The Next Arsenal of Democracies
Why the U.S. and Its Allies Must Mobilize Industrial Deterrence Now.
By Dr. Isaiah (Ike) Wilson III
“The Arsenal of Democracy” is a phrase we’ve invoked for generations — often with reverence, sometimes with nostalgia.
But today, nostalgia won’t deter war. Strategy, scale, and speed will.
We are at a critical inflection point.
Authoritarian adversaries — led by China and Russia — are not only modernizing their forces but outpacing the West in fusing industrial capacity with strategic intent.
The West, by contrast, continues to rely on outdated acquisition models, fragmented industrial ecosystems, and a brittle defense production culture increasingly misaligned with the realities of compound security competition.
What’s needed now is more than an American reawakening. It’s a full-spectrum, “all-of-democracies” campaign of industrial deterrence — distributed, allied, and resilient.
The Dilemma: Fragmentation, Fragility, and Strategic Decoupling
At the heart of the problem lies a disjointed and over-centralized industrial model — especially in the United States.
The Pentagon remains trapped in a low-volume, high-cost, sole-source attractor state, where boutique defense production methods churn out precision systems at strategic irrelevance for peer-level conflict. A Stinger missile today costs $400,000; a Tomahawk, nearly $2 million. These are hand-built Ferraris, not field-ready Fords.
Meanwhile, China is institutionalizing civil-military fusion and actively leveraging commodity market infrastructure — from rare earths to battery metals — to control both the upstream and the market dynamics of critical materials.
Russia, with its sanctioned economy the size of Mexico’s, continues to outproduce the West in munitions and drones. Iran and North Korea are proving their ability to mobilize horizontally across proxies, domains, and geography.
The United States, by contrast, lacks the industrial surge capacity — and worse, the economic architecture — to match.
Our defense base is increasingly decoupled from the broader commercial economy, dominated by a small cadre of prime contractors isolated behind complex regulatory moats. Over 60% of major acquisition programs are run by defense-specialist firms with minimal commercial footprint — up from just 6% in 1989.
This not only stifles innovation and cost efficiency, it makes the U.S. defense enterprise dangerously dependent on a system that is inherently slow, fragile, and strategically disconnected from global industrial resilience.
The Origins of Industrial Anemia: From “The Last Supper” to the Big Five Cartel
The present-day brittleness of the U.S. defense-industrial base is not a surprise. It is the predictable result of decisions made three decades ago.
In 1993, then-Secretary of Defense William Perry summoned top defense executives to a now-infamous dinner — later dubbed “The Last Supper” — and laid out the blunt reality: post-Cold War drawdowns meant far fewer programs, and thus far fewer prime contractors. The Pentagon effectively signaled, “Consolidate or die.” And consolidate they did.
By the early 2000s, five dominant firms—Lockheed Martin, Boeing, Raytheon (now RTX), Northrop Grumman, and General Dynamics—had emerged as the Big Five.
Today, they control the lion’s share of U.S. defense spending across aerospace, naval systems, and high-end munitions.
What began as a rational response to shrinking budgets has ossified into a structural vulnerability. The streamlining of the 1990s became the stagnation of the 2020s: a defense economy optimized for complexity, not scale; for high-margin platforms, not high-volume production.
As AEI’s Mackenzie Eaglen noted recently on Bloomberg's The Big Take, we now find ourselves in a situation where “We’ve spent decades building weapons like Ferraris… but we need to start thinking in terms of Toyotas.”
This disconnect has left the United States and its allies strategically under-mobilized and industrially under-equipped for the demands of prolonged, large-scale competition.
A Strategic Blind Spot: The Lack of Allied Industrial Integration
The challenge extends far beyond the borders of the United States.
Western democracies still lack a fully integrated, distributed industrial base for deterrence.
Despite decades of alliance-building and cooperative defense frameworks, production remains nationally siloed, bureaucratically paralyzed, and culturally risk-averse.
Coproduction deals with India, enhanced collaboration through AUKUS, and defense industry acceleration in Central and Eastern Europe are promising — but episodic and under-leveraged.
