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Why America Loves War: Warfare Economy

Why America Loves War

Wars are a good waste of lives and resources, and for that reason everybody is instead of wars. The American President, conversely, generally seems to love war. Why? Many critics believe the result are located in psychological factors. Some opined that George W. Bush considered it his duty to end the job started, however for some obscure reason not completed, by his father before the Gulf War; others think that Bush Junior expected a shorter and triumphant war which could guarantee him a second term within the White House.

I believe we have to look elsewhere for an explanation for the attitude with the American President.

The fact that Bush is attracted to war has little or nothing related to his psyche, but quite a lot using the American financial system. This system, America’s brand of capitalism, functions above all to create extremely rich Americans like the Bush “money dynasty” even richer. Without warm or cold wars, however, this method still can’t produce the expected result in the form of the ever-higher profits the moneyed and powerful of America consider as his or her birthright.

The great strength of American capitalism is additionally its greatest weakness, namely, it’s higher than normal productivity. In the historical development of the international economic system that individuals call capitalism, many factors have produced enormous increases in productivity, for instance, the mechanization with the production method that got under way in England as early as the 18th century. In the early 20th century, then, American industrialists created a crucial contribution in the form in the automatization at work by way of new techniques including the assembly line. The latter was an innovation designed by Henry Ford, the ones techniques have therefore become collectively called “Fordism.” The productivity from the great American enterprises rose spectacularly.

For example, already inside the 1920s, countless vehicles rolled off of the assembly lines of the automobile factories of Michigan everyday. But who was simply supposed to buy all of the cars? Most Americans during the time was lacking sufficiently robust pocket books for this kind of purchase. Other industrial products similarly flooded the market industry, along with the result was the emergence of a chronic disharmony between the ever-increasing economic supply and the lagging demand. Thus arose the economic crisis generally generally known as the Great Depression. It was essentially a crisis of overproduction. Warehouses were full of unsold commodities, factories let go workers, unemployment exploded, so the purchasing power with the American people shrunk more, making the crisis even worse.

It can’t be denied that in America the Great Depression only ended during, and due to, the Second World War. (Even the best admirers of President Roosevelt admit that his much-publicized New Deal policies brought minimum relief.) Economic demand rose spectacularly once the war which had started in Europe, as well as in which the USA itself has not been an energetic participant before 1942, allowed American industry to make unlimited numbers of war equipment. Between 1940 and 1945, the American state would spend at the least 185 billion dollars on such equipment, along with the military expenditures’ share of the GNP thus rose between 1939 and 1945 from an insignificant 1,5 per cent to approximately 40%. In addition, American industry also supplied gargantuan quantities of equipment to the British and even the Soviets via Lend-Lease. (In Germany, meanwhile, the subsidiaries of American corporations for example Ford, GM, and ITT produced a variety of planes and tanks and also other martial toys for the Nazi’s, also after Pearl Harbor, but that’s an alternative story.) The key problem from the Great Depression the disequilibrium between supply and demand, was thus resolved as the state “primed the pump” of economic demand through huge orders of the military nature.

As far as ordinary Americans were concerned, Washington’s military spending orgy brought not merely virtually full employment and also higher wages than any other time; it had been during the Second World War how the widespread misery associated using the Great Depression came to a close understanding that a majority from the American people achieved an unprecedented a higher level prosperity. However, the highest beneficiaries definitely with the wartime economic boom were the country’s businesspeople and corporations, who realized extraordinary profits. Between 1942 and 1945, writes the historian Stuart D. Brandes, the web profits of America’s 2,000 biggest firms were more than 40 per cent higher than during the period 1936-1939. Such a “profit boom” was possible, he explains, as the state ordered huge amounts of dollars of military equipment, still did not institute price controls, and taxed profits little whenever. This largesse benefited the American corporate environment generally, however in particular that relatively restricted elite of big corporations generally known as “big business” or “corporate America.” During the war, a complete of below 60 firms obtained 75% of most lucrative military as well as other state orders. The big corporations, Ford, IBM, etc., revealed themselves being the “war hogs,” writes Brandes, that gormandized with the plentiful trough in the state’s military expenditures. IBM, by way of example, increased its annual sales between 1940 and 1945 from 46 to 140 million dollars thanks to war-related orders, and its profits skyrocketed accordingly.

