A Great Transformation: Advanced Manufacturing’s Future is in the National Defense Industrial Strategy

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One of my favorite books was written against the backdrop of World War 2, centered around an argument aiming to explain the long-term causes for that conflict. Karl Polanyi’s The Great Transformation: the Political and Economic Origins of Our Time (1944) starts with an appropriately jarring first sentence: “Nineteenth-century civilization has collapsed.”

While perhaps not as readable as Polanyi, the Department of Defense’s first-ever National Defense Industrial Strategy (NDIS), released on January 11, 2024, also begins rather succinctly: “A robust and resilient industrial base provides the enduring foundation for military advantage.”

Dr. Laura D. Taylor-Kale, Assistant Secretary of Defense for Industrial Base Policy (left), and Ms. Halimah Najieb-Locke, (Acting) Principal Deputy Assistant Secretary of Defense for Industrial Base Policy. Image courtesy of the DoD

Following the thread of that initial sentence all the way through the NDIS, I couldn’t help but think of the main argument in The Great Transformation. That is the thesis of One Big Market and the double movement.

At the End of the World of One Big Market

“One Big Market” refers to Polanyi’s assertion that society in the 19th century had started to become entirely subordinate to the laws of the market economy, which is the first part of the double movement. The second part is the largely political response to the market’s takeover of everything in its surroundings. This primarily entails governmental regulation of what Polanyi refers to as the three “fictitious commodities”: labor, land, and money.

Why are they “fictitious” commodities? Because the classical definition of a commodity is that it is an item produced for sale, and this can’t be said of labor, land, and money in the same way that it can be said about something like crude oil or orange juice. As Polanyi puts it:

“Labor is only another name for a human activity which goes with life itself, which in its turn is not produced for sale but for entirely different reasons, nor can that activity be detached from the rest of life, be stored or mobilized; land is only another name for nature, which is not produced by man; actual money, finally, is merely a token of purchasing power which, as a rule, is not produced at all, but comes into being through the mechanism of banking or state finance.”

Nonetheless, these fundamentals of economic reality have to be treated to some extent as commodities in order for the market economy to function, which is where government regulation comes in: “While on the one hand markets spread all over the face of the globe and the amount of goods involved grew to unbelievable dimensions, on the other hand a network of measures and policies was integrated into powerful institutions designed to check the action of the market relative to labor, land, and money.”

Cover of the first edition of Karl Polanyi’s The Great Transformation (1944). Image courtesy of Wikipedia

Thus, if there isn’t some bare minimum of government restriction when it comes to selling labor, land, and money on the open market, the economy’s trajectory is put on a path of self-destruction.

After World War 2, the conflict in the midst of which Polanyi was writing, the market economy took more or less full control over human activity once and for all — with certain notable exceptions. For instance, the Soviet bloc, for better or worse, can be viewed as one mass response of the traditional functions of society against the unencumbered dominance of market forces.

In retrospect, the fact that Soviet power began waning barely a decade after the US established diplomatic ties with China hardly seems coincidental. At the very least, the Soviets’ downfall and China’s rise were symptomatic of the exact same macro process of the universalization of free market principles.

In any case, by the 1990s, the Soviet Union was no longer the Soviet Union, and the nation now known as the Russian Federation was adopting something along the lines of a market economy. Meanwhile, the world’s largest nation, and the largest self-described ‘Communist’ government, had become rapidly integrated into the structure of global capital, culminating in China’s entrance into the World Trade Organization (WTO) on December 11, 2001, exactly three months after the attacks on the World Trade Center.

20th century civilization had collapsed. 21st century civilization is still in the process of forming. Its formation is being accelerated by the full-scale reemergence of industrial policy.

