Upward Spiral

Upward Spiral is a term used by Paul Kennedy in his book "The Rise and Fall of Great Powers" to describe the continually rising cost of military equipment relative to civilian manufactured goods. According to Kennedy there is an upward spiral at work in "all areas" of military production which is "becoming increasingly divergent from the commercial". The desire for state-of-the-art weaponry is meant to be pushing up the cost.Kennedy, 1989, pp. 570-1.] This work has since been questioned by other academics who argue that these increases are the results of shorter production runs.

Theory

Writing in the late 1980s he said it was reasonable to assume that the next few decades would witness "the spiralling cost of the arms race, which is fuelled by the sheer expensiveness of newer weapons systems as well as by international rivalries." Quoting P. Mathias's comment that "One of the few constancies in history... is that the scale of commitment on military spending has always risen" [Mathias, 1969, p. 44.] Kennedy argues that this has become more important with time. According to Kennedy, "if that was true for the wars and arms races of the eighteenth century, when weapons technology changed only slowly, it is much truer of the present century [20th] , when each new generation of aircraft, warships and tanks is vastly more expensive than preceding ones, even when allowance is made for inflation."Kennedy, 1989, p. 570.] Kennedy uses several examples. While a pre-1914 battleship cost the British admiralty 2.5 million pounds, by the 1980s 120 million pounds was needed to buy a replacement frigate. Another is that of the American B-2 Spirit Stealth bomber whose cost rose into the 1990s. By the time it was deployed in 1993 its cost was $2.1 billion apiece. [Webb, 2007, pp. 295 – 310.]

Theory questioned

However, the existence of the "upward spiral" has been questioned. It has been argued that increases in military production costs are the result of short production runs. To be sure, Kennedy himself acknowledges that advanced technology items produced for the military sector are “less numerous” than those produced for the civilian, where, despite initial heavy investment in prototypes, average unit costs are pushed downwards by volume production. [Kennedy, 1989, p. 571.] But according to Kieran Webb, such short production runs are temporary phenomena that occur in situations of peace or else where one belligerent has greatly superior economic resources. It is in such circumstances that, ironically, there is pressure to economise, with the result that such short production runs are used, causing higher unit costs.Webb, 2007, pp. 295–310.]

Thus the price tag for the B-2 Spirit Stealth bomber could be understood in large part by the fact that the original order for 132, itself made in the peacetime of the Cold War 1980s, was cut to just 21 in the even more peaceful 1990s. Yet should the United States be confronted with a peer opponent in the future, and find the need to expand production of such an aircraft, unit costs would be brought down. There is evidence that the B-2 could be produced more cheaply with an expanded production run. In 2001, Northrop Grumman offered to build a further 40 of the bombers for a reduced price of $735 million each. A larger production run could get the price down much further. This is because aircraft manufacturing costs are typically brought down by a fifth with every doubling of production.

As a result, military production costs may converge rather than diverge with civilian production costs. Indeed, production costs for the B-2 bear similarity with civilian airliner costs when both are subjected to the same length of production run. It takes the production of 500-600 aircraft in the civil aviation industry before a model earns a profit. As a result, such planes sell for between $50 million and $250 million ranging from 120 seaters to Boeing 747. Webb applies a similar calculation to the B-2 and finds that the construction of 600 of these aircraft could be carried out at a unit cost of approximately $300 million.

ignificance

The temporary nature of the Upward Spiral has been argued for as a factor in the continued importance of distance in military affairs.

Notes

References

*Paul Kennedy, The Rise and Fall of Great Powers (London: Fontana, 1989).
*P. Mathias, First Industrial Nation: An Economic History of Britain 1700-1914 (London, 1969).
*Kieran Webb, 'The Continued Importance of Geographic Distance and Boulding's Loss of Strength Gradient', Comparative Strategy, Volume 26 Issue 4, 2007.

ee also

*Distance in military affairs
*Pre-paid supplies