War as an investment

Dwight D. Eisenhower, (president of the United States from 1953 to 1961), is perhaps best remembered today for a speech he gave three days before he left office in January 1961. In this he warned his fellow Americans that “in the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex,” something which he evidently saw as an imminent danger even 60 years ago.

If not many at that time clearly grasped what he was alluding to, it is now well understood that he had recognised the risks posed by the apparent concentration of vested interests favouring a build-up of the US military machine as the Cold War struggle with the Soviet Union continued and expanded. For such interests, it became clear, the arms race with the Soviets was not seen as a bad thing at all – even as official propaganda was all the while proclaiming the desirability of winding it down – given the opportunities it provided for enrichment of companies engaged in the supply of armaments. At the same time it may be said to have enhanced the prestige and influence of the military “top brass”, who doubtless also saw the potential for their own gainful employment once they left the service. Hence there may be said to have been a kind of symbiotic relationship between civilian and military decision-takers which favoured increased military expenditure in the private interests of both while naturally depending on the taxpayer to fund it.

At the same time the US was anxious to support the economic recovery of the defeated Axis powers, especially Germany and Japan, by aiding their (non-military) post-war reconstruction, notably through the Marshall Plan initiated in 1948. While this may be seen on the one hand as an admirable act of victors’ magnanimity, it should equally be viewed as an act motivated by self-interest in that it indirectly boosted the US economy and business as well.

Subsequent history has more than validated Eisenhower’s concerns. As long as the Cold War continued the prominence of the military-industrial complex in the structure of the US economy remained largely uncontroversial outside a fringe of protest groups whom it was still politically safe to ignore. Once it was over, however, political pressures grew from the 1990s to cut back on defence spending, not only through commitments made under the three START treaties with Russia from 1991.

In fact the possibility that such a state of affairs could arise had been foreshadowed in US policy since the end of World War II. This stemmed from the evidently justified perception that the war had provided an enormous stimulus to the US economy, banishing any remnants of the depression of the 1930s. Hence it was feared, not illogically, that reversion to a peacetime economy might lead to a damaging recurrence of depressed economic activity. This, together with the perceived threat of Soviet aggression, prompted the creation of the Department of Defense (sic) in 1947 along with the Central Intelligence Agency and the enactment of the National Security Act. This amounted to the creation of what has been called a “National Security State”, in which the needs of the military and the defence sector were henceforth to be prioritised, while at the same time anti-communist paranoia was allowed to grow and to dominate political discourse in the US up to and beyond the Korean War (1950-1953).

This conjuncture was the basis of the Cold War, which was to endure until the collapse of the Soviet Union in 1991. But this “victory” for the West, while greeted with triumphalist rhetoric in the US and among its NATO allies, was naturally not viewed as an unmixed blessing by the leaders of the military-industrial complex. For, as noted above, it removed much of the justification for the high level of defence expenditure that had been such a feature of the US (and to a lesser extent other Western economies) at least since 1940. These concerns were to be validated after 1990, when the US federal defence budget declined from over 5 per cent of Gross Domestic Product (GDP) to barely 3.1 per cent in 2000 (source: World Bank). Thereafter its share rose again to almost 5 per cent by 2010, only to decline again to 3.4 per cent in 2019 (the latest year for which data are available). Meanwhile other NATO member states have persistently failed to raise their defence budgets above 2 per cent of GDP despite their being pressed to do so by successive US administrations.

While it might seem implausible to suggest that any of the conflicts the US has been involved in since the 1990s may have been entered into with a view to stimulating increased defence expenditure, the above data could be seen as significant evidence to support the view that this has in fact been the case in some instances. In particular the so-called War on Terror – launched in 2001 in reaction to the 9/11 attacks on New York and Washington – can be regarded as partly a “war of choice” insofar as no clear (or legal) war aims were defined and the conflict was – and still is being – allowed to drag on inconclusively.

