The Rising Cost of Military Force

By Nader Elhefnawy

An examination of the defense picture in the advanced states instantly presents the onlooker with a host of contradictions. The military establishments of the major countries appear both massive and strained, important grand initiatives coming to naught, their efforts to rein in costs continually frustrated. The technological Revolution in Military Affairs appears to promise leaps in capability-but perhaps at such leaps in cost that virtually no one can actually afford them, perhaps not even the collective members of the European Union, commonly criticized by American observers as a laggard in this regard.

Such developments make it plausible that Joseph Tainter's observation that modern societies are seeing diminishing marginal returns for investment in complexity also applies to their militaries.1 Indeed, if one accepts Tainter's theory as basically valid, the odd thing would be if militaries did not parallel society at large in suffering from that trend.

Military establishments are certainly not exempt from the increases in the costs of key goods and services that affect other sectors of the economy. A rise in the price of energy will necessarily mean that militaries pay more for their own energy consumption. Additionally, even specifically military purchases and programs are broadly susceptible to broader trends affecting the civilian economy (even if more problematic for military establishments because of certain considerations). A number of these are listed below:

* A tendency toward diminishing returns on technological investment in recent decades, particularly in areas like aerodynamics, hydrodynamics and propulsion.2 For instance, the same technological issues which kept the size, speed, capacity, operating altitude and range of civil aircraft roughly constant since the 1960s also apply to military aircraft, which have not significantly changed in these respects either. While information technology is supposed to be an exception, and its centrality to the "Revolution in Military Affairs" may suggest this translates to the defense sphere, its impact may well have been overrated, not least because of IT's limitations with respect to tasks requiring eye-hand coordination.3 It is also worth noting that avionics have long comprised the area of greatest cost increase in the prices of fighter aircraft.4
* The divorce between designers and users of technology, which diminishes the efficiency of design processes, one reflection of which is the pursuit of features of limited utility by engineers (a process which has been referred to as "gold-plating" in military context).5 Exaggerating the problem is the tendency of customers of high technology to pursue the newest for fear of falling behind, rather than carefully weighing costs and benefits.
* The tendency of the unreliability of systems to rise along with their complexity, encouraging redundancy as a compensating approach, driving up costs further.6
* The increased need for collaboration on the part of multiple buyers, whether branches of one nation's armed forces, or several governments, which may have different goals and priorities, as a result of the price of developing and producing a major system. Historically this has resulted in expensive design compromises.7
* Just as there are fewer customers, there are also fewer suppliers, given the size and specialized nature of the industrial entities which alone can produce many of the needed services and systems; and the political sensitivity of military supply chains. The consolidation of the defense industry, not just in the U.S. but Europe as well, has slashed the number of participants in the market still further.8 This leaves customers with fewer practical option, diminishing the room for market forces to operate, and exacerbates a problem raised in a recent study of the fighter aircraft market by Defense-Aerospace.com, namely that "aircraft prices . . . like those of other manufactured goods, are determined as much by how much the market can bear as by their actual development and production costs."9
* The problem of amortizing the costs of system development, given shortening production runs. As a result the bill for research and development (an increasingly large part of the total) has to be recouped from a smaller number of sales, driving up unit cost.10 At the same time, the short runs make it more difficult to exploit economies of scale.11 It does not help that the weapons procurement process is subject to major, politically-driven work stoppages and restructurings, which lengthen the program and add to its costs.12
* Political corruption. This is difficult to quantify, especially over time, but the widely perceived "privatization of politics," dramatically described in books like Thomas Frank's recent The Wrecking Crew, makes a strong case that the situation has worsened.13 Additionally, the fact that governments are the sole buyers for major weapons systems makes this more of a factor in setting the price than other, dual-use goods with large non-governmental markets.
* The graying of populations, particularly in the industrial world. While the full consequences of this on economic performance have yet to be determined, given the possibility of extending healthy working life; changes in the nature of work; and the present looseness of the labor markets; the particular reliance of militaries on the young makes them more vulnerable to such a trend than other sectors. Put simply, smaller youth cohorts mean more difficulty filling a given number of billets.

However, it is also arguable that a number of problems unique to militaries are contributing to this trend.

System Senility and Technological Uncertainty
For decades now it has been argued that the weapons systems predominating in modern arsenals (aircraft, armored vehicles, warships) are increasingly "senile."14 That is to say, the weapon continues to perform its core, offensive function, but only with the aid of continual incremental modifications, simply to insure their survival in a more dangerous environment, or enable them to retain their effectiveness in the face of similarly upgraded opponents, which drive up their cost.

