Less than two weeks after Germany invaded Poland and two years before Pearl Harbor, the Wall Street–dominated Council on Foreign Relations began formulating a remarkably ambitious strategic plan for the war. But this was much more than just war planning. The planners mapped out schemes for U.S. entry into the war, for U.S. victory, and for the creation of a postwar world order to be dominated by the U.S. The CFR planning was called the War and Peace Studies Project. It was financed by the Rockefeller Foundation and carried out under the nominal auspices of the State Department. The project called for the U.S. to act as the hegemon of a vast capitalist imperium, ensuring the predominance of the U.S. and its junior partners over global resources and markets.
To manufacture public consent for these grandiose plans, the CFR relied on council member and media tycoon Henry Luce. His essay, “The American Century,” laid out the case for the CFR’s vision—without attributing it to the organization or its plutocratic backers, naturally. Most of Luce’s argument was presented in banal and altruistic terms, the odd, excessively candid passage notwithstanding:
Our thinking of world trade today is on ridiculously small terms. For example, we think of Asia as being worth only a few hundred millions a year to us. Actually, in the decades to come Asia will be worth to us exactly zero—or else it will be worth to us four, five, ten billions of dollars a year. And the latter are the terms we must think in, or else confess a pitiful impotence.
The CFR/Luce vision for American empire was met with some resistance. Most famously, it was opposed by Roosevelt’s vice-president, Henry Wallace. The vice-president’s “Century of the Common Man” speech was a direct rebuttal to Luce. The showdown between Luce and Wallace represents a seminal conflict between progressive, democratic elements and the forces which would become the postwar exceptionist American deep state. With the benefit of hindsight, the victory of the Luce faction seems overdetermined. The defeat of Wallace’s vision was made manifest by a conspiracy of political elites known as “Pauley’s coup.” Against the wishes of an ailing FDR, the powerful plotters removed Wallace from the 1944 Democratic ticket, replacing him with the much more pliable Harry S. Truman. It has been argued that “The attainment of the nuclear weapon was almost certainly the deep state’s moment of conception.” Though any metaphor is imperfect, it may be more accurate to describe the atomic bombings as the deep state’s birth—well after it was conceived by the War and Peace Studies Project. As the second most popular U.S. politician, behind FDR, the progressive Wallace was a staunch antifascist and antiimperialist. As such, he stood in the way of the U.S. corporate elite and the imperial designs—hence his removal in what was effectively an antidemocratic coup.
At the end of World War II, the US was the only undamaged great power. It had a monopoly on nuclear weapons and by far the greatest industrial capacity and largest gold reserves. No country in world history has ever been as secure and unassailable as the U.S. at that historical moment. By contrast, the Soviet Union had lost 26,600,000 people and suffered the destruction of many of its largest cities. Nevertheless, the U.S. did nothing to compensate its former ally for bearing most of the burden when it came to defeating Nazi Germany. Instead, the U.S. quickly settled upon the Soviet Union as a new existential foe. Those who advocated coexistence and peaceful competition with the Soviets—like Henry Wallace—were pilloried by conservatives and the emerging Cold War liberals who were considerably more bellicose than FDR and other prominent New Dealers.
To prosecute World War II, the U.S. had created a large military bureaucracy. This was done with considerable influence from the corporate overworld, and it would eventually give rise to the globe-dominating postwar U.S. deep state. These national security state institutions were conceived and midwifed with considerable and decisive input from the overworld of private wealth. Such was the case in a number of fateful instances in which top-down power was brought to bear in the making of history during this period—namely the War and Peace Studies Project, “Pauley’s coup,” the dropping of the atomic bombs, and the National Security Act of 1947. The original structure of the U.S. national security state was established when President Truman signed the National Security Act of 1947. Specifically, the act created the Joint Chiefs of Staff, the National Security Council, and the Central Intelligence Agency. Perhaps most notably, the CIA was willed into being through the efforts and influence of the upper strata of corporate America. The agency was conceived through the efforts of a number of Wall Street lawyers. Notably, it was a Wall Street lawyer who penned the “elastic clause” in the National Security Act. Shortly thereafter, the passage came to be interpreted as giving the CIA authority to carry out all manner of illegal covert operations—or “other duties” in the Act’s oblique language.
