Military Conversion Policies in the USA: 1940s and 1990s

Conventional theory of converting military to civilian economies holds that macro-economic policies which stimulate aggregate demand and labor policies which enable unemployed defense industry workers to move to new employment are sufficient to effect optimal transition from military to civilian production, without further need to interfere with market processes. The experience of the USA following World War II is often cited as evidence for this and recommended as a model for a much smaller 1990s conversion. This article briefly compares the four major conversions of the 20th century, 1918-21, 1944-47, 1953-55, 1968-74, but focuses on the conversion after World War II. It argues that both very favorable circumstances and considerable advance government and business planning also contributed to the relative success of the 1940s US conversion. Nevertheless, that success was sharply limited. For example, socially weak groups involuntarily left the labor force, and many facilities were lost to productive use. These failures resulted from conflicts over income distribution and a piecemeal planning vision. Under the unfavorable macro-economic circumstances of the 1990s and contrary interests of the military-industrial complex, optimal conversion requires an alternative policy approach to re-employ up to 2 million defense workers, and comprehensive decentralized planning for alternative use of production facilities.