The NDIS: Advanced Manufacturing as the Basis for the New Industrialization

Everything above may initially seem far too abstract and academic to apply to something as bureaucratically mundane as a US government policy document. But, in its own way, the NDIS touches on all those same issues:

“After World War II,” the NDIS states, “the United States and its allies adopted a global order based on fair trade and free markets enshrined in the General Agreement on Tariffs and Trade (GATT), the precursor to the World Trade Organization and European Union. Today, the PRC [People’s Republic of China], the Russian Federation, and others are challenging this system, flouting international legal and trade standards. Since the 1980s, the PRC has run massive trade surpluses against the U.S. and our allies and partners. Initially this was the result of differences in labor costs, exchange rates, trade policies, and relative consumer demand, but increasingly because the PRC engages in a host of market distorting activities. The sustained imbalance in trade weakened our domestic industries, displaced workers, hollowed out heavy industry, and contributed to the rapid increase in the U.S. national debt.”

Screenshot of the Biden Administration’s “Investing in America” tracker. Image courtesy of whitehouse.gov

While the NDIS may frame those problems as a deviation from free trade, the process described above is in fact a result of the establishment of free trade in its most absolute, deregulated form.

In turn, one can view the following sentence, from the same section of the NDIS, as a quintessential example of the second part of Polanyi’s double movement. Social institutions inevitably establish mechanisms of self-protection against the threats posed by unregulated markets: “The United States and our allies and partners now recognize that by continuing to adhere to the adversary-designed trade system with predatory and unfair practices without implementing appropriate safeguards, we put ourselves at a disadvantage (emphasis in original).”

That quote is from the section on ‘Economic Deterrence’, which is one of four of the NDIS’ main objectives. The other three are:

  • Resilient Supply Chains
  • Workforce Readiness
  • Flexible Acquisition

The most direct connection between the era Polanyi homed in on and our present era is a shifting economic landscape brought on by industrialization’s evolution. The world of One Big Market was catalyzed into existence by the first Industrial Revolution, while the world being remade from the major salvageable components of One Big Market is being catalyzed into existence by Industry 4.0.

Above all, in this context, it is important to recognize the interconnections between the four overarching objectives of the NDIS. As the document points out, “Each priority is complex and many overlap and have interdependencies with other priorities.” Advanced manufacturing is the key to understanding those interdependencies.

In the present era of industrialization, the US can’t achieve the four NDIS objectives by rebuilding anything like the previous manifestation of the domestic industrial base. For one thing, manufacturing workers now represent only around 11 percent of the US labor force, less than a third of the post-World War 2 peak of 35 percent in the late ’70s and early ’80s.

For another, relatedly, because of the decimation of the US manufacturing labor force and the parallel disappearance of US-based small and medium enterprises (SMEs), the domestic infrastructure necessary to rebuild the US as a conventional manufacturing powerhouse no longer exists. In the words of the NDIS, “Building enduring advantages through a resilient defense industrial ecosystem requires that the DoD optimize for dynamic production and capabilities the nation needs in a cost-constrained environment.”

The NDIS’s solution to both problems — labor and cost — is digitized automation driven by advanced manufacturing:

In a subsection of the chapter on “Resilient Supply Chains,” the NDIS states, “Advanced manufacturing automation streamlines and compresses development and production processes, reduces human intervention, lowers unexpected downtime, and improves overall manufacturing performance. Today’s advanced manufacturing automation is the result of decades of symbiotic interactions between the public and private sectors and separate independent private-sector driven advances. Some elements of the DIB [defense industrial base], however, have yet to adopt advanced manufacturing technologies, due to either post-Cold War industry atrophy, offshoring, or redirection of available investment capital. …DoD will expand efforts to incentivize, invest in, and otherwise promote the use of advanced automation technologies by defense suppliers to reduce total life cycle costs and increase readiness, and, as appropriate, fill workforce gaps.”

In the one sentence from that subsection, the NDIS mentions AM Forward as an example of the sort of program that will be deployed to achieve the stated goals. Interestingly, the document accidentally refers to it there as “Advanced Manufacturing (AM) Forward” — the only time it gets it wrong in the three references to AM Forward found in the NDIS (perhaps an unintentional acknowledgement of the significance of AM to the DoD’s overall advanced manufacturing plans).

