If the question is outlawing war, that happened with the Kellogg-Briand Pact of 1928, but that doesn't mean that war has ended. Same with slavery, outlawed in the 19th century but it still exists.
If the question is ridding ourselves of war, that depends on how you define war. The million man army wars of World War II are over--most probably--but can we rid ourselves of all outbreaks of violence inside or among countries? Now that it's generally considered that the only just wars are those of humanitarian intervention with the support of the UN--should those be outlawed?
The question might also be asked as to what is war, which assumes there are two states--complete war or complete peace, and that we can define exactly who starts the war and when. What if the good samaritan, ploughshare in hand, had arrived to see guerrilla warriors beating up on a defenseless enemy person, should the samaritan try to protect the victim using his ploughshare (a weapon certainly as vicious as the sword), or should he walk by and let the victim die? I would wager that the best action involves the least violence--but no one can know what that is. Gandhi would have said that it was the samaritan's responsibility to protect the victim--so although he's universally considered a pacifist, pacifists who believe in the total abdication of arms would disagree. Joseph Allen Baker, who worked for years to halt the build up in arms before World War I and galvanize religious and political leaders into making peace, decided after the War had begun to ask President Wilson to have the US enter the war, because of information supplied to him by a German friend about the dangers of Germany winning. Some say World War II might have been forestalled had pacifists not been so persuasive in preventing a vigorous response to Hitler, although socialist and pacifist A. J. Muste insisted that World War II could have been prevented on the eve of the war by the US making an apology to Hitler for treating Germany badly after World War I.
Since it really takes only one person to instigate a group to start a conflict, while it takes at least two people who are not working together to make peace is there any way to ever ensure peace.
Looking at defense spending and the military industrial complex assumes that only militaries create war, which many pacifists seem to consider as true. It's not simply the building up of arms which necessarily causes war. Even if the US and other countries were to totally disarm, there would always be armed individuals or groups ready to take up arms, And what if, during the 1990s, Clinton had stop focussing Pentagon funding on star wars and putting military spending into preventing terrorist attacks inside US borders the act of war that was September 11, 2001 might not have occurred. Like many, he considered the star wars defense as very important, as he told me in a very polite letter in response to my advice as to where his focus should be. Much of the work now done by our military is, ironically, relief work--which pacifists oppose in that they look at it militarization, even though it really involves civilianization of the military, and even though, throughout history, rebuilding countries has been the task of the military as wars end.
On defense spending, Gandhi once wrote, "Man for man, the strength of non-violence is in exact proportion to the ability, not the will, of the non-violent person to inflict violence." He probably wasn't thinking of military strength there, but the principle still applies--at times, though not always.
Two of the wisest suggestions I have found on defense spending were posted on Small Wars Journal (www.smallwarsjournal.com) in a discussion on defense spending--one guy pointing out that it's time we restored defense to the place it was given in the preamble to the constitution (4th), and another suggesting that all of our federal cabinets, not just defense, should include the provision of security as one of their goals--recognizing it's not just weapons that provide security, it's diplomacy, good roads, good education....