Tanks and battleships alike progressively moved through a cycle of thicker armor, more powerful engines to accommodate the extra weight and bigger guns for penetrating that thicker armor, without becoming dramatically more effective on the battlefield-and indeed, less so given that their function increasingly becomes their fighting other tanks.15 In recent decades, tanks have also become larger and heavier, complicating their mobility and ease of deployment (such as the M1A2 Abrams), so much so that in the case of the U.S., there has been great interest in pursuing lighter armored fighting vehicles (like the Stryker) specifically to compensate for this problem (without notable success). There is also more emphasis on their integration with other systems to this end, diminishing their effectiveness in the offensive (as with the surrounding of carriers with escorts, and the devotion of an increased proportion of their air wings to group protection).16 In the process, they also impose a greater strain on the logistical systems supporting them.17

However, this is not to imply that investment in "revolutionary" systems is an unproblematic matter. Senility is not obsolescence, and a convenient replacement does not necessarily exist for the major systems discussed above. It was fashionable in the wake of the U.S. invasion of Afghanistan to imagine aerospace power and light infantry working in concert to defeat any conceivable enemy.18 Yet, the "thunder runs" of the Iraq war a year and a half later were widely regarded as affirming the traditional value of armor. Similarly, despite the publicity given Predator drones, there was also no real sense that unmanned aerial vehicles and cruise missiles were on the verge of fully replacing air forces consisting of expensive manned aircraft (even if there was room for doubt about the necessity of F-22s), or "street fighter" warships doing away with carrier groups.

Meanwhile, the overselling of new technologies and tactics of even more limited kinds has led to costly disappointments, as with Harlan Ullman's "shock and awe" theory.19 Of course, it may be pointed out that shock and awe was simply a repeat of the claims theorists have made for air power since Giulio Douhet.20 Nonetheless, given the ambiguity of the post-Cold War strategic situation, and the emergence of "capabilities-based planning" (which shifts the focus from the need to respond to tangible threats, to the pursuit of whatever capacities modern technology might offer as almost an end in itself), there may be a greater susceptibility to this kind of thinking, with the effects on budgets and priorities all too obvious.21

At the same time, the advanced capabilities purchased so expensively have, in many real-world military situations, appear superfluous, raising the issue of whether or not older systems would have performed the task just as well, if not more cheaply. In the air defense environment of Afghanistan, for instance, it was not clear that the B-2 justified its high selling price.22

"War Amongst The People"
Additionally, whatever the costs and benefits of advanced weapons systems, it may be that contemporary political reality means they can only achieve so much. Conventional warfare, while still the technological and budgetary focus of the major defense establishments, has been increasingly rare since the end of World War II.

Many arguments have been offered for why this is the case (the dangers of armed conflict in the nuclear age, the diminished profitability of territorial conquest, the world's growing economic interdependence, etc.), and consistent with this disagreement about the causes, there has been disagreement about how long this pattern will continue into the future. A great many observers continue to anticipate large-scale conventional warfare among major powers, for instance, a Sino-American conflict over Taiwan.

Nonetheless, the decreasing frequency and duration of conventional, interstate conflict in the last half century has not been in doubt, or the trends observed in the fighting that did take place irrelevant to the thinking on the issue. And increasingly, when conventional fighting does take place, as in the invasion of Iraq in 2003, the battlefield victories appear to count for less since these wars are, in the phrasing offered by General Rupert Smith, fought "amongst the people."23 What this means is that rather than actors achieving political ends by destroying the forces of an enemy state and seizing its territory, doing those things (while still necessary) is only a way of creating conditions in which other "means and levers of power" are brought to bear on individuals and societies to achieve those ends-often, over the very long term.

In other words, the conventional phase, instead of essentially settling the conflict, is merely the opening portion of a longer, often costlier "mission other than war." Complicating matters further, it may be more rather than less difficult for the most advanced military forces to execute those tasks today.24

As a result, the value advanced conventional systems bring for the money spent on them is increasingly in question. Indeed, where counterterrorism is concerned, many experts hold military force should support police and intelligence efforts, rather than be the principal instrument. The result is that conventional forces may be seen as competing with them for priority in policy and budgeting (just as they are demanding more money themselves). In cases, an ill-judged use of military force may even worsen the problem by producing a political backlash-a charge repeatedly made against the conduct of the War on Terror, particularly by observers outside of the United States.25

The emphasis on missions other than conventional warfare has also meant that when the major states exercise military force, they tend to do so for vaguer objects and more ambiguous interests. Especially given the absence of old-fashioned territorial threats (certainly, to the homelands of most of the advanced industrial countries), this may have helped to depress traditional tendencies to identify patriotism with military service. Martin Van Creveld has also gone so far as to offer the argument that it is the irrelevance of conventional warfare that has permitted major weapons programs to become as politicized, protracted and costly as they have.26

