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This may sound kind of weird, but I'm looking for books that talk about the interaction of politics and governmental choices over the 20th and 21st century with the military. I guess you could say books about the history of the Defense Industry, how it works and has worked, and so forth - I'm not quite sure how to put it.

I'm mainly looking for books about the United States, but if anyone has any good english-language book recommendations about this type of thing in other countries, then I'm all ears. My interest has sort of been incited after reading Robert Gates' From The Shadows (the Robert Gates that is the Defense Secretary today. It's a book about the Cold War from Nixon onward, from his perspective at the time as a CIA guy and occasional staffer for the National Security Advisor).

Dereliction of Duty comes to mind.

I actually did try reading that book. I had a hard time getting into it, though, although the earlier sections concerning the bombing campaign were fascinating.

I'm not actually sure whether to recommend this or not, because I've never been able to decide whether I believe it because it's logically sound or because it appeals to my pessimistic streak-Philip Bobbitt's "The Shield of Achilles."
It's mainly about what comes next, but the author spends a fair amount of time trying to project the future from the past and goes into a fair amount of the detail you seem to be looking for.
It is fairly politically charged; I'm not entirely sure whether it constitutes a terrible warning to the left to get off it's arse and do something before it's too late, or a rightist wet dream.

For the UK, you're looking for Correlli Barnett's Decline and Fall series, particularly "The Collapse of British Power."