Nationalize Defense, Nationalise Defence

Not for the first time, a young American conservative sounds like a writer on Labour Heartlands or a stalwart of the Workers Party of Britain. Therefore, we must heartily approve of Indigo Olivier:

In 1934, Sen. Gerald Nye set out to investigate the “merchants of death” who had cashed in on World War I. “When the Senate investigation is over,” he promised, “we shall see that war and preparation for war is not a matter of national honor and national defense, but a matter of profit for the few.” Nye never achieved his ultimate goal of nationalizing the defense industry, but over 18 months, his committee held 93 hearings that shifted public opinion sharply against war, contributing to the passage of the Neutrality Acts, which barred the export of arms to foreign nations. The inquiry exposed shady practices, price-fixing, and rampant conflicts of interest that have only grown more entrenched with time. The questions Nye raised about profiteering and the proper role of the state are even more urgent today than they were in the 1930s.

In August, in a surprising move for a Republican president, Donald Trump announced the US government would take a 10 percent stake in Intel. A few days later, Commerce Secretary Howard Lutnick told CNBC that major defense contractors could be next. He noted that 97 percent of Lockheed Martin’s revenue comes directly from Washington, and said that the way the United States has historically financed munitions has amounted to a “giveaway.” He isn’t wrong.

Between 2020 and 2024, 54 percent of the Pentagon’s discretionary spending went to military contractors. Pentagon contracts were highly concentrated in just five firms: Lockheed Martin, General Dynamics, Northrop Grumman, RTX (formerly Raytheon), and Boeing. These are not ordinary companies, and it is long past time we stopped treating them as such. Unlike other businesses, their fortunes are not tied to consumer demand. Their profits depend on violence and instability—interests that run directly counter to the American people’s.

Building on recent moves with chip manufacturers, the Trump administration should therefore revive Nye’s agenda. The government should purchase a 51 percent equity stake in each of the “Big Five” defense contractors, and authorize Congress to appoint public representatives to their boards. When it comes to the defense sector, nationalization is not radical. It’s an idea whose time has come.

For decades, opponents of public ownership have invoked the specter of government inefficiency. They argue that only the private sector can deliver innovation. But the Pentagon is already the world’s largest employer, with nearly 3 million military service members and civilian employees—more than Walmart and Amazon. It has also been one of the most powerful engines of innovation in modern history, responsible for splitting the atom, developing the internet and Silicon Valley, and laying the foundation for artificial intelligence. The question is not whether the state can innovate, but whether innovation should be steered by the public interest or by shareholder returns.

The idea of taking the profit motive out of war is not new. Franklin Roosevelt, in the runup to World War II, called for heavy taxation on “excess profits” and warned that no one should get rich from conflict. Harry Truman made his name in the Senate by exposing shoddy production and war profiteering. Both understood that national defense cannot be left to the incentives of private enterprise.

In the decades since, however, we have moved in the opposite direction. Industry consolidation since the 1990s has seen the number of prime defense contractors shrink from 51 to just 5. The Defense Department warns that the consolidation of the defense industrial base poses a risk to national security. According to a 2022 report, 90 percent of all missiles come from just three sources. This consolidation reduces competition and drives up costs. A Stinger anti-aircraft missile that cost $25,000 in 1991, for instance, now sells for around $400,000. A 2023 CBS “60 Minutes” investigation found that military contractors routinely gouge the Pentagon, charging inflated prices for almost everything they sell.

As it stands, the defense sector is not a competitive marketplace. The Big Five function as monopolistic or oligopolistic contractors, inflating costs through sole-source bidding and cost-plus contracts. Globally, US defense firms made up 43 percent of arms exports between 2020 to 2024—nearly as much as the next eight arms exporters combined. (France, the world’s second largest global arms exporter, holds notable stakes in its key defense firms.) With such overwhelming dominance, the US arms industry is not just another player in the market but a driver of global conflict, with every incentive to keep the wars going.

Companies like Lockheed have profited handsomely from the devastating wars in Ukraine and Gaza. These profits create a powerful incentive for the United States to continue supplying the weapons, financing, and diplomatic cover that only prolong these conflicts. In 2023, when justifying sending more aid to Ukraine and Israel, then President Biden pointed to the factory jobs at home supported by these conflicts. Lockheed, Northrop, RTX, and BAE Systems—the makers of the infamous, $2 trillion F-35 fighter jet—openly tout it as “The Most Economically Significant Defense Program in History.” But war should not be a jobs program—especially since research from the Costs of War Project shows that more jobs are created on a dollar-per-dollar basis with investments in education, healthcare, infrastructure, and clean energy.

The defense industry also distorts American foreign policy more broadly. Contractors persuade elected officials that the United States is locked in a permanent arms race through relentless lobbying and manufactured alarmism. Threats are exaggerated, conflicts are framed as inevitable, and policymakers are nudged toward ever-higher levels of spending on artificial intelligence, autonomous systems, hypersonics, and more.

