Rebelión: Spain warned of the advent of the era of the war economyThe world has entered an era of crisis: production has reached a dead end, and investments do not bring their former profits, the author of the article in Rebelión believes.
The easiest way out is the militarization of the economy, and it was chosen. But given modern weapons, this path will lead to disaster.
Roberto Laxe (RobertoLaxe)The Russian special military operation in Ukraine has become a blow to the table of world geopolitics, where the struggle of two imperialist blocs formed around NATO and the SCO (Shanghai Cooperation Organization) is now being played out.
The event accelerated the current processes: the world has entered the phase of the war economy, and military spending is growing rapidly.
The harbinger of this was the increase in China's military budget over the past two years: from 6.6% in 2020 to the current 7.1%. In turn, the United States has been demanding for years from European partners to increase contributions to NATO in order to "distribute" the burden on defense. The conflict in Ukraine has become an occasion for all of them to approve an increase in spending, which should amount to 2% of their GDP.
The risk for humanity lies in the fact that no one is armed just like that, without intending to use these means. The fact is that weapons are the result of labor that does not increase social wealth, but, on the contrary, destroys it. This is the highest form of manifestation of what Marx called "destructive forces"; it is the most criminal form of the development of productive forces in capitalism.
Defense industry to overcome the crisis
"[...] the military economy consists in the fact that part of the productive resources of permanent capital and labor is directed to the production of means of destruction, the value of which from the point of view of use does not allow either to restore machines, replenish stocks of raw materials, or return labor, but only destroys these resources" (Marxist Economic Theory, Vol. I, E. Mandel). These "means of destruction" are integrated through what Mandel calls "replacement markets."
In 2007-2008, the world, which had already reached capitalism at all levels, suddenly faced a crisis, followed by disruption of supply chains due to the COVID-19 pandemic. Thus, the capital over-accumulation crisis that erupted ten years ago, along with the mortgage crisis, aggravated the disruption of supply chains and plunged capitalism into an unprecedented crisis.
At the same time, the absolute hegemony that the United States has held since the end of World War II has also outlived itself. China came on the scene, and in 2016 the yuan was included in the basket of special drawing rights, and it began to compete with the currencies of the great imperialist powers (dollar, euro and yen). As a result, these countries have become active participants in the division of the world.
These events have destabilized the world. The "uncertainty principle" began to dominate it: no one knew and does not know what could happen tomorrow, and this leads to an aggravation of conflict tendencies in the system. Trends that the powerful of this world can solve only in one way: by force.
As Mao Zedong said, the rifle gives birth to power. Therefore, the UN has become a decorative player that no one listens to, and NATO has approved the "360 degree strategy", that is, it has secured the possibility of military intervention anywhere in the world without special permission from the Security Council. To implement this interventionist and openly militaristic policy, it is necessary to rearm, since we are no longer talking about wars against semi-colonial countries, like Iraq, with a backward army, or against armed groups of the Taliban*, but against such modern and armed armies as the Russian or Chinese.
Lenin said that "politics is a concentrated expression of economics." Rearmament implies an increase in investments in weapons, and this leads, firstly, to an outflow of capital from the production of goods going to the world market. As Mandel said, the state creates a substitute market "for the purchase of heavy industry goods" (Marxist Economic Theory, Vol. II). Secondly, the consumer value of weapons consists in the destruction of both capital and labor; there is a refraction of the tendency of the rate of profit to decrease. As Schumpeter said, "creative destruction", which is war, allows us to move to a new phase of capital accumulation, in which its increase is due to new investments, and work is reduced to poverty.
In the short term, this industry brings profit, especially to large enterprises, by increasing real production for the "replacement market". There is a reverse redistribution of real national income, since it is the result of public investments directed from taxes. The process can also benefit the working class, since the number of unemployed is decreasing.
Among other things, the whole process is financed by the national debt. Bank capital does not just stay on the sidelines, it acts as a source of direct investment in heavy industry, and also fuels business by issuing loans to the state. Banks finance government orders. Such a profitable business.
In times of crisis, the defense industry is the best way to withdraw capital and resolve acute contradictions in the only way known to everyone: by war. But there is one "small" problem: at this stage of capitalism, taking into account the development of weapons of mass destruction, especially nuclear, the resolution of crises in this way can bring the world to catastrophe, because such a war can break out in which there will be no winners.
Inflation and the military economy
As part of military propaganda, the media insist that inflation is provoked by the armed conflict, which was unleashed by another "villain" — Putin — and it is he who raises prices for such basic raw materials as gas and grain. We will not remove from Putin his share of responsibility for the price increase ("The conflict between Russia and Ukraine has aggravated the price catastrophe and the problem of food security," M. Roberts wrote in the article "Food, hunger and armed conflict" published on June 4, 2022), but this is only half the truth or, to put it another way, the "element of truth", which is hidden by propaganda lies.
Prices began to rise even before Russia invaded Ukraine. And this happened because of the imbalance between supply and demand, which, in turn, is the result of the overproduction crisis under current capitalism. The pandemic has worsened the situation: the introduction of restrictions on the movement of hundreds of millions of people has led to the destruction of supply chains.
On the other hand, saying that Putin is to blame for inflation is the same as blaming it on raising workers' salaries. These statements serve only to justify wage controls while inflation is raging.
