Abstract
21st century states have increasingly outsourced security and defense to the market, acting as regulators of the tools of violence rather than owners of the tools of violence. While the phenomenon is now recognizable and common, it remains puzzling because a core feature of modern states is their legitimate political authority to control the 'public good' of national security within their territory. Advanced industrial democratic polities such as the US, European states, and the EU, however, have transferred significant aspects of domestic and foreign security power to private, market actors. I argue that outsourcing has not been driven by strategy but by a changing risk tolerance on the part of security bureaucracies. In a reversal of how 20th Century states absorbed political, financial, and legal risk for their societies and markets, states—under certain conditions—are shedding their willingness and ability to absorb public goods across the board, including the public good of security. Decisions to outsource have occurred when government personnel made low-level decisions to cede the authority of their agencies to the market, due to transparency, accountability, legal reporting, or financial pressures on their bureaucracies. In a number of critical functions, sovereign security power is now disaggregated and diffused into the market, without sovereign or strategic prerogatives. This paper evaluates one of these phenomena: the diffusion of public-sector defense R&D funding from state bureaucracies to the private sector, in the form of private, industry R&D funding of military prototypes. It evaluates original cross-national data on industry self-funding of defense technology amongst advanced industrial states, including firms active in the European and North American national defense markets.