Very early on, CIA elements began establishing illicit self-funding operations that utilized the drug trade. Specifically, the CIA’s Office of Policy Coordination collaborated with opium-trafficking Kuomintang officers in Burma and Thailand, ostensibly so the proceeds could fund the KMT’s hopelessly doomed effort to retake mainland China. A transnational commercial intelligence firm known as the World Commerce Corporation was involved in laying the groundwork for these efforts. The WCC was staffed by former British and U.S. intelligence officers, including the former head of the wartime Office of Strategic Services, Wall Street lawyer William Donovan. WCC’s financial backing came from overworld figures like Nelson Rockefeller, John McCloy, and Richard Mellon. Paul Helliwell, a CIA man and OSS veteran with close connections to Meyer Lansky, was also a key WCC figure. The whole episode illustrates the deep state nexus between the overworld of private wealth, the underworld of organized crime, and the governmental or private intelligence outfits that mediate between them. State secrecy, a globe-sprawling national security state, and the operant perception that the U.S. faced an existential threat in communism—all these elements conspired to transform the character of the American state, contributing to the rise of the exceptionist deep state.
NSC-68 and the Rise of the Military Industrial Complex
Around the time that a clandestine overworld/underworld milieu was impacting history through parapolitical means in Southeast Asia after the war, other events in America’s higher circles would also influence the trajectory of the emerging American deep state. The U.S. experienced economic downturns in the years following World War II, partly as a result of declining military spending. Additionally, there was the issue of Western Europe and the “dollar gap,” i.e., the looming inability of Western Europe to continue purchasing U.S. exports after Marshall Plan funding was to cease in the early 1950s. The fundamental issues facing U.S. policymakers at this time were not unforeseen by American elites. Wall Street’s Council on Foreign Relations had been involved in the formulation of U.S. prewar, wartime, and postwar planning. This was done on the basis of what the CFR deemed to be the national interest—basically, “a capitalist system with private ownership of the productive property of society, resulting in inequality in the distribution of wealth and income and attendant class structure.” To create a world order in the U.S. national interest, the CFR maintained that after the war, the U.S. would need unrestricted access to Asian raw materials and markets—as well as to Western European markets. This was deemed essential because two-thirds of U.S. foreign trade was outside of the Western Hemisphere. Alternatively, the need for these export markets could be negated by public ownership of essential productive sectors of the economy combined with democratically organized planning to ensure employment and healthy consumption. Any such course would be a nonstarter for the CFR since, as Shoup and Minter point out, every ruling set of elites “define[s] the national interest as the preservation of the existing set of economic, social, and political relationships and of their own rule, the national interest in a capitalist society is little more than the interest of its upper class.”
The key tactics and grand strategy of the American overworld would eventually be formulated in a 1950 National Security Council study known as NSC-68. The document was written largely by Paul Nitze according to the specifications of his boss, Secretary of State Dean Acheson. Arguably the ur-neoconservative, Nitze was also a protégé of the first defense secretary, James Forrestal. NSC-68 depicted the Soviets in apocalyptic terms, calling for all manner of exceptionalist anti-Soviet measures and for a massive U.S. rearmament campaign.
The conventional view of NSC-68 is that it was an alarmist strategic paper that resulted from the twin traumas of 1949—the communist victory in China and the Soviet acquisition of the atom bomb. Further, the orthodox narrative maintains that it was the Korean War which serendipitously intervened to make America’s rearmament possible. When examined critically, those events seem to have been pretexts of convenience, collectively serving as a cover story to achieve the express desired ends of the U.S. establishment.
In late 1949, Paul Nitze himself argued that “Nothing about the Soviets’ moves indicates that Moscow is preparing to launch in the near future an all-out military attack on the West.” For the American power elite, the real concern was the specter of a neutral Europe. This fear is articulated in NSC-68, a document that remains a classic in the genre of American crackpot realism: “The idea that Germany or Japan or other important areas can exist as islands of neutrality in a divided world is unreal, given the Kremlin design for world domination.” In general, the global communist meta-conspiracy theory is absurd given the historical realities at the time. In World War II, the Soviets lost 26.6 million people to America’s roughly 400,000 dead. Large swaths of Soviet territory had been destroyed by the Nazi invaders. As a finale, the U.S. ended the war with a gratuitous atomic massacre carried out largely to intimidate the Soviet Union. After the Soviets acquired the bomb, George Kennan himself said that “the damage we should be able to do in the Soviet Union is not affected by whether the Russians have the bombs themselves or not. Pointing out the obvious, Kennan added that “Russia has only recently been through a tremendously destructive war; that the Soviet economy has far less that it can afford to lose than we have; and that the Soviet leaders will not inaugurate a type of warfare bound to lead to great destruction within their country.”
In reality, it was not Soviet communists, but U.S. elites who had directed all planning to achieve dominance over as much of the globe as possible. It was American planners who had decided that the U.S. would need unfettered access to markets and raw materials in the non-communist world. In other words, to the extent that the U.S. could engineer it, noncommunist countries must not allow the Soviet bloc access to markets and raw materials. Although NSC-68 largely contrived the Soviet bogeyman for its sponsors’ political purposes, one “threat” was indeed real in 1950: the possibility of a neutral Europe. In the years leading up to NSC-68, the Soviets tried to promote Western European neutrality by encouraging Soviet-Western European diplomatic relations to the extent possible. NSC-68 refers to this possibility in dire terms: “If [neutrality] were to happen in Germany the effect upon Western Europe and eventually upon us might be catastrophic.”
