Innovation built U.S. hegemony, it’s the foundation of the military edge

Moreover, the United States has invested at very high levels for more than 70 years. The United States substantially ramped up its defense R&D investment in the 1950s to levels comparable to today’s spending. While it is true that in inflation-adjusted terms, defense R&D totals in the 1950s were lower than today’s, that is mainly because of the lower complexity of that era’s technological frontier, not because of some subsequent policy shift to greater emphasis on defense R&D investment.Footnote11 The continuing drive to push the military-technological frontier has kept R&D spending high all along, and the overall spending trend has increased in parallel with the increasing complexity rather than lagging behind. While R&D budget increases have not been constant, their cycle (including as shown in Figure 1) has Footnote12crested and troughed at very high levels. Annual spending has not dropped below 55 billion USD (in 2018 dollars) since 1983, and in several years, it has been very close to 100 billion USD. That high level of spending, year-in and year-out, has a cumulative effect, because it builds a foundation of tacit knowledge, experience in integrating complex systems, and human capital that understands the specialized parameters of military systems, which often differ from those of even high-end civilian systems. For comparison, the much-hyped Chinese defense budget (not the Chinese defense R&D budget) did not exceed the level of U.S. defense R&D spending until the late-2000s. Cumulative Chinese defense R&D investment is surely quite modest in comparison to cumulative U.S. defense R&D investment.Footnote12Footnote13

The intensity of U.S. interest in defense research began at the start of the Second World War, with scientists rather than the military. American scientists had been frustrated by the failure of the military to use them effectively in the First World War, when they were confined to military laboratories and subject to military discipline. Led by Vannevar Bush of MIT, they approached President Roosevelt and gained their own organization to manage wartime research, what was eventually called the Office of Scientific Research and Development (OSRD). That organization, not the military, directed the effort to develop the atomic bomb, radar, and many of the other significant technical advances of the war.Footnote14

In the postwar years scientists remained active in bomb research, though with less independence, in the newly created Atomic Energy Commission (later absorbed in the Department of Energy) and in the expansion of R&D efforts in the newly established Department of Defense (DOD), which sought in particular to exploit the advances in missile, jet propulsion, and submarine technologies of the war, including those made by the Germans. Although OSRD itself was disbanded, at least parts of its work continued in various university- and contractor-managed organizations and laboratories, the Federally Funded Research and Development Centers and University Affiliated Research Centers. Those organizations play a vital role in creating ‘soft’ innovation capabilities in the United States – preserving the institutional memory about past R&D efforts, cultivating multiple design-team philosophies that enable diverse approaches to technological challenges, and using their independence to prevent the capture of the U.S. R&D effort by rent-seeking activities of government customers and private-sector suppliers.Footnote15

For example, the Radiation Laboratory at MIT, which worked on radar in the Second World War, was renamed Lincoln Laboratory and continued under MIT management as an FFRDC doing classified work for the Air Force. The University of California manages the nuclear bomb-design laboratories, Los Alamos and Livermore, designated national laboratories for the Atomic Energy Commission. The Navy has its own set of university-managed laboratories, often called Applied Physics Laboratories, at Johns Hopkins University, the University of Hawaii, Pennsylvania State University, the University of Texas, and the University of Washington. The armed services also set up several policy-focused FFRDCs, the best known of which is the RAND Corporation. As new issues came up over the decades, new organizations were created such as the Software Engineering Institute at Carnegie Mellon University and the Institute for Soldier Nanotechnologies at MIT.

FFRDCs and related organizations do more than provide the American military with cutting edge research on important technical and policy problems. As non-profits dedicated only to serve government agencies, they are a source of valued, unbiased technical advice.Footnote16 In fact, some FFRDCs, specifically MITRE and the Aerospace Corporation but others as well, specialize in advancing systems design and integration skills to help the American military build its biggest systems.Footnote17

Until the Second World War, contractors hired to produce America’s weapons during wars returned to their commercial business at each war’s end, as military needs soon faded. But the end of the Second World War was quickly followed by the Cold War and the continuing demand for weapons. Many firms stayed in the weapons business, some focusing exclusively on defense while others formed specialized divisions to serve the military. This was especially true in the aviation industry, where firms like Lockheed, Northrop, Grumman, McDonnell, Douglas, and Boeing grew large developing and building the aircraft and missiles that were central to the Cold War arms competition.

