Our Chief Industry: War

The economy may be collapsing, but the war business is booming

by , November 18, 2009

We often hear the complaint that America doesn’t make anything anymore: that is, our economy seems driven not by producing actual things, but utterly intangible creations such as credit default swaps and securitized sub-prime mortgages. Our once-bustling factories are rusted relics. Entire industries have collapsed. Ghost towns have sprung up where cities once thrived, like mushrooms sprouting in a cemetery. Baffled Americans, who – mistaking debt for wealth – thought they lived in the wealthiest country in the world, struggle to define what is happening. Old words like "correction," contraction," and "recession" give way to talk of a second Great Depression, and, in this context, the question "What does America make anymore?" is raised with renewed vigor.

While our factories have long since moved abroad, where wages are lower and regulation is lax, and our crippled industries are in Dr. Obama‘s economic intensive care unit, on life support and awaiting last rites, America’s number-one export – representing, by far, our single largest capital investment – is our overseas military presence. What Chalmers Johnson referred to as our "empire of bases" is the framework of an international economic system in which the division of labor is roughly as follows: while Asia is the factory of the world, South America the farmland, and Europe increasingly a theme park/museum, the U.S. role is that of world gendarme.

What do you mean we don’t make anything? What about wars? We make plenty of those: Iraq, Afghanistan, and now Pakistan and perhaps Iran – the Globo-Cop business is booming.

Before the big crash of 2008, you’ll recall, in the glory days of the bubble years, our elites were all atwitter with a vague, glowing vision of the new economic reality, which touted the alleged benefits of "globalization." More than just the traditional free-market prescription of free trade, this concept envisioned extending the reach and influence of Western finance capital over the entire globe. At the end of this road – at "the end of history," as Francis Fukuyama famously put it – we would fall into the all-encompassing embrace of the emerging world state and live happily ever after.

This ever-upward-and-onward Panglossian view, which identified growing Western domination of the global economy with the march of progress itself, was the underlying rationale of an increasingly aggressive policy of U.S. military and political intervention worldwide. We said we were fighting for civilization as we bombed some of the oldest cities in Balkans, and when" humanitarian" interventionism gave way to a more Roman concept of America’s role in the world – the dividing line being, roughly, 9/11/01 – still we invoked the defense of universal values as the ultimate justification for occupation and mass murder. We unhesitatingly identified ourselves and our interests with the advent of modernity and took up the old Kiplingesque burden of empire with alacrity.

This kind of hubris, however, has since gone out of fashion. The trauma of Iraq and an economic downturn have tamped down our crusading fever; a new appeal is needed in order to buttress the global economic and political order our ruling elites once thought they had in their grasp. At a time when the whole rationale for our endless "war on terrorism" is being challenged, a more pragmatic course is called for.

As Republicans resist the extensive new social programs advanced by the Obama administration, including healthcare as yet another entitlement, and popular awareness of the national debt reaches new heights of anxiety, there is one way out: more spending on the military. Here is a measure the thoroughly neoconized Republicans can support wholeheartedly – especially if the money is being spent in their districts. This satisfies White House strategists, who seek a way out of a growing political impasse, and also the economic gurus at Obama’s ear, who believe government spending can create new jobs and kick-start the economy.

These economic geniuses are the latter-day followers of John Maynard Keynes, an economist who believed we could end unemployment and fight our way out of economic malaise by having the government hire workers to dig ditches and then fill them back up again. They didn’t necessarily have to produce anything of value, as long as they went through the motions. All government has to do is "prime the pump," and this will set in motion a process ending in full employment. You can build hospitals or pyramids, it doesn’t matter; military spending will do. In this scenario, we are back to when James Baker was asked to justify the first Gulf war, and he replied, "Jobs, jobs, jobs."

Anything to rev the "economic engine" and otherwise conflate an overused metaphor with a rather more complex reality.

The Obama administration, the Federal Reserve, and the titans of Big Business and Big Labor all face a common problem: how to re-inflate the economic bubble that burst with such a loud bang last year. So far, nothing has worked. The more they pump the economy full of air – i.e., rapidly depreciating dollars – the faster it seems to deflate. The various "stimuli" applied to the patient seem to wear off quickly. The one politically feasible "solution" to this problem is bipartisan support for greatly increased military operations worldwide. What better stimulus than a foreign policy of perpetual war?

In the heyday of the American Imperium, the deal with our vassals was this: we provided a market for their cheap imports and agreed to keep trade barriers down – as long as they took our side and, in many cases, allowed a substantial U.S. military presence on their soil. Yet this system was unsustainable. The problem with having a worldwide empire, as Garet Garrett, the mid-20th-century conservative critic of globalism, put it, is that "everything goes out and nothing comes in."

What the American empire, at its height, aspired to was the creation of a de facto world state [.pdf], with Washington as its capital. What this nascent global government lacked, however, were the two essential items in any government’s toolbox:

(1) The power to levy taxes. Earlier empires exacted tribute from their vassals, but in the American empire the exact opposite principle holds sway: our vassals exact tribute from us, in the form of "foreign aid," including massive military aid.

(2) A central bank, in this case a world central bank, with the power to monetize government debt and re-inflate the economic bubble on a world scale, regulating and "fine-tuning" a fully globalized economy.

As it is, the whole system rests on massive U.S. government debt. In exchange for policing the globe and keeping the "peace," our rulers depend on foreigners buying U.S. debt securities. This is the Achilles heel of the American giant.

As we await Obama’s decision on how many fresh troops to send to the Afghan front, a grand compromise is in the making. Its terms will be as follows: the GOP, for ideological reasons, gives critical support to Obama’s foreign policy initiatives, particularly when it comes to Afghanistan and Pakistan, while the Democratic majority pushes through successive economic stimuli, including generous handouts to their various constituencies: Wall Street, the unions, and the growing underclass. The twin engines of the Keynesian perpetual motion machine will thus be kept whirring – until the bill comes due.

NOTES IN THE MARGIN

I’ve been contributing regularly to The Hill in the form of brief comments on "The Big Question" of the day. Yesterday’s topic: "Which issue will be more important to voters in 2010 – the deficit or jobs?" Here is my answer.

Read more by Justin Raimondo