from GlobalResearch Website
This incisive article was written on April 30, 2003,
by historian and political
scientist Jacques Pauwels.
30 April 2003
The American President, on the other hand, seems to love war. Why?
Many commentators have sought the answer
in psychological factors. Some opined that
George W. Bush considered it
his duty to finish the job started, but for some obscure reason not
completed, by his father at the time of the Gulf War; others believe
that Bush Junior expected a short and triumphant war which would
guarantee him a second term in the White House.
Without warm or cold wars, however, this
system can no longer produce the expected result in the form of the
ever-higher profits the moneyed and powerful of America consider as
In the early 20th century, then, American industrialists made a crucial contribution in the form of the automatization of work by means of new techniques such as the assembly line. The latter was an innovation introduced by Henry Ford, and those techniques have therefore become collectively known as "Fordism."
The productivity of the great American
enterprises rose spectacularly.
Most Americans at the time did not have sufficiently robust pocket books for such a purchase. Other industrial products similarly flooded the market, and 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 known as the Great Depression.
It was essentially a crisis of
overproduction. Warehouses were bursting with unsold commodities,
factories laid off workers, unemployment exploded, and so the
purchasing power of the American people shrunk even more, making the
crisis even worse.
Economic demand rose spectacularly when the war which had started in Europe, and in which the USA itself was not an active participant before 1942, allowed American industry to produce unlimited amounts of war equipment.
Between 1940 and 1945, the American state would spend no less than 185 billion dollar on such equipment, and the military expenditures' share of the GNP thus rose between 1939 and 1945 from an insignificant 1,5 per cent to approximately 40 per cent. In addition, American industry also supplied gargantuan amounts of equipment to the British and even the Soviets via Lend-Lease.
(In Germany, meanwhile, the subsidiaries of American corporations such as Ford, GM, and ITT produced all sorts of planes and tanks and other martial toys for the Nazi's, also after Pearl Harbor, but that is a different story.)
The key problem of the Great Depression
- the disequilibrium between supply and demand - was thus resolved
because the state "primed the pump" of economic demand by means of
huge orders of a military nature.
However, the greatest beneficiaries by far of 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 net 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, because the state ordered billions of dollars of military equipment, failed to institute price controls, and taxed profits little if at all.
This largesse benefited the American business world in general, but in particular that relatively restricted elite of big corporations known as "big business" or "corporate America."
During the war, a total of less than 60
firms obtained 75 per cent of all lucrative military and other state
orders. The big corporations - Ford, IBM, etc. - revealed themselves
to be the "war hogs," writes Brandes, that gormandized at the
plentiful trough of the state's military expenditures. IBM, for
example, increased its annual sales between 1940 and 1945 from 46 to
140 million dollar thanks to war-related orders, and its profits
Much more equipment was needed, and in order to produce it, America needed new factories and even more efficient technology. These new assets were duly stamped out of the ground, and on account of this the total value of all productive facilities of the nation increased between 1939 and 1945 from 40 to 66 billion dollar.
However, it was not the private sector that undertook all these new investments; on account of its disagreeable experiences with overproduction during the thirties, America's businesspeople found this task too risky. So the state did the job by investing 17 billion dollar in more than 2,000 defense-related projects.
In return for a nominal fee, privately
owned corporations were permitted to rent these brand-new factories
in order to produce… and to make money by selling the output back to
the state. Moreover, when the war was over and Washington decided to
divest itself of these investments, the nation's big corporations
purchased them for half, and in many cases only one third, of the
The answer is:
On account of this, the public debt increased dramatically, namely, from 3 billion dollar in 1939 to no less than 45 billion dollar in 1945.
In theory, this debt should have been reduced, or wiped out altogether, by levying taxes on the huge profits pocketed during the war by America's big corporations, but the reality was different.
As already noted, the American state failed to meaningfully tax corporate America's windfall profits, allowed the public debt to mushroom, and paid its bills, and the interest on its loans, with its general revenues, that is, by means of the income generated by direct and indirect taxes.
Particularly on account of the regressive Revenue Act introduced in October 1942, these taxes were paid increasingly by workers and other low-income Americans, rather than by the super-rich and the corporations of which the latter were the owners, major shareholders, and/or top managers.
However, the American public, preoccupied by the war and blinded by the bright sun of full employment and high wages, failed to notice this.
Affluent Americans, on the other hand, were keenly aware of the wonderful way in which the war generated money for themselves and for their corporations. Incidentally, it was also from the rich businesspeople, bankers, insurers and other big investors that Washington borrowed the money needed to finance the war; corporate America thus also profited from the war by pocketing the lion's share of the interests generated by the purchase of the famous war bonds.
In theory, at least, the rich and powerful of America are the great champions of so-called free enterprise, and they oppose any form of state intervention in the economy.
During the war, however, they never
raised any objections to the way in which the American state managed
and financed the economy, because without this large-scale dirigist
violation of the rules of free enterprise, their collective wealth
could never have proliferated as it did during those years.
In other words, the arduous task of maximizing profits - the key activity within the capitalist American economy - can be absolved much more efficiently through war than through peace; however, the benevolent cooperation of the state is required.
