Introduction: is the government to blame?

In addressing controversial problems, society and the media often seek to blame some individual, group or organization. For controversies associated with arms producers, governments are an obvious target for criticism. In response to the question of whose fault it is, the reply is often that the government is to blame! This chapter explores the role of government in arms industries. It assesses the importance of government and the validity of claims that “it is all the government’s fault”.

The role of government

Governments are central to understanding the arms market and arms industries. Their importance arises from their buying power, with government as either a monopsony or major buyer of arms, particularly of lethal equipment (including the supply of parts and components for such equipment). Examples include aircraft carriers, warships, nuclear-powered submarines, combat aircraft, missiles, tanks, armoured fighting vehicles and artillery, where national governments are often the only buyers of such equipment. As a single buyer, they are monopsony buyers. Exceptions arise where arms are exported, so there are also foreign buyers but the national government remains a major buyer of the equipment. In such cases the national government is not only a major buyer: it is also the original buyer that initiated and funded the project.

Governments can use their buying power to determine the size, structure, conduct, performance and ownership of both arms producers and arms industries. Buying power takes the form of arms contracts. National governments awarding arms contracts to their domestic arms producers and industries can determine the size of the arms industry: more contracts mean a larger domestic industry. For example, arms industries expand during wars and conflicts such as the First and Second World Wars, the Cold War, and the Korean, Vietnam, Afghanistan and Iraq conflicts.

Government can also use its buying power to determine the structure of its national arms industry through affecting the size of firms as well as the conditions of entry and exit from the industry. For example, major contract awards might be conditional on arms producers merging to create larger firms.