For the US empire, war is profitable

WHEN the United States and Israel launched strikes against Iran earlier this year, the first reaction was not only on the battlefield. It was on Wall Street. Within hours of the attack, shares of America’s largest weapons manufacturers began climbing. Investors immediately understood the signal: Conflict means rising military spending, and rising military spending means profits for the companies that build the machinery of war, even push for such conflicts that kill millions of humans.

This reaction was not surprising. War has long been good business for the American defense industry, the euphemism for war-weapons firms. The surge in defense stocks after the Iran strike offered a revealing glimpse into the economic engine that former US president Dwight Eisenhower warned about more than six decades ago: the military-industrial complex.

Eisenhower knew what he was talking about. Before entering politics, he had commanded Allied forces during World War II, overseeing one of the largest military campaigns in history. In his farewell address in 1961, he cautioned Americans that the US had created something unprecedented: a permanent alliance between a massive military establishment and a powerful arms industry. This system, he warned, possessed the potential to acquire “unwarranted influence” over national policy.

How US power operates

At the time, the warning sounded abstract. Today it reads like a description of how American power actually operates.

Since World War II, the US has fought or intervened militarily in at least 30 major wars across the globe — from Korea and Vietnam to Iraq and Afghanistan, and in countless smaller military operations in the Middle East and Africa. The justifications have changed with the decades: containment of communism, defense of democracy, humanitarian intervention, counterterrorism. But beneath the shifting rhetoric lies a constant — the enormous economic power of America’s war industry.

The scale of that industry is staggering. The US now spends roughly $900 billion to nearly $1 trillion every year on its military, far more than any other country on Earth. That figure represents roughly one-third of global military spending.

Put differently, the US spends more on defense than the next several major military powers combined. Even countries often portrayed as strategic rivals — China and Russia — spend only a fraction of the American defense budget.

Such spending cannot easily be explained by immediate security threats. The US faces no imminent invasion. Its homeland is protected by two vast oceans and friendly neighbors to the north and south. Yet it maintains hundreds of overseas bases, fleets of aircraft carriers patrolling every ocean and a nuclear arsenal capable of destroying the planet many times over.

Why maintain such a vast military apparatus in peacetime?

The answer lies partly in economics. War preparation has become one of the largest and most profitable industries in the American economy.

Gigantic firms at the center

At the center of this system stand a handful of gigantic corporations whose fortunes rise with every escalation of global tensions. Companies such as Lockheed Martin, RTX Corp., Boeing and Northrop Grumman manufacture the hardware that powers the American war machine — fighter jets, missiles, drones, submarines, radar systems and advanced surveillance technologies. Their revenues depend entirely on government contracts.

In recent years, the largest of these firms have received hundreds of billions of dollars in Pentagon contracts. Lockheed Martin alone earns tens of billions annually from programs such as the F-35 fighter jet — the most expensive weapons system ever built costing the equivalent of P6 billion.

In such a system, war is not merely a geopolitical event. It is a market.

Financial markets understand this logic well. Consider again the reaction to the Iran strike. Just before the attack, Lockheed Martin stock was trading at roughly $658 per share. Within hours of the escalation, it surged to about $702, a jump of more than 7 percent. Even after the initial surge cooled, the shares remained significantly above their prewar level.

The pattern was repeated across the industry. RTX Corp. rose about 4 to 5 percent, while Northrop Grumman climbed from roughly $465 to nearly $490. Boeing — whose business includes commercial aviation — also gained several percentage points.

These gains may appear modest. But when companies are worth tens or hundreds of billions of dollars, even small percentage increases translate into enormous gains in market value.

Reinforced by politics

The power of the military-industrial complex, however, does not rest solely on economics. It is reinforced by politics.

Defense companies spend millions of dollars every year lobbying Congress and financing political campaigns. Their goal is straightforward: to ensure that military budgets remain large and that new weapons programs receive congressional approval.

Members of Congress have powerful incentives to support such spending because defense contracts create jobs in their districts. Major weapons programs are often deliberately spread across dozens of states, ensuring that lawmakers from across the political spectrum have an economic stake in maintaining them.

Meanwhile, a revolving door connects the Pentagon and the defense industry. Retired generals frequently join arms companies as consultants or executives. Former government officials responsible for military procurement often move into corporate leadership positions.

This circulation of personnel between government and industry creates a powerful network of shared interests linking policymakers and defense contractors. The result is a system in which military spending becomes politically difficult to reduce — even when wars end.

Throughout the Cold War, rivalry with the Soviet Union provided the primary justification for massive military budgets. Conflicts such as Korea and Vietnam consumed enormous quantities of aircraft, bombs and ammunition supplied by defense contractors.

When the Soviet Union collapsed in 1991, many observers expected a “peace dividend” — a sharp reduction in military spending. Instead, new threats were identified to justify continued militarization.

Regional conflicts

Regional conflicts replaced superpower rivalry. The Middle East became the central theater of American military operations. Wars in Iraq and Afghanistan ensured that demand for weapons remained strong.

After the terrorist attacks of Sept.11, 2001, counterterrorism became the organizing principle of US foreign policy. Trillions of dollars were spent on military operations, surveillance systems and private security contracts.

For the defense industry, the so-called War on Terror became one of the most profitable periods in modern history.

Another striking feature of the military-industrial complex is its ability to frame global events in ways that justify continued military expansion. Every generation seems to require a new strategic enemy. During the Cold War, it was the Soviet Union. After 2001, it was terrorism. Today, it is the Islamic Republic of Iran and the People’s Republic of China. Each new threat narrative leads to the same conclusion: The US must expand its military capabilities, deploy more forces abroad and invest billions in new weapons systems.

What Eisenhower however didn’t know was that the military-industrial complex is not a separate subsector. It is just one industry of US finance capitalism, today the engine of American imperialism, which Marxists define as “the fusion and dominance of financial power over industrial production, by which control of money becomes control of the entire economy.”

By biggest finance firms

This is obvious in the fact that the US major weapons manufacturers are owned by its biggest finance capital corporations, euphemistically called asset managers: State Street Corp., the Vanguard Group, BlackRock, Charles Schwab Investment Management, Geode Capital, Morgan Stanley and the Capital Group.

Because weapons in this day and age are high-tech devices, the other major bloc of US capital, the technology firms such as AMD, Intel/Altera, Nvidia, Microsoft and Palantir, have essentially become essential parts of the military-industrial complex. US weapons systems carry a Lockheed, RTX, Boeing or Northrop branding, but much of its intelligence and electronic architecture are from tech firms whose other products are your tablet, smartphone, electronic games and especially your artificial intelligence app.

Without the technology of America’s tech industry, the US could not have murdered Iran’s Supreme Leader Khamenei, his daughter, granddaughter and 11 of his top officials as well as 170 girls in a girls’ school in one missile strike — before the Americans declared war.

In his farewell address on Jan. 17, 1961, Eisenhower said: “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist… We must never let the weight of this combination endanger our liberties or democratic processes.”

Indeed, the US under Trump, in its war vs Iran, has torn down its pretensions as the world’s policeman for freedom, and has blatantly revealed itself as a brutal imperialist, in this present episode out to corner the world’s most important energy source, oil.

Indeed, Eisenhower’s prophecy has come to pass.

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For the US empire, war is profitable
Source: Breaking News PH