Rep. Les Aspin (D-Wis.) claims Japan and, to a lesser extent, western Europe use money they save on defense to whip the United States in the industrial marketplace and that the Reagan administration's plan to increase U.S. defense spending will worsen the situation.

"It is nothing short of insane, not to mention economic suicide, for the United States to take upon to take upon itself an even greater share of the western burden while Japan and, to a lesser extent, western Europe . . . pump their capital into industries that are starved in the United States because of the defense umbrella" that the United States traditonally holds protectively over the allies, Aspin said in a study released today.

Aspin says statistics clearly show that countries with a higher investment in defense grow economically at a slower pace. Japan, which spends less than 1 percent of its gross national product on defense, has enjoyed by far the most rapid growth. The United States and Britain, with the biggest commitments to defense, have grown most slowly, with France and West Germany in the middle.

The congressman, who comes from a state with relatively little defense industry but who has specialized in defense issues, claims the Reagan administration's devotion to supply-side economics -- in which investment, incentives and productivity are the keys -- is missing when it comes to the U.S. defense budget. He calls that budget a disaster in the sense of undermining the U.S. competitive position in the world because it pours investment money and engineering talent into industries other than the ones needed to revitalize the U.S. economy and commercial competitiveness.

In the study and a recent interview, Aspin argues that the United States needs to push allies harder to take a more equal share of the common defense burden and that if even a small part of the defense budget, which he feels is too big under Reagan, were diverted to revitalizing other American industries the United States would be restored to its former competitive position.

Aspin claims his study is meant as a measure of "the damage we are doing ourselves worldwide" by not taking a closer look at how defense money is spent and how much the United States lets its allies off the hook. If spread over a decade, he argues, "the diversion of only about 10 percent of our annual defense budget to capital investment in civilian industry would soon reinvigorate our economy."