America’s big corporations exploited their Fordist expertise for the fullest as a way to boost production, but even that had not been sufficient to satisfy the wartime needs with the American state. Much more equipment was needed, as well as in order to produce it, America needed new factories and a lot more efficient technology. These new assets were duly stamped out of the ground, as well as on account of this the entire value of productive facilities with the nation increased between 1939 and 1945 from 40 to 66 billion dollars. However, it wasn’t the non-public sector that undertook every one of these new investments; on account of its disagreeable experiences with overproduction during the thirties, America’s businesspeople found it might be too risky. So, the state of hawaii did the job by investing 17 billion dollars in over 2,000 defense-related projects. In return to get a nominal fee, privately owned corporations were allowed to rent these brand-new factories in order to make, and to make money by selling the output back for the state. Moreover, when the war was over and Washington decided to divest itself of such investments, the world’s big corporations purchased them for half, and in many cases merely one third, with the real value.

How did America finance the war, how did Washington pay the lofty bills presented by GM, ITT, and also the other corporate suppliers of war equipment? The answer is: partly by means of taxation, about 45 percent, but much more through loans, approximately 55 percent. On account with this, the general public debt increased dramatically, namely, from 3 billion dollars in 1939 to no less than 45 billion dollars in 1945. In theory, this debt really should have been reduced, or damaged altogether, by levying taxes around the huge profits pocketed throughout the war by America’s big corporations, though the reality was different. As already noted, the American state failed to meaningfully tax corporate America’s windfall profits, allowed the general public debt to mushroom, and paid its bills, and the interest on its loans, having its general revenues, that is certainly, by means with the income generated by direct and indirect taxes. Particularly on account from the regressive Revenue Act introduced in October 1942, these taxes were paid increasingly by workers along with other low-income Americans, rather than by the super-rich and the corporations of that your latter were pet owners, major shareholders, and/or top managers. “The burden of financing the war,” observes the American historian Sean Dennis Cashman, “was sloughed firmly upon the shoulders of the poorer members of society.”

However, the American public, preoccupied through the war and blinded from the bright sun of full employment and high wages, failed to notice this. Affluent Americans, however, were keenly aware from the wonderful way in which the war generated money on their own and for their corporations. Incidentally, it had been also through the rich businesspeople, bankers, insurers along with other big investors that Washington borrowed the money necessary to finance the war; corporate America thus also profited through the war by pocketing the lion’s share with the interests generated with the purchase in the famous war bonds. In theory, at the very least, the rich and powerful of America would be the great champions of so-called free enterprise, and they oppose any type of state intervention inside the economy. During the war, however, they never raised any objections for the way in that this American state managed and financed the economy, because without this large-scale dirigiste violation in the rules of free enterprise, their collective wealth could do not have proliferated since it did during those years.

During the Second World War, the wealthy owners and top managers of the big corporations learned a very important lesson: throughout a war there’s money to be made, a lot of money. In short, the arduous task of maximizing profits, the true secret activity within the capitalist American economy, could be absolved a lot more efficiently through war than through peace; however, the benevolent cooperation from the state is required. Ever since the Second World War, the rich and powerful of America have remained keenly conscious on this. So is their man inside White House today [2003, i.e. George W. Bush], the scion of your “money dynasty” who was simply parachuted to the White House to be able to promote the interests of his wealthy loved ones, friends, and associates in corporate America, the interests of greenbacks, privilege, and power.

In the spring of 1945 it had been obvious that the war, fountainhead of fabulous profits, would soon be over. What would happen then? Among the economists, many Cassandras conjured up scenarios that loomed extremely unpleasant for America’s political and industrial leaders. During the war, Washington’s purchases of military equipment, and absolutely nothing else, had restored the cost-effective demand thereby authorized not simply full employment but also unprecedented profits. With the return of peace, the ghost of disharmony between supply and demand threatened to return to haunt America again, as well as the resulting crisis could be a lot more acute as opposed to Great Depression of the “dirty thirties,” because throughout the war years the productive capacity of the nation had increased considerably, even as we have seen. Workers would have being fired precisely on the moment when countless war veterans will come home looking for a civilian job, and the resulting unemployment and decline in purchasing power would aggravate the demand deficit. Seen in the perspective of America’s rich and powerful, the approaching unemployment was not a problem; what did matter was the golden chronilogical age of gargantuan profits tummy flatness, although with an end. Such a catastrophe had being prevented, but how?