The Pursuit of "Strength Against Madness"
Finally, there is the pursuit of an unprecedentedly high level of security in a key respect, namely the making of defense policy around the presumption of actors unconstrained by rational deterrence, an object sociologist Zaki Laidi describes as "strength against madness."27 The existence of weapons of mass destruction, and the risk of certain destruction in the event of their use, has enlarged the danger that such actors are seen to present, as with the scenario of a "rogue" state willing to launch a devastating nuclear attack in spite of the certainty of its annihilation in a retaliatory strike.28

Assuming an undeterrable opponent, and the devastating consequences of the attack, the sole approach becomes either to deny them access to the weapon entirely, or to fully neutralize that capability, with all the challenges involved. Permanently denying other actors the possession of whole classes of weapon requires an extraordinary degree of political (and sometimes, military) commitment that may ultimately be unsupportable-especially when one considers the demands of preventive war. Neutralizing those weapons once they do have them may be even less feasible, as the demands of ballistic missile defense and, even more ambitious, space dominance, make clear.29

However, it should be noted that this kind of threat is viewed as chimerical by many observers. Martin Van Creveld in particular has made a strong case against such thinking in The Future of Nuclear Proliferation, where he showed that, where at least states are concerned, such claims of irrationality (regarding the Soviet Union and the People's Republic of China under the "mad" Stalin and Mao, or the supposed irrationality of Pakistan and India) ultimately did not hold water.30

Conclusions
It appears that modern militaries are seeing diminishing marginal returns on investment in complexity. This is partly due to broad technological, economic, political and demographic trends affecting advanced societies in general ways, from which militaries simply are not exempt. However, changes in the security environment-particularly the "senility" of the major weapons systems and the diminution of the conventional war-fighting around which militaries are organized (and the emphasis placed on the prospect of irrational actors presenting existential threat) also play an important role.

While much of the cause for the rising cost of defense is not neatly separable from the problem facing modern societies at large, some amelioration might be found in more cautious decision-making regarding both the level of security sought, and particular decisions regarding the mission orientation and technological acquisition of military forces.

AUTHOR'S NOTE: This article was originally part of an early draft of my article, "Societal Complexity and Diminishing Returns in Security," which appeared in the Summer 2004 issue of International Security. It has since been heavily revised and updated.

