The “war budget” Ruthless Criticism

The “war budget”

[Translated excerpt from “Krise und Kriegswirtschaft in den USA” in GegenStandpunkt 3-02]

1) On the capitalistic nature of the state's finances in general: “faux frais” on credit

State rule costs money. It takes it from its capitalistically employed society: it “socializes” private property. That's really just bad manners in this system, in fact it contradicts the existence of social wealth as private property in the form of money and the purpose for which money is actually there: to serve as a means of its own accumulation, thus of the enrichment of its capitalistically engaged owners. Money in state hands is a deduction from property; state expenditures are wrong costs because no advance is implemented in order to return increased; it is an expenditure which does not pay off, “faux frais.” And therefore it is fundamentally unpopular with the professional owners of the social wealth and the apparatchiks of its accumulation.

At the same time, the beneficiaries of the privately owned wealth have themselves to blame for this block of costs. Without a universal public force with laws and a gigantic administrative apparatus to ensure it, their great love, their property bent on accumulation, would not exist at all, let alone safely, and its use as a means of access to the source of social wealth, its power of command over social labor, would be in a bad way. In the “faux frais” of state power, the fundamentally dissatisfied owners and managers of capital just face the fact that the all-encompassing force relationship that their rule over all the social productive forces is based on is not to be had for free. Incidentally, whatever the burden imposed on them by the monopolist on violence, they can be absolutely sure that a modern democratic government never forgets for long its reason and purpose by organizing its expensive ruling activities economically. The functioning operation of all the requirements of a successful market-economy in the use of land and people, which coincide in such a wondrous way with the material interests of the moneyed minority of the society, is recognized and followed as an inescapable criteria for all budgetary policies. This applies to the tax authorities’ access to the money incomes and money assets of its citizens: capitalistically productive revenue shall be spared; instead they conveniently detect how much surplus can be squeezed by the state power from the total income of the “dependent” population, which is barely enough for its owners to live on. The state power wants to make sure that everything that it affords with its expenses is “economically reasonable,” namely that it improves the conditions for capitalistic growth; the money-squeezed citizen has a right to this.

And in one respect, the aforementioned “reason” with its computations also always comes at their expense. Because it is actually not at all the case that the sum of money that the state de-privatizes and uses for its interests is definitely a detraction from businesses’ use of it. Certainly, for a while it does not belong to the professional money accumulators who in all modesty claim an absolute right to it; this capitalistic nuisance remains. But it always flows “back” to their tills. Because the state buys – directly or indirectly – whatever it needs and whatever its personnel uses from its capitalist entrepreneurs; in the place of other paying customers, it converts their commodities into cash along with the profit contained in it; in this system-appropriate way it fits perfectly into the turnover of social capital – what else would it do in the free market economic system? In this role of the financially powerful big customer, the modern state still does not limit itself to the sums it appropriates from the whole mass of social earnings. On an enormous scale, it lends itself money and pays interest on it, straightforwardly transforming financial resources into interest-bearing capital – and increases not only the means by which rich people can allow their money to “work” in a completely solid and reliable way. In addition, it permits the use of its debt instruments as lendable property, and this forms the basis for the power of the financial industry to create credit; as the “bank of banks” in the last instance it even guarantees the availability of funds for doing business without needing to already have been earned. With its debt, it takes nothing away from any businessman; on the contrary, it increases the financial means for the initiation of capitalist business as well as the social purchasing power on which its realization depends, pushing – in a mutually prosperous cooperation with finance capital – the limits on national business life set by the amount of previously accumulated capital, on both the sides of capitalistic advance payments as well as the return flows to be handled by the general solvency, thus inflating advance and surplus on a national order of magnitude. So the expenses that it causes its society do not reduce the capitalist course of business in its society, but accelerate it.

To be sure, the national capital location must also bring a decent growth. Otherwise, the powerful equation with which the state performs its capitalist good deed – i.e., so that its debts will really be as good as increased money – becomes a little doubtful: ultimately, it does not gain profit from the loans, but in the last instance lets its taxpayers be responsible once again for the principal sum and interest; the growth of the nationally earned and taxable sum of money therefore decides whether it has worked as desired in a capitalistically productive way with its miraculous business accumulation, or whether the forcible equation of its debts with real money was too risky and then is all too consequentially shaken out against the real money of the society. The risk is certainly included in the state debt economy: the fact that the private business world calculates – indeed handsomely – on its national yields, but its fictitious earnings really do not enrich it at all and are certainly not very impressive internationally; because in the end finance capital is authorized to punish the credit and currency of the nation with its critical assessments. This risk is, however, only the inevitable downside of a relationship which is universally welcomed, demanded and practiced, that the state with its “faux frais” pursues the accumulation of capitalist wealth and with the credit that it takes for this it makes growing private enrichment an objective compulsion; an objective compulsion which can even fail in its capital-enabling applications. Capitalist growth and state financial power require each other; this applies in a boom just like in a crisis.

