Part XI: AMERICAN CAPITAL’S DEPENDENCE ON WAR AND THE END OF “CONTAINMENT”

Generally speaking, however, from the end of World War II until today, profits have not depended so much on America entering foreign conflicts, even though under its “containment” strategy, war has been a constant feature since the 1950s.

America’s air warfare campaigns since 1945 are listed chronologically as follows:

Country	Year/s	Comments
China	1945-49	conventional; biological
Korea	1950-53	conventional; biological; chemical; incendiary
China	1954	conventional; biological; chemical
Guatemala	1951-52	conventional
Indonesia	1958	conventional
Cuba	1959-61	conventional; biochemical attacks in other years
Guatemala	1960	conventional
Vietnam	1961-73	conventional; chemical; biological; cluster
Gongo	1964	conventional
Peru	1965	conventional
Laos	1964-73	conventional; chemical; biological; cluster
Guatemala	1967-69	conventional
Cambodia	1969-70	conventional; chemical; biological
Cambodia	1975	conventional
El Salvador	1980-89	conventional
Nigaragua	1980-89	conventional
Grenada	1983	conventional
Lebanon	1983-84	conventional
Syria	1984	conventional
Libya	1986	conventional
Iran	1987	conventional
Panama	1989	conventional; chemical; biological
Iraq	1991-2002	chemical; biological; cluster; DU
Kuwait	1991	conventional; chemical; biological
Somalia	1993	conventional
Bosnia	1993-95	conventional; cluster; DU
Sudan	1998	conventional; biological
Afghanistan	1998	conventional
Yugoslavia	1999	conventional; chemical; biological; cluster; DU
Afghanistan	2001-02	conventional; chemical; biological; cluster; DU

Source: Basic Statistics for United States Imperialism, Internet

Thus, while America exploited the fear of war, rather than war itself, i.e. the so-called “Cold War”, justifying increased U.S. military spending, the U.S. military-industrial complex⁸⁴ prospered and grew as a result of the multitude of foreign wars that blew up during the post-1945 period, apart from the ones (listed above) in which the United States committed military personnel, but which also boosted arms sales.

Another matter arises here, one that is very worrying. The First and Second World Wars did generate growing profits across the economy and also had significant effects on the world power system, pushing the United States into the dominant position. We are now witnessing the development of a war policy which appears to envisage war continuing for the foreseeable future, not just to boost America’s massive armaments corporations, but the economy as a whole.

“This fourth world war, I think, will last considerably longer than either World Wars I or II did for us. Hopefully not the full four-plus decades of the Cold War⁸⁵.”

This message of a “long war” has been repeated. On February 15th, 2006, the media reported a new Pentagon report, “The Long War”:

“We are at a critical time in the history of this great country and find ourselves challenged in ways we did not expect. We face a ruthless enemy intent on destroying our way of life and an uncertain future…” The report sets out a plan for prosecuting what the Pentagon describes in the preface as “The Long War”, which replaces the “war on terror”. The long war represents more than just a linguistic shift: it reflects the ongoing development of US strategic thinking since the September 11 attacks⁸⁶.”

But this was already implied by the nature of the initial stimulus to war, the attacks of September 11, 2001. There is no doubt that the project was planned from the start, and has not just “dawned on” the minds of America’s military leaders.

Looking beyond the Iraq and Afghan battlefields, US commanders envisage a war unlimited in time and space against global Islamist extremism. “The struggle … may well be fought in dozens of other countries simultaneously and for many years to come,” the report says. The emphasis switches from large-scale, conventional military operations, such as the 2003 invasion of Iraq, towards a rapid deployment of highly mobile, often covert, counter-terrorist forces. (ibid.)

The two world wars -world wars because of their economic effects -focused on Europe. The present is a continuation of America’s worldwide (cold) war (containment) policy, previously oriented around the Soviet Union, and is aimed at the developing countries. Although the United States is spearheading this project, it is getting support from its rivals.