Military state expenditures were the origin of high profits. In order to hold the earnings gushing forth generously, new enemies and new war threats were urgently needed since Germany and Japan were defeated. How fortunate how the Soviet Union existed, a country which during the war had been a particularly useful partner who had pulled the chestnuts out in the fire to the Allies in Stalingrad and elsewhere, but additionally a person whose communist ideas and practices allowed it being easily transformed into the new bogeyman with the United States. Most American historians now admit that in 1945 the Soviet Union, a land that had suffered enormously during the war, did not constitute a threat at all for the economically and militarily far superior USA, understanding that Washington itself would not perceive the Soviets like a threat. These historians also acknowledge that Moscow was very keen to operate closely along with Washington in the postwar era.

Indeed, Moscow had absolutely nothing to gain, and everything to lose, coming from a conflict with superpower America, which was packed with confidence as a result of its monopoly of the atom bomb. However, America, corporate America, the America of the super-rich, urgently needed a new enemy in order to justify the titanic expenditures for “defense” which are had to keep the wheels with the nation’s economy spinning at full speed also following your end from the war, thus keeping income in the required, or in other words, desired, high levels, and even to raise them. It is that is why the Cold War was unleashed in 1945, not from the Soviets but through the American “military-industrial” complex, as President Eisenhower would call that elite of wealthy individuals and corporations that knew the best way to profit through the “warfare economy.”

In this respect, the Cold War exceeded their fondest expectations. More plus much more martial equipment had to become cranked out, since the allies inside so-called “free world”, which actually included a good amount of nasty dictatorships, had to get armed towards the teeth with US equipment. In addition, America’s own military never ceased demanding bigger, better, plus much more sophisticated tanks, planes, rockets, and, yes, chemical and bacteriological weapons along with other weapons of mass destruction. For these goods, the Pentagon was always able to pay huge sums without asking difficult questions. As had been the truth through the Second World War, it had been again primarily the large corporations who have been permitted to fill the orders. The Cold War generated unprecedented profits, plus they flowed into the coffers of these extremely wealthy individuals who happened to become the owners, top managers, and/or major shareholders of these corporations. (Does it come being a surprise that inside United States newly retired Pentagon generals are routinely offered jobs as consultants by large corporations involved in military production, understanding that businessmen related to those corporations are regularly appointed as high-ranking officials of the Department of Defense, as advisors in the President, etc.?)

During the Cold War too, the American state financed its skyrocketing military expenditures by using loans, this also caused the public debt to elevate to dizzying heights. In 1945 people debt stood at “only” 258 billion dollars, however in 1990, if the Cold War ground with an end, it amounted to a minimum of 3.2 trillion dollars! This was a stupendous increase, also when one takes the inflation rate into account, and yes it caused the American state for being the world’s greatest debtor. (Incidentally, in July 2002 the American public debt had reached 6.1 trillion dollars.) Washington could and really should have covered the cost of the Cold War by taxing the large profits achieved with the corporations involved within the armament orgy, but there were never any question of a real thing. In 1945, once the Second World War come with an end as well as the Cold War acquired the slack, corporations still paid 50 % of all taxes, but during the course with the Cold War this share shrunk consistently, now it only amounts to approximately 1%.

This was possible because the nation’s big corporations largely know what the federal government in Washington might do, also inside field of fiscal policy. In addition, lowering the tax burden of corporations was developed easier because following the Second World War these corporations transformed themselves into multinationals, “at home everywhere and nowhere,” as a possible American author has developed in connection with ITT, and so believe it is simple to avoid paying meaningful taxes anywhere. Stateside, where they pocket the largest profits, 37% of American multinationals, and a lot more than 70% coming from all foreign multinationals paid not a single dollar of taxes in 1991, whilst the remaining multinationals remitted lower than 1% with their profits in taxes.

The sky-high costs with the Cold War were thus not borne by those that profited from that and who, incidentally, also continued to pocket the lion’s share of the dividends paid on government bonds, but from the American workers and also the American middle class. These low- and middle-income Americans failed to get a penny through the profits yielded so profusely through the Cold War, nevertheless they did receive their share with the enormous public debt that that conflict was largely responsible. It is they, therefore, who have been really saddled using the costs of the Cold War, and yes it is they who carry on and pay making use of their taxes for the disproportionate share of the burden in the public debt.

In simple terms, while the earnings generated through the Cold War were privatized to the good thing about a very wealthy elite, its costs were ruthlessly socialized for the great detriment of most other Americans. During the Cold War, the American economy degenerated into a gigantic swindle, right into a perverse redistribution from the nation’s wealth on the advantage with the rich and on the disadvantage not simply of the poor and in the working class but also of the middle class, whose members tend to subscribe to the myth the American capitalist system serves their interests. Indeed, whilst the wealthy and powerful of America accumulated ever-greater riches, the prosperity achieved by many other Americans in the Second World War was gradually eroded, along with the general quality of life declined slowly but steadily.

