Economic conversion
Encyclopedia
Economic conversion, defence conversion, or arms conversion, is a technical
, economic and political process for moving from military
to civilian
markets. Economic conversion takes place on several levels and can be applied to different organizations. In terms of levels (roughly corresponding to geographic scales), conversion can take place at the level of new innovation projects, divisions within multi-divisional firms, companies, and national economies. In terms of objects, conversion can govern workers (i.e. retraining), firms
(in terms of workers, capital, facilities and real estate) and land (in terms of real estate
). Some of these scales obviously overlap. Organizations that can be converted include defense firms, military bases, and defense laboratories.
Conversion should be distinguished from economic diversification although the two processes overlap. Conversion involves the maximum reuse
of military committed resources
, with the emphasis on reuse of existing personnel. The key personnel within defense firms are engineers and factory workers, and managers skilled in managing innovations. Another key emphasis in conversion is in the area of new product development. Diversification can involve financial manipulation, e.g. in purchasing new firms, which leaves in place existing commitments to military production. Sometimes however, economic conversion requires purchase of another firm to supply "complementary capacities." Generally, conversion can be supported by various factors that help defense firms overcome specialization
.
Among the key periods associated with economic conversion have been the postwar conversion after World War II
, numerous experiments in diversification (with conversion of defense engineers' skills) in the period after the Vietnam War
in the 1970s, and similar efforts after the Cold War
. Various militarist and corporate critics battled labor and peace advocates during these conversion openings, with the former usually winning the day.
In modern times, a key figure in promoting the idea of economic conversion was the late Seymour Melman
(1917-2004), a professor
at Columbia University
in the United States
. In recent times, the idea has also been promoted by various scholars and activists, particularly during the 1980s and 1990s, in Europe
, the United States, Israel
and South Africa
. Following the end of the Cold War, great attention was placed on the prospects for economic conversion.
Regarding differences in the 1970s and the postwar era, Seymour Melman
noted that: "The problem of conversion from military to civilian work is fundamentally different now from the problem that existed after World War II. At that time, the issue was reconversion; the firms could and did go back to doing the work they had been involved in before the war. They could literally draw the olds sets of blueprints and tools from the shelf and go to work on the old products. At the present time, the bulk of military production is concentrated in industries, firms, or plants that have been specialized for this work, and frequently have no prior history of civilian work" (The Defense Economy, 1970: 7).
Detailed empirical
studies conducted by Seymour Melman, John Ullmann, Lloyd J. Dumas
, Catherine Hill, Greg Bischak, Ann Markusen, Michael Oden, Jonathan Michael Feldman, and others have shown the technical or economic viability of economic conversion. After the September 11, 2001 attacks
and concentrated political power directed towards military-serving interests, the obstacles to conversion have been considerable. Extensive political barriers suggest that conversion promotion requires various forms of institutional transformation and social movement mobilization.
To be successful, conversion must be part of a larger political program involving, military budget
reductions, reindustrialization
, and infrastructure
renewal. For example, if a given defense firm should convert, its production could be easily replaced by output from another firm. Marcus Raskin
at the Institute for Policy Studies
in Washington, D.C.
has developed such a draft treaty
for comprehensive disarmament.
In the contemporary period, from the late 1990s to the present day (circa 2010) the prospects for conversion have been constrained by regional conflicts, the so-called "war on terror," and consolidation within the defense industry through megers, acquisitions and regional production networks. These barriers have decreased the incentives to shift into civilian markets for various firms, except for those more on the periphery of defense acquisition. Nevertheless, the potential debate over mega military systems like specific jet fighter programs or Trident (in the U.K.) as well as an overall climate of fiscal austerity might pressure or encourage some military firms to go civilian. Arms control agreements related to nuclear weapons might also lower the projected demand for some military suppliers. Ultimately, the extension of civilian markets for defense firms might be encouraged by building up the demand for civilian industrial markets like mass transit, alternative energy and sustainable, civilian infrastruture.
Technology
Technology is the making, usage, and knowledge of tools, machines, techniques, crafts, systems or methods of organization in order to solve a problem or perform a specific function. It can also refer to the collection of such tools, machinery, and procedures. The word technology comes ;...