Besides the geopolitical motivations behind the campaign to ratchet up the Cold War and drastically boost military spending, there were domestic political considerations as well. For one thing, the U.S. aerospace industry was in dire straits in the years following World War II. American imperialists understood that U.S. plans for global hegemony required primacy in the aerospace industry. But U.S. aerospace predominance was going to be difficult to achieve without massive and profitable firms. The U.S. could have embarked upon the creation of a national R&D division that employed the services of the best engineers and gave them access to government funding and facilities. But this was anathema to the corporate American overworld. Following the exposure of massive World War I profiteering, there were calls throughout the country and in Congress to nationalize the arms industry. But as with most substantial progressive reforms, this effort was crushed in top-down fashion by corporate American forces.
For all the right’s rhetoric about government inefficiency, it seems that what the corporate overworld truly fears is efficiency in the public sector. If this wasn’t clear in the twentieth century, it should be obvious in the present day as corporate actors have relentlessly sought to privatize everything from social security, utilities, the postal service, and even public education. Leading corporate oligarch Jeff Bezos went so far as to create his own delivery service at great expense to avoid utilizing the services of the U.S. Postal Service. So for the mid-twentieth century corporate American hive-mind, a nationalized aerospace industry would have been a horrifying prospect. It is no coincidence that one of the men typically cited as being among the earliest neoconservatives was Henry “Scoop” Jackson Washington’s Democratic senator—a man sometimes mocked as being “the Senator from Boeing.”
The aerospace industry had been a major beneficiary of the U.S. war effort. Of the $3.7 billion invested in the industry’s expansion from 1940 to 1944, 92 percent came from federal government spending. The wartime profits were spectacular. From 1941 to 1945, Boeing alone was earning around $12 million, roughy $200 million in today’s dollars, a year after taxes. With the government funding most of the investment, it is estimated that private investment in Boeing was $15.9 million from 1941 to 1945. Therefore, Boeing’s $60 million of after-tax profits in those years represent a sum “at a minimum 3.77 times larger than the [estimated private investment] figure of $15.9 million.” In other words, Boeing’s profits represented a 377 percent return on investments over that period.
With the war over, aerospace profits tanked. The firms’ military and commercial business declined drastically. Business strategies to reverse the firms’ fortunes all failed. This left political action as the last hope for these companies. The tremendous weakness of the industry paradoxically gave its leaders an advantage when it came to persuading the ruling U.S. corporate elite to back the campaign for vast military contracts. Leading U.S. magazines printed articles with assessments of the industry’s predicament and prospects. Such would include items like: “[The] invalid aircraft manufacturing industry [. . .] has probably received more sympathetic attention in Washington during 1947 than any other single business group,” and “[T]he present state of the aircraft industry represents as grave an industrio-economic problem as exists in the US today.”
Part of the corporate overworld’s concern for aerospace stemmed from its connections to other key sectors like the steel industry as well as major firms like General Motors, General Electric, and Westinghouse—all companies that profited from large aerospace procurement contracts. Perhaps most decisive was the fact that the Rockefeller family had enormous holdings in the industry. The largest investment bank in the world at the time—Chase National Bank—was acquired by John D. Rockefeller Jr. in 1930. So large was Chase’s stake in aerospace that the industry’s troubles posed a serious threat to the bank. During World War II and after, Chase was by far the top single creditor to the aerospace firms.
Enter Winthrop W. Aldrich, chairman of Chase and brother-in-law to John D. Rockefeller Jr. Aldrich was also a friend of Defense Secretary James Forrestal, a man who had previously been the president of Wall Street’s venerable Dillon, Read and Company. Previously, Aldrich’s connections had led his being appointed to chair the President’s Committee for Financing Foreign Trade. In this context, it is important to note that in 1948, the Secretary of the Air Force sent a letter to Aldrich asking for help: “the problem is how to get the money to get what we want, and any advice you could give us to that end would be very much appreciated.” For the Air Force “to get the money to get what [they wanted]” would also mean pulling the aerospace industry and its powerful creditors out of danger.
The story behind the deceptive campaign to make all these things happen is too long to go into here, but it is best told in history professor Frank Kofsky’s book, Harry S. Truman and the War Scare of 1948: A Successful Campaign to Deceive the Nation. To summarize, President Truman, Secretary of Defense Forrestal, and Secretary of State George Marshall collaborated in 1948 to contrive a war scare that would save the aerospace industry. In opportunistically misinterpreting events in Czechoslovakia, Finland, and Berlin, the three men “employed deceit and duplicity to convey the deliberately misleading impression that the USSR was poised to invade Western Europe at a moment’s notice.” The scare tactics worked and the federal government did intervene to reverse the industry’s fortunes. However, this would be only a stopgap measure—a prequel to the events of 1949 which were followed by the drafting of NSC-68 in 1950.
