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The Global War Economy

Linsey McGoey

The defence secretary, Ben Wallace, choked back tears on LBC earlier this week as the Taliban consolidated control in Afghanistan. ‘The big regret for me is that some people won’t get back,’ he said.

Between 2003 and 2005, Wallace was overseas director at QinetiQ, the military technology firm created in April 2001 when the Defence Evaluation and Research Agency was privatised. Its revenues are around a billion pounds a year.

Wallace’s contradictory roles – as a former senior executive at a company reaping financial rewards from the ongoing ‘war on terror’ and as a senior minister claiming rightly that much is owed by the UK to the people of Afghanistan – reflects a larger contradiction at the heart of the global war economy.

On the one hand, it’s obvious that war is lucrative business, and the ‘war on terror’ – which has vastly expanded Western governments’ reliance on private contractors and mercenaries – has been especially lucrative, helping returns to shareholders in the top five global defence firms to soar over the past twenty years.

On the other hand, when it comes to considering the place of war and conquest in economics and the social sciences more broadly, many mainstream economists continue to ignore the ways that the ‘war on terror’ helps to enrich a small but influential number of people.

It’s both a new and an old problem. Laissez-faire economists in the 19th century made deliberate efforts to create a perceptual wedge between military conflict and economic trade. Frédéric Bastiat (1801-50) believed that unfettered free trade could be a force for global peace, but to achieve it, people had to pretend that trade was as conflict-free in reality as he wished it to be in his theoretical fantasies. ‘Let us banish from political economy all expressions borrowed from the military vocabulary,’ he wrote: ‘to fight on equal terms, conquer, crush, choke off, be defeated, invasion, tribute, such expressions are inimical to international co-operation.’

John Stuart Mill also tried to pretend that the world was more peaceful than it was. In The Subjection of Women, he praises ‘the most advanced nations of the world’ (including Britain) for paving the way towards a new age of free trade marked by consensual relations between nations rather than the more barbaric principle of the ‘law of the strongest’. It’s a funny claim to have made at the height of the British Empire. True, there was a waning of wars between European powers on the continent of Europe in the last half of the 19th century. But only by overlooking violence and brutality in the colonies could Mill and others maintain that free and peaceful trade largely prevailed when it didn’t.

One of Mill’s heirs today in this respect is Steven Pinker, whose Better Angels of Our Nature (2011) and Enlightenment Now (2018) describe a three hundred year decline in global violence. The claims are mostly an artefact of statistical opportunism, however. The number of displaced people fleeing conflict is at its highest today since the Second World War, but refugees get hardly a mention in Pinker’s bestselling books.

As the sociologist Michael Mann has pointed out, Pinker’s theory of declining violence rests on a ‘conventional’ view of warfare which sees it as ‘progress’ that wars between European states have declined while civil wars outside the West have proliferated. The problem, as Mann emphasises, is that the ‘conventional’ view ignores the reality of Anglo-American involvement in non-Western civil wars. It’s a way of keeping the false appearance of a clean national hand.

The US economist Tyler Cowen, meanwhile, attributes stagnating growth in Western nations to an alleged lack of warfare. ‘We live in this funny bubble of a world where there has not been a major war anytime lately,’ Cowen suggested on his podcast in 2017, nearly twenty years into the US-led ‘war on terror’.

It’s a deeply questionable claim for a host of reasons. First, although war often is lucrative, it’s lucrative in a top-heavy way, enriching elites but not the rest of us. There’s no direct link between wars and overall national wealth, as Adam Smith was among the first to point out:

Since the establishment of the English East India Company, for example, the other inhabitants of England, over and above being excluded from the trade, must have paid, in the price of the East India goods which they have consumed, not only for all the extraordinary profits which the company may have made upon those goods in consequence of their monopoly, but for all the extraordinary waste which the fraud and abuse inseparable from the management of the affairs of so great a company must necessarily have occasioned.

Even Forbes, no enemy to big business, described Cowen’s narrative as both economically misleading and ‘scary’. But even if the spoils of conquest did benefit the aggressor nation as a whole, that’s hardly reason enough to laud deliberate warfare for economic gain.

