Eisenhower was going to call this new animal the “military-industrial-congressional complex,” which most would agree today is a pretty accurate description of the system since it includes all the players. But the outgoing president, apparently worried about political blowback, deleted “congressional,” leaving us with the more sinister –and aurally compelling — term.
But the “complex” that Ike warned us about had yet to be established. Instead, his warning actually helped create the very system he warned against. The answer to Ike’s warning was to reign in the services with centralization and put controls on the industrial base. The 1958 Defense Reorganization Act (passed prior to the speech but caught up in this whole post-Sputnik craziness) was the gateway legislation that paved the way for the Soviet-inspired Planning, Programming, and Budgeting System (PPBS) which governs American defense planning and budgeting to this day. That was followed by the Truth in Negotiations Act in 1962. PPBS (now known as PPBE) helped the Pentagon and Congress do a better job of creating earmarks and TINA led to a unique oversight system that placed barriers in the way of anyone who was not already part of the defense industry. All of this helped drive out experimentation and prototyping and locked in the incumbents.
That was from Bill Greenwalt, Ike Was Wrong: The Military-Industrial-Congressional Complex Turns 60. He argues that false claims of a “missile gap” after sputnik and Ike’s farewell address where he calls out the military-industrial complex led to the destruction of a production defense acquisition system. These two failings, one technological and one political, created a great drive for centralization, excess bureaucracy, and handing the keys to the kingdom over to congress for their own self-interested ends.
I tend to see it a little differently. For me, the Great Depression “proved” to economists and elites that markets did not work. Throughout WWII and the postwar years, it was the height of fashion to discuss how redundant and wastefully competitive the military services were. The 1958 reorganization act and the PPBS in 1961 simply followed the existing trends from the 1953 reorganization act (which killed democratic board/committee structures and replaced them with assistant secretaries of defense), from the 1949 National Security Act Amendment (which increased SecDef power and gave him the performance budget, an early model of the PPBS), and the from the 1947 National Security Act (which of course created the National Military Establishment under a SecDef).
So I don’t blame Ike. Indeed, the PPBS guys at RAND saw Ike’s presidency has completely lacking in his willingness to do what all the elites wanted: rationalize the services under a socialist central planning scheme. If you showed the PPBS to top socialist economists in the 1930s like Abba Lerner, the socialists would have been impressed and perhaps envious of the PPBS.
I’ll make one last point the excellent Mark Mandeles made to me: The military-industrial complex wasn’t warning about technological and military efficiency, but that the complex would take over the American political system. Maybe the political system was in danger of losing control to big defense primes and military generals, and without the speech there would have been something like a “coup”. But from hindsight, that seems unlikely. The real danger was losing industrial innovativeness. Without a doubt, the years following Eisenhower led to an enormous destruction of value creation and industrial potential.
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