Another key piece of historical context related to U.S. rearmament was the growing strength of organized labor. There were massive worker uprisings in the U.S. after World War II. The anti-New Deal Taft-Hartley Act was passed in 1947 in response to labor militancy and couched with anticommunist pretenses. For example, under the law, union officers were required to sign anticommunist affidavits for the federal government. Orthodox historiography seems to encourage a posture of studied naivety about America’s rich elites and their domination of the state. Obviously, the pronouncements of policymakers are not typically framed in terms of profit or of commercial interests’ dominance over the U.S. and the world. For mainstream journalists, historians, and social scientists, it is considered gauche to attribute elite actions to elite class interests.
In other words, it is bad form to assume that the motives behind elite schemes and strategies derive from unstated, class-conscious imperatives such as (1) accruing ever more wealth and power and (2) maintaining their hegemony over society. If one is too unflinching in attributing the actions of wealthy and powerful people to a desire to aggrandize their wealth and power, one is a materialist—i.e., a Marxist—and thus beyond the pale. New Left historian Bruce Cumings is in part seemingly alluding to this when he writes about historical “imponderables,” a reference to the opaque motives and decision-making processes at the top of the American power structure.
At this juncture, it is time to ponder some imponderables. As C. Wright Mills pointed out in The Power Elite, by the mid-1950s it was clear that the privately incorporated permanent war economy, the PIPWE, to coin an acronym, had been institutionalized. For the American power elite, the PIPWE was their politico-economic cure-all. PIPWE saved U.S. aerospace and its financiers, it ended the postwar economic slump, it served to stave off the impending “threat” of Western European neutrality, and it weakened labor by elevating anticommunism to the status of state religion. In so doing, it gave rise to the military-industrial complex, a term coined by Eisenhower’s speechwriter, a political scientist who was certainly drawing from the work of C. Wright Mills.
In lieu of any sort of benevolent reforms that would first and foremost create material security and prosperity for the American people, military spending became the alpha and omega of U.S. economic planning. The more straightforward and proximate reasons for this are outlined above, but deeper motives may also help explain this historic disaster. In 1987, old school Cold Warrior George Kennan wrote, “Were the Soviet Union to sink tomorrow under the waters of the ocean, the American military-industrial complex would have to remain, substantially unchanged, until some other adversary could be invented. Anything else would be an unacceptable shock to the American economy.” This is an exemplary formulation of establishment crackpot realism from one of its most storied apostles. But that does not explain why the massive, economically crucial government expenditure must necessarily be for the military rather than for human needs. To answer this deeper question, we must turn to literature.
In George Orwell’s 1984, there’s a strange passage that provides some insight. The text is supposed to be part of a terrorist group’s manifesto, but it is never clear whether or not the terrorist group is or is not some kind of stage-managed false flag operation of the state. Orwell is presenting some grim material in an obscure way. It is reminiscent of Plato’s use of dialog between Socrates and Thrasymachus in The Republic to make Plato’s own views ambiguous. Orwell writes,
The primary aim of modern warfare (simultaneously recognized and not recognized by the directing brains of the Inner Party) is to use up the products of the machine without raising the general standard of living. Ever since the end of the nineteenth century, the problem of what to do with the surplus of consumption goods has been latent in industrial society. At present, when few human beings even have enough to eat, this problem is obviously not urgent, and it might not have become so, even if no artificial processes of destruction had been at work. The world of today is a bare, hungry, dilapidated place compared with the world that existed before 1914, and still more so if compared with the imaginary future to which the people of that period looked forward. In the early twentieth century, the vision of a future society unbelievably rich, leisured, orderly, and efficient—a glittering antiseptic world of glass and steel and snow-white concrete—was part of the consciousness of nearly every literate person. Science and technology were developing at a prodigious speed, and it seemed natural to assume that they would go on developing.
