“…recounts the defeat of Marxism by rational choice liberalism: a philosophy of markets and democracies that was developed in part to anchor the foundations of American society during the Cold War.” (pgs. 2-3)
RC has persisted past the Cold War and has become a nearly transcendent principle.
Democracy based on the “rational actor,” the embodiment of the “liberal individualist’s” self-interest in the context of objective, universal laws.
Kenneth Arrow – Social Choice and Individual Values – 1951: conflation of “citizen’s sovereignty” with “consumer’s sovereignty.” Politics as the culmination of various trajectories of actors pursuing self-interests.
Mathematics underlying RC: John Nash, game theory
Rational choice theory proposes that rational agents have a consistent set of preferences and act to obtain that which they most prefer. The theory pertains to both parametric environments and strategic environments with other self-interested rational actors, as well as to uncertain and risky circumstances. The term “self-interest” encompasses both selfish and altruistic preferences, although most often theorists accept that agents are self-interested in a narrowly construed, self-oriented manner… Rational choice is normative, prescriptive, and descriptive in scope, and it is applied to individuals in varying decision making contexts using highly abstract, mathematically expressed conditions. The theory both defines the conditions to which rational agency must conform, and can be used to explain and predict the actions of agents supposed to be rational. (pgs. 5-6)
Describes RC as a key concept deployed by analysts at the World Bank, and as the bedrock of the “Washington Consensus” in development economics in the 1990s. (pg. 6)
Origins of RC trace back to John von Neumann and Oskar Morgenstern’s Theory of Games and Economic Behavior.
Von Neumann applied game theory to nuclear warfare; carried it over to the RAND Corporation. Key RAND theorists: Duncan Luce and Howard Raiffa.
Key texts that defined the relationship between capitalism, democracy, and liberalism prior to the rise of RC: Schumpeter’s Capitalism, Socialism, and Democracy; Hayek’s The Road to Serfdom; and Popper’s The Open Society. All as reaction to Communism: Schumpeter and Popper analyze Marx’s critique of capitalism, Hayek critiques the ideologies of collectivism. (pg. 16)
Each criticized capitalism’s laissez faire approach, “did not strike the appropriate balance between social justice and economic freedom and was therefore untenable” (pg. 16)
- Schumpeter: socialist society inevitable because “capitalism is being killed by its achievements” (creative destruction); yet socialism cannot co-exist with democratic pluralism.
- Hayek: freedom means that individuals pursue their own self-interests, thus any kind of planning or collectivism infringes upon the notion of freedom; at the same time, pursuit of self-interest renders the ideas of a “social goal” or “common good” as profoundly anti-freedom → adopts Adam Smith’s idea of the market creating an “unplanned social order,” yet (like Smith), argues that this can only work if legal and other institutional frameworks are put in place to ensure that this order can emerge.
- Popper: Marx was correct in seeing that social injustice was a byproduct of unrelenting capitalism, yet Marx was wrong in looking at a materialist base for all social, political, or scientific relationships; thus, he pushed towards a dangerous “irrationalism.’ Popper’s solution: ‘piece-meal social engineering’: “the demand for the rationalization of society, for planning for freedom, and for its control by reason.” (pg. 20)
Chapter 1: Managing the National Security State: Decision Technologies and Policy Science
Late 1950s: RAND scientists discover the “missile gap,” a disparity between the strengths of the respective arsenals in the USSR and the US
President Kennedy wins by using the media reception of the missile gap, brings Robert McNamara into his administration as National Security Adviser to deal with the issue. [Note: McNamara had previously been one of the “Whiz Kids,” members of a ‘management science’ task fore in the US Air Force who became executives in the Ford Motor company.]
McNamara finds that the intelligence reports on the Soviet’s arms was faulty, yet insists that “contemporary intelligence cannot definitively prove disprove that the Soviet’s had a significant military advantage.” (pg. 29)
Amadae argues that the proper understanding of this era of the Cold War was not one of the US as a unified actor on the world stage, but one with a massive internal struggle over interpretations of the Cold War, and how these interpretations would determine future action. Thus, we’re confronted with a kind of “manufacturing” of the Cold War. (pg. 30)
RAND established by the US Air Force’s General Henry “Hap” Arnold and the executives of Douglas Aircraft Company to build a “symbiosis” between the worlds of the university and industry and national defense. Arnold’s prime ally in Douglas Aircraft is Frank Collbohm, assistant to the company’s vice president of engineering and a veteran of the Manhattan Project and MIT’s Rad Lab. RAND is founded in 1946 as an “autonomous unit” inside Douglas Aircraft. Maintains close connections with the top levels of the Air Force chain of command.
