Tag Archives: domestic economy

Imperialists’ Wars Worsen Rulers’ Financial Woes

Imperialist war takes a serious toll on the domestic economy. In fact, as U.S. imperialism enters a period of “persistent” and escalating conflict a chief task of the next president will be forcing economic sacrifices from workers (as usual) but also from capitalists.

Bad “subprime” loans based on the bursting housing bubble only partly explain the current U.S. economic crisis (see CHALLENGE, 2/13). True, the unfolding mortgage fiasco drastically curtails lending and spending. But even while a handful of corporations like Haliburton grab enormous profits, the skyrocketing costs of U.S. rulers’ ever-widening wars act as a brake on profits. Government bonds to pay for the war machine — production for destruction — draw investors away from investing in production for consumption since the government bonds are more secure. That makes it harder for consumer-goods capitalists to find money to invest in their industries, out of which they reap profits from their workers’ labor. Thus, it limits their ability to increase, or even maintain, profits.

The New York Times (2/4/08) reported that the Pentagon’s proposed 2009 budget of $515.4 billion “when adjusted for inflation, will have reached its highest level since World War II….Yet those demands for money do not even include the price of refocusing the military’s attention beyond the current wars to prepare for other challenges.” Nor does it include the $200+ billion spent in Iraq and Afghanistan.

Not a penny of this colossal waste finances productive investment. The rulers’ war spending only destroys. U.S. bosses, meanwhile, seek to make workers pay for both recession and war through massive cuts in jobs, wages, health, education and other vital services.

Rivals Took Advantage of A U.S. Weakened by the Vietnam War

While U.S. capitalists were devoting 9% of gross domestic product (GDP) to genocide in Vietnam in the 1960s and 1970s, their Asian and European rivals were modernizing factories and consolidating financial structures, putting the U.S. at a competitive disadvantage. U.S. bosses lost global dominance in auto, electronics and other key sectors and began a permanent, one-way trend of mass destruction of manufacturing jobs. German and Japanese banks became the world’s largest.

Trade and war-related budget deficits ballooned. This, combined with pressure in the early 1970s from French banks that demanded payment in gold rather than paper money (which was losing its value because of war-caused inflation), officially ended the dollar’s “good-as-gold” status. The U.S. had to abandon gold payments because of insufficient stockpiles, so French capitalists and others demanded even more paper money payments to compensate for devalued dollars. This further weakened U.S. economic prestige.

“Stagflation” (negligible growth combined with inflation) took hold. Working families’ incomes, which had more than doubled between 1946 and 1973, now grew less than one percent per year against inflation. Today, the income of a young man in his thirties is 12% below what it was for a worker at that same age 30 years ago, working two weeks more annually and “putting in 350 more hours per year than the average European.” (Robt. Reich, Financial Times, 1/29)

Democrat Carter Began U.S.Build-Up For Mid-East Wars

The military component in today’s money crunch stems directly from the U.S. defeat in Vietnam. Emboldened by the 1975 fall of Saigon, foreign rivals started assailing the cornerstone of U.S. imperialism’s economic empire, its Middle East oil racket. When Islamists (who later befriended Russia and China) seized Iran in 1979, Democrat Jimmy Carter threatened war against any nation with designs on United States’ “vital interests.” Having lost both a major source of crude and a military ally in Iran, Carter vowed that the U.S. would deploy its own armed forces in the region.

Carter launched the Rapid Deployment Force which soon expanded into the Pentagon’s Central Command that has now invaded Iraq twice at enormous expense. The U.S. effort to oust the Soviets from strategic Afghanistan in the 1980s has backfired into an open-ended, cash-burning war against the U.S.’s former Taliban allies and their al Qaeda protégés. Even with only 55,000 troops in Iraq by 2013, U.S. rulers admit they will have thrown away $3.5 trillion in Iraq and Afghanistan by 2017. (“War at Any Price?” a Congressional Democrats’ report, November 2007)

For the foreseeable future, U.S. rulers’ need to control the Mid-East will saddle them with costly, protracted, Iraq-style wars of occupation. The Army’s newly-revised operations manual “describes the United States as facing an era of ‘persistent conflict’ in which the American military will often operate among civilians in countries where local institutions are fragile and efforts to win over a wary population are vital.” (NY Times, 2/8/08) The report on the manual is filled with phrases such as “long, grueling struggles”; “blueprint to operate over the next 10 or 15 years”; “how to prepare for future conflicts.”

Eyeing a laundry list of potential hot spots, the liberal Brookings Institution calls for vast expansion of U.S. armed forces. “Even greater increases in the size of the ground forces [than the 65,000 added soldiers and Marines already approved] may be prudent. Highly plausible scenarios involving Iraq, Afghanistan, Iran, Korea, Pakistan, Saudi Arabia, and other large countries (such as Indonesia, Congo, and Nigeria) illustrate the need to provide the next President with the capacity to muster large new forces without delay” (Brookings, Independent Ideas for Our Next President).

Growing threats to U.S. rulers from China and Russia, however, stand to push Pentagon expenditures way beyond their current 4% of GDP levels. During the budget debate, phony “anti-war” Congressman John Murtha declared, “We [need]… a military that can deploy to stop China or Russia or any other country that challenges us. I want to be prepared in case there’s a confrontation about energy.” (Reuters, 2/5/08) Such a clash would eat up trillions.

Clinton, Obama, McCain:All War Hawks

Make no mistake. Clinton and Obama aren’t calling for higher taxes on the rich to pay for social programs. Both promise to expand U.S. ground forces, Obama by 92,000 troops. Staunch defenders of the profit system, Clinton and Obama are every bit as militaristic as war-hawk McCain. Voting for any one of them will only select the next warmaker. While we have focused on the dollars wiped out by the war machine that all the candidates serve, the cost in workers’ lives has been horrific and will intensify.

Capitalism, which ceaselessly creates economic panics and imperialist wars, will always squeeze and destroy workers’ lives. Don’t vote. Join and build the Progressive Labor Party to achieve the long-term goal of communist revolution, the only answer to the horrors of the profit system.

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