In January 1961, President Eisenhower popularised the term, the Military-Industrial Complex. It refers to the close relations that existed between the US military, and the huge armaments companies that supplied it. Analysis showed the extent to which military personnel, and politicians involved in the area of defence, moved seamlessly into lucrative posts with the big industrial companies whose businesses relied on being able to continue to sell ever more, and ever more expensive armaments to the US state. The top generals, and the civilian top brass at the Department of Defence, built bigger personal empires, and increased their status by enlarging the military and its budgets, and the defence contractors made ever larger profits in supplying them with the weapons systems that enabled them to build those personal empires. It required that the US citizens continually felt themselves to be in imminent danger of attack. The expenditure put no value back into the US economy, whilst representing a huge drain of value from it. A similar situation exists with healthcare, and the huge pharmaceutical and medical equipment companies that supply it. It represents a Medical-Industrial Complex. It similarly requires a belief by citizens that they are faced with some existential threat that requires the building of huge hospitals, stuffed to the gills with the latest, most expensive machines, and the provision of the latest, most expensive medicines. COVID19, has been a perfect example of it, and how it distorts public policy making, in the same way as the military-industrial complex has done for the last 60 years.
Capitalism always seeks the most efficient means of producing, so as to lower the cost of production, and, thereby, raise the rate of profit. It seeks to reduce the cost of the provision of the commodities required for the reproduction of labour-power, so as to reduce the proportion of necessary labour to surplus labour, so as to raise relative surplus value, the rate of surplus value, and, thereby, the mass and rate of profit. For some things, that has meant that the capitalist state must take on functions on behalf of capital as a whole. There are various reasons for that. For some things, like the development of space technology, the amounts of capital required were so large, and the rate of turnover so long, that no private capitals would undertake it. Of course, in the US, although NASA itself was a state entity, the companies that provided it with equipment were non-state owned, but relied on the state paying them huge amounts of money both to develop technologies, and to buy them when turned into actual equipment. That was really just an extension of the military-industrial complex.
Capital soon realised that to produce the labour-power it required, it had to have workers educated at least to a minimum standard to operate machinery, to read and write, and to be able to function in a society, which increasingly also produced commodities that were technological in nature. So, the idea of the state taking over that function, so as to do it on a large, Fordist mass production basis soon arose. It also meant that the capitalist state could keep control of the ideas being fed directly into young workers heads, rather than them getting dangerous ideas as a result of workers organising education for themselves. And, in much of the advanced capitalist economies, in Europe, it also became obvious that a similar approach was required with healthcare. The state was able to organise healthcare on the kind of large scale that is required for Fordist production lines, standardisation, and economies of scale. In the US, the persistence of a huge number of small producers meant that it was reluctant to follow, because those small producers saw it as only increasing their costs. If their workers got sick, they could easily replace them. Not so for the huge US industries that arose, and which found themselves at a competitive disadvantage to their European competitors, as the US companies found themselves having to contribute to ever more costly private health insurance schemes for their workers. In the 1960's, the US itself introduced socialised healthcare via Medicare and Medicaid, and the battle for its extension continues to this day.
The development of these huge state healthcare systems was intended to produce all of these benefits of Fordism, and of economies of scale, and indeed, they do. But, as with all such monopolies they also have their downsides. In Capital III, Marx demonstrates the way in which monopolies can drain surplus value from elsewhere, in the form of rent. The classic example, of course, is landed property. Marx shows how, landed property is able to prevent competition in the production of primary products from driving down the market price to the price of production. Primary products are then sold at the individual value of the least efficient producer. Even where primary products are sold at their market value, this results in a surplus profit (profit above the average profit), which is the basis of absolute rent, but with primary products actually sold at the individual value of the least efficient producer, this means that the more efficient producers make additional surplus profits that are the basis of differential rent.
But, this ability to extract rent, and so to appropriate a portion of surplus profits, by preventing competition from eliminating them applies to all monopolies. For many commodities, competition ensures still that surplus profits are eradicated. For example, car companies are huge oligopolies, with just five companies dominating global production. But, they all have to compete for market share from consumers. Consumers are free to choose which car they buy. The big car companies now try not to compete on prices, because that is destructive of their profits. Instead they compete by trying to convince consumers that their brand is better than the others, which occurs via a combination of actual continual improvement in the product, along with clever advertising and marketing. They try to increase their profits, by continually trying to reduce their costs of production. This monopolistic competition means that their market prices are driven down to the price of production, and any surplus profits arising from technological improvements by one producer, quickly disappear, as others adopt the same technologies.
But, when it comes to things like the military industrial-complex or the medical-industrial complex, this does not apply. Its not citizens buying military equipment or healthcare (other than on a small scale, such as the purchase of guns, or private healthcare), but the state. Even where the citizen does buy their own gun or private healthcare, they still have to pay taxes to the state towards the cost of the state's expenditure on those things. The citizen is not free to say I will provide for myself, than you very much, and, thereby to seek out the best deal for their needs. And that means that those in the state that have a monopoly over this expenditure then have clear incentives to form an alliance with those that have a monopoly in the provision of goods and services to the state in those areas. They have vast sums of other people's money to spend, and their powerful positions mean that they can use that money to further their own interests, and expand their own personal empires.
In the case of the military-industrial complex it requires that citizens be scared witless into a belief that Armageddon is at hand, that there are reds under the bed, Islamist terrorists in every mosque, and so there is a need for a huge surveillance state, for extensive, uncontrolled security services using the latest spying and surveillance equipment, and, of course, huge armies, navies and air forces, spread across the globe to provide protection against these threats. And, as each economic bloc produces these things, it becomes a self-fulfilling prophecy, because if NATO armies are on the borders of Russia and China, then the Russian and Chinese elites say, look what a threat we are under, and so justify their own expenditure on these things, sending their armies, navies and air forces to the borders of NATO. And, most ludicrous of all is vast expenditures on nuclear weapons which could never be used without causing the mutual destruction of those on either side.
Instead, therefore, of this military-industrial complex minimising the necessary costs for the state, and so for capital, it creates an ever expanding cost to the state, and an ever expanding drain of value and surplus value out of the economy. It represents increasing waste of resources. It is not a production of means of production, but means of destruction. As Bukharin describes it, in place of Marx's expanded reproduction, it represents expanded negative reproduction.
In the case of the medical-industrial complex, it requires a similar belief amongst citizens that they face some kind of existential threat, whereas in fact, nearly all of the actual existential threats to life and health were dealt with long ago. It wasn't expensive drugs and treatments that dealt with those threats. The big killers of the 19th century, such as cholera and typhoid were dealt with simply by environmental health measures to provide clean drinking water and sanitation. The biggest contributor to improved health and life expectancy in the 20th century, came from improved diets and living conditions for workers, as living standards rose. The other major contributors came not from astronomically expensive drugs and other treatments but from the fact that understanding of bacteria meant that simple hygiene and sterilisation meant that you were no longer likely to die from any treatment as a result of infection, and the discovery of penicillin, meant that if you did develop a bacterial infection, it could now be treated.
The expansion of the medical-industrial complex has come on the basis of the idea that what has to be provided is not good health, but expensive means of treating ill-health that has been allowed to develop, in just the same way that the military-industrial complex develops, because instead of seeking means of reducing the causes of war, it seeks to provide ever more expensive means of winning a war should one arise.
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