Swords into Dow Shares: Governing the Decline of the Military-Industrial Complex

Swords into Dow Shares: Governing the Decline of the Military-Industrial Complex

Swords into Dow Shares: Governing the Decline of the Military-Industrial Complex

Swords into Dow Shares: Governing the Decline of the Military-Industrial Complex

Synopsis

Contemporary legal doctrine holds that corporate managers have obligations, first and foremost, to maximize profits for their shareholders. This doctrine is based on the assumption that shareholders alone bear the financial risks and contribute the equity necessary for production. But what if other groups contribute assets and also risk losing their investments? What if other groups actually shelter shareholders from financial risks? Such is the case with the nation's prime defense contractors. By examining the case of defense contracting, where the federal government and, indirectly, the taxpayers assume most of the risks and costs of producing weaponry, Rachel Weber critiques the assumptions underlying our system of corporate governance. The Department of Defense provides contracts for billions of dollars, specialized components and facilities, interest subsidies, tax breaks, and regulatory relief. These public contributions make the record shareholder returns and executive compensation packages of the early 1990s all the more problematic. This book follows the case of General Dynamics, the nation's largest military shipbuilder and considered a trendsetter in the industry for its explicit shareholder orientation. The behavior of contractors like General Dynamics in the post-Cold War period raises serious concerns about the private stewardship of public funds. How can the government make contractors accountable to other public interests? In Swords into Dow Shares Rachel Weber offers some original suggestions for redirecting defense resources to foster innovation, decrease the tax burden of military spending, and help to retain and create high-wage jobs in a civilian-industrial economy.

Excerpt

Scholarship in the social sciences aspires to the highest level of objectivity and value neutrality. Positivists invoke Max Weber's distinction between the vocations of science and politics to support the assertion that truth claims require an obedience to an impersonal, objective system of analysis. We must adopt scientific methods so that our values do not dictate the results of our research. To betray some personal connection to one's subject matter is to elicit suspicions about the soundness and rigor of one's methods. "What are the checks you use to control your biases?" people will ask. "Don't you need some distance from a problem in order to fully understand it?"

In the following book, I do not reveal my personal attachments to the subject matter, but they are nevertheless very present. I grew up in the region that is a focus of this study—New London County, Connecticut— and imbibed some of the bitterness and anger of my interview subjects. My parents and friends bore the brunt of the dislocative restructuring decisions I describe. Many lost their jobs and left the area. Stories circulated about laid-off Electric Boat employees who squandered their severance pay at the new casinos. The involuntarily retired engineers on my block, antsy with skills and know-how, took to making endless home improvements. Their wives still held jobs outside the home and could be seen commuting to work in the family car. Such was the changing demographic of the suburban military-industrial complex in the early 1990s.

When asked why I did not choose a more distant subject matter or a more value-neutral method, I respond in a few ways. First, all problem definitions, methods, and research questions involve interpretations and decisions about value. Why are only those who reveal their attachments suspect? Much of neoclassical economics, for example, betrays value judgments about the primacy of efficiency over equity, markets over states, and choice over control. In his recent book about doing documentary work, Robert Coles reminds us that "a search for the factual, the palpable, the real, a determined effort to observe and authenticate, and afterwards, to report, has to contend, often enough, with a range of seem-

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