Addicted to war: A tale of three corporations

In the unfolding of the current economic crisis, many are looking to the state for help. There has been a sudden revival of state intervention or Keynesianism. But what kind of state intervention? There is a dangerous pattern, established over years, of corporations in trouble turning to “Military Keynesianism” – producing for sale to the armed wing of the state – as a “quick fix” for deep structural problems. Corporations addicted to war are the worst way to fix economic problems – a “solution” which only accelerates pressures to engage in overseas military adventures.

Some corporations are well-known as being embedded in the Military-Industrial Complex. In Bowling for Columbine, Michael Moore identified Lockheed-Martin as the world’s biggest weapons maker, and in spite of the outrage this created from supporters of U.S. imperialism, his statement is probably true.[1] But there are other corporations which are less well-known as arms-manufacturers. Boeing, for instance, while for a long time a supplier to the Pentagon, is usually seen as a largely civilian corporation – the company of the Jumbo Jet. However, in a dramatic evolution since the early 1990s, Boeing has transformed itself from civilian to military production.

Boeing revealed itself as a major military player in the context of the development of the National Missile Defence (NMD) program – better known as Star Wars. Boeing is the “Lead System Integrator” for NMD “responsible for ensuring that all component NMD parts and systems are developed and integrated successfully.”[2] Pushed to the background by the wars in Iraq and Afghanistan, the time-bomb of NMD is still ticking away in the background. Col-Gen Varfolomey Korubushin, first vice-president of the Military Science Academy in Russia, has said, “If the U.S.A. deploys a national missile defence [system], other nuclear powers may opt for increasing their nuclear missile potential, which will worsen the situation in the world.”[3] He should know. After all, his government is a full participant in this burgeoning arms race, in 2005 successfully testing a “missile with a highly manoeuvrable warhead capable of annihilating the national missile defence (NMD) currently being developed by the Americans.”[4]

Boeing’s NMD role was symptomatic of a deep change in the physiognomy of the company. In the early 1990s, fully 80 per cent of Boeing’s revenue came from its sales of commercial planes – the jumbo jets and other passenger planes that are everywhere in the skies of the world. But in the next two years Boeing suffered a serious decline in revenues. In its annual report for 1995 it explained this decline as “due to fewer commercial jet transport deliveries as a result of economic conditions and airline industry overcapacity in most major market areas of the world,” [5] what Karl Marx called “a crisis of overproduction.”

The company’s solution to this problem was revealed in 1997, with its merger with McDonnell Douglas. The merger was driven by one consideration – while Boeing was in its majority a “civilian” corporation, McDonnell Douglas was one of the Pentagon’s prime contractors. Its 1996 Annual Report “At A Glance” section, proudly proclaimed that it was “#1 military aircraft maker, #2 prime contractor and research-and-development contractor to the U.S. Department of Defense, and #4 NASA contractor.”[6]


The chart here shows its evolution through the 1990s, the percentage of its revenues derived from building military aircraft, missiles and other paraphernalia of the U.S. war machine rising from two-thirds to nearly 80 per cent.[7] Now there are some who would challenge the interpretation of these statistics. McDonnell Douglas, for instance, has three categories and not two: “military aircraft,” “commercial aircraft,” and “missiles, space and electronic systems.” But unless you are a “fly me to the moon” romantic, it is pretty obvious that “missiles and space” production is driven by the needs of a war economy, not by visions of Star Trek exploration. If anything, the emergence of Star Wars should make this abundantly clear.


The second chart reveals the resulting transformation of Boeing. From deriving just 20 per cent of its revenues from arms sales in the early 1990s, by 2004 and 2005, arms sales accounted for 60 per cent of its revenues.[8] From 2005 to 2008 that drifted down again to the 50 per cent mark. But that was before the outbreak of the current crisis. The picture is clear – Boeing has attempted to “solve” the crisis of overproduction that was plaguing it in the early 1990s, by turning to a customer with an eternal appetite for commodities – the Pentagon.

The transition to the war economy has succeeded in slowing Boeing’s decline. (But only partially – In 2003, Boeing had to cede to AirBus its position as the world’s largest airplane manufacturer.[9])

AirBus has unveiled its new, massive A380 airliner – the largest passenger jet ever built – capable, in some configurations, of seating more than 800 people. The plane is designed as a “jumbo-jet killer” to displace Boeing’s big 747 at the top of the commercial airline market. Perhaps then we can look to Europe as a place where business is not driven by militarism. This is in fact how spokespeople for the European Union often market their institutions.