The Ukraine war revealed this strategic shortfall in real time. While the U.S. rushed Javelins and Patriots, European stockpiles dwindled. Partner nations — many politically willing — were materially constrained. The bottleneck wasn’t just equipment. It was industrial posture.
This is the critical gap the West must now close: building a geographically distributed, interoperable, and demand-responsive defense-industrial ecosystem. One in which Australia, Poland, Germany, South Korea, the UK, Taiwan, and others are not just customers or suppliers — but co-producers, investors, and frontline participants in deterrence-by-capacity.
A New Strategic Hurdle: The America First Era
Complicating matters further may be the geopolitical recalibration underway in the United States itself.
The post-WWII U.S. role as security guarantor and convening hegemon is now in strategic tension with a domestic orientation increasingly shaped by America First, transactional foreign policy instincts, and neo-mercantilist priorities.
From steel tariffs to NATO burden-sharing disputes to the uncertain future of U.S. security commitments under potential future administrations, many allies have begun planning for a world in which the American security umbrella is less reliable — if not fully retracting.
This creates a strategic high hurdle: can the West reforge collective industrial and defense alignment amid a period of U.S. introspection and realignment?
The answer is: it must. Because in paradoxical fashion, the very pressures driving this uncertainty may become the seeds of renewal.
In Europe, the post-Ukraine surge in defense budgets has signaled a deeper commitment to self-reliance and intra-European defense production.
In Asia, Japan, South Korea, and Australia are investing in new capabilities, regional partnerships, and high-tech R&D.
If aligned wisely, this moment of distributed national rearmament could — in time — yield a stronger alliance system, healed at its once-broken industrial places.
The ‘Fix’: Reforging the Arsenal, Together
We propose a twin-track response — one focused on U.S. internal transformation, the other on allied industrial integration.
1. Transform the U.S. from Defense Buyer to Strategic Market-Maker
The U.S. must end its top-down, cost-plus, sole-source acquisition regime and become a demand signaler and competitive enabler — a better customer in every sense.
This requires:
Transparent, time-definite procurement timelines
Take-or-pay contracting that allows small- and mid-size vendors to invest in scale
Matching programs that crowd in private venture capital for DOD-relevant innovation
A C-ARPA model — a Cost Abatement and Reduction Projects Administration laser-focused on contracting efficiency and cost reduction, not just innovation
Market-making infrastructure for munitions and consumables, with pricing, forecasting, and options structures akin to global commodity markets
2. Expand and Align Allied Production — the “Distributed Arsenal”
The U.S. must architect and accelerate allied co-production platforms, offering both strategic capital and structural incentives for partner nations to manufacture and export defense systems within a common operational framework.
Key steps include:
Creating forward-stationed industrial nodes — not just supply caches — in allied states
Standing up interoperable licensing regimes to allow partner nations to produce U.S.-origin systems with minimal friction
Establishing joint venture “Defense Free Zones” — secure industrial corridors backed by mutual investment and distributed supply chains
Building shared commercial-defense tech transfer ecosystems through NATO, AUKUS, and the Quad
This is not about outsourcing. It is about geo-strategic redundancy, economic agility, and shared deterrence posture — the industrial corollary to combined operations.
A Campaign of Industrial Deterrence
This effort is not just about resilience. It’s about signaling.
If adversaries believe the West can out-produce, out-innovate, and outlast them — then the calculus of aggression changes. Deterrence becomes more than doctrine. It becomes material fact.
Our proposal — a revitalized, distributed Arsenal of Democracies — is not a nostalgia project. It is the operational backbone for 21st-century strategy.
We have the tools. We have the technology. What’s required now is a campaign mindset — one that fuses policy with procurement, economics with geopolitics, and industrial capacity with strategic intent.
If we do that, we won’t just defend democracy. We’ll arm it.
Dr. Isaiah “Ike” Wilson III is Founder & CEO of Wilson W.i.S.E. Consulting LLC and Professor & President Emeritus of the Joint Special Operations University.