No wonder it was difficult to sell the new war project to the armed forces. It is clear that much argument took place between the U.S. military and the U.S. Administration over the way the Iraq invasion was to be launched.

According to a “senior retired U.S. military official” interviewed on July 15, 2002:

”’there is total unity among the Joint Chiefs of Staff and the regional Commanders-in-Chief, in opposition to an Iraq invasion.’ The source named the new Commander of the Pacific Command as one of the more vocal critics of Washington’s war plans, ‘noting that the Pacific Command is the key support for all U.S. military operations in the Middle East and Persian Gulf⁸⁷.”

Later, it was reported:

“The chiefs of staff and other senior military officers have voiced their opposition to the Iraq war plans favored by the civilian leadership in the Pentagon. Some are even against the war entirely… [The] primary concerns of top military planners are that the administration is misprioritizing the threat posed by Iraq, ‘the absence of friendly nations siding with the United States,’ the danger of diverting resources away from the conflict in Afghanistan, and ‘the lack of a clear plan for Iraq once Hussein is removed.’ But: ‘Whatever doubts the Pentagon’s top-ranked officers harbored earlier about moving against Iraq, they are said to be in agreement now that the United States could fight and win a war against Iraq⁸⁸.”

The military elite originally appears to have been against the Bush plan, but somehow this changed. It would be naïve to think that the U.S. Administration was unaware of the military arguments against invading Iraq. Indeed, back in 1992, General Colin Powell, now U.S. Secretary of State, wrote the following words in the Council on Foreign Relations’ journal Foreign Affairs:

“The Gulf war was a limited-objective war. If it had not been, we would be ruling Baghdad today at unpardonable expense in terms of money, lives lost and ruined regional relationships.”

And in 1998, George Bush Senior and Brent Scowcroft wrote:

“We should not march into Baghdad…to occupy Iraq would instantly shatter our coalition, turning the whole Arab world against us, and make a broken tyrant into a latter-day Arab hero…assigning young soldiers to a fruitless hunt for an securely entrenched dictator and condemning them to fight in what would be a an unwinnable Guerilla war. It could only plunge that part of the world into even greater instability.”

“Trying to eliminate Saddam, extending the ground war into an occupation of Iraq, would have violated our guideline about not changing objectives in midstream, engaging in ‘mission creep,’ and would have incurred incalculable human and political costs. Apprehending him was probably impossible. We had been unable to find Noriega in Panama, which we knew intimately. We would have been forced to occupy Baghdad and, in effect, rule Iraq. The coalition would instantly have collapsed, the Arabs deserting it in anger and other allies pulling out as well. Under those circumstances, there was no viable ‘exit strategy’ we could see, violating another of our principles. Furthermore, we had been self-consciously trying to set a pattern for handling aggression in the post-Cold War world. Going in and occupying Iraq, thus unilaterally exceeding the United Nations’ mandate, would have destroyed the precedent of international response to aggression that we hoped to establish. Had we gone the invasion route, the United States could conceivably still be an occupying power in a bitterly hostile land. It would have been a dramatically different -and perhaps barren -outcome⁸⁹.”

In other words, several arguments of a diplomatic, military and ethical nature were put forward in the past cautioning against an invasion of Iraq, by the very people who spearheaded the attack in 2003. And the soldiers left to guard Iraq (and Afghanistan) are facing exactly what these people had expressed concern about. Why would the U.S. government allow such a situation to come about and why would the military cave in to the government’s position?

For one thing, it seems there have been differences among America’s strategy-makers since the first Gulf War of 1991. In 1992, Paul Wolfowitz, then Deputy Secretary of Defense for Policy⁹⁰ prepared a document known as the Defense Planning Guidance which is written every few years, in which he stated that the policy of containment being applied by the Bush (senior) government to Iraq was a relic of the Cold War, that America should be outspoken, use its military power to act in pre-emptive self-defense against the proliferation of weapons of mass destruction and if America has to act alone, it should do so. Following the scandal the leakage of this document to the New York Times created, the White House ordered Defense Secretary of the time Richard Cheney to rewrite it after parts were leaked to the press. Cheney erased all mention to pre-emptive defense and America acting alone.

