Late Stage FARism

Going through my LinkedIn feed the other day, I came across a post from a change agent in the defense community and their claim that they had a recent education in Late Stage Capitalism. For those not familiar with the term, it originates from Marxist thinkers Werner Sombart at the turn of the century, Ernest Mandel a half-century later and others who believe capitalism has stages, the last one being just prior to the end of the capitalist system itself. Some believe we are currently in that last stage of this economic system now and are on the precipice to witnessing the fall of capitalism. 

I don’t plan to get into the arguments for and against this line of thinking, but since the use of the term came from someone close to the recent innovation movement in the Department of Defense, the post did get me thinking. Supporters who believe capitalism will ultimately fail point to the absurdities and discrepancies of the system as evidence for why it is flawed. They look at $500 denim jeans with fake mud from Nordstrom’s and $1200 margaritas as examples of a system out of control. Never mind the fact that the consumer has a choice whether to purchase those items or not as opposed to being dictated that they will pay those prices or face consequences.

I don’t believe these examples, however, to be too far an analogy from comparing these absurdities and discrepancies to those seen, real or not, in the Federal Acquisition System (a similar economic system for supply and demand) where the famous $600 hammer was purchased (even though the hammer really cost what a real hammer should cost but was caught up in an accounting bookkeeping exercise where it was bundled with higher priced components and all components including the hammer were allocated an even amount based on the total project cost, including a more expensive engine). 

This does not diminish, however, cases of real and negligent mismanagement of funds within the complexities of the Federal Acquisition Regulations or the valid concern that without some manipulation, regulation or better competition, runaway costs that go unchecked will reduce buying power, potentially to a point of limiting the ability to purchase basic needs and services, including those products and services that support the defense of this country. As a result of real or perceived absurdities and discrepancies within the federal acquisition system, there have been over 150 studies since World War II on improving the system and ongoing legislative efforts through Title VIII in annual National Defense Authorization Acts, including the provision gaining much attention recently that allows for Other Transaction Authorities. Additionally, the Defense Acquisition Workforce Improvement Act of 1990, the Federal Acquisition Streamlining Act of 1994, the Clingher-Cohen Act of 1996 and the Weapon System Acquisition Reform Act of 2009 were all major legislative efforts to attempt to fix what was seen as a dated and broken system, hence my term Late Stage FARism.

There are different theories for how capitalism will ultimately fail, including a revolution by the proletariat, or the working class. Interestingly enough there is a revolution afoot in the defense department by those calling themselves the virtuous insurgents and can be found using the clever hashtag moniker #agileAF. They too are tired of old ways of doing business and believe that capital is being accumulated and amassed by a select few, consistent with President Eisenhower’s warning of a military industrial complex, and looking for non-traditional partners to do business with, including, interestingly enough, some of those in Silicon Valley who are accused by the Marxists of accumulating and amassing their own commercial fortunes. There have been successes within this group, but ultimately the current federal acquisition system remains in place. The question that remains is that if this is late stage for both or either capitalism and FARism, what options remain as the next system to move to that is better. There have been several attempts at reform through legislation as mentioned, but the system has not been converted to something entirely different. I believe in our basic freedoms, including free markets. Regulations, requirements, and laws all impact how effective the systems are, either to the positive or to the negative, and can alter the definition of the free market where supply and demand should find equilibrium. People are still choosing to buy $500 jeans (for some reason) just like some of those in the defense acquisition workforce are still choosing to do business in traditional ways with traditional partners with programs that increase in cost but deliver less than originally promised. Is there something to be concerned with, are other options not viable or feasible or is all this late stage talk, just that. 

Similar to today’s virtuous insurgents in the defense department, I too was seen as a maverick in my time in the military. I challenged myself to find the best way to maneuver freely to get the best return on investment of the dollars the American taxpayers entrusted me with. At the time, however, I was doing it within the system because I didn’t see a new Federal Acquisition System replacing the current one. But for those that do, it would be interesting to hear what the department should move to. It could be an interesting social experiment for what will replace capitalism, if there’s ever a better economic system that will.

-Tom Cooke

Cooke Consulting Solutions, LLC