A widely retweeted article this week in the Intercept claims that the 20-year Afghanistan war, far from being a failure, was an “extraordinary success” for the top five U.S. defense contractors.
The article calculates that if you had invested an evenly divided $10,000 in those companies’ stocks on Sept. 18, 2001, the date President George W. Bush signed the Authorization for the Use of Military Force, those shares would be worth $97,795 today. By contrast, if you’d put the same money in an S&P 500 index fund, you’d have only $61,612. So the big five defense corporations outperformed the stock market by 56 percent.
This is spurious, to say the least. Yes, there is a military-industrial complex, and yes, defense companies have performed better than many (but far from all) other sectors of the economy since the century began. But the growth of the five largest companies—Boeing, Raytheon, Lockheed Martin, Northrop Grumman, and General Dynamics—has had almost nothing to do with Afghanistan.
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Boeing has made most of its profits on commercial airliners. Its big-ticket defense contracts have come for its work on the B-1 bomber, C-17 cargo jet, V-22 Osprey vertical takeoff plane, and F-15 and F-18 fighters. (It recently sold 28 of the latter fighters to Kuwait for $1.45 billion.) None of these weapons played much of a role in Afghanistan.
The same can be said for the other aerospace giants.
Raytheon’s big contracts have been for a new nuclear cruise missile, strategic missile defense systems, and a lot of projects dealing with sensors, satellites, electronics, and cyberwar.
Lockheed Martin has made some money from the Afghanistan war, especially in its subdivisions that manufacture Black Hawk helicopters and multiple-launch rocket systems. But the big bucks have come from contracts for the F-35 stealth fighter ($12 billion in the current budget alone), the combat systems for Aegis cruiser ships, and lots of electronics for command-control, cyberwar, and space communications.
General Dynamics has made a little money from Afghanistan with the Marines’ LAV-25 light-armored vehicle, but the multibillion contracts have been for nuclear submarines, Burke-class destroyer ships, and—on the commercial side—Gulfstream jets.
Northrop Grumman’s big-ticket items have been missiles and combat planes, including the next-generation intercontinental ballistic missile and B-21 bomber (now in research and development), as well as the Webb Space Telescope, the orbiting observatory, and the Mars Ascent Propulsion System.
In other words, if the United States had never gone to war in Afghanistan, the profit sheets of these companies would be pretty much unchanged.
The surge in defense budgets over the past two decades—from $305 billion in 2001 to $754 billion in 2021, with a likely spurt to $777 billion next year—has been propelled by many events, mainly by the renewed tensions with Russia and China, which have provided the U.S. Air Force and Navy with rationales for new and expensive fighter jets, bombers, missiles, ships, and submarines. (The war in Iraq also played a role, much more so than the war in Afghanistan, but even there, the big five contractors didn’t make a lot of money from the fighting—most of which was conducted with drones, helicopters, armored vehicles, and rifles. Most of the money spent on the Iraq and Afghanistan wars were for personnel, training, and health care.)
Over the 20-year war, the U.S. supplied the Afghan military with a total of $83 billion in supplies and weapons. That comes to a little more than $4 billion a year on average—a small fraction of the total U.S. defense budget.
If it were otherwise, we should see a precipitous decline in defense stocks as the U.S. war in Afghanistan has screeched to a halt. But an article in this week’s Barron’s argues that the withdrawal will benefit defense stocks. The fall of Kabul to the Taliban will mean less stability in the region, which will increase demand for “intelligence, surveillance, and reconnaissance missions” as well as “unmanned systems, missiles, and satellite capabilities.” That’s where the major contractors are primed for growth. They’ve had very little to do with combat in Afghanistan, but they may play a role in what President Joe Biden has called “over-the-horizon” surveillance and targeting in the future (i.e., gathering intelligence and launching air or missile strikes from hundreds of miles away).
The war in Afghanistan was a misguided morass in many ways. But it’s an ideological cliché—and a mistaken one, at that—to suggest that the military-industrial complex had anything to do with it.