During the Second World War America had witnessed a modest redistribution in the collective wealth from the nation to the advantage from the less privileged members of society. During the Cold War, however, the rich Americans became richer as the non-wealthy, and positively not merely poor people became poorer. In 1989, 4 seasons the Cold War petered out, greater than 13% coming from all Americans, approximately 31 million individuals were poor according towards the official criteria of poverty, which definitely understate the situation. Conversely, today 1 % coming from all Americans own at least 34% of the nation’s aggregate wealth. In no major “Western” country may be the wealth distributed more unevenly.

The minuscule percentage of super-rich Americans found this development extremely satisfactory. They loved the concept of accumulating more plus much more wealth, of aggrandizing their already huge assets, on the expense of the less privileged. They planned to keep issues that way or, if possible, get this sublime scheme even more efficient. However, perfect things must come for an end, as well as in 1989/90 the bountiful Cold War elapsed. That presented a significant problem. Ordinary Americans, who knew they had borne the price of this war, expected a “peace dividend.”

They thought how the money the state of hawaii had spent on military expenditures might certainly be used to produce benefits for themselves, by way of example within the type of a national medical health insurance as well as other social benefits which Americans as opposed to most Europeans haven’t enjoyed. In 1992, Bill Clinton would actually win the presidential election by dangling out your prospect of a national health plan, which needless to say never materialized. A “peace dividend” was of no interest whatsoever on the nation’s wealthy elite, because the provision of social services by the state doesn’t yield profits for entrepreneurs and corporations, and definitely not the lofty type of profits generated by military state expenditures. Something had to become done, along to become done fast, to stop the threatening implosion with the state’s military spending.

America, in other words, corporate America, was orphaned of its useful Soviet enemy, and urgently required to conjure up new enemies and new threats so that you can justify a high level of military spending. It is on this context that in 1990 Saddam Hussein appeared for the scene just like a type of deus ex machina. This tin-pot dictator had previously been perceived and treated from the Americans being a buddy, and the man ended up armed towards the teeth in order that he could wage a foul war against Iran; it had been the USA, and allies including Germany, who originally supplied him with all sorts of weapons. However, Washington was desperately in need of a new enemy, and suddenly fingered him as being a terribly dangerous “new Hitler,” against whom war needed being waged urgently, even though it was clear which a negotiated settlement from the issue of Iraq’s occupation of Kuwait has not been out of the question.

George Bush Senior was the casting agent who discovered this useful new nemesis of America, and who unleashed the Gulf War, where Baghdad was showered with bombs and Saddam’s hapless recruits were slaughtered in the desert. The road to the Iraqi capital lay wide-open, nevertheless the Marines’ triumphant entry into Baghdad was suddenly scrapped. Saddam Hussein remained in power so the threat he was designed to form could possibly be invoked again in order to justify keeping America in arms. After all, the sudden collapse in the Soviet Union had shown how inconvenient it can be when one loses a handy foe.

And so Mars could remain the patron saint in the American economy or, more accurately, the godfather in the corporate Mafia that manipulates this war-driven economy and reaps its huge profits without bearing its costs. The despised project of the peace dividend could be unceremoniously buried, and military expenditures could remain the dynamo with the economy and also the wellspring of sufficiently high profits. Those expenditures increased relentlessly through the 1990s. In 1996, as an example, they amounted to at the least 265 billion dollars, when one adds the unofficial and/or indirect military expenditures, for example the interests paid on loans employed to finance past wars, the 1996 total located approximately 494 billion dollars, amounting to a outlay of just one.3 billion dollars daily! However, with simply a considerably chastened Saddam as bogeyman, Washington think it is expedient and then to look elsewhere for first time enemies and threats. Somalia temporarily looked promising, in due course another “new Hitler” was identified inside the Balkan Peninsula inside person of the Serbian leader, Milosevic. During much from the nineties, then, conflicts inside former Yugoslavia provided the necessary pretexts for military interventions, large-scale bombing operations, and the acquisition of countless newer weapons.

