Why the ‘Merchants of Death’ Survive and Prosper

As long as people retain their faith in the supreme value of military might, we can probably also expect “defense contractors” to continue profiting from war at the public’s expense.

During the mid-1930s, a best-selling exposé of the international arms trade, combined with a U.S. Congressional investigation of munitions-makers led by Senator Gerald Nye, had a major impact on American public opinion. Convinced that military contractors were stirring up weapons sales and war for their own profit, many people grew critical of these “merchants of death.”

Today, some eight decades later, their successors, now more politely called “defense contractors,” are alive and well. According to a study by the Stockholm International Peace Research Institute, sales of weapons and military services by the world’s largest 100 corporate military purveyors in 2016 (the latest year for which figures are available) rose to $375 billion. U.S. corporations increased their share of that total to almost 58 percent, supplying weapons to at least 100 nations around the world.

The dominant role played by U.S. corporations in the international arms trade owes a great deal to the efforts of U.S. government officials. “Significant parts of the government,” notes military analyst William Hartung, “are intent on ensuring that American arms will flood the global market and companies like Lockheed and Boeing will live the good life. From the president on his trips abroad to visit allied world leaders to the secretaries of state and defense to the staffs of U.S. embassies, American officials regularly act as salespeople for the arms firms.” Furthermore, he notes, “the Pentagon is their enabler. From brokering, facilitating, and literally banking the money from arms deals to transferring weapons to favored allies on the taxpayers’ dime, it is in essence the world’s largest arms dealer.”

In 2013, when Tom Kelly, the deputy assistant secretary of the State Department’s Bureau of Political Affairs was asked during a Congressional hearing about whether the Obama administration was doing enough to promote American weapons exports, he replied: “[We are] advocating on behalf of our companies and doing everything we can to make sure that these sales go through. . . and that is something we are doing every day, basically [on] every continent in the world . . . and we’re constantly thinking of how we can do better.” This proved a fair enough assessment, for during the first six years of the Obama administration, U.S. government officials secured agreements for U.S. weapons sales of more than $190 billion around the world, especially to the volatile Middle East. Determined to outshine his predecessor, President Donald Trump, on his first overseas trip, bragged about a $110 billion arms deal (totaling $350 billion over the next decade) with Saudi Arabia.

The greatest single weapons market remains the United States, for this country ranks first among nations in military spending, with 36 percent of the global total. Trump is a keen military enthusiast, as is the Republican Congress, which is currently in the process of approving a 13 percent increase in the already astronomical U.S. military budget. Much of this future military spending will almost certainly be devoted to purchasing new and very expensive high-tech weapons, for the military contractors are adept at delivering millions of dollars in campaign contributions to needy politicians, employing 700 to 1,000 lobbyists to nudge them along, claiming that their military production facilities are necessary to create jobs, and mobilizing their corporate-funded think tanks to highlight ever-greater foreign “dangers.”

They can also count upon a friendly reception from their former executives now holding high-level posts in the Trump administration, including: Secretary of Defense James Mattis (a former board member of General Dynamics); White House Chief of Staff John Kelly (previously employed by several military contractors); Deputy Secretary of Defense Patrick Shanahan (a former Boeing executive); Secretary of the Army Mark Esper (a former Raytheon vice president); Secretary of the Air Force Heather Wilson (a former consultant to Lockheed Martin); Undersecretary of Defense for Acquisition Ellen Lord (a former CEO of an aerospace company); and National Security Council Chief of Staff Keith Kellogg (a former employee of a major military and intelligence contractor).

This formula works very well for U.S. military contractors, as illustrated by the case of Lockheed Martin, the largest arms merchant in the world. In 2016, Lockheed’s weapons sales rose by almost 11 percent to $41 billion, and the company is well on its way to even greater affluence thanks to its production of the F-35 fighter jet. Lockheed began work on developing the technologically-advanced warplane in the 1980s and, since 2001, the U.S. government has expended over $100 billion for its production. Today, estimates by military analysts as to the total cost to taxpayers of the 2,440 F-35s desired by Pentagon officials range from $1 trillion to $1.5 trillion, making it the most expensive procurement program in U.S. history.

