The Global War Economy
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.