, economic and political process for moving from military
Military
A military is an organization authorized by its greater society to use lethal force, usually including use of weapons, in defending its country by combating actual or perceived threats. The military may have additional functions of use to its greater society, such as advancing a political agenda e.g...
to civilian
Civilian
A civilian under international humanitarian law is a person who is not a member of his or her country's armed forces or other militia. Civilians are distinct from combatants. They are afforded a degree of legal protection from the effects of war and military occupation...
markets. Economic conversion takes place on several levels and can be applied to different organizations. In terms of levels (roughly corresponding to geographic scales), conversion can take place at the level of new innovation projects, divisions within multi-divisional firms, companies, and national economies. In terms of objects, conversion can govern workers (i.e. retraining), firms
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
(in terms of workers, capital, facilities and real estate) and land (in terms of real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
). Some of these scales obviously overlap. Organizations that can be converted include defense firms, military bases, and defense laboratories.
Conversion should be distinguished from economic diversification although the two processes overlap. Conversion involves the maximum reuse
Reuse
To reuse is to use an item more than once. This includes conventional reuse where the item is used again for the same function, and new-life reuse where it is used for a different function. In contrast, recycling is the breaking down of the used item into raw materials which are used to make new...
of military committed resources
Human resources
Human resources is a term used to describe the individuals who make up the workforce of an organization, although it is also applied in labor economics to, for example, business sectors or even whole nations...
, with the emphasis on reuse of existing personnel. The key personnel within defense firms are engineers and factory workers, and managers skilled in managing innovations. Another key emphasis in conversion is in the area of new product development. Diversification can involve financial manipulation, e.g. in purchasing new firms, which leaves in place existing commitments to military production. Sometimes however, economic conversion requires purchase of another firm to supply "complementary capacities." Generally, conversion can be supported by various factors that help defense firms overcome specialization
Departmentalization
Departmentalization refers to the process of grouping activities into departments.Division of labour creates specialists who need coordination. This coordination is facilitated by grouping specialists together in departments....
.
Among the key periods associated with economic conversion have been the postwar conversion after World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, numerous experiments in diversification (with conversion of defense engineers' skills) in the period after the Vietnam War
Vietnam War
The Vietnam War was a Cold War-era military conflict that occurred in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. This war followed the First Indochina War and was fought between North Vietnam, supported by its communist allies, and the government of...
in the 1970s, and similar efforts after the Cold War
Cold War
The Cold War was the continuing state from roughly 1946 to 1991 of political conflict, military tension, proxy wars, and economic competition between the Communist World—primarily the Soviet Union and its satellite states and allies—and the powers of the Western world, primarily the United States...
. Various militarist and corporate critics battled labor and peace advocates during these conversion openings, with the former usually winning the day.
In modern times, a key figure in promoting the idea of economic conversion was the late Seymour Melman
Seymour Melman
Seymour Melman was an American professor emeritus of industrial engineering and operations research at Columbia University's Fu Foundation School of Engineering and Applied Science....
(1917-2004), a professor
Professor
A professor is a scholarly teacher; the precise meaning of the term varies by country. Literally, professor derives from Latin as a "person who professes" being usually an expert in arts or sciences; a teacher of high rank...
at Columbia University
Columbia University
Columbia University in the City of New York is a private, Ivy League university in Manhattan, New York City. Columbia is the oldest institution of higher learning in the state of New York, the fifth oldest in the United States, and one of the country's nine Colonial Colleges founded before the...
in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. In recent times, the idea has also been promoted by various scholars and activists, particularly during the 1980s and 1990s, in Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
, the United States, Israel
Israel
The State of Israel is a parliamentary republic located in the Middle East, along the eastern shore of the Mediterranean Sea...
and South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
. Following the end of the Cold War, great attention was placed on the prospects for economic conversion.
Regarding differences in the 1970s and the postwar era, Seymour Melman
Seymour Melman
Seymour Melman was an American professor emeritus of industrial engineering and operations research at Columbia University's Fu Foundation School of Engineering and Applied Science....
noted that: "The problem of conversion from military to civilian work is fundamentally different now from the problem that existed after World War II. At that time, the issue was reconversion; the firms could and did go back to doing the work they had been involved in before the war. They could literally draw the olds sets of blueprints and tools from the shelf and go to work on the old products. At the present time, the bulk of military production is concentrated in industries, firms, or plants that have been specialized for this work, and frequently have no prior history of civilian work" (The Defense Economy, 1970: 7).
