dynamics
- Northrop Grumman
- Huntington Ingalls
- Booz Allen Hamilton
- General Electric
- Amentum (formed when a private equity firm acquired AECOM’s management business; just purchased DynCorp)
These are the main players in profitable war. Omitted from the rankings, some foreign corporations (e.g. London’s BAE Systems, Rome’s Leonardo DRS, Ottawa’s Canadian Commercial Corporation) are deeply tied to the U.S. war industry and are therefore important to acknowledge.
A joint venture (JV) is a partnership between corporations. JVs allow corporations to share expertise and/or pool resources. Prominent JVs in the U.S. war industry include:
- United Launch Alliance: Lockheed Martin and Boeing selling satellite launch services
- Javelin: Raytheon and Lockheed Martin selling portable anti-tank missiles
- Longbow: Northrop Grumman and Lockheed Martin selling fire control radar and missiles (to be used on Boeing’s AH-64 attack helicopter)
- HRL Laboratories: Boeing and General Motors selling R&D on microelectronics and large sensors
- Range Generation Next (RGNext): General Dynamics and Raytheon operating sites where war corporations launch vehicles into space for the government.
Some people think it’s a chicken-or-egg scenario. They argue that it’s difficult to tell which came first—the war industry or the need to go after bad guys around the world. It’s not even a situation where there’s a problem, and the war industry comes up with a solution for the problem. It’s just the opposite: The war industry inflates an issue, avoids addressing the root causes, manufactures weaponry, and markets the weaponry, which the Pentagon purchases for use in military operations. This process is comparable to the process Corporate America uses to get you, a consumer, to purchase a product that you don’t need. The only difference is that the war industry has more direct, incisive forms of marketing, offering goods and services eagerly consumed by a rapacious military establishment.
War corporations market their goods and services as “solutions.” A Raytheon executive, John Harris, explained to the Defense & Aerospace Report in summer, 2018, that engaging “with senior members of government” is just “providing solutions to our customers,” providing “integrated solutions to meet our customers’ needs,” and even “figuring out how we can solve our customers’ problems using a dispassionate system approach.” The “solutions” trick works well when selling to the U.S. military. Booz Allen Hamilton offers digital solutions, CACI offers information solutions, Leidos offers innovative solutions, and Raytheon offers cyber solutions. Through its inherently harmful, anti-democratic activities, the war industry creates the miserable conditions for which it then offers “solutions,” of course without ever taking responsibility for the dismal state of affairs (i.e. nonstop war) that it helped create. “Providing solutions” sounds prettier and more generous than “making money selling death and destruction.” MIC officials also regularly couch D.C.’s imperialism, weapon sales, and war-first foreign policy as giving the troops the “tools they need” to get the job done. Keep your eyes and ears peeled for a similar phrase that industry executives use (“We’ve listened to the warfighter”) when selling goods and services, particularly upgrades and technological insertions.
Corporations regularly invoke “our troops.” Exploitation of the troops is often flagrant. Non-martial corporations are on the record exploiting the troops in advertisements for financial gain—for example, Budweiser is “proud to serve those who serve”; Fritos honors “our nation’s heroes”; and USAA makes billions in annual profits selling insurance and banking services to the troops and military veterans—but war corporations take it to another level. Northrop Grumman has marketed products under the headline, “Protecting SOCOM’s Most Important Asset – Its People.” A major corporation selling military vehicles, says it “builds the world’s best military vehicles because we care most for the people who drive them… No matter where our vehicles serve, our troops will never ride alone.” Another corporation, Peraton, boldly claimed to “protect and promote freedom around the world,” as the ABOUT US tab on the corporation’s website made clear in 2018. These corporations flagrantly position themselves as benevolent or altruistic. If war corporations truly cared about the troops, they wouldn’t lobby and push for policies that end up killing/maiming the troops (see: INFLUENCE, page 8).