The “warfare economy” could thus still run on all cylinders also after the Gulf War. However, in view of occasional public pressure for example the demand for any peace dividend, it is not simple to keep this technique going. (The media present not a problem, as newspapers, magazines, TV stations, etc. are generally of big corporations or use them for advertising revenue.) As mentioned earlier, the state needs to cooperate, so in Washington you need women and men it’s possible to count upon, preferably individuals from your individual corporate ranks, individuals totally committed to utilize instrument of military expenditures as a way to supply the high profits that are needed to make ab muscles rich of America even richer. In this respect, Bill Clinton had fallen short of expectations, and corporate America could never forgive his original sin, namely, he had been able to have himself elected by promising the American people a “peace dividend” in the kind of a method of health care insurance.

On account of the, in 2000 it had been arranged that not the Clinton-clone Al Gore moved to the White House but a team of militarist hardliners, virtually without exception representatives of wealthy, corporate America, like Cheney, Rumsfeld, and Rice, and also course George W. Bush himself, son in the man who had shown with his Gulf War the way may be done; the Pentagon, too, was directly represented inside the Bush Cabinet within the person from the allegedly peace-loving Powell, in fact another angel of death. Rambo moved into the White House, also it failed to take long for that leads to show.

After Bush Junior had been catapulted to the presidency, it searched some time as if he would proclaim China as the newest nemesis of America. However, a conflict achievable giant loomed somewhat risky; furthermore, much too many big corporations make good money by trading with all the People’s Republic. Another threat, preferably better plus more credible, was necessary to maintain your military expenditures in a sufficiently high level. For this purpose, Bush and Rumsfeld and company may have desired no more convenient compared to the events of September 11, 2001; it is extremely likely them to be aware from the preparations of those monstrous attacks, but that they can did not even attempt to prevent them given that they knew that they could reap the benefits of them. In any event, they did take full advantage with this opportunity to be able to militarize America more than previously, to shower bombs on individuals who had nothing about 9/11, to wage war for their hearts’ content, and therefore for corporations which do business with the Pentagon to ring up unprecedented sales. Bush declared war not on a country but on terrorism, an abstract concept against which one cannot really wage war and against which a definitive victory can’t ever be performed. However, in reality the slogan “war against terrorism” meant Washington now reserves the authority to wage war worldwide and permanently against whomever the White House defines being a terrorist.

And so the problem with the end in the Cold War was definitively resolved, as there is henceforth a justification for ever-increasing military expenditures. The statistics speak for themselves. The 1996 total of 265 big in military expenditures had been recently astronomical, but as a result of Bush Junior the Pentagon was in a position to spend 350 billion in 2002, and then for 2003 the President has promised approximately 390 billion; however, it’s now virtually certain that the cape of 400 billion dollar will probably be rounded in 2010. (In order to finance this military spending orgy, money has being saved elsewhere, for example by cancelling free lunches for poor children; every small bit helps.) No wonder that George W. struts around beaming with happiness and pride, for he, essentially a spoiled rich kid of very limited talent and intellect – has surpassed the boldest expectations not merely of his wealthy family and friends but of corporate America as a whole, to which he owes his job.

9/11 provided Bush with carte blanche to wage war wherever and against whomever he chose, and as this essay has purported to produce clear, it won’t matter that much who happens to become fingered as enemy du jour. Last year, Bush showered bombs on Afghanistan, presumably since the leaders of the country sheltered Bin Laden, but recently the second sought out of fashion and it had been once again Saddam Hussein who allegedly threatened America. We cannot deal here in detail with all the specific reasons why Bush’s America absolutely wanted war using the Iraq of Saddam Hussein and not with, say, North Korea. A major reason behind fighting this particular war was that Iraq’s large reserves of oil are lusted after with the US oil trusts with whom the Bushes themselves, and Bushites including Cheney and Rice, after whom an oil tanker happens to become named, are so intimately linked. The war in Iraq is additionally useful as a lesson along with other Third World countries who don’t dance to Washington’s tune, and being an instrument for emasculating domestic opposition and ramming the non plus ultra right-wing program of the unelected president down the throats of Americans themselves.

The America of wealth and privilege is addicted to war, without regular and ever-stronger doses of war it still can’t function properly, which is, yield the desired profits. Right now, this addiction, this craving has been satisfied by using a conflict against Iraq, this happens to be dear to the hearts of the oil barons. However, does anybody feel that the warmongering stop once Saddam’ scalp will join the Taliban turbans within the trophy display case of George W. Bush? The President has recently pointed his finger at those whose turn has decided to come, namely, the “axis of evil” countries: Iran, Syria, Lybia, Somalia, North Korea, and of course the previous thorn inside the side of America, Cuba. Welcome towards the modern day, welcome to George W. Bush’s brave new era of permanent war!

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