Remember, it's been known since the Great Depression that anything like free-market capitalism is a total disaster: it can't work. Therefore every country in the world that has a successful economy is somewhere close to fascism--that is, with massive government intervention in the economy to coordinate it and protect it from hostile forces such as too much competition. I mean, there just is no other way to do it really: if you pulled that rug out from under private enterprise, we'd go right back into the Depression again. That's why every industrial economy has a massive state sector--and the way our massive state sector works in the United States is mainly through the military system.
I mean, I.B.M. isn't going to pay the costs of research and development--why should they? They want the taxpayer to pay them, say by funding a N.A.S.A. program, or the next model of fighter jet. And if they can't sell everything they produce in the commercial market, they want the taxpayer to buy it, in the form of a missile launching system or something. If there are some profits to be made, fine, they'll be happy to make the profits--but they always want the public subsidies to keep flowing. And that's exactly how it's worked in general in the United States for the past fifty years.
So for example, in the 1950s computers were not marketable, they just weren't good enough to sell in the market--so taxpayers paid 100 percent of the costs of developing them, through the military system (along with 85 percent of research and development for electronics generally, in fact). By the 1960s, computers began to be marketable--and they were handed over to the private corporations so they could make the profits from them; still, about 50 percent of the costs of computer development were paid by the American taxpayer in the 1960s. In the 1980s, there was a big new "fifth generation" computer project--they were developing new fancy software, new types of computers, and so on--and the development of all of that was extremely expensive. So therefore it went straight back to the taxpayer to foot the bills again--that's what S.D.I. [the Strategic Defense Initiative] was about, "Star Wars." Star Wars is basically a technique for subsidizing high technology industry. Nobody believes that it's a defense system--I mean, maybe Reagan believes it, but nobody whose head is screwed on believes that Star Wars is a military system. It's simply a way to subsidize the development of the next generation of high technology--fancy software, complicated computer systems, fifth-generation computers, lasers, and so on. And if anything marketable comes out of all of that, okay, then the taxpayer will be put aside as usual, and it'll go to the corporation to make the profits off it.
In fact, just take a look at the parts of the American economy that are competitive internationally: it's agriculture, which gets massive state subsidies; the cutting edge of high-tech industry, which is paid for by the Pentagon; and the pharmaceutical industry, which is heavily subsidized through public science funding--those are the parts of the economy that function competitively. And the same thing is true of every other country in the world: the successful economies are the ones that have a big government sector. I mean, capitalism is fine for the Third World--we love them to be inefficient. But we're not going to accept it. And what's more, this has been true since the beginnings of the industrial revolution: there is not a single economy in history that developed without extensive state intervention, like high protectionist tariffs and subsidies and so on. In fact, all the things we prevent the Third World from doing have been the prerequisites for development everywhere else--I think that's without exception.
Understanding Power by Noam Chomsky, pg. 72-73