United States Hegemony and the New Economics of Defense

Abstract Liberal theory asserts that the need for cost-effective, technologically advanced weapons requires the United States to acquiesce to increasing defense globalization even as this restrains U.S. power. Realist logic dictates that the United States should resist defense liberalization to retain its self-sufficiency. This is a false choice; the United States encourages defense globalization in order to extend its international political influence. This paper proposes an alternate theory of technological hegemony that explains the U.S. policy of massive R&D investment in both the late Cold War and the current era of American preponderance. Modern weapons' complexity and economies of scale tend to produce monopolies, and the value chain for the production of these monopolistic goods is dominated by the systems integration techniques of prime contracting firms. In turn these prime contractors remain largely enthralled by U.S. market power. The United States gains international influence by controlling the distribution of these weapons. Put simply, technology with international political effects is likely to have international political origins. Jonathan D. Caverley is a Ph.D. candidate in political science at the University of Chicago and a research fellow in the International Security Program at the Belfer Center for Science and International Affairs, Harvard University. His dissertation is entitled "Death and Taxes: A Rational Theory of Democratic Grand Strategy." In 2008, he will be assistant professor of political science at Northwestern University. The author would like to thank Dan Drezner, Lloyd Gruber, Kevin Narizny, Michael Noonan, Bob Pape, and Bonnie Weir for their invaluable feedback.