First project: studying the logistics of America’s satellite program. The importance of the study shifts RAND’s alliance from Air Force to the Office of the Secretary of Defense; Air Force command becomes some of RAND’s biggest critics. (pg. 34)
With RAND’s close ties to Douglas Aircraft, worries arose about the possibilities of conflicts of interest. Arnold brings inside “independent and objective” consultants; begins to move RAND towards corporate status to cut ties with Douglas. H. Rowan Gaither, an assistant director from MIT’s Rad Lab, is brought in to assist the process. Gaither and the RAND executives conclude that non-profit status would be the best choice of action. (pg. 34)
Gaither gets $300,000 in funding from the Ford Foundation to help prop up RAND. At the same time, the Ford Foundation asks Gaither to draft a mission statement for the Ford Foundation.
Thus, while Gaither oversaw the reorganization of RAND, he was additionally responsible for creating a report expressing the Ford Foundation’s mission. This statement is telling of Gaither’s vision of society as a technocracy governed by an objective elite, and was personally acknowledged by Henry Ford II to have been “the most important step formulating the policies of the Foundation.”… The statement articulated as a plan for philanthropic support specifically what RAND managed to achieve in the 1950s: the development of a professional corps who, due to their superior expertise, could guide the nation through challenging policy decisions. The report describes a society managed by an educated elite outside the public arena and suggests that it is the duty of philanthropies to support this elite. (pgs. 35-36)
1950: Paul Hoffman appointed president of the foundation; rejects the Cold War ethos guiding the philanthropy and begins subsidizing civil rights movements and working to counter the prevalence of the House on Un-American Activities. Worried that Hoffman is steering the philanthropy away from Gaither’s mission statement, Ford Motor executives remove Hoffman as president and appoint Gaither himself instead. Gaither openly supports the use of foundation money going to “further political and psychological warfare.” (pg. 38)
Under Gaither, RAND becomes a primary beneficiary of Ford Foundation funding. Legions of economists flock to RAND, composing the largest unit inside the organization; “systems analysis” becomes RAND’s signature trademark.
Systems analysis, an interdisciplinary study of complex problems, had been promoted earlier by Douglas Aircraft as an “ambitious scheme of developing a total science of warfare in which any logistical and strategic problem, no matter how complex, could be solved with rigorous, quantitative analysis.” (pg. 41)
First use of systems analysis at RAND: Offensive Bomber Study, taking into consideration “U.S bomber base location, vulnerability to attack, and target selection as the background information from which to conclude that which bomber design and bomb combination would grant the United States optimal strategic advantage.” (pg. 41)
Air Force considers study a failure; attacked its solutions as both impractical and cost heavy. RAND begins a Cost Analysis program, headed by economist David Novik. Novik’s work leads him to drawing up a budgeting framework for the entirety of the Department of Defense.
1951 – Offensive Bomber Study reformulated, driven by cost effectiveness → discovered that the “Achilles’ heel of Amerian defense” was that the emphasis on Air Force superiority left the nation open to a potential Soviet invasion. Again, the Air Force dismisses the report; but the RAND personnel on the study continue on: they recommend that “in order to maintain an effective defensive posture, America must have a sufficient nuclear arsenal to withstand the most devastating attack imaginable and still maintain a counterforce to act, if not as a deterrent, then to ensure equivalent devastation of Soviet military and industrial facilities.” (pg. 45)
In the wake of Sputnik, Gaither submits a report to President Eisenhower a “top secret, fear-mongering” report titled “Deterrence and Survival in the Nuclear Age.” Triggers the fear of the missile gap.
April 4th, 1957: Eisenhower commissions several studies dealing with civil defense and nuclear weaponry; one commission, the Security Resources Panel, is chaired by Gaither. Other members include Robert A. Lovett and John C. McCloy, James R. Killian, and Paul H. Nitze.