It is obviously inconceivable that the 9/11 atrocities – involving the simultaneous suicide of 20 Arab terrorists – could have been masterminded by the US government. What is somewhat less implausible, however, is that the US authorities could have become aware that such terrorist actions were being planned and might have taken steps to prevent them but failed to do so – even though they could not have foreseen the precise consequences of such failure. Such a hypothesis was advanced by the eminent commentator the late Gore Vidal (1925-2012) and is matched by many other informed claims that the attacks could have been foreseen if not averted. Although the truth may never be known, this is consistent with the view that many high-level US officials a) had some advance knowledge of the impending attacks and b) were persuaded that such a large-scale atrocity could be in the interest of the military-industrial complex by justifying a large-scale military action in retaliation – even without knowing quite how fearful its consequences might prove to be. It is clearly hard to believe that such unconscionable treason might be wilfully perpetrated by sane government officials – even if it might be presented, as it has been, as the result of mere negligence. Yet it is hardly more incredible than the idea that President Roosevelt was warned of the impending Japanese attack on Pearl Harbor in 1941 – in which some 2,400 US service personnel were killed – but deliberately chose not to alert his forces for political / tactical reasons (a hypothesis once generally dismissed but now quite widely accepted).

Over the 20 years it has lasted to date the most authoritative estimate puts the cost of the ensuing “war on terror” to the US federal budget – comprising mainly that of the still ongoing conflicts in Afghanistan and Iraq since 2001 – at around $8 trillion ($8,000 billion) – plus the loss of 900,000 lives. Spread over 20 years this suggests an average annual cost equal to at least 0.5 per cent of GDP, a significant amount which also comprises many billions that have swollen the coffers of the private contractors supplying goods and services as part of the war effort. However, as has been widely noted, it leaves out of account the massive non-financial costs of the so-called war.

The horrific history of this “war of choice” demonstrates starkly why, as noted in our last blogpost, the incentive provided by modern market capitalism to promote defence and armaments expenditure is one of its major dis-benefits – indeed probably the most damaging of all. Hence, assuming the absence of an economic model devoid of the need to maximise private profit, it is entirely conceivable that the 9/11 atrocities – and all the ensuing horrors of war, plus torture, Guantanamo etc. – would not have happened at all.

It would doubtless be hard for the public to come to terms with the idea that such appalling crimes and destruction might not have occurred if such a system geared to profit maximisation had not been in place. On the other hand, given the appalling collateral damage that has resulted in so many countries in the Middle East and elsewhere, it would be surprising if there were not soon stronger political pressures to address the problems that have been created. The most obvious example of this is the increasingly lethal explosion of refugees both from civil conflict and (often related) economic collapse – presently manifest, for instance, in the rapidly growing influx of boat people crossing the English Channel (many from Afghanistan, Syria and other countries laid waste by war as well as economic collapse) with a view to entering the United Kingdom illegally.

Purported solutions to such problems tend to be of the “sticking-plaster” variety and fail to address fundamental weaknesses. Hence there is no concerted movement to make armed conflict less likely notwithstanding the monumental misery and physical destruction caused. On the contrary, it appears that even members of the United Nations Security Council, particularly the US and Russia, are more prone than ever to treat military force as a first rather than last resort, typically in flagrant disregard of the UN Charter. This may be partly because the advent of “hi-tech” methods of warfare, such as drone strikes, make it possible to strike at perceived enemies without arousing as much reaction or protest as might happen in the case of a more conventional attack.

Meanwhile the financial / economic incentives to resort to war remain, perhaps enhanced by the lack of more conventional / peaceful opportunities to invest in potentially profitable activities. Moreover, it may not be too cynical to suggest that warfare as an “investment class” could be seen as more attractive than others to the extent that it entails the physical destruction of equipment and buildings which will need replacing. – as notably in the repeated bouts of Israeli destruction in Gaza.

It might be supposed that an economic system which incentivises such ruinous destruction and promotion of misery would by now have been subjected to ruthless collective scrutiny by the international community with a view to marginalising or replacing it, especially 100 years after the end of the “war to end all wars”. As suggested in earlier posts, the most effective single means of achieving this would be to make the granting of limited liability to any enterprise in either the public or private sector conditional on its allowing the public – whether at local, national or international level – the right of veto over key decisions concerning investment, pricing etc.

Regrettably no initiative along these lines is currently under discussion. Moreover, it may be presumed that in the event that any Western government or major political party were to propose such a change it would meet with uniform and vociferous hostility from international big business, which could correctly argue that such a move would spell the end of capitalism – even though the privilege of limited liability has only been generally available in Britain and other developed countries since the 1850s. However, if it were also considered that such a change might render the possibility of future atrocities such as 9/11 more remote – as well as eliminating many of the other disfiguring blemishes of contemporary capitalism – society might well see it as well worth while.

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