A deeper question is what counts as a ‘major war’. Millions of people have died as a direct result of the invasions of Afghanistan in 2001 and Iraq in 2003, but to Cowen, these deaths seem to be of negligible importance. It’s troubling how many people would agree with him. Bastiat got his way: the language of conquest has largely been banished from the mainstream of political economy. According to the Campaign Against the Arms Trade there are nearly two hundred former public servants who now work in the arms and security industries. The financial nexus between the ‘war on terror’ and the British government doesn’t get enough airtime – and many leading academics and policymakers seem to prefer it that way.


Comments


  • 20 August 2021 at 12:46pm
    sol_adelman says:
    People like Wallace and the retired 4-star generals who work for defense contractors and appear as experts on US cable news are among the worst and most dangerous people on the planet. We must be grateful that Biden stopped heeding their depraved, self-serving counsel, like the vast majority of ordinary people.

    • 23 August 2021 at 2:51pm
      Harvey Greenberg says: @ sol_adelman
      I wish this were so. The presidency et co, sui generis, has always been involved in questionable relationships with weapons industries and hired buns of whatever ilk. HR Greenberg

  • 21 August 2021 at 10:37am
    XopherO says:
    Wars test out new equipment and tactics and strategies. Generals exist to fight wars and gain recognition. Wars also get rid of equipment that is going out of date, or shown to be not as good as it 'should be' - that destruction or redundancy requires replacement by the arms industries. So many self-interested people are involved, so many others with investments in military/war-related companies. At least half of US companies work in some way for the military. Why do we even show any surprise?

  • 23 August 2021 at 12:32pm
    Howard Medwell says:
    Thankyou for this. It is very noticeable that the centrist media in England do not mention this aspect of the liberal intervention in Afghanistan, Iraq, Syria and points east, because their main aim to re-establish ( re-establish??) the Blairite liberal interventionists at the heart of British politics.

  • 23 August 2021 at 7:17pm
    Earl Scipo says:
    As it happens, I've just been reading about the Korean War - in the course of which there were some asides about Vietnam. One point made, which seems relevant to this piece, was that the war in Korea gave a big boost to the Japanese economy after WW2, since so much of the war effort was channelled through Japan. Similarly, the South Korean economy was helped by the demands of the Vietnam War.

    This is not to disagree with the thrust of the piece - certainly there are military/industrial corporations that benefit from conflicts and those at the top of those corporations will benefit more than those at the bottom, according to the laws of unequal distribution built into capitalism. But wars do surely also have a wider stimulating effect on economic activity (not that this is a justification for encouraging wars, just a consequence).

    • 24 August 2021 at 2:01pm
      XopherO says: @ Earl Scipo
      Didn't Keynes argue that government spending should stimulate the economy from a depression? The New Deal was not nearly enough spending, but the US economy boomed during WW2. I think he said that you could pay the unemployed to dig holes and fill them in, or have a war - same wasteful thing, but gets money circulating! However, better to spend on hospitals, schools and homes. We just need to wait to see what war the US will use now they are pulling out of Afghanistan, unless Biden's big public spending programme does the same.

  • 26 August 2021 at 6:41pm
    Camus says:
    I have just finished reading an article in a recent copy of LRB which discusses the heritage of the Gang of Four who ran the CIA in its early days. It makes depressing reading as it lists the errors made by the CIA in its propagation of freedom and human rights since 1945.
    Nobody knew that the communists would take over China or that the Vietnamese would fight the French, and so on from Iran in1952 to Irak , with its huge supplies of weapons of mass destruction and the victories of the Taliban, originally supplied with weapons by the USA. And now we are told that nobody knew that the Taliban were getting closer to victory every day.
    Nobody knew? Why does the USA spend vast sums of money on satellites, drones, surveillance aircraft (remember the U2 incident?) every form of technology known to mankind as well as spies on the ground in every battle since 1945? The USA spends more on weapons than the ten countries that follow on the SIPRI list. And President Obama was awarded the Nobel Peace Prize. So was Kissinger. Any hope anywhere?

  • 30 August 2021 at 9:25pm
    nlowhim says:
    I agree. Here in the States there's been a real lack of clarity, as the people who helped get us in the 20 year mess (and were essentially lying the entire time) end up being the same ones who get the most air time on cable etc. And they've made their point by making sure that even though withdrawing from Afghanistan was popular, the POTUS took a huge hit for doing so. Impressive indeed.

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