2) The business value of defense spending: increasing wealth by the permanently extended reproduction of destructive machinery

The rule of economic “reason,” which the “faux frais” of the modern state system obeys, makes no exception for what states spend on their military. For the growth of capital on a national scale, this money is absolutely necessary, more necessary than a lot of other things that a state power affords. It ultimately finances the security that the domestic firms need for the business use and requisition of foreign sources of wealth – labor power, natural resources, production facilities, financial solvency. The destructive power of an army is in this respect a real capitalistic productive force. Therefore, it goes without saying that spending on the military and armaments must be higher the more capital accumulates in a nation, the further the radius of business interests extends abroad from the country, and certainly the more capital is already engaged abroad. The early days of modern imperialism are indeed past when colonial armies still had to open access to foreign lands and possibly had to guarantee them exclusively; in comparison, today’s multinationals and “medium-sized companies” with their global search and investment decisions enjoy something like world peace. However, it consists of an especially high level of militarily unequivocally guaranteed political control over the whole world of states; and the peaceful world economic nations themselves and their capital sites are culpable for being as responsibly involved in that as possible. That’s why their absolute and relative military power is essential and vital: it decides whether and to what extent, under the conditions of today's world peace order, they belong to the controllers or the controlled. And how deadly seriously they take this question becomes quite clear in the turmoil that the United States contributes with its new definition of global security, precisely with its allies.

Military spending is capitalistically productive in another respect, in that it serves capitalist producers as a source of enrichment; in this it does not take second place to a traffic or education budget at all. It realizes the profit that a highly skilled workforce has incorporated into munitions like any capitalist commodity. Nothing in this is actually changed by the fact that weapons are not at all constitutive of use value in themselves, but are only good for destruction; on the contrary, it only makes obvious the abstract nature of the wealth on which the market economy system solely depends: for increasing this, tanks are just as good as road construction and bullets are no different than chewing gum. In a downstream respect, armament devices are even better than civilian products: the state with its virtually inexhaustible purchasing power, its enormous demand, its forward planning, its willingness to bring officers and experts from industry together and to devise future war needs, etc is for capitalist entrepreneurs simply the ideal “market.” The military budget performs its solid contribution to the general growth: suppliers earn from it; money spreads “among the people” and obviously does not remain there, but promptly finds its way back into the cash registers of other entrepreneurs, where it also belongs according to the rules of “economic reason.” With its way of “creating value,” capitalism through the production of pure destructive power makes the social wealth, namely private property, larger; therefore, for its economic boost, an opulent military budget is no harm, but a pure blessing.

This is why the governments of powerful capitalist nations find more credit for arms projects justifiable. They expect a stimulus to growth from it, and they do it for the reason that every sum that they give their armaments industry earns the equal of its capitalistic value several times over. Here, in close military-industrial cooperation, they speed up technical progress, providing for all sectors, from materials science to pharmacology to electronics to whatever else, as well as for the development of cutting edge technologies that ensure decisive competitive advantages in civilian applications for national corporations. Military devices quickly deteriorate according to “moral depreciation”: they become outdated in no time. Unlike other commodities, however, they do not become obsolete as a means of commerce: they are sold to the many foreign violence monopolies which cannot just yet supply their own third-rate means of force; the government ties the bonds necessary for it. The weapons companies of the leading nations also enrich themselves from foreign states’ demand for violence; foreign funds support the national growth and thus contribute to the “faux frais,” which the national purchaser has put into its more advanced industrial complex, leading to a general capital accumulation that again put things more or less in line with the bloated mass of state debts. And the nation wins political influence on foreign sovereigns, also benefiting business relations, if the government tackles all this even partly skillfully.

For capitalistic communities, it is not a curse but a blessing if a lot of credit is inflated for the capability to wage war to such an extent that the industries so excessively supplied with it manage to conquer all competitors for means of violence on the world market. Business and violence simply fit indissolubly well together in the market economy.