War corporations use standard, industry-wide schemes when contracting with the U.S. military. The first scheme is to underestimate the cost when pitching a product. Expenses accumulate, and the final product costs far more than initially estimated. Corporations underestimate cost and overestimate performance as a matter of routine. The second scheme involves incorporating regular upgrades of software and hardware into the product. That way, the war corporation remains involved indefinitely. Technicians service, maintain, and upgrade the product, all at great expense. The third scheme is pushing for noncompetitive contracts. When the Pentagon solicits proposals using an open, competitive bidding process, corporations compete to deliver decent services at the cheapest price. Noncompetitive contracts allow greater profits. Furthermore, many major contracts that are awarded through nominally open and free competition are not open or free; only a handful of corporations have the technology and the financial clout to place a legitimate bid. In order to obtain noncompetitive contracts, corporations masterfully exploit the Federal Acquisition Regulation (FAR), the rulebook that sets out the parameters by which the U.S. government can purchase goods and services. The fourth scheme is piling additional modifications onto a supposedly straightforward contract. Years into a contract with a war corporation, a lone Pentagon official might step back and marvel at how the provision of a simple good has metastasized into a ballooning multiyear project that incorporates disparate services and a variety of funding sources. The fifth and final scheme is the sale of consumables. Products produced by war corporations ought to be repaired. But many industry products are pushed as consumables instead of reparables. In other words: use it, discard it, and then buy a new product, instead of using it and repairing it. In parallel, corporations require many goods sold as reparables to be returned to the corporation within a finite time for scheduled repair, regardless of whether the good actually needs to be repaired at that point. Collectively, these schemes produce contract after contract caring for industry, not necessarily military need.
Eager to maintain and expand its might and breadth, the military side of the MIC happily gobbles up industry’s goods and services. The U.S. military has dozens of different funding buckets to use to pay for goods and services. Popular funds include working capital funds, operations & maintenance funds, procurement funds, and research, development, test, and evaluation funds. The government has a long-standing policy that guides military units of all sizes to spend their budgets by the end of the fiscal year. If units spend all of their money, they are typically allocated the same amount of money or more in the next budget appropriation. However, if they economize, find savings, or do more with less, they likely get their budget cut in the next appropriation. Going by different nicknames over the years, this policy does not incentivize fiscal responsibility.
It gets worse. The Defense Finance & Accounting Service is the military’s primary financial management arm. A 2013 Reuters investigation by Scot Paltrow concluded that DFAS implements monthly “unsubstantiated change actions”—illegal, inaccurate “plugs”—that forcibly make the War Department’s books match Treasury’s books:
“Fudging the accounts with false entries is standard operating procedure… Reuters has found that the Pentagon is largely incapable of keeping track of its vast stores of weapons, ammunition and other supplies; thus it continues to spend money on new supplies it doesn’t need and on storing others long out of date. It has amassed a backlog of more than half a trillion dollars… [H]ow much of that money paid for actual goods and services delivered isn’t known.”
DFAS cooks the books, and the Pentagon’s high-ranking officers and civilian leaders are complicit.
This unconstitutional con has an added bonus: Because the public has no true idea of how much money the Pentagon is wasting, the Pentagon is able to ask Congress every year for more and more money, in brutal contempt of soldierly efficiency and military necessity.
In recent years, the Pentagon has hired Corporate America to audit its books. The U.S. military has yet to pass the audit. The audit is ongoing and quite costly.
Federal departments are encouraged to allocate nearly one quarter of their procurement funds to small businesses. The War Department dishes out more money to small businesses than any other government department or agency. All sides of the MIC are bound symbiotically in the small business game: The Pentagon fast-tracks contracts and militarizes greater portions of the economy, industry gets noncompetitive contracts, and Congress spouts “jobs” rhetoric. Some small businesses are often not small. Small businesses can be quite big, including corporations with over $100 million in contracts with the military or corporations with hundreds of employees. Corporations have been known to hold on to Small Business classification even though they are now larger than “small.” Furthermore, a large corporation can use a smaller subsidiary for contracting as a small business, even though the parent company is a behemoth. Awarding numerous contracts annually to small businesses, genuine or posers, militarizes the economy while shunning competitive bidding, further trapping the country in the costly permanent warfare state.
Secrecy is the MIC’s chainmail. Military and industry classify information (e.g. Confidential, Secret, Top Secret) in order to keep the public ignorant of government criminality, the scope of the surveillance state, the costs of war, MIC incompetence, and fraud, waste, and abuse. Classifying information prevents the public from understanding and acting against entrenched, costly militarism.
Read the full Study Guide.
Christian Sorensen is a novelist and independent journalist. His work focuses on the U.S. war industry. His new book is Understanding the War Industry. Support Christian on Patreon. His website is War Industry Muster.
From the archives:
Christian Sorensen: Brain Drain
Christian Sorensen: Introduction to U.S. Military Contracting Announcements
Christian Sorensen: Military Contract Literacy
The Top Driving Force Behind Wars Is The War Industry, by David Swanson
Christian Sorensen: War Industry Muster–Intro to Foreign Military Sales (FMS)
Christian Sorensen: War Industry Muster–Why Work for the War Industry? + Johns Hopkins University Applied Physics Lab is a Part of the War Industry
Christian Sorensen: War Industry Muster–The Corporate Underpinnings of the Special Relationship
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