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This article has two sections. First, we try to explain the dynamics of military spending and other social expenditures in the period 1988–2010 for the United States. Relying on empirical data, we support the argument that there is a remarkable trade-off in the allocation of public spending because, often, the increase in military expenditures was to the detriment of those for education, social security, and healthcare. In the second section we analyze the transition from the old “military-industrial complex” to the new “military-security system” in light of defense industry restructuring. We focus in particular on the role of financialization and industrial concentration of firms.JEL Codes: H, H56, L, N4, P