[Note: it would be interesting to cross-reference many of these individuals with the following chart]:
Commission launches critique on Eisenhower’s national security policies, demanding higher defense spending, massive ICBM build-up, and a reorganizing of the DoD. John McCloy and Robert Lovett reported that “the people as a whole and the business community in particular would support the President if he urged increased spending for defense.” (pg. 51) Eisenhower is dismissive of the report’s alarmism – the commission is lax on actual data, despite the fact that the head of the CIA’s U-2 spy plane program, Richard Bissell, is a member. [NOTE: Bissell entered the CIA after working at the Ford Foundation] The proposals gain traction, however, in the more hawkish membership of the policy establishment
Chairman of the executive committee of the Ford Foundation, Donald K. David, headed a business-interest consortium called the Committee for Economic Development (CED), which maintained overlapping membership with the Gaither committee:
The Gaither committee’s co-director, William C. Foster, served on the CEO’s Subcommittee on Economic Policies for National Security. Gaither committee advisory panel member and Republican financier Robert A. Lovett served as an honorary trustee of the organization. Richard M. Bissell Jr. served as an advisor, along with RAND’s head of economics, Charles Hitch. Other members of interest with prominent CEO roles include Don K. Price, vice president of the Ford Foundation; W. Allen Wallis, dean of the University of Chicago’s school of business and future president of the University of Rochester; and Ralph W. Tyler, director of the Center for the Advanced Study in the Behavioral Sciences, which had been established at Stanford University with Ford Foundation money in 1955. (pg. 55)
1958: CED echoes the Gaither commission’s report with their own “The Problem of National Security: Some Economic and Administrative Aspects” – pushes for higher defense spending and ICBM build-up. Also insists for the reorganization of the Pentagon with a “rational and efficient” management.
Presidential candidate John F. Kennedy begins using Eisenhower’s defense weaknesses as an electoral platform; RAND members involved with Gaither begin working with his campaign. Kennedy ultimately wins, and Eisenhower’s farewell address alludes to the existence of the “military industrial complex.” Robert McNamara, close to Ford and RAND, begins the president’s NSA.
Robert McNamara’s interest in “rational management”: “[m]anagement is the gate through which social, political and economic and technological change … is rationally and effectively spread through society… running the Department of Defense is no different from running Ford Motor Company or the Catholic Church.” (pg. 58)
McNamara denounces the missile gap (states that if there is a gap, “it’s in our favor”); Kennedy not pleased, considering that continued belief in the gap is essential for the American public. The phantom of the gap diminished between 1957 and 1963, yet the left-over fear of the Soviet military threat did not wane. Kennedy and McNamara oversee the largest peacetimes arm build-up in American history.
McNamara reorganizes the DoD through rational management bordering on “total control,” rerouting the chain of command to run solely through himself. While he enacted these reforms of his own accord, “he did so by acting as a gatekeeper for the wholesale importation of a defense management infrastructure that had been under design for more than a decade at RAND.” (pg. 60) Indeed, many of McNamara’s appointees were RAND luminaries, and he brought in the Gaither Commission’s Paul Nitze as assistant secretary of defense for International Security Affairs.
McNamara establishes the Office of Systems Analysis, headed by RAND’s Alain Enthoven. Enthoven’s unit begins to reformulate the entirety of armed forces chain of command, and begins to place civilian contractors with authority over military decision processes. The basis of this revolution is RAND’s Planning-Programming-Budgeting System, carried out by McNamara’s appointee for DoD comptroller, Christopher Hitch. Hitch, incidentally, employs RAND’s David Novik to assist him.
In line with the Gaither commission and the CED’s policy recommendation, defense budget ceilings are removed. Hitch sees the possibility that it would be possible for defense and national security expenditures to rise by $30 billion per year. (pg. 63)
RAND alumni Thomas Schelling: “budgetary processes are a means of control. Secretary McNamara surely did not use PPBS [RAND’s Planning-Programming-Budgeting System] … merely to cut waste and to Improve efficiency or to save money. He took advantage of his central role in the defense-budgeting process to exercise what he believed to be his authority over military policy.” (pg. 64)
PPBS as hierarchical and centralized; a system of managerial “command and control” in the Pentagon with civilian ‘defense rationalists’ at the top of the pyramid → justified on the grounds that the armed forces are supposed to serve the American people.
McNamara announces that a new tactical fighter, then TFX, will be developed for Air Force and Navy use: lighter and smaller (built for landing and storage on aircraft carriers) that also had a high-bomb yield and could fly intercontinental missions (for potential Air Force strikes on Soviet targets). The military is taken aback by McNamara’s proclamation (after all, he has no engineering knowledge), but a bidding war ensues between four corporations. In the end, the contract goes to General Dynamics – a decision forced by McNamara, despite the fact that the Air Force high command agreed unanimously on awarding the contract to Boeing. (pg. 65)
A Congressional investigation in launched to get to the root of McNamara’s decision. The conclusion is that the decision to award the TFX contract to General Dynamics was allegedly to “showcase” the PPBS process, but was “more about cutting the military out of decisions than it was about careful and rigorous analysis.” (pg. 67) The Joint Chiefs of Staff was blocked from any input in the decision-making process, with McNamara instead differing to a business-community adviser unit he established called the Defense Industry Alliance Council (DIAC).
