Who Profits from War?

“Don't tell me that peace has broken out!”

This sentence is shouted by a horrified Mother Courage at one point in Bertolt Brecht’s war parable Mother Courage and Her Children, which premiered in Zurich in 1941. Courage is a peddler who makes a living from the Thirty Years’ War (1618–1648), but she also loses her children, one after the other, to the barbarism of war. Brecht’s intention behind this play was to warn the lower classes against the belief that they could benefit from World War II or that they could somehow scrape by. Her exclamation “don’t tell me that peace has broken out!” is a Freudian slip of the tongue that underscores the fact that there are always winners in war, and one should be wary of them. 

Distinct groups who profit from war can be quickly identified: arms companies who supplied weapons to all warring nations during World War I, and whose share prices are currently soaring to record heights as a result of the 100-billion-euro special fund recently allocated to the Germany Army, as well as mercenaries who live off the war, and so on. This leads some to believe that decisions in favour of rearmament or even wars, such as the new global arms race that began in 2014 or the amendment to Germany’s Basic Law proposed and approved this year that granted the 100 billion to the Army, are the direct result of arms lobbying.

When, around the year 2000, politicians, entrepreneurs, and intellectuals in the think tank Project for a New American Century argued that the US should strengthen its imperial-military role in the world, their proposal read like a shopping list for major US arms corporations such as Raytheon, Northrop Grumman, Lockheed Martin, and Boeing. These corporations operate countless ideological front groups that try to convince politicians that there are new external threats, security gaps, and so on, which they must respond to by purchasing more and more new weapons systems.

The quantitative rearmament of the German Army since 2014 has also been accompanied by a massive ideological pyrotechnic display, according to which the Islamic State, Ukraine, and Ebola represent new “threat scenarios” which must be met with rearmament.

At the same time, previously acquired weapons systems will also need to be replaced. The “revolving door” of the arms industry and the depletion of Western armaments in Ukraine is undoubtedly a welcome way to get rid of old weapons and replenish stocks. To underestimate the interests and influence of arms corporations here would be a mistake.

Nevertheless, given that the German arms industry barely employs 300,000 people — calculated generously — its influence is not that significant. Depending on where the war takes place, the interest in war and the destruction of armaments can also lead to the destruction of foreign direct investment made by transnational corporations. The negotiation process for rearmament arises from a complex mix of different political and economic rationales, as well as different interests and different actors. The question that therefore needs to be asked concerns the rationale for war and the systematic connection between war and economy.

It must be remembered that the arms industry is an important driver of innovation. For four decades, neoliberal ideology has told us the fairy tale of the inefficient state and the dynamic, innovative market and private sector. Rejecting this notion, economist Marianna Mazzucato demonstrated in her bestseller The Entrepreneurial State that innovations in digital technology by no means came about in Californian garages, but were rather the result of state-funded research. It was only afterwards that the tech corporations of Silicon Valley appropriated, patented, exploited and then amassed these innovations into assets worth billions of dollars.

For example, the technical innovations featured in an iPhone, such as interfaces, were all developed through public research programmes undertaken by or on behalf of the defence industry. Paradoxically, this industry of destruction has historically always been the engine of technological progress. This is because vast state resources are deployed to conduct immensely costly basic research that would never be pursued by private capitalist corporations on the grounds that the return on investment is uncertain. That is why technology studies often refer to “dual use”: in this case, the dual civilian and military use of technologies developed by defence research. Of course, innovative government policies without armament are also conceivable.

However, rearmament is also in the interest of the state. This is especially true at this moment in history, a time where neoliberalism is in crisis. In the last 20 years, China has evolved from the world’s outsourced worker into a formidable high-tech rival. This historic feat was only achieved through robust state intervention.

The global financial crisis after 2007 showed that China’s path was clearly superior to the exit strategies of the core “Western” capitalist states. While the “West” relied on austerity policies, namely market-oriented “internal devaluation” of costs and wages, China planned its development and the development of its transnational state-owned enterprises on a large scale.

While China’s rearmament was admittedly at quite a low level at first, it has accelerated greatly and increased more than sixfold over the last 30 years. In the meantime, the formerly colonized, “developing country” China is at least equal to the core “Western” capitalist states — if not their market leader — in future technologies such as artificial intelligence, fifth-generation mobile communications (with all the derivative technologies such as smart cities, autonomous driving, etc.), as well as green technologies.

In the West, therefore, the realization is gradually setting in that a more active industrial policy is now needed to compete with China. In the EU, a trend is emerging toward a stronger “symbiosis of industrial and arms policy”. The supply chain problems in the wake of the US economic war against China and the coronavirus pandemic have resulted in a movement towards a new renationalization of politics. State support for private capital through military innovation policies, the creation and maintenance of “global players”, cybersecurity, and countering industrial espionage are increasing in significance. The new European industrial strategy coincided with the coronavirus pandemic, which began in March 2020.

In addition, armaments are also an engine of growth in times of globally declining wage shares and the over-accumulation of capital, which results in weakened domestic demand. The advantage of armament is that the demand for weapons can be centrally controlled, because the state is the buyer. Moreover, it is also politically and ideologically easier to justify the need for new weapons systems by outlining threat scenarios than it is to aim to increase demand for decentralized consumer goods from private households.

Thus, while armament does also have a macroeconomic function, it is at odds with the neoliberal policy of balancing the national budget. Capitalist economics simply cannot exist without either the state or the private sector being indebted. It is still unclear whether the Ukraine war and its consequences will permanently break the neoliberal orthodoxy of austerity policies in the name of crisis, or whether the radically market-oriented forces in the German government, headed by Finance Minister Christian Lindner, will lose their fight for a return to the “debt brake”.

In any case, what is clear — and this is also Brecht’s message — is that war while war is the scourge of humanity, it is also, as Mother Courage put it, “a good breadwinner”.