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Grinberg on Defense Industrial Base:Personal Theories of Power Series at The Bridge

Thursday, May 29th, 2014

[by Mark Safranski, a.k.a. "zen"]

Mikhail Grinberg tackles a topic too often neglected in defense thinking, one that obsessed commissars and worried kaisers, translating economic production into military power and geopolitical influence:

Defense Industrial Base: A Personal Theory of Power

….The Thirty Years’ War (1618-1648) changed the scale of conflict and the materiel required to conduct it. At last there were “large-scale profits to be made” from the “business of war”.[v] In Genoa, Hamburg, and Amsterdam centers comprised of weapons manufacturers emerged alongside merchants that specialized in capital, financing, and market access. A multinational arms industry was born that “cut across not just national, but confessional, and indeed military boundaries.”[vi]

Berlin based Splitgerber & Daum was one firm born from this system. Formed in 1712, its two proprietors began as commissioned agents. They raised capital to supply munitions first to local arsenals in Saxony and eventually the Prussian army itself. Their growth can be attributed to an early observation: that success in their business “could be achieved only within the framework of a strictly organized mercantilist economy.”[vii]Patriotism became a marketing tool.

By 1722, Splitgerber & Daum was manufacturing “gun barrels, swords, daggers, and bayonets” at Spandau and assembling guns at Potsdam.[viii]By mid-century it was a conglomerate. Frederick the Great, unlike his grandfather the “mercenary king,” was not an admirer of contractors. But after the Seven Years’ War ended in 1763 he guaranteed the company a “regular flow of government orders” as long as it remained loyal to Prussian interests.[ix] He understood that in order to “raise Prussia to the status of great power required the services of merchants, manufacturers, and bankers.”[x] 

….World War II stretched this logic to its absolute; all state resources were translated into the machinery of war. In 1940 the US only built 2,900 bombers and fighters; by 1944 it built 74,000 on the back of industry. From 1941 until the war’s end 2,711 Liberty ships were built; welded together from 250,000 parts, which were manufactured all over the country. And from 1942 to 1946, 49,324 Sherman tanks were built by 11 separate companies such as Ford and American Locomotive?—?built by the “arsenal of democracy.”[xiv]

After the war, all countries began to balance national security objectives with resources via defense industrial base policies. A country’s industrial base capability could be measured as a combination of its scope (how many different cross-domain technologies it could develop), scale (at what quantity), and quality (battlefield performance).

Read the rest here.

Grinberg concludes his essay with very wise advice that I fear is doomed because it runs contrary to all present irrational defense acquisition incentives.

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Pre-Angellism

Wednesday, April 16th, 2014

[by Lynn Rees]
Angellism before Angell, at the dawn of the French Revolution:

French military might strode defiantly across the land, contemptuous of the political calculus with which other governments anxiously weighed enmities and alliances, weakening the forces of war and binding the raw element of conflict in diplomatic bonds. To their own and everyone else’s surprise, the French learned that a state’s natural power and a great simple cause were far stronger than the artificial structure of international relations by which other states were ruled.

Such a fundamental transformation was least of all expected at a time when many believed that highly developed state finances and standing armies had led to a level of civilization at which the strength of the people was excluded from public affairs. Everything was reduced to a a few strands—treasury, credit, army—which the cabinet held in its hands…

Carl von Clausewitz,
“Observations on Prussia” (c. early 1820s),
Historical and Political Writings
Edited and translated by Peter Paret and David Moran 

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Robb on the Networked Age

Saturday, February 16th, 2013

John is en fuego today:

Life in a Networked Age

.….In the last thirty years, we’ve seen a shift in the technological substrate.  This new susbstrate is increasingly a family of technologies related to information networks.

As this new substrate begins to take control, we’re going to need new management forms.  Both bureaucratic and market systems are proving insuffient solutions to the challenges of a networked age.  

In both cases, the emergence of a global network is eroding the efficacy of bureaucracy and markets as solutions.  How?  One reason is scale.  

A global network is too large and complex for a bureaucracy to manage.  It would be too slow, expensive, and inefficient to be of value.  Further, even if one could be built, it would be impossible to apply market dyanmics (via democratic elections) to selecting the leaders of that bureaucracy.  The diversity in the views of the 7 billion of us on this planet are too vast.  