1965: President Lyndon Johnson mandates the PPBS become the standard process in all federal agencies.
As Congress was keen to emphasize, a vital characteristic of democracy is that a people be governed by reasoned argumentation in which citizens participate, directly or through elected representatives. But the new technologies of social management filtering into federal agencies from the Pentagon had an entirely different logic and looked to the claims of science, objectivity, and expertise to obviate the legislative, democratic process. (pg. 68)
Alain Enthoven insisted that RAND’s science of System Analysis, embodied in the PPBS process, could be put to use at all levels of government, ranging from federal down to local, and could also become essential in social welfare programs. PPBS is fully integrated into the Great Society programs of poverty alleviation, and this quickly becomes the key ‘testing-ground’ for the theory on a mass scale.
Backlash against PPBS: at odds with democratic government → shuts out policy figures for private interests, heavily technocratic, deterministic, and conforms all under its yoke to a ‘military regimentation.’ This discontent grows over the course of the 1960s, and by 1969, the PPBS program is discontinued. However, this didn’t eliminate PPBS; it had become integrated in the governing mentality and analysis methodology in an almost organic growth. Training programs for government staffers, curriculum at business schools, consulting agencies, and think-tank all incorporated RAND-inspired systems analysis into their own systems. (pg. 71) Systems analysis effectively shifted from something viewed as profoundly anti-democratic and technocratic to a legitimatized process inherent to functioning systems.
Systems analysis becomes fully integrated into the elite business schools of the country, thanks in no small part to the interlocking relationships academic administration came to maintain with RAND:
The pattern of interlocking RAND alumni careers weaving in and out of government, consulting organizations, and universities was another powerful factor in establishing a knowledge production regime. The most highly visible of these career paths were those of key alumni who helped to bring about the disciplinary shift from public administration of the 1940s and 1950s to “public policy,” which had recognizably replaced in the by the mid-1970s.At Harvard, RAND alumnus Thomas Schelling, who had a joint appointment at Harvard’s schools of government and business along with his rational-choice oriented student Richard Zeckhauser led the movement for core curriculum reform and the reconstruction of the old Graduate School of Public Administration under the new name of the Kennedy School of Government. At the University of California, Berkeley, RAND and DOD alumnus William Niskanen presided over the establishment of the curriculum for the new Public Policy program. After assuming the presidency of RAND in 1964, and pursuing the newly established high growth area of domestic policy analysis, Henry S. Rowen joined Stanford s business school faculty and served as director of the Urban Management Program. Alain Enthoven similarly joined the business school faculty at Stanford. This set of career paths is only the most visible and easiest to articulate in the wider network of connections that established rational decision technologies as a basic part of the American intellectual endowment, and as the core idea set of the newly emergent field of public policy. (pgs. 74-75)
McNamara leaves government, becomes president of the World Bank → implements system analysis as the primary methodology in World Bank development economics.
Amadae argues that systems analysis/rational choice gained a sense of institutional legitimacy by its evolution from RAND’s drawing boards to Pentagon policy and beyond; at the same time, this was matched by a proliferation of systems analysis/rational choice in the field of social science. Like its governmental counterpart, the social sciences approach was wholly contingent on researchers and theorists emerging from RAND. At the heart of both was the influence of John von Neumann and game theory, particularly with hisTheory of Games and Economic Behavior. Other RAND-linked texts paving the way for rational choice included Kenneth Arrow’s Social Choice and Individual Values; An Economic Theory of Democracy, by Anthony Downs (a student of Arrow); James Buchanan and Gordon Tullock’s The Calculus of Consent; and Mancur Olson’s The Logic of Collective Action. (pg. 78)
Only three initial rational choice theorists did not work at RAND: Duncan Black, Vincent Ostrom, and William H. Riker. However, Ostrom and Riker were both affiliated with the Center for the Advanced Study of Behavioral Sciences (CASBS), opened at Stanford University in conjunction with the Ford Foundation – and more specifically, under the direction of Gaither. (pg. 79)
Links of related interest:
- Deterritorial Investigations Unit – Between the Transnational Capitalist Class and Global Civil Society
- Noir Realism: The Bionic Horizon
- Noir Realism: The Fourth Estate
- Brian Holmes: Alarm Clock Films