Armaments and Unemployment
The disarmament conference organised by the Labour Party in January 1911 passed a resolution in favour of a campaign to secure the mutual gradual reduction of armaments; with a view to the ultimate disbandment of all armies and navies. It rejected a proposal for a general strike to prevent war and would not even discuss an amendment to the main proposal, which declared that disarmament could only be brought about by the abolition of capitalism and establishment of Social Democracy. Many interesting things were said at the Conference, including a declaration that the British Government was absolutely responsible for the world armament race, made by Will Thorne, M.P., who three years later was heartily supporting the war “against the German militarists”. But what concerns us here is an amendment, debated at the Conference, which would have postponed any effort to reduce armaments until such time as a law had been passed providing full maintenance for workers who lost their jobs in the armaments industries. The amendment was defeated but the attitude persisted and is with us still: there are still many workers who believe that it is only armaments that keep capitalism busy, and that if governments reduce armaments, employment and trade and wages will collapse. How much truth is there in this belief?
It can be answered categorically from past experience as well as from general considerations that capitalism is not kept going simply by armament expenditure and therefore the effect that reductions of armament expenditure will have depends on all sorts of other factors as well. To start with, except in war-time, expenditure on armaments and armed forces represents only a small proportion of total national income and production—in Britain it is now about 7½ per cent, in U.S.A. about 11 per cent, and in other European countries very much less than 7½ per cent.
It is of course obvious that if the British Government suddenly destroyed all arms, gave up arms production and disbanded the armed forces, thus saving an annual expenditure of £1,400 million, it would create immediate problems for hundreds of thousands of redundant soldiers and armament workers, as well as for manufacturers with cancelled contracts. If trade conditions were already depressed at that time the effects might he severe and prolonged, but they would not be different in magnitude from the effects produced by any other sudden cessation of demand for labour and goods totalling £1,400 million a year. One factor to he remembered here is that what is called “defence expenditure” is not wholly or mainly on weapons of war; about half is on the food, uniform, buildings and pay military and civilian staffs.
In 1945 war expenditure was equal to nearly half the total national income. Then in two years it was cut from £5,000 million to under £850 million, and the size of the armed forces was slashed from 5 million to 800,000. The effect of this on unemployment was negligible though it involved millions of men changing their work and millions of others finding jobs after demobilisation. All that happened was that as the armed forces dwindled the numbers of workers m civilian employment grew, for capitalism was in a vigorous phase of expansion. Experience after the first world war was not the same. There was much more industrial disorganisation when the troops were demobilized and within three years came the acute though short lived slump of 1921.
British capitalism was still expanding in 1951 when the Labour Government launched the re-armament programme which more than doubled defence expenditure from £740 million to over £1,400 million. To make it possible other activities, including building and the capital expenditure on the Post Office and nationalised industries, had to be cut down because there were insufficient reserves of labour and raw materials to carry on the existing volume of civilian production plus the expansion of armaments, Within a year the Government reported that the planned expansion of armaments was itself falling behind because of these limitations.
America immediately after the end of World War It had much the same experience as Britain when it demobilized most of its war-time armed forces, but unemployment did not fall to so low a level.
Germany and Italy had a quite different experience. They were not going through a phase of expansion in the early port-war years and their demobbed soldiers and redundant munition workers largely went to swell the very heavy unemployment that lasted for ten years or more.
But later, though Germany’s armament expenditure still represented only about 2 per cent or 3 per cent of national income and production, German industry has had several years of boom conditions with more vacancies than workers to fill them and hundreds of thousands of workers being brought in from neighbouring countries.
We can therefore say that though arms and armies play a considerable part in the whole field of production arid employment and can ax times exercise a considerable influence on the total magnitude, expenditure on them is no more decisive than any other expenditure of similar size, i.e. on average about 5 per cent to 10 per cent of total national production and expenditure, It all depends on whether capitalism is in an expanding or a contracting phase.
To put it in perspective, it may be added that while capitalism continues no government is in fact going to abolish its armies and armaments though, as in the past, there may be occasions when expenditure is reduced.
(Socialist Standard, July 1961)