The military consumed an enormous quantity of investible surplus value that would otherwise have gone into the productive economy-according to a calculation by Michael Kidron, an amount equal to 60 percent of US gross fixed capital formation. The immediate impact of such spending was to provide a market for the output of major industries:
More than nine-tenths of the final demand for aircraft and parts was on government account, most of it military; as was nearly three-fifths of the demand for non-ferrous metals; over half the demand for chemicals and electronic goods; over one-third the demand for communication equipment and scientific instruments; and so on down the list of eighteen major industries one-tenth or more of whose final demand stemmed from governmental procurement.25
The role of military expenditure has been ignored by most mainstream Keynesian accounts of the post-war boom and by many Marxists. On both sides there has been a tendency to identify capitalism with the pure "free market" form it took for a brief period in Britain in the 1 9th century and to see the state and the military as extraneous to it. Missing has been any sense of the changes that had already begun to be analysed by Hilferding, Bukharin and Lenin, let alone the further transformations brought about through slump, war and the Cold War.
Some Marxists and a few Keynesians did, however, grasp one important impact of arms spending. It provided a market for the rest of the economy that was not affected by the ups and downs of the wider economy-a buffer that limited the downward movement of the economic cycle. So the American Marxists Paul Baran and Paul Sweezy could see arms spending as an important mechanism for absorbing an ever growing "surplus" and overcoming overproduction.26 They could not, however, explain why taxation to pay for it did not have the effect of reducing demand elsewhere in the economy. And, as Michael Bleaney has pointed out, the military purchases of the US government could not have played a major direct role in boosting the European economies.27
The account of the impact of waste expenditure (see Chapter Five) on the dynamic of the wider economy provided by Kidron was able to deal with such problems, since its starting point was not "underconsumptionism" but the rate of profit. Arms expenditure, like "unproductive" expenditures, might be a deduction from profits in the short term, but in the long term it had the impact of reducing the funds available for further accumulation and so slowed the rise in the ratio of investment to the employed labour force (the "organic composition of capital").
The Long Boom
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