Detailed empirical
Empirical
The word empirical denotes information gained by means of observation or experimentation. Empirical data are data produced by an experiment or observation....
studies conducted by Seymour Melman, John Ullmann, Lloyd J. Dumas
Lloyd J. Dumas
Dr. Lloyd Jeff Dumas is a Professor of Political Economy, Economics, and Public Policy in the School of Economic, Political and Policy Sciences at the University of Texas at Dallas....
, Catherine Hill, Greg Bischak, Ann Markusen, Michael Oden, Jonathan Michael Feldman, and others have shown the technical or economic viability of economic conversion. After the September 11, 2001 attacks
September 11, 2001 attacks
The September 11 attacks The September 11 attacks The September 11 attacks (also referred to as September 11, September 11th or 9/119/11 is pronounced "nine eleven". The slash is not part of the pronunciation...
and concentrated political power directed towards military-serving interests, the obstacles to conversion have been considerable. Extensive political barriers suggest that conversion promotion requires various forms of institutional transformation and social movement mobilization.
To be successful, conversion must be part of a larger political program involving, military budget
Budget
A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...
reductions, reindustrialization
Reindustrialization
Reindustrialization is the economic, social, and political process of organizing national resources for the purpose of re-establishing deteriorated industries or change declining or contaminant industries to emerging or cleaner ones. The process often proceeds as a result of a need to reinvigorate...
, and infrastructure
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
renewal. For example, if a given defense firm should convert, its production could be easily replaced by output from another firm. Marcus Raskin
Marcus Raskin
Marcus Raskin is a prominent American social critic, political activist, author, and philosopher, working for progressive social change in the United States....
at the Institute for Policy Studies
Institute for Policy Studies
Institute for Policy Studies is a left-wing think tank based in Washington, D.C..It has been directed by John Cavanagh since 1998- History :...
in Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
has developed such a draft treaty
Treaty
A treaty is an express agreement under international law entered into by actors in international law, namely sovereign states and international organizations. A treaty may also be known as an agreement, protocol, covenant, convention or exchange of letters, among other terms...
for comprehensive disarmament.
In the contemporary period, from the late 1990s to the present day (circa 2010) the prospects for conversion have been constrained by regional conflicts, the so-called "war on terror," and consolidation within the defense industry through megers, acquisitions and regional production networks. These barriers have decreased the incentives to shift into civilian markets for various firms, except for those more on the periphery of defense acquisition. Nevertheless, the potential debate over mega military systems like specific jet fighter programs or Trident (in the U.K.) as well as an overall climate of fiscal austerity might pressure or encourage some military firms to go civilian. Arms control agreements related to nuclear weapons might also lower the projected demand for some military suppliers. Ultimately, the extension of civilian markets for defense firms might be encouraged by building up the demand for civilian industrial markets like mass transit, alternative energy and sustainable, civilian infrastruture.
External links
- Site dedicated to Seymour Melman
- Site by researchers who worked with Seymour Melman and addressing various conversion, disarmament and reindustrialization issues
- http://www.webcom.com/ncecd/
- German site for economic conversion: BICC
Key references
- Jonathan M. Feldman, "The Conversion of Defense Engineers’ Skills: Explaining Success and Failure Through Customer-Based Learning, Teaming and Managerial Integration." Chapter 18 in The Defense Industry in the Post-Cold War Era: Corporate Strategy and Public Policy Perspectives, Gerald I. Susman and Sean O'Keefe, eds. Oxford: Elsevier Science, 1998.
- Jonathan Feldman, “Extending Disarmament Through Economic Democracy,” Peace Review, “Workplace Democracy,” Summer Issue, May, Volume 12, Number 2, 2000.
- Jonathan Michael Feldman, “Industrial Conversion: A Linchpin for Disarmament and Development,” Chapter 10 in Dimensions of Peace and Security, Gustaaf Geeraerts, Natalie Pauwels, and Éric Remacle, eds. Brussels: Peter Lang, 2006.
- Ann Markusen and Joel Yudken, Dismantling the Cold War Economy, New York: Basic Books, 1992.
- Jonathan Michael Feldman, “From Mass Transit to New Manufacturing,” The American Prospect, April 2009: A12-A16.
- Seymour Melman, The Defense Economy: Conversion of Industries and Occupations to Civilian Needs, New York: Prager Publishers, 1970.
- Seymour Melman, The Permanent War Economy: American Capitalism in Decline, New York: Simon and Schuster, 1974.
- Seymour Melman, After Capitalism: From Managerialism to Workplace Democracy, New York: Alfred A. Knopf, 2001.