Congress, awash in defense industry lobbying money and with members themselves profiting from defense stocks, has little incentive to challenge the system. The defense sector spent $151 million on lobbying in 2024. Dozens of lawmakers personally hold stock in the very companies they are tasked with overseeing. The revolving door ensures further capture. Pentagon officials routinely take lucrative jobs at private companies. The three Defense Secretaries preceding Pete Hegseth exemplify this dynamic: Before government service, Lloyd Austin sat on Raytheon’s board, Mark Esper was a Raytheon weapons lobbyist, and James Mattis served on General Dynamics’ board.

Nationalizing the defense industry would dismantle the perverse incentive structure that currently shapes US military policy. By removing the profit motive, it would help ensure that decisions are determined by the public interest rather than by the connections between defense contractors, Pentagon officials, and members of Congress—a set of relationships often called the “iron triangle.”

Nationalization should go hand in hand with a renewed congressional investigation into the rot that has festered in the defense industry. Just as Nye exposed the “merchants of death” in the 1930s and Truman built his reputation rooting out war profiteering during World War II, lawmakers today should hold hearings to uncover the waste, fraud, and abuse that plague Pentagon contracting. Sen. Bernie Sanders has proposed such a committee. The Pentagon itself has never once passed a full audit, despite commanding the largest discretionary budget in the federal government. Oversight must extend not only to the corporations that profit from war but also to the military bureaucracy that enables them. A standing committee modeled on the Truman Committee could shine daylight on sweetheart deals, inflated costs, and conflicts of interest, to ensure that nationalization is not simply a transfer of ownership but the beginning of genuine democratic accountability.

The United States has nationalized industries before in moments of necessity—from railroads in World War I to Fannie Mae and Freddie Mac during the financial crisis. We do it when the stakes are too high to leave vital systems in private hands. Surely war, with its extraordinary costs in lives and treasure, qualifies.

The defense industry is the closest thing we have to a planned economy. The Pentagon guarantees demand. Taxpayers guarantee revenue. Yet corporate boards—and not the American people—decide how the companies are run. That contradiction is no longer tenable.

In a 1969 New York Times op-ed, economist John Kenneth Galbraith argued that “large, specialized defense contractors are really public firms.” Buying them out, he wrote, would create “no real increase in public debt or liability,” since their value already rested entirely on the assumption that the government would keep them “busy, solvent and profitable.” Galbraith wryly suggested that conservatives should think twice before citing defense contractors as champions of private enterprise: “Better let the public sector have the blame; that’s where it belongs.”

Ever since the end of the Cold War, it has always been “the most dangerous time since the end of the Cold War”. Our Armed Forces are so tiny, so badly paid, and so badly equipped, that even when you remembered that we counted things like military pensions, the Coast Guard, the Met Office, and the BBC World Service, then someone is still being paid on an enormous scale. Such is the British way, from HS2, to PPE, to Test and Trace, to the Bibby Stockholm, to the Rwanda Plan, and so on, and on, and on. The arms companies are very good at kicking back to politicians and at employing retired top brass. For only the twenty-second highest population in the world, the sixth highest military spending is still not enough for some people, because they are the hired megaphones of corporate greed.

In any case, a huge proportion of that figure is Trident, which we have instead of tanks, fighter jets, and indeed personnel for our own country, never mind for anywhere else, including Ukraine, which has now been for years in exactly the permanent stalemate that some of us predicted from day one. Russia makes no claim to any British territory. Nor does China, Iran, North Korea, or anywhere else on the latest Axis of Evil. The Hard Right’s latest Fatherland is the only country from which there is any risk of an invasion of British soil. The Hard Right’s apparently permanent Motherland recently murdered three British veterans who, as is common, were working simultaneously as aid workers and as intelligence operatives. But we are not allowed to mention that, just as we are not allowed to mention that Motherland’s assistance of that Fatherland’s last invasion.

Instead of NATO, we need bilateral non-aggression treaties with all other European countries including Russia and indeed Ukraine, with the United States, and with Canada. We need non-aggression treaties with the Shanghai Cooperation Organisation and with the Collective Security Treaty Organisation, and preferably with each of their members bilaterally. There should be no foreign military bases on British soil, while military force should be used only ever in self-defence, and only ever with the approval of the House of Commons, the composition of which therefore needs to be changed dramatically.

BAE Systems should be renationalised as the monopoly supplier to our own Armed Forces, with a ban on all sale of arms abroad, and with a comprehensive programme of diversification in the spirit of the Lucas Plan. Armed neutrality never includes the nuclear weapons that are purely offensive. Instead of Trident, an extra £70 billion should be given to each of the Royal Navy, the British Army, and the Royal Air Force. This would not entail depriving anything else of funding. As a sovereign state with its own free-floating, fiat currency, the United Kingdom has as much of that currency as it chooses to issue to itself, with the fiscal and monetary means to control inflation, means that therefore need to be under democratic political control in both cases.