The F-35’s enthusiasts have justified the enormous expense of the warplane by emphasizing its projected ability to make a quick liftoff and a vertical landing, as well as its adaptability for use by three different branches of the U.S. military. And its popularity might also reflect their assumption that its raw destructive power will help them win future wars against Russia and China. “We can’t get into those aircraft fast enough,” Lieutenant General Jon Davis, the Marine Corps’ aviation chief, told a House Armed Services subcommittee in early 2017. “We have a game changer, a war winner, on our hands.”

Even so, aircraft specialists point out that the F-35 continues to have severe structural problems and that its high-tech computer command system is vulnerable to cyberattack. “This plane has a long way to go before it’s combat-ready,” remarked a military analyst at the Project on Government Oversight. “Given how long it’s been in development, you have to wonder whether it’ll ever be ready.”

Startled by the extraordinary expense of the F-35 project, Donald Trump initially derided the venture as “out of control.” But, after meeting with Pentagon officials and Lockheed CEO Marilynn Hewson, the new president reversed course, praising “the fantastic” F-35 as a “great plane” and authorizing a multi-billion dollar contract for 90 more of them.

In retrospect, none of this is entirely surprising. After all, other giant military contractors―for example, Nazi Germany’s Krupp and I.G. Farben and fascist Japan’s Mitsubishi and Sumitomo―prospered heavily by arming their nations for World War II and continued prospering in its aftermath. As long as people retain their faith in the supreme value of military might, we can probably also expect Lockheed Martin and other “merchants of death” to continue profiting from war at the public’s expense.

Lawrence Wittner

Lawrence S. Wittner is professor of history emeritus at SUNY/Albany. His latest book is a satirical novel about the corporatization of higher education, ‘What Going On at UAardvark?

By David Korten Yes Magazine

As 2017 draws to an end, it is perhaps fitting that Congress chose to close out the year with the passage of a tax bill that does more to redistribute wealth to the already wealthy than any other piece of legislation since the Gilded Age.

The tax bill, as regressive as it is, isn’t new, but simply the logical outcome of our current economic system. In recent months, we’ve seen many examples of how this end-stage capitalistic system is playing out.

The tax bill, as regressive as it is, isn’t new, but simply the logical outcome of our current economic system. In recent months, we’ve seen many examples of how this end-stage capitalistic system is playing out.

Forbes reported that the three richest Americans now are wealthier than the combined bottom half of the U.S. population. Amazon shares reached a record high of $1,213.41 on Nov. 27, and CEO Jeff Bezos became the only person in the world with a personal fortune of more than $100 billion.

At the same time, McKinsey Global Institute estimated that by 2030 automation likely will have destroyed up to 73 million U.S. jobs, and—not unrelated—the price of a Bitcoin hit $17,900, with the total market value of the electronic currency in circulation now reaching $300 billion.

These stories broke as I was pondering the message of Peter Temin’s recent book, The Vanishing Middle Class: Prejudice and Power in a Dual Economy. Temin examines the structural forces behind the deteriorating economic circumstances experienced by most Americans even as financial markets hit new highs and official unemployment statistics suggest the economy is thriving.

Temin notes that the U.S. economy has fractured into two sectors rather like the split between capitalist and subsistence sectors in traditional developing economies. Roughly 20 percent of U.S. workers are now employed in a high-paying finance, technology, and electronics sector. The other 80 percent face a daily struggle to survive on insecure, low-wage jobs in an everything-else subsistence sector.

When I was growing up in the 1950s, we assumed that a middle-class family could be supported by one adult with a secure 40-hour-a-week job. The family owned a home and a car, met daily expenses without consumer debt, expected its children would graduate debt-free from trade school or college, and looked forward to a secure and comfortable retirement. That lifestyle, once enjoyed by most white families, now requires an income at least twice the current median U.S. family income of $57,617.