Look more closely. AirBus pushed hard to finish work on the A380 to allow its engineers to turn to building a new military transport plane, the A400M. This massive plane is described by Airbus Military as “the most ambitious European military procurement programme ever undertaken.”[10] One commentator said that this, “the biggest joint venture ever in the European defence industry” was “crucial for the credibility of the European Union’s commitment to strengthen its military capability and coordination.”[11]

“Total firm orders for the A400M stand at 192 aircraft,” according to a leading airforce technology web site. Outside of Europe, South Africa has ordered 14. Malaysia has ordered four which could open the door to sales in other Asian countries.[12] European industry, in other words, is just as capable of playing the war production game as is American.

Perhaps this new militarism is particular to the troubled aerospace industry, desperate for sales in a world saturated with expensive to build and maintain airplanes? Turn your attention to the world’s biggest manufacturing corporation, General Motors. GM, as everyone knows, is in trouble. Its current lurch towards bankruptcy has roots that go back years. By the end of 2004, its debt burden had skyrocketed to a mind-numbing $291 billion.[13] In 2005, it recorded losses totaling $10.6 billion.[14] The vast majority of GM’s earnings came from its finance arm, General Motors Acceptance Corp. (GMAC), but to cover its mounting losses, it reached an agreement to sell 51 per cent of GMAC by the fourth quarter of 2006[15]. This staved off problems for a few months, but they came back with a vengeance in 2007 and 2008. February 2008, GM announced 2007 losses of $38.7 billion “the largest annual loss in the history of the auto industry.”[16]

Business analyst Robert Walberg has a solution. GM must, he says, find a “higher margin business with more promising and stable growth prospects.” That business, of course, is the death business. He doesn’t call it that. The nice word for the death business is “defence contracting”. Such a move into war production “could be a good one for the automaker, just as it was for the jet maker Boeing nearly a decade ago.” Walberg is nostalgic for “the 1940s, when GM delivered more than $12 billion worth of war material.”[17] Walberg doesn’t mention that the 1940s was the decade of the most destructive war in human history.

In this tale of three corporations, we have in outline form some of the key elements in the contemporary U.S. and world economy. Industry cannot survive in its traditional markets. Recurring crises of overproduction are driving debt levels higher and higher. In the search for a reliable consumer of last resort, again and again corporations are driven towards arms production. War requires that states purchase massive quantities of expensive to produce weapons and materiel – and if overproduction is the problem, then war with its infinite destructive potential is “the answer”.

It is an economic solution that clearly carries with it huge political and social risks, and very starkly poses the necessity of finding a political solution. The turn to state intervention into the economy is a welcome reprieve from the decades of neoliberalism. But if that state intervention is the intervention of the warfare state and not the welfare state, the dangers for working people around the world are obvious.

© 2008 Paul Kellogg

References

[1] See for instance Andrea Rothman, “U.S. chief executives, Pentagon brass fail to make Paris show,” Chicago Sun-Times, June 17, 2003, p. 54. Rothman without comment and quite uncontroversially, refers to L-M as “the world’s biggest weapons maker.” But this is for the consumption of the readers of the business press. It is one thing for investors to know the truth about who builds what. It’s a little more awkward when that is made available to the public at large.
[2] Kevin Martin, Rachel Glick, Rachel Ries, Tim Nafziger and Mark Swier, “The Real Rogues: Behind the Star Wars missile defense system,” Z magazine, September 2000.
[3] Cited in “Deploying U.S. national missile defence may trigger arms race – Russian expert,” BBC Monitoring Former Soviet Union, February 27, 2006, ProQuest document ID: 994482301
[4] “Russia has successfully tested a warhead,” The Press Trust of India Limited, November 2, 2005, Gale Document Number: A138245614
[5] Boeing, 1995 Annual Report, www.boeing.com
[6] McDonnell Douglas, 1996 Annual Report, www.boeing.com
[7] Based on McDonnell Douglas, Annual Reports, 1994-1996, 2nd Quarter 1997, www.boeing.com. The figures for 1997 represent revenue for the first half of the year only
[8] Boeing, Annual Reports, 1995-2007, www. Boeing.com . Figures for 2003-2007 updated from “Five-Year Summary (Unaudited),” The Boeing Company 2007 Annual Report, p. 21 . 2008 Figures are annualized approximations based on three quarters of results available at “Boeing Posts Lower Third-Quarter Results on Reduced Commercial Deliveries,” News Release, October 22, 2008
[9] Robert J. Samuelson, “The Airbus Showdown,” Washington Post, December 8, 2004, p. A31
[10] Airbus Military, “Final go-ahead for A400M military airlifter,” Press Release, May 27, 2003, www.airbusmilitary.com
[11] Yacine Le Forestier, “Europe’s military aircraft dream takes wing at last,” AFP, May 27, 2003
[12] “A400M (Future Large Aircraft) Tactical Transport Aircraft, Europe,” www.airforce-technology.com
[13] Daniel Gross, “GM’s Debt Crisis,” Slate, Dec. 21, 2004, www.slate.com
[14] “Management’s Discussion and Analysis of Financial Condition and Results of Operations / General Motors,” www.gm.com
[15] David Streitfeld, “GM Agrees to Sell 51% of Finance Unit,“ Los Angeles Times, April 4, 2006, ww.latimes.com
[16] Associated Press, “GM reports biggest-ever automotive loss,” www.msnbc.msn.com, Feb. 12, 2008
[17] Robert Walberg, “GM’s best offense could be defense,” MSN.com, February 3, 2005, www.moneycentral.msn.com