In terms of markets, a global marketplace is too unstable.   Interlinked, and tightly coupled markets are prone to frequent and disasterous failures.  Additionally, a global marketplace is easy for insiders to corrupt and rig, as we saw with the 2008 financial melt-down.   Given instability and unmitigated corruption, markets will fail as a decision making mechanism.  

So, what’s going to replace bureaucracy and markets?

Read the rest here.

In very strong agreement with John. I like markets and think they produce efficient and optimized results for many things ( not all things) but free markets currently face massive (and sadly bipartisan) efforts to rig them by the oligarchy here at home, much less in autocratic states where the  practice of state socialism, kleptocracy and government by mafia or tribal/sectarian minority is the norm.  People will seek work-around structures to adapt, thrive and evade extortionate schemes by elites that have hijacked the state.

Hat tip to Lexington Green

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Book Mini-Review: Makers: the New Industrial Revolution by Chris Anderson

Wednesday, February 13th, 2013

Makers: The New Industrial Revolution by Chris Anderson 

This is a fun book  by the former editor-in-chief of WIRED , author of The Long Tail and the co-founder of 3D Robotics, Chris Anderson. Part pop culture, part tech-optimist futurism and all DIY business book, Anderson is preaching a revolution, one brought about by the intersection of 3D printing and open source “Maker movement” culture, that he believes will be bigger and more transformative to society than was the Web. One with the potential to change the “race to the bottom” economic logic of globalization by allowing manufacturing entrepreneurs to be smart, small, nimble and global by sharing bits and selling atoms.

Anderson writes:

Here’s the history of two decades of innovation in two sentences: The past ten years have been about discovering new ways to create, invent, and work together on the Web. The next ten years will be about applying those lessons to the real world.

This book is about the next ten years.

….Why? Because making things has gone digital: physical objects now begin as designs on screens, and those designs can be shared online as files…..once an industry goes digital in changes in profound ways, as we’ve seen in everything from retail to publishing. The biggest transformation, but in who’s doing it. Once things can be done on regular computers, they can be done by anyone. And that’s exactly what we’re seeing happening in manufacturing.

…..In short, the Maker Movement shares three characteristics,  all of which I’d argue are transformative:

1. People using digital desktop tools to create designs for new products and prototype them (“digital DIY”)

2. A cultural norm to share those designs and collaborate with others in online communities.

3. The use of common design file standards that allow anyone, if they desire, to send their designs to commercial manufacturing services to be produced in any number, just as easily as they can fabricate them on their desktop. This radically foreshortens the path from idea to entrepreneurship, just as the Web did in software, information, and content.

Nations whose entire strategy rests upon being the provider of cheapest labor per unit cost on all scales are going to be in jeopardy if local can innovate, customize and manufacture in near-real time response to customer demand. Creativity of designers and stigmergic /stochastic collaboration of communities rise in economic value relative to top-down, hierarchical production systems with long development lags and capital tied up betting on having large production runs.

Interesting, with potentially profound implications.

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State Failure is the Child of Oligarchy

Sunday, August 12th, 2012

An interesting piece in Democracy Journal by James Kwak:

Failure Is an Option

….Countries differ in their economic success because of their different institutions, the rules influencing how the economy works, and the incentives that motivate people,” write Acemoglu and Robinson. Extractive institutions, whether feudalism in medieval Europe or the use of schoolchildren to harvest cotton in contemporary Uzbekistan, transfer wealth from the masses to elites. In contrast, inclusive institutions—based on property rights, the rule of law, equal provision of public services, and free economic choices—create incentives for citizens to gain skills, make capital investments, and pursue technological innovation, all of which increase productivity and generate wealth. Economic institutions are themselves the products of political processes, which depend on political institutions. These can also be extractive, if they enable an elite to maintain its dominance over society, or inclusive, if many groups have access to the political process. Poverty is not an accident: “[P]oor countries are poor because those who have power make choices that create poverty.” Therefore, Acemoglu and Robinson argue, it is ultimately politics that matters.

The logic of extractive and inclusive institutions explains why growth is not foreordained. Where a cohesive elite can use its political dominance to get rich at the expense of ordinary people, it has no need for markets and free enterprise, which can create political competitors. In addition, because control of the state can be highly lucrative, infighting among contenders for power produces instability and violence. This vicious circle keeps societies poor. In more fortunate countries, pluralistic political institutions prevent any one group from monopolizing resources for itself, while free markets empower a large class of people with an interest in defending the current system against absolutism. This virtuous circle, which first took form in seventeenth-century England, is the secret to economic growth….

Read the rest here. 

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