Defense industry in transition

By Anak Agung Banyu Perwita

BANDUNG (JP): The 20th century has seen more than its share of economic trauma and devastating war. In many parts of the world, actual progress in improving broad-based economic well-being has fallen far short of aspirations. International arms races have captured the attention and considerable critical economic resources of many of the world's nations.

Since the mid-1980s, "new thinkings" have begun to set the agenda of the security-military debate in world politics. These new thoughts include the need to divert military industry into economic welfare industry.

In the last decade of this century, the prospects for improving this state of affairs have dramatically improved. Political changes and a wider readiness to consider new economic possibilities have created a climate in which the centuries-old dream of converting "swords into plowshares" has met with the hard realities of unattained economic goals to create a compelling force for positive change. Still, it will take a great deal of careful, pragmatic action to capitalize on this opportunity.

Basically, the idea that military industries should be transformed into firms producing civilian goods is not a new one. In the mid-1970s, peace movements in both the United Kingdom and the United States formulated such a hypothesis in terms of its political possibilities and technical feasibility. It must also be remembered that at the end of the World War II, industries involved in the production of military supplies rapidly transformed their structures to meet the new demand for civilian products, particularly technology and commercial products.

What is more, modern firms have been recognized in such a way as to allow for the rapid identification of new product types, and for the adoption of whatever steps are necessary to produce them. This is particularly true of multinational companies, especially if they operate in more than one sector (conglomerates), and of large national industrial groups, but it is also characteristic of many firms of average size.

Whether an economy of a particular state is socialist or market oriented, the system of military industries is always government-operated. Depending on whether or not the facility is to stay in the control of the government, the kind of detailed information required to convert it may be kept confidential by the government or may need to be made public.

This disclosure problem may actually be more sensitive than that involved with production facilities and the like, since some details of the layout and facilities of military bases are much more revealing of their military mission.

Conversion is an inherently proscriptive issue. It is not possible to talk intelligently about it without raising the question of where the process is headed. It is also not enough to have general ideas about good things that could be done with the resources released from military activity. There must be specific alternative civilian activities developed for those people and facilities now servicing the armed forces.

It would also be useful for the nation to develop an explicit agenda of national needs -- areas of civilian activity that address what that nation perceives to be the critical civilian problems that it faces. The national needs agenda should be wide- ranging, including not only traditional public works projects such as road-building but also projects aimed at attacking key social problems such as drug trafficking or crime.

The government involved could then determine the kinds of specific projects in which it could and should be involved that will address those problems. Then, the resource requirements of these projects should be compared with the supply of resources released as a result of conversion. A subset of projects could then be selected that would both address the needs and serve as reasonable alternative activities for the facilities and workforces to be converted.

In a planned economy, these projects could be directly integrated into a planning process. In a market economy, the government might undertake to award contracts for the projects for which direct government involvement is politically acceptable. It might encourage other projects, either by preferential tax treatment or special financing. And it might seek to build interests in others by bringing the issue persuasively to the public's attention. However, it is highly likely in a market economy that the private sector will generate many of its own alternatives in the process of seeking profitable markets.

The development of international needs agendas on regional and global bases could also be encouraged. There is little doubt that some of the most critical problems facing the world are best solved cooperatively. Many of these also present alternative agendas of useful economic opportunities for the resources that are being converted. Technical fixes will certainly not solve the problem of global pollution or stagnated development.

However, the most pragmatic solutions to these problems may have components that could usefully employ scientific and technical skills now focused on military research and development.

The productive capacity of other forms of labor and capital released from military activities could likewise play a role in producing a range of goods such as pollution-control devices and equipment that would also further these objectives. It would certainly be within the role of the United Nations to help instigate a process of developing such needs agendas, along with practical projects that would move them forward.

These large-scope projects might also be divided into subprojects that are coordinated internationally but funded independently by each of the nations that undertakes responsibility to carry them out. Alternatively, an international fund to support key global infrastructure and environment projects could be established.

The fund could be created with financing provided by contributions equal to an agreed fraction of the money saved as each member nation's military expenditure is reduced. According to some economists, the reduction or elimination of military expenditure is always taken as a welcome development. Military expenditure, to a large extent, is an economic burden to a nation's economy. Such expenditures represent a government allocation of national resources for a military product that flows neither into public consumption, which increases the general standard of living, nor to investment, which benefits society's future productivity.

To put it another way, military expenditure is both economically unproductive and socially wasteful. Indeed, military goods and services are unique in that this output eventually leaves the economic cycle almost entirely. Access to the fund could also be made dependent on the extent to which the nations involved cut back on their arms expenditure.

A sufficient number of civilian options must be found if conversion is to be successful. To be sure, each nation will approach the search for these options in a different way, but it would be desirable to have a degree of international cooperation so that gains from conversation might be turned most effectively to the benefit of the largest possible fraction of the world's population. To a larger extent, it would eliminate the use of military force in international relations and on the other hand, it would also stimulate the creation of a new better world order in the coming century.

The writer is a graduate from Lancaster University, England, and a lecturer at the Department of International Relations, Parahyangan Catholic University, Bandung.