Clearly, conditions must have changed in ten years. However, we should note that both Powell’s and Bush Senior’s arguments were presented as ethical ones, not as points of view based upon currently-existing conditions, but as positions based on principle, respect for international law, the United Nations, etc. While it might be argued that George Bush Senior has had no part in his son’s government, and that his arguments indicate disapproval of what he is doing, this is hardly believable, just looking at George Bush Senior’s interests and influence in the Middle East region⁹¹.

And while Colin Powell’s position on Iraq after 2001 represented a complete volte-face from his position in 1992, his core position does not seem to have changed. In 1992, for instance, Powell told the House Armed Services Committee that the United States required sufficient power to:

”...deter any challenger from ever dreaming of challenging us on the world stage … I want to be the bully on the block … there is no future in trying to challenge the armed forces of the United States⁹².”

Beefing up America’s armed forces was central to Bush’s presidential campaign in 2000 -not because those within his group and behind it wanted to please the army chiefs, but because the need for a bigger and more efficient army was implicit in the global strategy endorsed by America’s financial oligarchy.

By September 2000, Bush was campaigning for the presidency and saying such things as

“It’s time for new leader ship in Washington, D.C., that will rebuild the morale of the United States military⁹³,”

During the 1990s, it was generally agreed that over-capacity was a problem in America’s armed forces, and large cutbacks were made by Clinton. Highlighting what he said were Clinton’s excessive cutbacks in the armed forces, Colin Powell argued at the Bush campaign rally in September, 2000:

“We had a sensible plan to bring our forces down, but the new administration came in and, without consulting anybody, said, ‘let’s cut another 200,000 out of the military, cut the budget even further.’” (Ibid.)

The mood in America has changed since then (thanks, undoubtedly, to the aerial attacks on U.S. targets on September 11, 2001). And since 2002, calls for increased troop numbers via the draft have been made by members of the U.S. Legislature who do not necessarily endorse the Bush Administration’s specific military projects.

“Representative Charles Rangel of New York, a strong opponent of war with Iraq, introduced HR 163 on January 7, 2003. This bill would require military service or civilian service for all men and women in furtherance of national defense and homeland security…. Rangel is concerned that under the current all-volunteer army, “the burden of military service is being borne disproportionately by members of disadvantaged groups⁹⁴.”

Although both Bush and U.S. Defense Secretary Donald Rumsfeld rejected this call for conscription at the time, the issue continues to be raised.

US Profits and War

What is behind the profits generated during war? War modifies the manner in which surplus-value is realized as profits by guaranteeing sales when overproduction has led to great uncertainties in this regard. Regarding World War I, for example, Smedley Butler notes that:

$1,000,000,000 … was spent by Uncle Sam in building airplane engines that never left the ground! Not one plane, or motor, out of the billion dollars worth ordered, ever got into a battle in France. Just the same the manufacturers made their little profit of 30, 100, or perhaps 300 per cent⁹⁵.

The present U.S. government’s military policy has led to large increases in profits for America’s armaments firms. Lockheed Martin, for instance, reporting a 16-percent rise in first-quarter profit and its shares rose nearly 2 percent in April 2004, thanks to “soaring demand for its combat aircraft and government information-technology services⁹⁶.” In October, 2004, it was reported that Aerospace giant Boeing Co. was reporting a 78 percent jump in third-quarter earnings, buoyed by a strong defense business⁹⁷. And Northrop Grumann, another big defense contractor, saw 51% third quarter profit surge⁹⁸.