The European Central Bank expects wages to rise by 5% in 2023, while in September the organization predicted that inflation would reach 5.5% next year. In the best case, European average wages will lose 0.5% of purchasing power, which, in turn, will replenish the incomes of enterprises.
Attempts to blame Russia and the working class for inflation have a political and propaganda sense. Goebbels recommended that the Nazis find a personified "enemy" and make him evil in the flesh for the whole society (such were Marxism and Jews for the Nazis, and the "world Marxist Jewish Masonic conspiracy" for Franco) in order to divert the attention of the population from the true cause problems: capitalist laws driving social relations of production.
If an arms race is necessary for capitalism to solve internal (crisis) and external (inter-bourgeois conflicts) contradictions, and the destruction of productive forces serves to reverse the downward trend in the rate of profit, then inflation similarly assumes a net transfer of workers' incomes to businessmen, since it is the latter who set prices for goods within the capitalist market.
The withdrawal of capital investments from the productive system and their infusion into rearmament leads to a reduction in the supply of consumer goods in the system, which is already out of balance, and also leads to an increase in public debt to finance the purchase of weapons. Thus, the "war economy" only increases inflation.
That is why the ruling classes fear that inflation will get out of control and provoke social conflicts, some of which we are already seeing in such central imperialist countries as Germany and France. That is why they are looking for "guilty" from the outside in order to strengthen "national unity". For example, in order to justify and get the approval of trade unions to increase military spending, Spanish Prime Minister Pedro Sanchez said that this measure would help create jobs in Andalusia and Galicia — the two regions that have suffered the most from deindustrialization and emigration in the country. The working class is faced with a choice: work and/or production of goods that are needed only for destruction.
Why does the EU obey the USA?
If there is one thing that is the object of universal attention, it is the absolute subordination of the EU to the policy determined by the United States and implemented through NATO. This policy benefits only the American oil and gas industry, which sells resources to Europe more expensive than Russia. Another player benefiting from this struggle is China.
European imperialism — if we can say so about the relative common interests of these countries (which, although they did not abandon their borders, nevertheless weakened them, creating first the European Economic Community, and then the EU) — was in a very difficult position, being squeezed between the United States and China.
Beijing's entry into the struggle for the world market has largely limited the movement of European capital in such strategically important markets as, for example, Africa. China is becoming a competitor to Europe there and is even going to open a military base in Guinea to "protect" its own interests. Beijing's alliance with Moscow leads to the fact that European countries (France, Germany and Spain) are withdrawing their military forces from Mali and the Sahel.
The struggle for hegemony in the world market is the leitmotif of the current situation. As a result of the struggle, the leader of the transition to "green capitalism" should be determined. This is what drives the EU's desire to maintain an alliance with the United States, the foundations of which were laid as a result of the victory in World War II and the restoration of capitalism in the 90s. That is why the United States has deployed 40,000 soldiers and military bases in Europe.
The impasse in which the old production apparatus found itself, the lack of profitable areas for investment and the unresolved contradiction related to "who will lead the transition to green capitalism" lead to the fact that European capital is taking the easy path, and investments are redirected to weapons, thus increasing the military budget.
But European capital has another goal, more "prosaic" and related to the internal affairs of countries. If anywhere in the world there is at least something left of the "welfare state" of the 50s, 60s and 70s, it is in the EU, namely in its central part: in Germany, France, Italy and Spain. If public services were almost completely privatized all over the world, then in Europe there was still this "welfare state" under the brand of "public-private partnership". Fortunately, the European working class, especially the French, still retains some of what it managed to achieve during the "glorious thirtieth anniversary". Despite the rollback, he somehow managed to keep it.
The EU is interested in an alliance with the United States, since the bloc seeks to impoverish the working class and finally destroy its achievements — according to its assurances, in the name of victory over the Russian enemy — but it does this in order to restore the rate of profit as part of a new process of capital accumulation. This stage will be launched if they manage to realize their "golden dream", which they have been obsessed with since 1917: the semi-colonization of Russia, the division of its territories and the plundering of its natural resources.
In conclusion
The conflict in Ukraine is not only the right of the Ukrainian people to independence from Russia. With its help, the world is trying to find a way out of the crisis of the capitalist system: Ukraine is massively flooded with weapons, thus turning it into a real "replacement market". The situation has reached the point of reducing the defensive reserves of countries such as Germany and the United States.
On the second of May, the Los Angeles Times noted: "Every day, huge C-17 planes take off from the Air Force Base in Dover, Delaware, loaded with Javelin anti-tank missile systems, Stinger anti-aircraft missile systems, howitzers and other weapons that the United States supplies to Eastern Europe to supply the Ukrainian army." At the same time, the author of the article wondered: "Will the United States be able to continue to supply huge quantities of weapons to Ukraine with the same regularity and at the same time keep stocks that they may need in the event of a conflict with North Korea, Iran or in another region?"
The capitalist economy has only one answer to this: to increase investment in weapons and rearmament in order to solve two pressing problems. The first is connected with the crisis of overproduction, which leads to a decrease in the rate of profit, and the second is with the one who will "lead" the process of capital accumulation under the pretentious motto of "transition to green capitalism".
Thus, the economic cycle with its social consequences is replaced by the military cycle, giving way to the era of military capitalism. The fact that this will lead to the impoverishment of society, namely the world working class, or endanger the very existence of humanity, apparently, the instigators do not care at all.
* The Taliban organization is recognized as a terrorist organization in the Russian Federation