The economist Michael Hudson often writes and speaks about these issues. The aim of classical economists was to reform economies in such a way as to move toward a “free market.” This is not the mythical “free market” extolled by plutocrat-sponsored right-wing economists. Rather, the free market was a market free of economic rent that would otherwise go to a wealthy rentier class. Defined as the sum left over when cost is subtracted from price, economic rent refers to “income that has no counterpart in necessary costs of production.” It is the “free lunch” that allows the surplus of the economy to accrue to a privileged rentier class that passively gains wealth by way of the economy’s organization. The classical economists sought to reduce and eliminate the “free lunch” and thereby bring prices more closely in line with costs. This would unleash economic productivity by eliminating the parasitism of the rentier class. At the dawn of the twentieth century, the application of classical economics combined with advances in technology led people to believe that a golden age of human progress and prosperity was approaching. But the reactionary rentier class used its rentier fortunes to launch an economic “Counter-Enlightenment.” As Michael Hudson summarizes,
To deter public regulation or higher taxation of such rent seeking, recipients of free lunches have embraced Milton Friedman’s claim that There Is No Such Thing As A Free Lunch. [. . .] The actual antidote to free lunches is to make governments strong enough to tax economic rent and keep potential rent-extracting opportunities and natural monopolies in the public domain.
The point here, articulated by Orwell, is that technological progress in production and in economic planning should have ushered in a golden age of civilization. Instead, activist elites recognized the implications of this dynamic and responded by using their wealth and power to maintain the inequality and material insecurity that are preconditions for their continued dominance over society.
Orwell continues in this vein:
This [bright future] failed to happen. [. . .] Nevertheless the dangers inherent in the machine are still there. From the moment when the machine first made its appearance it was clear to all thinking people that the need for human drudgery, and therefore to a great extent for human inequality, had disappeared. If the machine were used deliberately for that end, hunger, overwork, dirt, illiteracy, and disease could be eliminated within a few generations. And in fact, without being used for any such purpose, but by a sort of automatic process—by producing wealth which it was sometimes impossible not to distribute—the machine did raise the living standards of the average human being very greatly over a period of about fifty years at the end of the nineteenth and the beginning of the twentieth centuries.
The paradox of deprivation alongside latent or even excessive productive capacity speaks to the power of the extant regime. For example, we rarely hear it publicly stated that our civilization does not even consider solving easily solvable socioeconomic problems—problems that could have been solved with technology that existed by the mid-twentieth century. Instead, we are conditioned to be resigned to dystopian facts like the existence of a large homeless population alongside an even larger number of vacant homes.
But why wouldn’t elites want to preside over a golden age of human civilization? It is counterintuitive, to be sure. Orwell grapples with the deep politics of industrialized civilization:
[I]t was also clear that an all-round increase in wealth threatened the destruction—indeed, in some sense was the destruction—of a hierarchical society. In a world in which everyone worked short hours, had enough to eat, lived in a house with a bathroom and a refrigerator, and possessed a motor-car or even an aeroplane, the most obvious and perhaps the most important form of inequality would already have disappeared. If it once became general, wealth would confer no distinction. It was possible, no doubt, to imagine a society in which wealth, in the sense of personal possessions and luxuries, should be evenly distributed, while power remained in the hands of a small privileged caste. But in practice such a society could not long remain stable. For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realize that the privileged minority had no function, and they would sweep it away. In the long run, a hierarchical society was only possible on a basis of poverty and ignorance.
This gets closer to the heart of the matter. Economic insecurity and deprivation are key components of a hierarchical society. If they are eliminated, and if literacy and education are widespread, the elites have to deal with a population that is not as easily mesmerized by power and not compelled by necessity to submit to subjugation and exploitation in exchange for material security. Thus, an independent (i.e., non-imperialized) society with no underclass would likely have the wherewithal to topple the hegemony of its rentier class. It is not difficult for elites to grasp this by extrapolating. And elites in every classical, feudal, and capitalist civilization have essentially the same job description: They work to reproduce their own hegemony over society. Their class interests, elite education, and vast wealth allow them to organize and overcome the collective action problems that overwhelm non-elites.
[It was not] a satisfactory solution to keep the masses in poverty by restricting the output of goods. This happened to a great extent during the final phase of capitalism, roughly between 1920 and 1940. The economy of many countries was allowed to stagnate, land went out of cultivation, capital equipment was not added to, great blocks of the population were prevented from working and kept half alive by State charity. But this, too, entailed military weakness, and since the privations it inflicted were obviously unnecessary, it made opposition inevitable. The problem was how to keep the wheels of industry turning without increasing the real wealth of the world. Goods must be produced, but they must not be distributed. And in practice the only way of achieving this was by continuous warfare.
Now Orwell is getting into the deep inner logic that informs the privately incorporated permanent war economy. By “real wealth,” he is referring to economic institutions that provide for human life. How can the economy keep generating profits without eliminating the economic insecurity that is a prerequisite for the exploitative system over which the rentier class presides?
The essential act of war is destruction, not necessarily of human lives, but of the products of human labour. War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent. Even when weapons of war are not actually destroyed, their manufacture is still a convenient way of expending labour power without producing anything that can be consumed. [. . .] In principle the war effort is always so planned as to eat up any surplus that might exist after meeting the bare needs of the population. In practice the needs of the population are always underestimated, with the result that there is a chronic shortage of half the necessities of life; but this is looked on as an advantage. It is deliberate policy to keep even the favoured groups somewhere near the brink of hardship, because a general state of scarcity increases the importance of small privileges and thus magnifies the distinction between one group and another.