How not to remember World War I

Letter to the Editor submitted to The Guardian, Nov. 16, 2008 • Some wars are controversial. There is a huge debate, for instance, about World War II – which may have been the most destructive war in history, but is nonetheless justified by many as a “necessary evil” – the war to stop the Nazis. That is a debate that should be had. But about World War I there is little debate. It was a senseless slaughter, poor boys dying for the greed of the rich, fighting over the imperialist carve-up of what today we call the “Global South”.

Apparently not. British academic Gary Sheffield was given the honour of kicking off a week-long retrospective on World War I, by the usually “progressive” editors of The Guardian.[1] Sheffield – a professor of war studies at the University of Birmingham – tells us that “this war was no accident.” But to make his case, he throws the study of the “Great War” back several generations – returning to the oldest argument in the book – that it was a war by the civilized democracies against expansionist Germany.

Sheffield discusses the “world policy” of the Kaiser of Germany, his Weltpolitik which “was an attempt to gain colonies and expand German power and economic influence.” Well, that is true. Germany was trying to gain colonies. But the “civilized powers” – Britain and France – didn’t have the same imperative. They already had their colonies. Sheffield glosses over this detail.

Sheffield warns us that the Kaiser was “mentally unstable.” Perhaps that is true. But why no mention of the interestingly limited mental capacities of the Czar of Russia – key ally to Britain and France? Or perhaps a long discourse on Rasputin the very interestingly unstable “adivsor” to the Czar’s wife Alexandra. Not a whisper.

The war professor tells us that the German parliament was “largely toothless” – to make the point that this was a war of democracies (England and France) against autocracies. But what teeth did the Russian Duma (parliament) have? About this not a word.

The method is an old one – the use of selective information to reinforce an idée fixe. This was a war of democracies against autocracy. So we will ignore the fact that the biggest army on the side of the democracies was that of the autocratic Russian Czar. This is a war of good against evil, so we will emphasize the instability of the German Kaiser, and stay mute on the capacities of the Russian Czar and one of his principal advisors.

“Britain entered the war because it, too, could not afford to see Germany triumphant.” That is true. It couldn’t bear another imperialist power encroaching on its territory in Africa and Asia. The world was already divided up – Germany was not allowed into the party.

Most outrageously, Sheffield tells us that “the drafters of the Versailles treaty had it broadly right after all” when it stated that “ ‘the aggression of Germany and her allies’ was responsible for the war.” So as well as showing us that the war was necessary, he is rehabilitating a treaty that many analysts see as laying the basis for World War II – a treaty so punitive toward the German people in the war reparations demanded, that it created fuel for the racist nationalism that would lead to the creation of the Nazis.

