Revolving funds were widely introduced in 1949 at a time of active, enthusiastic reform of the military establishment on the model of business. I explain the ideas about structuring incentives for managers that the first generation of reformers used to promote revolving funds and go on to share some cases of what market simulation meant on the ground. The following decade saw an expansion in the use of revolving funds as economic reasoning gained prominence in the Defense Department. Drawing on neoclassical economics, a new generation of reformers saw revolving funds not just as a behavioral tool that would promote cost consciousness in local mangers, but an attractive way to structure the entire defense establishment based on the allocative efficiency of markets. While this dream would remain unfulfilled, proponents of revolving funds legitimated the calls of free-market advocates for privatizing many of the historical functions of the defense establishment.
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