Obviously, Orwell’s dystopia is not a perfect analogy for mid-twentieth century America. Though it is ever shrinking, the American middle and upper-middle classes have enjoyed high living standards by many measures. But material insecurity is always looming with medical bankruptcies and homelessness and other horrors as real possibilities. With the default exception of the Western intellectuals, it falls to artists like the comedian George Carlin to plainly articulate matters: “The poor are there just to scare the shit out of the middle class . . . keep on showing up at those jobs.”
Still, the war mentality is essential, as Orwell understood:
[T]he consciousness of being at war, and therefore in danger, makes the handing-over of all power to a small caste seem the natural, unavoidable condition of survival. War . . . accomplishes the necessary destruction . . . in a psychologically acceptable way. [. . .] What is concerned here is not the morale of masses, whose attitude is unimportant so long as they are kept steadily at work, but the morale of the Party itself. Even the humblest Party member is expected to be competent, industrious, and even intelligent within narrow limits, but it is also necessary that he should be a credulous and ignorant fanatic whose prevailing moods are fear, hatred, adulation, and orgiastic triumph. In other words it is necessary that he should have the mentality appropriate to a state of war.
With the U.S. power elite in mind, note the description of the party functionary: “a credulous and ignorant fanatic whose prevailing moods are fear, hatred, adulation, and orgiastic triumph.” This cast of mind was observed in mid-twentieth century America by shrewd thinkers like C. Wright Mills. The prevailing crackpot realism was sometimes given explicit expression by its high priests like John Foster Dulles. In one ubiquitously quoted passage, Dulles wrote, “In order to bring a nation to support the burdens of maintaining great military establishments, it is necessary to create an emotional state akin to war psychology. There must be the portrayal of an external menace. This involves the development to a high degree of the nation-hero, nation-villain ideology and the arousing of the population to a sense of sacrifice.” This was exactly the logic that was employed in the war scare hoax of 1948 and further articulated by NSC-68 in 1950.
In reality, NSC-68 was simply a grand strategic policy proposal. It took intervention from the corporate overworld to institutionalize the military industrial complex or—in a larger sense—to establish the privately incorporated permanent war economy. While Orwell’s grim dystopian musings are relevant and illuminating, there are aspects of the U.S. experience that did not conform to his depiction of the garrison state endlessly at war. To overcome the public resistance to massive remilitarization, deep state actors created a propaganda organization to promote the correct mindset in politicians and the public. Called the Committee on the Present Danger, it was formed shortly after NSC-68 was produced. Several of CPD’s founding members were establishment figures who had been involved in the drafting of NSC-68, including James Conant, Vannevar Bush, and Tracy Voorhees. The CPD lasted only a few years, disbanding in 1953 after having accomplished its mission of putting the U.S. on a permanent war footing.
For the corporate overworld, the utility of the Cold War was manifold. The military generated massive profits. Anticommunism served as a pretext for covert operations to ensure that decolonization became neocolonialism. Domestically, anticommunism allowed for organized labor and the political left more broadly to be largely neutralized. And yet, the privately incorporated permanent war economy did not spell meager subsistence for the American people, by and large. Labor unions were relegated to the middle levels of power, with real decision-making taking place in the higher circles. Still, there was a large and growing middle class, due in part to the business of military production. In the 1950s, it was part of U.S. propaganda to contrast high U.S. living standards with life in the Soviet Union, as evidenced by the “kitchen debates” between Nikita Khrushchev and Richard Nixon. While the immediate postwar years were characterized in part by economic slump, the 1950s were widely, if unevenly, prosperous owing in part to the war machine.
The military Keynesian foundations for the prosperous 1950s were laid by the administration of Harry S. Truman. But whatever might be said about Truman’s New Deal sympathies, the facts remain that his administration massacred over one hundred thousand with atomic bombs at Hiroshima and Nagasaki, set off an arms race with the potential to end human civilization, started the Cold War, created the CIA, and brought the military-industrial complex into existence. This is not to place too much emphasis on the man himself. Rather, it speaks to the nature of American society that prevailing forces would tragically select such a man for a such a position at such a point in history.