The peak technologies in the arms race changed over time, but the U.S. organizations and level of investment maintained the U.S. lead. The 1950s added space: the shock of the launch of the Sputnik satellite spurred dramatic increases in American R&D investments and the commitment to reach the moon before the Soviet Union. The lead the United States already had in ballistic missiles became obvious in the 1960s, as it met milestone after milestone in the quest to deploy strategic nuclear forces and build satellites to support them, all the while fighting a war in Vietnam and reaching the moon. As the Soviet Union sought to catch up, the United States began the investment in sensors and precision weapons that eventually undermined Soviet power and self-confidence. The American emphasis on strategic defenses, sometimes more potential than real, nevertheless threatened to cancel the advantages the Soviets had worked hard to achieve in nuclear missile numbers and warhead size.Footnote18 The conventional warfare revolution took away the Red Army menace that had kept half of Europe in its grip and the other half in its fear for decades.Footnote19 The Soviets lost hope of winning battles that were never fought.

Little of this R&D structure went away at the end of the Cold War. The increase in defense R&D spending that marked the Reagan Build-up was a ratchet. Today, the United States spends more on defense research, in real terms, than it did at the height of the Cold War. Defense industry mergers and base closures reshuffled ownership of some military research facilities but did not shrink many of them. DOD employs nearly 100,000 people in 63 research laboratories and centers.Footnote20 The FFRDCs and similar organizations continued their work supporting the military. The end of the Cold War was a dip, not a cliff.

Soft institutional factors: Incentives for innovation

What also didn’t go away with the end of the Cold War were the incentives that drive American military innovation – the institutional factors or ‘shared prescriptions guiding conduct [of] participants within the system’ that drive the American defense innovation system.Footnote21 There are at least three. One is a concern for avoiding casualties. A second is the rivalry that exists among the various components of the American defense establishment. And the third is the openness of American society to immigrants and their ideas.

The concern for avoiding casualties runs deep in American military operations and stems from both a persistent national labor shortage and the democratic nature of the American polity.Footnote22 There were never enough people to build the country, thus the constant importation of labor, free or not, to tend the fields or run the factories. The earliest defense forces were militias made up of all local men, but it was difficult to assemble significant troops for expeditions or to keep them deployed for long because of the need for their labor back home. Mobilization for wars relied heavily on state forces, which varied in quality and commitment. Later resort to conscription was contentious and often produced evasion and rioting. The United States resisted the maintenance of a large, professional military until the 1950s.Footnote23

Even when the United States succumbed because of the Cold War, it sought to limit the military’s growth through the intense application of technology. The World Wars drew the United States into the age of total war with huge armies, but the combat experience made the United States fully aware of the human costs inherent in modern industrialized warfare. The Army Air Corps became the champion of strategic bombing doctrine that called for fleets of bombers bypassing the carnage of the battlefield to destroy industries that were thought to be central to an opponent’s power. Bombers themselves proved vulnerable in World War II, and when they failed to achieve the intended strategic effects, air power advocates repeatedly promised that with just a little more technological progress they would achieve the precision and invulnerability needed to make the operational concept work.Footnote24 The accuracy problem persisted through the Vietnam conflict, where the destruction of specific targets, usually bridges, often required risking the lives or capture of hundreds of pilots in multiple missions involving dozens upon dozens of aircraft each.Footnote25 Given the limited goals at stake in such conflicts, individual losses mattered much politically. Thus, the great and successful effort to improve the accuracy of conventional weapons and the speed and stealth of the platforms that carry them to the point where if a target can be identified and located, it can be destroyed with little or no risk to American personnel.Footnote26 The means depend upon the circumstance, often weather- or platform-determined, and include laser- and GPS-guided weapons. Now drones often take the place of manned aircraft.

The race to develop new weapons and doctrine is spurred on in the American system by inter-service competition.Footnote27 The United States military, unlike those of nearly all big nations, is not dominated by one armed service, the Royal Navy in the United Kingdom or the Red Army in the Soviet Union. The United States does not fear invasions across its borders by foreign armies, nor does it need a navy to link it to distant colonies. Instead, each of its armed services seeks special prominence among the others as being the answer to emerging dangers or the foreign policy desires of the president. There is overlap and duplication in their efforts – and the incentive to innovate.

It was this competition that gave the United States the lead in the race to develop ballistic missiles and satellites of all types.Footnote28 Civilian agencies, particularly the Central Intelligence Agency and the National Aeronautics and Space Administration, sometimes join in. The United States has several intelligence agencies, four air forces, three armies, and a navy or two, and each favors certain technologies and sees a particular threat best. They are rivals for attention, resources, and public acclaim.