To some, the onset of peace ushers in a period of diminished expectations for both the United States and the Soviet Union. As the power of the pocketbook outweighs that of the generals, influence is widely seen as shifting from the superpowers to the more commercially oriented societies of Western Europe and East Asia.
Yet despite the dislocations caused by the winding down of the arms imbroglio, the prospect of peace actually offers opportunities to both erstwhile superpowers. After decades of wasteful military spending, a radical reduction in armaments could prove a critical salve for two societies wracked by deepening fears of technological and economic decline.
In comparison with the Soviet Union, America's conversion problems are relatively minimal. The Soviets spend roughly one-fifth of their gross national product on defense, according to Alexei Kireyev, a senior economic adviser to the International Department of the Central Committee of the Soviet Communist Party--more than three times the 6% spent by the United States.
Yet despite this, U.S. defense expenditures are enormous compared with those of its leading economic competitors--more than twice the proportion of GNP footed by the West Germans and five times the Japanese. Clearly, as Kireyev and countless U.S. economists have pointed out, the lack of a massive defense apparatus presents no hindrance to performing well in the world marketplace.
Yet even with large-scale disarmament now possible, many in both countries still argue for massive military expenditures as a means of achieving technological and economic advantage. Particularly outspoken is former U.S. Defense Secretary Caspar W. Weinberger. Weinberger is warning that any cuts in defense will lead to "the added costs" of unemployment benefits, welfare and food stamps.
Such views, however, are anachronistic in today's global economy. Certainly, military spending did accelerate tremendous technological advances--from Germany's development of the jet engine to America's unleashing of nuclear power--in the crisis environment of World War II and the early Cold War. But as the Cold War military stalemate became institutionalized after the 1950s, the new technologies started to shift from firms whose sole customers were the Pentagon or the Soviet Defense Ministry.
The enormous U.S. defense burden has sapped America's technological lead in many critical industries. With as much as 30% of its high-tech work force on war-related industries, the United States has been a long-distance runner laden with weights in the technology race with more commercially oriented nations in Europe and Asia. In recent years, even the Defense Department has warned that incipient declines in civilian-based industries--such as sensing devices, semiconductors and computers--threaten national security in today's technology-sen-sitive defense environment.
Most misleading of all, however, are assumptions about the long-term negative economic effects of defense cutbacks. Certainly, the spate of layoffs at such large defense contractors as Northrop Corp., Hughes Aircraft Co. or Lockheed Corp. will have severe short-term effects on defense-oriented economies such as Southern California's.
But recent history shows that, rather than slowing down economic development, military cutbacks ultimately spark new growth. Indeed, the real "peace dividend" generated by cuts in defense spending will not come in Washington, but from the release of scarce managerial and technological resources into more productive commercial uses.
This pattern has been clear since 1945--when many predicted postwar military cutbacks would decimate Southern California's economy. "Peace," warned Los Angeles Mayor Fletcher Bowron, "threatens industrial dislocations in this area which might throw thousands out of work."
Despite Bowron's predictions, Los Angeles' drive toward massive industrialization barely paused. With the military spigot turned off, entrepreneurs such as the late Charles B. (Tex) Thornton, founder of Litton Industries, tapped wartime-developed technologies to move into the burgeoning fields of commercial aviation, consumer electronics and computer systems.
The same process repeated itself in the mid-1970s, with the cutbacks following the Vietnam War. After a brief recession, Southern California's adaptable entrepreneurs shifted into fields such as microcomputers and scientific instrumentation. Similar developments took place in Northern California's Silicon Valley and along Massachusetts' Route 128.
In the 1990s, Southern California's economy could reap similar benefits from demilitarization. Certainly a larger portion of the area's technical work force, the nation's largest, can now apply their skills to commercial pursuits, creating both new firms and applications for military-derived technologies.