Eisenhower and the Growing Deep State
The American deep state was nurtured by the Truman administration. Key events under Truman were the product of elite machinations, including his ascension to the vice-presidency and the creation of the CIA within the National Security Act of 1947. Networks of elites representing or controlling overworld interests comprise a crucial component, perhaps the crucial component, of the deep state. The conflicts between the deep state and the democratic state preceded the creation of the national security state and figured heavily in momentous events in the postwar U.S. President Truman claimed that he never intended for the CIA to be involved in covert operations. In the aftermath of the Kennedy assassination, Truman wrote that he “would like to see the CIA be restored to its original assignment as the intelligence arm of the President [. . .] and that its operational duties be terminated or properly used elsewhere.” The agency assumed operational powers only through the obscure legalese of Wall Street lawyer Clark Clifford, who penned the sections of the National Security Act which created the agency in 1947.
Even in the early postwar years, the cleavages in the tripartite state were emerging. The Truman administration and the oil cartels provide an important case. In 1952, the Justice Department of the Truman administration sought to end the cartel agreements and prosecute key figures in the oil industry under antitrust laws. At the time, the global oil market was controlled by the “Seven Sisters” oil cartel, comprised of five U.S. companies, a British company, and a Dutch company. When a U.S. government order demanded that Esso (Standard Oil of New Jersey) hand over relevant documents, the company’s lawyer—Arthur Dean of Sullivan and Cromwell—refused to comply. To justify this defiance, Dean asserted his prerogative on grounds of “national security.” The documents, he argued, were “the kind of information the Kremlin would love to get its hand on.”
Around the same time that this antitrust investigation was going on, the U.S. members of the Seven Sisters were collaborating with the British “Sister,” the Anglo-Iranian Oil Company—later to become British Petroleum. Their efforts were aimed at preventing the nationalization of Iranian oil. Mohamed Mossadegh, the country’s prime minister, had been elected on the basis of one issue: the nationalization of Iran’s oil, theretofore controlled by the British. The Seven Sisters undermined Iran by instituting a boycott of Iranian oil exports. While only one of the Seven Sisters—the AIOC—was directly affected by the nationalization of Iranian oil, they all had every incentive to oppose any example that would encourage resource nationalism. To that end, the Seven Sisters controlled 99 percent of the crude oil tankers in operation at the time. Additionally, the oil cartel dominated all the markets in which the oil could conceivably be exported. And yet, despite the tremendous power wielded by the Seven Sisters, and despite a plea from Winston Churchill himself, Truman could not be convinced to authorize the CIA to overthrow the democratically elected Iranian government. However, despite Truman’s refusal to authorize the policy, officials within the CIA began to plan operations in late 1952 that would involve assisting the M.I.6/oil cartel campaign to oust Mossadegh.
The election of Eisenhower proved decisive in resolving the oil cartel’s conflicts in both the U.S. and Iran. Eisenhower had received substantial prior support from the oil industry. Upon his election, he appointed Sullivan and Cromwell partner John Foster Dulles as secretary of state and his brother Allen Dulles as director of Central Intelligence. The Truman Justice Department’s criminal complaint against the cartel was dropped and replaced by a civil complaint. The responsibility for prosecution was transferred to Dulles’ Department of State, which theretofore had never prosecuted an antitrust case.
On July 22, 1953 the CIA’s Operation AJAX was approved by President Eisenhower. The operation successfully overthrew Mossadegh and installed the Shah as a U.S. client-dictator. For years, some accounts described the coup as being a product of Iranian domestic politics. The common view today, even acknowledged by the New York Times, is that it was a CIA operation. However, Peter Dale Scott’s chronology suggests that it was an oil cartel operation that the CIA joined later. By this rendering, the deep state began a foreign intervention—a campaign that security state elements (the CIA) tentatively joined even before receiving formal authorization from the supposedly sovereign democratic state.
With Eisenhower installed, Mossadegh uninstalled, and the Seven Sisters antitrust investigation in the hands of Sullivan and Cromwell alum John Foster Dulles, the oil cartel emerged as an even stronger pillar of the U.S. deep state. With the Truman administration’s vestigial New Deal elements removed from power, big oil could fully capitalize on its vast influence on Wall Street, in the CIA, and in the public state via Eisenhower officials like Secretary of State Dulles. The deep state overcame restraints posed by democratic states—American and Iranian respectively.
In the U.S., this was accomplished by backing a presidential candidate who would support Wall Street interests more or less unequivocally. Such hopes were confirmed with Eisenhower’s appointment of the Dulles brothers to key positions, both brothers being lawyers from Sullivan and Cromwell. The nascent Iranian democratic state was overcome by the U.S. deep state thanks to the power of the oil cartel in conjunction with the Anglo-American clandestine services. The Mossadegh government was performing in a way that would be expected of a democratic state. It is unsurprising that the Iranian people preferred leaders who would support the national interest of Iran. The country’s previously existing oil arrangement under the AIOC favored a tiny Iranian elite. It fostered and exacerbated tremendous socioeconomic inequality in the country. Iranian democracy was dealt a death blow by AJAX. The consequences have been catastrophic for Iranian society up to the present day.