Ever since the Second World War, the
rich and powerful of America have remained keenly conscious of this.
So is their man in the White House today [2003, i.e. George W.
Bush], the scion of a "money dynasty" who was parachuted into the
White House in order to promote the interests of his wealthy family
members, friends, and associates in corporate America, the interests
of money, privilege, and power.
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 nothing else, had restored the economic demand and thus made possible not only 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, and the resulting crisis might well be even more acute than the Great Depression of the "dirty thirties," because during the war years the productive capacity of the nation had increased considerably, as we have seen.
Workers would have to be laid off precisely at the moment when millions of war veterans would come home looking for a civilian job, and the resulting unemployment and decline in purchasing power would aggravate the demand deficit. Seen from the perspective of America's rich and powerful, the coming unemployment was not a problem; what did matter was that the golden age of gargantuan profits would come to an end.
Such a catastrophe had to be prevented,
How fortunate that the Soviet Union existed, a country which during the war had been a particularly useful partner who had pulled the chestnuts out of the fire for the Allies in Stalingrad and elsewhere, but also a partner whose communist ideas and practices allowed it to be easily transformed into the new bogeyman of the United States.
Most American historians now admit that in 1945 the Soviet Union, a country that had suffered enormously during the war, did not constitute a threat at all to the economically and militarily far superior USA, and that Washington itself did not perceive the Soviets as a threat.
These historians also acknowledge that
Moscow was very keen to work closely together with Washington in the
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 were needed to keep the wheels of the nation's economy spinning at full speed also after the end of the war, thus keeping profit margins at the required - or rather, desired - high levels, or even to increase them.
It is for this reason that the Cold War
was unleashed in 1945, not by the Soviets but by the
American "military-industrial" complex,
would call that elite of wealthy individuals and
corporations that knew how to profit from the "warfare economy."
More and more martial equipment had to be cranked out, because the allies within the so-called "free world", which actually included plenty of nasty dictatorships, had to be armed to the teeth with US equipment. In addition, America's own armed forces never ceased demanding bigger, better, and more sophisticated tanks, planes, rockets, and, yes, chemical and bacteriological weapons and other weapons of mass destruction.
For these goods, the Pentagon was always ready to pay huge sums without asking difficult questions. As had been the case during the Second World War, it was again primarily the large corporations who were allowed to fill the orders.
The Cold War generated unprecedented profits, and they flowed into the coffers of those extremely wealthy individuals who happened to be the owners, top managers, and/or major shareholders of these corporations.
(Does it come as a surprise that in the
United States newly retired Pentagon generals are routinely offered
jobs as consultants by large corporations involved in military
production, and that businessmen linked with those corporations are
regularly appointed as high-ranking officials of the Department of
Defense, as advisors of the President, etc.?)
In 1945 the public debt stood at "only" 258 billion dollar, but in 1990 - when the Cold War ground to an end - it amounted to no less than 3.2 trillion dollar!
This was a stupendous increase, also when one takes the inflation rate into account, and it caused the American state to become the world's greatest debtor. (Incidentally, in July 2002 the American public debt had reached 6.1 trillion dollar.)
Washington could and should have covered
the cost of the Cold War by taxing the huge profits achieved by the
corporations involved in the armament orgy, but there was never any
question of such a thing. In 1945, when the Second World War come to
an end and the Cold War picked up the slack, corporations still paid
50 per cent of all taxes, but during the course of the Cold War this
share shrunk consistently, and today it only amounts to
approximately 1 per cent.
In addition, lowering the tax burden of corporations was made easier because after the Second World War these corporations transformed themselves into multinationals, "at home everywhere and nowhere," as an American author has written in connection with ITT, and therefore find it easy to avoid paying meaningful taxes anywhere.
Stateside, where they pocket the biggest
profits, 37 per cent of all American multinationals - and more than
70 per cent of all foreign multinationals - paid not a single dollar
of taxes in 1991, while the remaining multinationals remitted less
than 1 per cent of their profits in taxes.
These low- and middle-income Americans
did not receive a penny from the profits yielded so profusely by the
Cold War, but they did receive their share of the enormous public
debt for which that conflict was largely responsible. It is they,
therefore, who were really saddled with the costs of the Cold War,
and it is they who continue to pay with their taxes for a
disproportionate share of the burden of the public debt.
During the Cold War, the American economy degenerated into a gigantic swindle, into a perverse redistribution of the nation's wealth to the advantage of the rich and to the disadvantage not only of the poor and of the working class but also of the middle class, whose members tend to subscribe to the myth that the American capitalist system serves their interests.
Indeed, while the wealthy and powerful
of America accumulated ever-greater riches, the prosperity achieved
by many other Americans during the Second World War was gradually
eroded, and the general standard of living declined slowly but
In 1989, the year the Cold War petered out, more than 13 per cent of all Americans - approximately 31 million individuals - were poor according to the official criteria of poverty, which definitely understate the problem. Conversely, today 1 per cent of all Americans own no less than 34 per cent of the nation's aggregate wealth.
In no major "Western" country is the
wealth distributed more unevenly.