The most obvious profits of war are generated by arms producers, but once a war has got under way these increases in profits become more generalized, and involve many companies that are not specifically in the arms business, but which produce materials that are used by the capital and labor needed by it -e.g. steel, engines, electrical components, oil and so on plus food and clothing for both the civil and military workers and their families.

The government increases its demand thanks to war, but how is this financed? In two ways: a) by increased government borrowing, i.e. deficit finance; b) by increased taxation. War serves to impose higher taxes, given the fear it inculcates among the populace who are therefore less likely to resist this direct transfer of wealth. Both forms of financing have not just increased during war, but the continued growth of abundance under capitalism during the 20th century has had the effect of increasing these methods also during times of relative peace -although we can see that war is always on the horizon somewhere, as the real long-term growth of defense spending shows. The power vested by the State in the largest, most influential concerns has, therefore, become an ever-present part of the capitalist mode of production. Money is transferred from the pockets of the people not through any market mechanism, but as tribute to the State, and is used, in turn, as a significant part of aggregate demand.

Before going on, however, it should be noted that while U.S. defense spending has increased since 1945 in real terms, dwarfing the defense budgets of any other country, it has not grown as fast as the overall U.S. economy. In other words, although defense spending has grown significantly, it has declined as a proportion of GDP, so that even in 2004, it represented a very small proportion of US GDP compared with all years since 1945, except 1948 and the period 1994-2001. At the same time, parallel with the civil economy, it has become increasingly capital intensive, i.e. weapons represent an increasing proportion of total defense spending and the personnel required to operate them has necessarily to be more highly trained.

We can see several things from this. First, there is a generalized growth in real profits over time, i.e. during a period of more than 70 years, profits grew by more than 7 times in real terms. During that period, one world war occurred, with profits clearly growing, and two large “contained” wars, with the United States playing a major role in each of these, and corresponding profit growth in each of them. Like nominal profits and the overall economy, real profits move in waves, and although war has boosted them, the more civil factors, including technological and organizational development and globalization, have pushed up profits. But although war may not have contributed equally obviously in all cases, higher defense spending by U.S. governments has occurred regularly when profit booms have begun to weaken.

N.B. This is a continuing project. We welcome comments, corrections, suggestions, criticisms from readers.

NOTES

⁸⁴ And, it might be added, the British military-industrial complex, far more than the other industrialized States -see Mary Kaldor Notes 66 and 67.

⁸⁵ “Ex-CIA director: U.S. faces ‘World War IV’”. Former CIA Director, James Woolsey (who described the “Cold War” as the “Third World War”) speaking, by Charles Feldman and Stan Wilson, CNN, Thursday, April 3, 2003. The word “us” presumably refers to the United States.

⁸⁶ The Guardian, February 15, 2006.

⁸⁷ Center for Cooperative Research quoting: Electronic Intelligence Weekly July 22, 2002
fn88. Center for Cooperative Research quoting: Washington Post, September 1, 2002

⁸⁹ George H.W. Bush and Brent Scowcroft, “A World Transformed”, 1998

⁹⁰ From 2001 to 2005, Deputy Secretary of Defense under Donald Rumsfeld; since June1, 2005, President of the World Bank.

⁹¹ There are now many studies linking George Bush, James Baker et al to the Carlyle Group, for instance

⁹² Taken from “Dick Cheney’s Song of America”, by David Armstrong, October 2002, Harper’s Magazine.

⁹³ “Bush vows to boost military morale”, Howard Wilkinson, The Cincinnati Enquirer Friday, September 08, 2000

⁹⁴ “Conscription, Faith, and Youth”, “Will there be a draft?”, Titus Peachey, Mennonite Central Committee U.S., February, 2003

⁹⁵ Smedley Butler, ibid.

⁹⁶ Reuters, “War profits”, April 28, 2004.

⁹⁷ Uncommon Thought Journal: “War Profits -In Brief”, October 27, 2004.

⁹⁸ Associated Press, October 27, 2004.