3) From the defense budget to the war budget – and back again: “force majeure” as a case of loss

The matter looks slightly differently when a state no longer peacefully prepares for potential wars, but leads real wars. Then the bourgeois community still does not stop settling accounts according to all the rules of double-entry bookkeeping. The expenses for murder and manslaughter as well as, if necessary, for reconstructing its own location are neatly registered as budgetary accounting items. In the market economy, war is even an honorable source of enrichment for the capitalists who supply the state power with its desiderata and in so doing obstinately think of their rate of return. That is why the killing and destruction and repair must be properly financially “depicted”: in a budget for which the commander in chief goes into debt with his finance capitalists; with credit papers which are properly handled and which blow up the socially available mass of finances. In all respects, in war the symbiosis between state power and capitalistic business already tested during the arms buildup proves itself – but it is not left there. Because, on the other hand, the execution of major military actions not only brings additional business into motion, but also brings a lot of ongoing and planned business to a halt. The capitalist sources of wealth – labor power, production facilities, its own and ever so much foreign solvency – will be damaged because then normal circulation just does not continue, and speculation on their progress, this sensitive superstructure on whose credit and investment decisions the material substructure so decisively depends, becomes a mess. Ongoing operations are disrupted or destroyed; advances must be depreciated; so the basis for renewed accumulation is decimated. With the destruction of the sources of material wealth, even the capital magnitudes on which the market-economy really depends suffer: the legal titles to future profits which capitalist property really essentially consists of. Because these would be zero if they lay around only materially; in one or another form it is always ongoing as an advance for profit and growth, as a demand or bond with the promise of return. Therefore, it is ultimately worth only as much as the prospects of the business it is placed with. And in the event of war these are, on the whole, no longer widely seen. In this somewhat complicated way, war is also an immense case of loss according to the capitalist way of calculating.

This applies quite especially to the private wealth that the war-waging state power has borrowed and whose continued respectable existence and ability to increase it guarantees with its interest payments. Because, on the one hand, in financing its military operations it is absolutely unaware of functional considerations for the national economic growth; on the other hand, it finances all growth-oriented budgeting with the means of national preservation and the assertion of its power. The appropriately exorbitant and heedless expansion of its stock of debt stands not at all face to face with any equilibrated inflation of the general national money earnings, but is rather a gash in current business life, a reduction in the accumulated property. This relation then quite significantly qualifies the equation according to which state debts should be financial means of indestructible value and must be an inherent necessity for the sake of a prosperous symbiosis of state financial power and private enrichment. At the national level, “abstract” wealth along with its national form, the currency, suffers from war.

And for all that, this is not immediately knocked off by force of arms. Because, strictly speaking, it is actually the case – a final beauty of the intimate relationship between the violence of war and capital accumulation – that the war suspends the onset of the damage to capitalism that it causes. Indeed, it hollows out the capitalistic property of the nation at war; however, as long as it is in the war, it refuses to tolerate every criticism by finance capitalist of its efforts for a system-compliant financing of its combat, thus prevents the disclosure of the increasing dubiousness of all title claims to the yields of future growth which the government has brought into circulation and which otherwise are still in circulation. The question, directly utilizing the technique of finance capital, whether the capitalist wealth of the nation is actually enough for the war, is disallowed in practice. It becomes a proper criticism with the return of peace, and the re-opening of civilian business life brings the test of how much capitalistic growth actually is set into motion with all the bloated masses of circulating property titles, whether the social money product can foreseeably vouch for the state debtor’s promises to pay interest – and consequently what its debts are really worth. Then it cares that it comes to light that much too much “war-related” – i.e., more precisely: related via the sparklingly pure market economy financing of the whole slaughter – credit is in motion than its profitable usefulness is foreseeable and would still be reliable in state promissory notes. As a result, the achieved peace is the real economic loss to a capitalistic war economy.

Even so – to give capitalism its due honor in this regard – at least in the post war destitution, the misery of an otherwise decent and industrious surviving population in a landscape of ruins, in which there is an enormous amount to rebuild, is also a really good business condition; only provided that there is enough capital that uses this opportunity, as well as a good money that earns its capitalistic value. Business blossoms where such a symbiosis of capital and destitution arises, and some nations, following the biggest disaster in their history, have brought about a world-envied postwar boom – very fitting for a mode of production which unfolds its growth in peacetime in such a way that its accumulating private property wealth periodically, for want of further growth opportunities, rigorously destroys and allows to go to ruin commodities produced as sources of wealth, complete with the employees, so as to be able to cut loose its new growth on a reduced basis. Without a money, certainly, which first makes the post-war destitution capitalistically usable, and without capital which also really uses it as a business condition, these remain merely terms and conditions, according to the laws of the market economy, for the needs of a reconstruction – a highly dismal political economic condition that perpetuates the misery. The examples of this are much more numerous than of the capitalistic bonanza in which financially powerful investors turned a wasteland full of handy poor people into a paradise of exploitation. And this is no wonder since good money and solid credit, those essential means of capitalist reconstruction, are now in short supply in a nation that afforded for its war all the debts that it just required for reasons of a tidy war financing.