However, all good things must come to an
end, and in 1989/90 the bountiful Cold War elapsed. That presented a
serious problem. Ordinary Americans, who knew that they had borne
the costs of this war, expected a "peace dividend."
In 1992, Bill Clinton would actually win the presidential election by dangling out the prospect of a national health plan, which of course never materialized. A "peace dividend" was of no interest whatsoever to the nation's wealthy elite, because the provision of social services by the state does not yield profits for entrepreneurs and corporations, and certainly not the lofty kind of profits generated by military state expenditures.
Something had to be done, and had to be
done fast, to prevent the threatening implosion of the state's
It is in this context that in 1990 Saddam Hussein appeared on the scene like a kind of deus ex machina.
This tin-pot dictator had previously been perceived and treated by the Americans as a good friend, and he had been armed to the teeth so that he could wage a nasty war against Iran; it was the USA - and allies such as 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 a terribly
dangerous "new Hitler," against whom war needed to be waged
urgently, even though it was clear that a negotiated settlement of
the issue of Iraq's occupation of Kuwait was not out of the
Saddam Hussein was left in
power so that the threat he was supposed to form might be invoked
again in order to justify keeping America in arms. After all, the
sudden collapse of the Soviet Union had shown how inconvenient it
can be when one loses a useful foe.
The despised project of a peace dividend could be unceremoniously buried, and military expenditures could remain the dynamo of the economy and the wellspring of sufficiently high profits. Those expenditures increased relentlessly during the 1990s.
In 1996, for example, they amounted to no less than 265 billion dollars, but when one adds the unofficial and/or indirect military expenditures, such as the interests paid on loans used to finance past wars, the 1996 total came to approximately 494 billion dollar, amounting to an outlay of 1.3 billion dollar per day!
However, with only a considerably chastened Saddam as bogeyman, Washington found it expedient also to look elsewhere for new enemies and threats.
Somalia temporarily looked promising,
but in due course another "new Hitler" was identified in the Balkan
Peninsula in the person of the Serbian leader, Milosevic.
During much of the nineties, then, conflicts in the former
Yugoslavia provided the required pretexts for military
interventions, large-scale bombing operations, and the purchase of
more and newer weapons.
As mentioned earlier, the state has to cooperate, so in Washington one needs men and women one can count upon, preferably individuals from the very own corporate ranks, individuals totally committed to use the instrument of military expenditures in order to provide the high profits that are needed to make the very 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, that he had managed to have himself elected by
promising the American people a "peace dividend" in the form of a
system of health insurance.
Rambo moved into the White House,
and it did not take long for the results to show.
However, a conflict with that giant loomed somewhat risky; furthermore, all too many big corporations make good money by trading with the People's Republic. Another threat, preferably less dangerous and more credible, was required to keep the military expenditures at a sufficiently high level.
For this purpose, Bush and Rumsfeld and company could have wished for nothing more convenient than the events of September 11, 2001; it is extremely likely that they were aware of the preparations for these monstrous attacks, but that they did nothing to prevent them because they knew that they would be able to benefit from them.
In any event, they did take full advantage of this opportunity in order to militarize America more than ever before, to shower bombs on people who had nothing to do with 9/11, to wage war to their hearts' content, and thus for corporations that 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 never be
achieved. However, in practice the slogan "war
against terrorism" meant that Washington now reserves the
right to wage war worldwide and permanently against whomever the
White House defines as a terrorist.
The statistics speak for themselves. The 1996 total of 265 billion dollar in military expenditures had already been astronomical, but thanks to Bush Junior the Pentagon was allowed to spend 350 billion in 2002, and for 2003 the President has promised approximately 390 billion; however, it is now virtually certain that the cape of 400 billion dollar will be rounded this year.
(In order to finance this military spending orgy, money has to be saved elsewhere, for example by cancelling free lunches for poor children; every little 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 only of his wealthy family and friends
but of corporate America as a whole, to which he owes his job.
Last year, Bush showered bombs on Afghanistan, presumably because the leaders of that country sheltered Bin Laden, but recently the latter went out of fashion and it was once again Saddam Hussein who allegedly threatened America. We cannot deal here in detail with the specific reasons why Bush's America absolutely wanted war with the Iraq of Saddam Hussein and not with, say, North Korea.
A major reason for fighting this particular war was that Iraq's large reserves of oil are lusted after by the US oil trusts with whom the Bushes themselves - and Bushites such as Cheney and Rice, after whom an oil tanker happens to be named - are so intimately linked.
The war in Iraq is also useful as
a lesson to other Third World countries who fail to dance to
Washington's tune, and as an instrument for emasculating
domestic opposition and ramming the extreme right-wing program of an
unelected president down the throats of Americans themselves.
Right now, this addiction, this craving is being satisfied by means of a conflict against Iraq, which also happens to be dear to the hearts of the oil barons. However, does anybody believe that the warmongering will stop once Saddam' scalp will join the Taliban turbans in the trophy display case of George W. Bush?
The President has already pointed his finger at those whose turn will soon come, namely, the "axis of evil" countries:
Welcome to the 21st
century, welcome to George W. Bush's brave new era of permanent