Computers, and the different, wide-ranging technology which was created as a result of this industry, has frequently been shown as an example of the benefits which capitalism, private enterprise and risk taking can bring. But if one starts to scratch the surface of this topic, one comes to a different conclusion.
Like every industry, its start-off point is the most crucial in deciding whether it survives or not. At the start, the development of the semiconductor (which is the building block of computer chips) was massively subsidised by the U.S. military. ''In its early years, up to 100 percent of the [semiconductor] industry's output was purchased by the military, and even as late as 1968 the military claimed nearly 40 percent.''-Laura D'Andrea Tyson, Who's Bashing Whom?: Trade Conflict in High-Technology Industries, Washington: Institute for International Economics, 1992. She goes on to say how ''The willingness and ability of the U.S. government to purchase chips in quantity at premium prices allowed a growing number of companies to refine their production skills and develop elaborate manufacturing facilities. . . .''
The military remained the biggest buyer of these leading edge parts during the 1960's, with the military ''funding covered an estimated 85 percent of overall American R&D in electronics. . . .''-Tyson.
Computer development was incredibly expensive at the time, so much so that without the State to massively subsidize it, it would have been seen as too risky for corporations to invest in. This huge spending continued on for decades, with DARPA (Defense Advanced Research Projects Agency) encouraging universities and private companies to build technology, with research grants of 1.5 billion dollars handed out in 1992 alone.
''Throughout the Reagan and much of the Bush Administrations, Congress pumped hundreds of millions of dollars into DARPA, enabling the agency to work hand in hand with industry on technologies that would be critical not just to defense but to U.S. competitiveness in civilian markets as well (my bold)''- Elizabeth Corcoran, "Computing's controversial patron," Science, April 2, 1993, with Andrew Pollack calling DARPA ''the closest thing this nation has to Japan's Ministry of International Trade and Industry''.
The Star Wars, or Strategic Defense Initiative (SDI) project was another roundabout way of massively subsidising the high technology industry, with Army Colonel Robert W. Parker, director of resource management in the office of SDI saying "One way or another, 80% of our money is going to the private sector."(Dave Griffiths, Evert Clark, and Alan Hall, "Why Star Wars Is A Shot In The Arm For Corporate R&D).
Malcolme W. Browne, "The Star Wars Spinoff" (cover story), in the New York Times Magazine, on August 24, 1986 stated that ''It is estimated that adapted Star Wars technology will eventually yield private-sector sales of $5 trillion to $20 trillion. . . .'' (my bold). ''To get all the necessary advances, it (SDI) will pump 3% to 4% of its projected budget [$26 billion] over the next five years into pushing innovations in technologies...''(my bold)-Dave Griffiths, Evert Clark, and Alan Hall, "Why Star Wars Is A Shot In The Arm For Corporate R&D," Business Week, April 8, 1985.
This Defense spending had little to do with National Security. It was mainly to do with the taxpayer pumping vast amounts of money (much of it no strings attached) into developing technologies which would then be sold back to the taxpayer. The Star Wars ''plan'' would never work and wasn't expected to work, maybe by Reagan himself, but by no-one else. ''The best evidence indicates that . . . a space-based defense has no chance of working as envisioned by President Reagan''-William J. Broad, "Star Wars Is Coming, But Where Is It Going?," New York Times Magazine, December 6, 1987, p. 80.
This Defense R and D spending is still going on, with 10's of billions of dollars spent every year to largely subsidise big industry. Think of what that money could be used for if it went into social spending projects.