It is striking how well the names “capitalist” and “subsistence” fit the two sectors of the current U.S. economy. Capitalism has always been about concentrating power to enrich the already rich.

It is striking how well the names “capitalist” and “subsistence” fit the two sectors of the current U.S. economy. Capitalism has always been about concentrating power to enrich the already rich. In capitalism’s latest iteration, the ideal is to make money without the inconvenience of producing anything of value or the need to pay anyone a living wage. This brings us to Bitcoin and Amazon—each an iconic expression of this ideal.

A current star in finance, Bitcoin’s only evident function is to create new fortunes based solely on a belief that the price of a computer-generated number will keep rising in a financial bubble. What differentiates Bitcoin from other financial bubbles based on more familiar fictional assets—like derivatives that simply mirror the price of real assets—is that it requires massive computer power—consuming more electricity per year than the whole of Ireland. Its success inspires other capitalists to invest real resources, including human talent, in creating ever more bizarre crypto currencies based on nothing but faith, all while the economy ignores the essential needs of the billions of people capitalism has consigned to the subsistence sector.

Amazon is another star in capitalism’s pantheon of concentrated power. While we may think of it as a convenient online retailer, it is actually a technology company that is rapidly monopolizing control of producer-consumer relationships. Its success rests on highly advanced forms of automation that strip retail transactions of most human interaction. This video of machines at work in an Amazon warehouse depicts a strikingly humanless future. At the least, as described by Wired magazine, it’s a world in which machines are in control:

Entering the [Amazon] fulfillment center in Phoenix feels like venturing into a realm where the machines, not the humans, are in charge…. [T]he place radiates a non-human intelligence, an overarching brain dictating the most minute movements of everyone within its reach.

The pieces are fitting together. The financial and technology sectors are concentrating power by controlling our access to a means of living, the avenues by which we obtain the goods and services we need and desire, the instruments of our communications, and the news sources that frame how we interpret the events transforming our lives.

People with specialized skills remain essential to the sector’s ability to concentrate power. They are the ones in the 20 percent of the economy with pay and benefits that make for a comfortable life. But the number of well-paid jobs for that group of people will likely further decline as technology advances and capitalists further consolidate their power. The high-skill workers no longer needed by the economy will be relegated to the subsistence economy in which there is no middle class.

The process understandably angers the white people who once enjoyed a middle class lifestyle and the people color who for a brief time were assured that they soon would share in the American Dream. Both rightfully feel betrayed—a situation ripe for exploitation by Trumpian demagogues who empower themselves by turning the rest of us against one another.

We are dealing with the consequences of a collapsing system that puts the future of all—including Jeff Bezos—at risk. It cannot be fixed simply by increasing opportunities for a few women and people of color to briefly become equal opportunity exploiters.

People across the United States and around the world are mobilizing across lines of gender, race, and class to grow solidarity economies. They are finding ways to earn their living by producing and exchanging goods and services that meet their needs while rebuilding community relationships to care for one another and their place on Earth.

As YES! Magazine recently reported, people across the United States and around the world are mobilizing across lines of gender, race, and class to grow solidarity economies. They are finding ways to earn their living by producing and exchanging goods and services that meet their needs while rebuilding community relationships to care for one another and their place on Earth.

These economies reduce our dependence on money while securing the well-being of those who do the real work of growing and preparing our food, educating our young, caring for our elders, and maintaining the systems that provide us with essential services such as housing, water, electricity, communications, and transportation.

It is an early step beyond both rapacious capitalism and repressive socialism as we begin the transition to a truly democratic society that functions in a balanced co-productive relationship with living Earth. A fitting project to unite us all in the new year ahead.

David Korten

Dr. David Korten is the author of Agenda for a New EconomyThe Great Turning: From Empire to Earth Community, and the international best seller When Corporations Rule the World. He is board chair of YES! Magazine, co-chair of the New Economy Working Group, a founding board member of the Business Alliance for Local Living Economies, president of the Living Economies Forum, and a member of the Club of Rome. He holds MBA and PhD degrees from the Stanford University Graduate School of Business and served on the faculty of the Harvard Business School

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