Obviously, the democratic state did not retain sovereignty over Iran. Although less dramatic, the declining sovereignty of the U.S. democratic state is also illustrated in this episode. It is noteworthy, and hard to imagine today, that the U.S. government would have sought to prosecute oil majors for conspiratorial, criminal business practices. But the fecklessness of U.S. democracy came to the fore. The assertion of national security privilege by an oil company lawyer from Sullivan and Cromwell was profoundly antidemocratic on its face.
The Seven Sisters’ actions preceding the 1953 coup in Iran were tantamount to neocolonial corporate fascism. Operation AJAX was a flagrant violation of the U.N. Charter—and thus of the Supremacy Clause of the U.S. Constitution. The episode marks a clear decline in American democracy—a set of traditions and institutions which had peaked during the New Deal. This decline was in considerable part due to unprecedented U.S. power and the securitization of politics which accompanied it—all of which served to further empower the power elite of the American overworld. The formal organs of the security state are certainly an important aspect of this story. But the forces and institutions that prevailed were intertwined with—and above—the public state and the security state.
All of this serves as argument for a tripartite conception of the state. Even in comparison to dual state theory, the tripartite state construct provides a way for social scientists to address elements of the political order which are typically suppressed or not given theoretical expression.
The case of Iran and the oil majors in the early 1950s is but one case in which the U.S. deep state conflicted with the democratic state. As Eisenhower left office, he delivered a farewell address warning about the military-industrial-complex that had grown to gargantuan proportions during his administration. This was in essence a warning of the power of the deep state, though narrowly focused upon the nexus between the arms industry, the military, and Congress—though Congress was omitted from the final version of the speech. It is worth noting that each of the three represents a component of the tripartite state, while the nexus between them collectively represents a further concentration of deep state power. The military-industrial complex nexus serves to make the democratic state less democratic. But it does not democratize the military, nor the deep state collectively, nor the armaments industry in particular.
Spanning the Truman and Eisenhower administrations, McCarthyism and the HUAC hearings of the early Cold War represented further consolidation of deep state power. In so doing, this second Red Scare infamously relied upon very questionable personages and constitutionally dubious methods. Multiple purposes were served. The radical left was neutralized, fanatical anticommunist elements were empowered, and formerly effectual progressive democratic voices within the elite were dispatched. In particular, the prosecution of Harry Dexter White seems to have been part of a power struggle to destroy New Deal forces. White and other like-minded figures were open to finding a modus vivendi with the Soviet Union. Furthermore, they sought to hold accountable certain conservative, Nazi-collaborating persons and institutions like Thomas McKittrick and the Bank for International Settlements.
To summarize, Dwight D. Eisenhower’s ascendency to the presidency was another milestone in the rise of the American deep state. Backed by vast sums of corporate cash—especially oil money—the Eisenhower administration proceeded to devote U.S. power toward furthering the CFR/Luce vision of American empire and thus to extinguish any remaining chances for a “century of the common man.” This was most clearly epitomized by Eisenhower’s appointment of the Dulles brothers to head the State Department and the CIA. The two brothers had previously been lawyers from Sullivan and Cromwell, the illustrious Wall Street law firm whose clients included the top U.S. and Western multinational corporations. Thus did the Wall Street overworld enjoy the deepest ties to the state department and to the CIA—collectively the pinnacle of U.S. foreign policy decision making.
When a journalist asked CIA director Allen Dulles what the CIA was, the spymaster answered that the agency was “the State Department for unfriendly countries.” The “unfriendly” countries would include Iran, Guatemala, Egypt, Syria, and Indonesia. In these places, the CIA and its agents carried out all manner of covert operations, up to and including assassinations and the overthrowing of governments. While the full history of almost all of these episodes has remained at least partly submerged, it was during the Eisenhower administration that C. Wright Mills wrote The Power Elite. Even without the bulk of the historical evidence which supported his thesis, Mills was able to make the case that democratic sovereignty had become a façade and that control lay in the hands of an increasingly interchangeable elite of power situated at the top of the organizations which dominated big business, the federal government, and the military.
At the end of his presidency, Eisenhower delivered—in the passive voice—a warning about the military-industrial complex, an undemocratic pillar of the deep state that had at the very least metastasized during his administration. Eisenhower’s speechwriter, political science professor Malcolm Moos, was surely influenced by Mills and The Power Elite. The term military-industrial complex was in essence a repurposing of Mills’ privately incorporated, permanent war economy—though obviously Eisenhower, unlike Mills, did not anchor it in a deeper critique of the antidemocratic character of big business and the military. Whatever the old general may have been referring to near the end of his presidency, Eisenhower best summed up his administration when he said that to his successor, he leaves “a legacy of ashes.”
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