The state of the armed forces became a distinct point of contention in the 2000 presidential campaign. The campaign saw the two major party candidates give differing interpretations as to the capabilities, morale, and readiness of the military. At the same time, students of armed forces and society have been pointing to a growing civil-military gap. [1] The focus in this article will be on the military as a social organization, not on technological developments or global strategy. Most members of the armed forces understand and experience the military as a social organization. This article seeks to be both conceptual and practical: conceptual in that it presents a model of organizational change within the military, and practical in the sense that it sets forth proposals on which to base manpower policies. Background In broad terms, the armed forces went through serious personnel difficulties following the end of the draft in 1973. During the early 1980s, personnel matters took a marked turn for the better, a state of affairs that lasted until the mid-1990s. Recent years have seen a reappearance of both recruitment and retention problems. The overarching hypothesis is that the American military has been moving away from an institutional format to one that increasingly resembles that of an occupation. [2] The contrast between institution and occupation is easy to overdraw, of course. To characterize the armed forces as either an institution or an occupation is to do an injustice to reality. Both elements have been and always will be present in the military system. But the social analyst must use pure types to advance conceptual understanding. Our concern is to grasp the whole, to place the salient fact, to have a framework to appraise the relevant policy. Even though terms like institution or occupation have descriptive limitations, they do contain core connotations that serve to distinguish each from the other and offer insight into the working of the all-volunteer force. An institution is legitimated in terms of values and norms, that is, a purpose transcending individual self-interest in favor of a presumed higher good. Members of an institution are often seen as following a calling, captured in words like duty, honor, and country. They are commonly viewed and regard themselves as being different or apart from the broader society. Role commitment in an institutional military tends to be diffuse; members are expected to perform tasks not limited their military specialties. Unlike most civilian compensation systems, in which marketability determines reward, remuneration in the institutional military is essentially based on rank and seniority. An occupation is legitimated in terms of the marketplace. Supply and demand, rather than normative considerations, are paramount. Whether under the rubric of econometrics or of labor market analysis, such a redefinition of the military is based on a set of core assumptions: (1) cost-effectiveness analyses of civilian enterprises and military services are equally valid; (2) military compensation should be as much as possible in cash, rather than in kind, thereby allowing for a more efficient operation of the marketplace; and (3) military compensation should be linked directly to skill differences of individual service members. The occupational model implies the priority of self-interest rather than that of the employing organization. In broad terms, reference groups in the military are organized vertically, whereas occupation reference groups tend to be horizontal. In the conventional military, being part of the same organization has traditionally been more important than the fact that military members do different jobs. People in an occupation tend to feel a sense of identity with others who do the same sort of work and receive similar pay whether in the same or different organizations. The institution-to-occupation thesis was not well received by the econometric mindset that had become dominant in the Office of the Secretary of Defense and its sponsored research on military manpower. …