This is no way to remember the ten million who died in the horrible slaughter of the “Great War” – including 65,000 Canadians. Their deaths should remind us of why we need to build an anti-war movement. Their deaths are dishonoured when used for articles that amount to pro-war apologetics. For a more balanced account, Sheffield and others should study Marc Ferro’s sobering and authoritative The Great War 1914-1918.[2]

© 2008 Paul Kellogg

References

[1] “First World War,” insert in The Guardian, November 8, 2008
[2] Marc Ferro, The Great War 1914-1918 (Routledge, 2002)

Spirit of Palestine in Toronto

“The spirit of Palestine will be in every theatre in Toronto.” With these words, Rafeef Ziadah introduced “Salt of This Sea,” first offering in the first ever Toronto Palestine Film Festival. With more than 800 in attendance, the opening was a smash success. Through eight days of screenings, more than 4,000 people attended 36 films. As well as a cultural success, politically the film festival was testament to the growing support for Palestine solidarity in the city of Toronto.

The timing of the event was not accidental. 2008 is the 60th anniversary of the Nakba – the catastrophe of ethnic cleansing which expelled hundreds of thousands of Palestinians from their land, as part of the creation of the state of Israel. Palestine House Education and Cultural Centre conceived of the festival as a way of both marking this anniversary, and helping to put the issue of Palestine on the map in Toronto.

The full line-up of films shown can be found at the Toronto Palestine Film Festival web site, www.tpff.ca. To find out more about Palestine House, visit their web site at www.palestinehouse.com.

© 2008 Paul Kellogg

Bolivian masses defeat the right

Mass mobilizations of indigenous peasants and workers, in conjunction with actions taken by the government of Evo Morales, have won a decisive victory against a right-wing plot to destabilize the country. The events are as significant for the movement in Latin America as the April 2002 defeat of a right-wing coup attempt against Hugo Chávez in Venezuela. Frederico Fuentes has provided a gripping account of these events, summarized below.[1]

Morales’ won a decisive victory in an August 10 referendum – gaining 67.4 percent of the vote nationally. Even in the “half moon” area of Bolivia – the eastern departments of Pando, Beni, Santa Cruz and Tarija – where opposition to Morales has been intense, Morales did very well, winning in Pando, tying in Tarija and getting over 40% in Beni and Santa Cruz.

Frustrated at the polls, the right-wing turned to violence. Central to this violence was the role of US ambassador Philip Goldberg (since expelled from the country). He met with anti-Morales forces after their defeat in the referendum. That meeting resulted in “a plan to destabilize the east, stirring up violence to the point where either the military would be forced to react, causing deaths and Morales’ resignation, or creating the justification for some kind of United Nations intervention to ‘restore stability.’”

What happened was nearly catastrophic. Groups of armed thugs took over airports in the “half moon” area. Paramilitaries took the streets, openly saying that would only take orders from the anti-Morales prefectures (governors). Morales ordered troops to the area to restore order, but once in Pando “the top commander of the Armed Forces, Luis Trigo, known to have links with the Santa Cruz oligarchy … ordered troops to remain in their barracks and turned off his phone.”

In effect, Trigo was giving tacit permission to the right-wing and their paramilitaries to proceed with their destabilization campaign. He was in Pando, but he was folding his arms and refusing to act.

The right wing understood the signal very clearly. September 11, an unarmed group of peasants, traveling to a meeting of their union, were attacked by right-wing paramilitaries. The number killed is at least 20 – including women and children – and maybe be much higher. More than 60 are still missing.

But the day before, social movements had held an emergency meeting to respond to the crisis. They accelerated their plans in the wake of the massacre, setting out to encircle Santa Cruz, epicentre of right-wing organizing. Peasants cut off all access to the city.

The massacre had backfired. Ordinary soldiers were repulsed at the bloodshed. They were also inspired by the sight of thousands of peasants mobilized to surround the city. “Soldiers demanded to be allowed to go and defend their indigenous brothers. Under direct order from Morales, new troops were sent to Pando.” These troops confronted the paramilitaries in the airport and moved to restore order in the capital Cobija. This, in combination with the emergency summit of UNASUR (union of South American Nations) which fully backed Morales, left the right-wing isolated and in disarray.

There now exists in Bolivia a new force, “the National Coalition for Change (CONCALCAM), which unites more than 30 peasant, indigenous, worker and social organizations, together with the Bolivian Workers Central.” It is clear that such unity will be necessary in the months ahead. A “coup in slow motion” has been defeated. But mass mobilization and organization are a permanent necessity to counter a right-wing which has shown a clear commitment to using violence to defend its entrenched privileges.

© 2008 Paul Kellogg

References

[1] Frederico Fuentes maintains the important blog, Bolivia rising. Quotes in this article are from Frederico Fuentes, “Bolivia: Right-wing push to stop change defeated,” Green Left Weekly, October 25, 2008, www.greenleft.org