Oskar Morgenstern, A Political Economist Views the Navy/Industry Look at the Future (1961)

Oskar Morgenstern’s published address to the IAS/Navy Naval Aviation Meeting offers a critical response to preceding presentations on technology, weapons, and strategic planning. Its organizing concern is that technical ingenuity cannot compensate for inadequate concepts of change, conflict, and national power. Moving from technological forecasting through political decision-making and games of strategy to weapons valuation and economic measurement, Morgenstern challenges an audience whose confidence he finds insufficiently attentive to discontinuity and uncertainty. His interventions connect the economist’s scrutiny of measurement with the game theorist’s insistence that military action confronts an intelligent opponent.

The opening contrasts projections for the next ten to fifteen years with the transformations of the preceding fifty. Atomic energy, electronic computers, plastics, and solid-state electronics demonstrate how radically the technological field can change, yet their possibilities remain far from exhausted. Morgenstern’s anecdote about a Bell Telephone executive hoping for reliable telephone billing exposes the narrowness of forecasts that merely improve familiar operations. The deeper problem is not only anticipating discoveries but recognizing uses for knowledge already available. His examples of delayed applications of DDT and thermocouples lead to a proposal that research institutions investigate methods of recognizing and developing new ideas.

It seems, therefore, that there is a great danger in the extrapolation of present technology.

This warning follows examples of authoritative judgments that ruled out developments subsequently realized: intercontinental missiles, useful atomic energy, and space flight. Morgenstern treats the Polaris missile as a discontinuity, not simply an improvement along an established trajectory. The Army’s defense of horse cavalry while German mechanized forces overran western Europe supplies an institutional counterpart: existing expertise may actively preserve obsolete assumptions. Prospective laboratories in space sharpen his contention that forecasts can be overtaken by changes in the conditions of experimentation themselves.

The address then turns from technological conservatism to strategic overconfidence. General assurances that difficulties will be mastered, or that manned aircraft will survive, do not specify operational functions. Morgenstern contrasts this confidence with the apprehension he has encountered among scientists. Against the immediate background of Berlin’s division, he argues that material capability cannot be separated from political resolve:

Arms are no good if there is no determination to use them.

His account of deterrence is relational: success in restraining thermonuclear conflict increases the significance of limited war; controlling limited war would shift competition further toward political and ideological struggle. A hypothetical encounter between carriers and shadowing Soviet submarines makes the point concrete. Speed and armament alone cannot determine whether, or when, those submarines should be attacked. Such decisions depend on political authorization and strategic purpose. His defense of nuclear options in limited war, including neutron-bomb development, belongs to this Cold War argument that inhibitions about using weapons could neutralize an apparent advantage.

Morgenstern next challenges the conceptual models through which military decisions are understood. Chess and GO fail as analogies because their perfect information excludes bluff, concealment, and ignorance—even uncertainty about one’s own forces when command and control break down. Poker more closely resembles political and military conflict. The essential distinction is between optimizing against impersonal conditions and acting against an opponent who deliberately frustrates one’s plans:

We have to make decisions not against nature, but against a consciously interfering adversary.

This shift from engineering to strategic interaction changes the meaning of uncertainty. Morgenstern rejects the straightforward transfer of risk concepts to situations involving countermoves. Decoys, artificial underwater noises, and identification of friend and foe exemplify problems in which an adversary shapes the evidence available to the decision-maker. Improved sampling procedures are therefore insufficient without a richer account of strategic deception.

Questions of timing and valuation extend this critique. Morgenstern doubts a projection of 500 Soviet nuclear-powered submarines, but argues that even accepting it would undermine another speaker’s recommendation to strike submarine bases. If hundreds of armed submarines were already at sea, destroying their bases would not prevent their ballistic-missile mission. The mismatch reveals why separately plausible claims must be tested together. Assessing “military worth” likewise requires more than ranking technical improvements on a common scale. He proposes that weapons may exhibit a non-Archimedean ordering: quantitative improvements cannot necessarily bridge differences between kinds of capability.

Differences in kind demand differences in treatment; they demand new ideas.

The final movement applies the same conceptual discipline to economic comparisons. Reported American and Soviet growth rates possess an implausible precision; even accurate aggregate rates would not establish their strategic meaning. Consumer abundance and investment in military production or machine tools have different consequences for the balance of power.

I think we should not construct a mere growth index, but a power index.

Morgenstern acknowledges that power measures would also have limited accuracy. His demand is for strategically relevant measurement, not another appearance of numerical certainty. Examples of Chinese steelmaking and the international movement of rocket expertise underscore how technical knowledge can spread despite poverty or political barriers. Nuclear proliferation outside existing alliances and population expansion close the address by widening its horizon beyond bilateral military competition. Its enduring conceptual contribution is the insistence that forecasting, weapons assessment, and economic comparison must account for qualitative change, purposeful opposition, and the political conditions under which resources become effective power.