NOTES
1 For a discussion of Tainter's theory, see Joseph Tainter, The Collapse of Complex Societies (New York: Cambridge University Press, 1988). Also see T.F.H. Allen, Joseph Tainter, and Thomas W. Hoekstra, Supply-Side Sustainability (New York: Columbia University Press, 2003).
2 Michael O'Hanlon, Technological Change and the Future of Warfare (Washington D.C.: Brookings Institution Press, 2000), p. 194.
3 Robert J. Gordon, "Does the 'New Economy' Measure up to the Great Inventions of the Past?" Journal of Economic Perspectives 14.4 (Fall 2000), pp. 49-74.
4 Dr. Richard P. Hallion, "A Troubling Past: Air Force Fighter Acquisition Since 1945," Airpower Journal 9.4 (Winter 1990), pp. 4-23.
5 Gene I. Rochlin, Trapped in the Net: The Unintended Consequences of Computerization (Princeton, NJ: Princeton University Press, 1997), pp. 29-34.
6 Chris C. Demchak and Patrick D. Allen, "Technology and Complexity: the Modern Military's Capacity for Change," in Conrad C. Crane, ed., Transforming Defense (Carlisle, PA: Strategic Studies Institute, U.S. Army War College, 2001), p. 110.
7 Mary Kaldor, The Baroque Arsenal (New York: Hill and Wang, 1981), pp. 20-26.
8 For an examination of the less-discussed situation in Europe, see Rachel Epstein, "Divided Continent: Globalization and Europe's Fragmented Security Response," in Jonathan Kirshner, ed., Globalization and National Security (New York: Routledge, 2006), pp. 231-257.
9 Defense-Aerospace.com, "Sticker Shock: Estimating the Real Cost of Modern Fighter Aircraft," occasional report, Jul. 12 2006, p. 2. Accessed at http://www.defense-aerospace.com/dae/articles/communiques/FighterCostFinalJuly06.pdf.
10 According to one study, the ratio of R & D costs to production costs went from 5 percent in 1945 to 47 percent in 1989. Thomas L. McNaugher, New Weapons, Old Politics (Washington D.C.: Brookings Institute, 1989), pp. 98-99.
11 McNaugher, pp. 179-80. To give one recent example, it was calculated that whereas three to four Los Angeles-class submarines could be manufactured annually for $6-800 million each, each submarine would cost $1.5 to $2 billion each if produced at the rate of one a year. David Lewis, "Is the DD-21 Another Seawolf?" Proceedings 127.8 (Aug. 2001), pp. 54-57.
12 Indeed, the Defense-Aerospace report cited above emphasized the role of discontinuous development in cost overruns. Defense-Aerospace.com, "Sticker Shock," p. 4.
13 According to the work of Mancur Olson, long political stability tends to permit the growth of special interests which undermine economic performance. The postwar situation, particularly with respect to the defense establishment, may be a case in point. See Mancur Olson, The Rise and Decline of Nations (New Haven: Yale University Press, 1982).
14 George and Meredith Friedman, The Future of War: Power, Technology and American World Dominance in the Twenty-First Century (New York: Crown, 1996). You can find my review of that book here.
15 Additionally, senile systems increasingly reply on collaboration with other systems to preserve their effectiveness, diminishing the flexibility and autonomy that make them effective in the offensive. Also see Martin Van Creveld, Technology and War: From 2000 B.C. to the Present (New York: Free Press, 1989), pp. 280-282.
16 Van Creveld, Technology, pp. 280-282.
17 More expensive weapons systems mean higher costs for training, spare parts and other support functions all too likely to be short-changed, with a negative impact on readiness. McNaugher, pp. 98-99.
18 Edward Luttwak, "Power Relations in the New Economy," Survival 44.2 (Summer 2002), pp. 16-17.
19 This also extends to the overselling of other kinds of policies, like the privatization of military services, and the savings and other benefits that were supposed to accrue from it. See Peter Singer, Corporate Warriors (Ithaca, NY: Cornell University Press, 2003).
20 See Giulio Douhet, The Command of the Air, trans. Dino Ferrari (New York: Coward-McCann, 1942).
21 For a trenchant critique of capabilities-based planning, see Frederick Kagan, Finding the Target: The Transformation of American Military Policy (New York: Encounter, 2006). It is worth noting, however, that it had an antecedent in the "follow-on" system of the Cold War era. See Kaldor, pp. 65-74.
22 According to one estimate, a B-2 cost over $2 billion, compared with $42.9 million for the B-52 bombers which also saw service in the conflict. Stephen I. Schwartz, "Stealth Bomber is Latest in a String of Failures," New York Times, Sep. 26, 1997.
23 You can read the theory of "war amongst the people" in Smith's The Utility of Force: The Art of War in the Modern World (New York: Alfred A. Knopf, 2007). I also offer a summary of his idea in my review of the book for Strategic Insights, accessible here.
24 Territorial occupations in the developing world, for instance, increasingly mean policing a larger, more urbanized and more socially mobilized population, while advanced militaries increasingly substitute technology for manpower both for advantage and necessity. See Nader Elhefnawy, "Are Territorial Military Occupations Becoming More Difficult?" The Rambling Man, Nov. 13, 2008. Accessed at http://naderelhefnawy.blogspot.com/2008/11/round-up-of-news-items.html.
25 Michael Howard, "'9/11' and After: A British View," Naval War College Review 55.4 (Autumn 2002), pp. 11-22; International Institute of Strategic Studies (IISS), The Military Balance 2003-2004 (London: IISS, 2003).
26 Martin Van Creveld, The Transformation of War: The Most Radical Reinterpretation of Armed Conflict Since Clausewitz (New York: Free Press, 1991), p. 209.
27 Zaki Laidi, A World Without Meaning, trans. June Burnham and Jenny Coulon (London: Routledge, 1998), pp. 105-122. For a discussion of such thinking, see Keith Payne, Deterrence in the Second Nuclear Age (Lexington, Kentucky: University Press of Kentucky, 1996).
28 A related concern is the worry that such strikes may be staged in such a way that their culpability is not immediately obvious (as with a state which chooses to smuggle a bomb into a target city rather than using military means in the attack), or, particularly where non-state actors like terrorist groups are concerned, retaliation is impossible for lack of an appropriate target.
29 Robert S. Litwak, "The New Calculus of Pre-emption," Survival 44.4 (Winter 2002-03), pp. 53-80. For an overview of the relevant discussion of space policy, see Nancy Gallagher and John D. Steinbruner, Reconsidering the Rules for Space Security (Cambridge, MA: American Academy of Arts and Sciences, 2008). Also see Nader Elhefnawy, "Four Myths About Space Power," Parameters 33.1 (Spring 2003), pp. 124-132.
30 Martin van Creveld, The Future of Nuclear Proliferation (New York: Macmillan, 1991). For the response to the arguments of this sort made prior to the 2003 invasion of Iraq, see John J. Mearsheimer and Stephen M. Walt, "An Unnecessary War," Foreign Policy 134 (January/February 2003), pp. 50-59.