In any case, that stance on advanced manufacturing is the linchpin of the DoD’s plans to usher the US into the next era of industrialization, and 3D printing is central to the DoD’s advanced manufacturing activities. This is intended to benefit not only the DoD, but the US government as a whole and, by extension — and above all — the entire US economy. In addition to maximizing the potential of a lean workforce and lowering costs, the idea of automated advanced manufacturing is to enhance “supply chain visibility”:

“Supply chain visibility is the ability to track parts, materials, and services from prime contractors back to sub-tier level suppliers and sources — effectively from the raw materials to the end product,” states the NDIS. “This includes the associated transportation and warehousing logistics chain for the prime contractor and their suppliers. The goal of supply chain visibility is to better manage the DoD’s supplier base by reducing the effect of supply chain disruptions on military readiness. In a 2022 report, the DoD acknowledged that as its supply chain became more global, prime contractors lost sight of their own sub-tier supply chains and faced the risk of sourcing resources from potential adversaries… Complementing greater supply chain visibility, the DoD will also improve the sharing of supply chain risk indicators across the DoD and the interagency where appropriate. This can help establish methods for the Department and the whole of government to better share identified supply chain risk indicators with industry.”

In the long run, that sentence on “sourcing resources from potential adversaries” is likely the issue that DoD will be most singularly focused on addressing. It is notable that, later in the report, in the ‘Economic Deterrence’ chapter, the NDIS explicitly points to absolute faith in the free market as the source of that problem:

“Over the last decade, the DoD has struggled to curtail adversarial sourcing and burnish the integrity of defense supply chains. Despite these efforts, dependence on adversarial sources of supply has grown. DoD continues to lack a comprehensive effort for mitigating supply chain risk. Policy concerning prohibited sources today remains piecemeal, inadequate to address the current complexity of the DoD supply chain, and is often difficult to execute and enforce. Predictably, this approach has delivered only marginal results with DoD continuing to procure items from adversarial sources in line with low-cost free market principles but not in line with national security and resilience-oriented principles (emphasis added).”

The direct contrast established there between “free market principles” on the one hand, and “national security and resilience-oriented principles” on the other, is precisely what Polanyi described as the double movement: “While on the one hand markets spread all over the face of the globe and the amount of goods involved grew to unbelievable dimensions, on the other hand a network of measures and policies was integrated into powerful institutions designed to check the action of the market relative to labor, land, and money.”

Conclusion: 3D Printing’s Role in Our Great Transformation

As the global economy enters a new phase of great transformations, we will likely see One Big Market devolve into Several Big Markets, as the monetary, environmental, and human costs of shipping incentivize the shortening of supply chains, as resource scarcity incentivizes against waste, and as a dwindling manufacturing labor force encourages the maximization of automation. To put things understatedly, 3D printing is a tool that can be a most useful asset in addressing all of those needs.

In order for 3D printing to play as effective a role as possible in the overall undertaking, companies in the industry will have to keep apace with the daily unfolding of government policymaking around the planet. They will also have to adopt the attitude described this way in the NDIS: “…[we need] increased flexibility and risk tolerances and [to embrace] ‘fail fast’ and similar concepts. Risk aversion must be replaced by aggressive, learning mindsets in both developing and fielding systems underpinned by strong commitments of accountability and responsibility.”

Again, the transformation isn’t just about the military, and it can’t be if the transformation is to be a successful one. But those interested in all other applications can (and should) certainly take lessons from what the military has demonstrated in its AM evolution over the last decade, and apply those lessons in their own relevant areas of business.

Those lessons aren’t just about the underlying technologies, either; equally, they are about how to navigate the resurgent world of public-private partnership. The NDIS frames the stakes aptly in its final sentence, asserting, “This call to action may seem a great cost, but the consequences of inaction or failure are far greater.”

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