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April 2003 • Vol 3, No. 4 •

War and Sinking Economy Divides World Imperialism

By Nat Weinstein

“War is competition by other means”—Carl Clausewitz1

Bush and company, with the full support of the two houses of Congress, carried out a high-powered campaign in the mass news media to make the case that Iraq was a pushover. The news media, in the final days before the assault, hammered away at the theme that a massive bombing campaign dubbed, “shock and awe,” would cause mass desertions, rebellion, and in a matter of weeks if not days, would result in the collapse of the Saddam Hussein regime.

They hoped that with the stick of mass destruction and the carrot of promises of economic development and humanitarian aid—and, of course—freedom and democracy, Saddam’s “slaves” would revolt and Iraq’s armies would disintegrate and surrender.

However, the biggest mistake made by American military and political strategists, was to have believed their own propaganda—something liars should never do. Those in America’s ruling circles went so far as to ignore the warnings by their Generals that a more massive force would be needed than what the White House had ordered.

Blinded by the way they want the world to be, they report events as they wish them to be, rather than the way they are. Thus, several days after the invasion had begun, an alleged outbreak of shooting was reported, based on little if any credible evidence, that fighting had erupted in Basra, Iraq’s second biggest city, between opponents and supporters of the regime.

One of Washington’s key reasons for anticipating the most optimistic outcome of their long-planned invasion of Iraq hinged to a great extent on an expected anti-Saddam uprising of Shiites and other opponents of the Iraqi regime. To be sure, there are those like the Shiite Muslim majority in Basra and in Iraq as a whole that are opposed to the regime. And since the population of neighboring Iran is also largely Shiite, it was presumed that Iran would back an uprising by Iraqi Shiites.

Such presumptions still saturate official U.S. war propaganda even though it is well known that when a people are faced by a choice between a foreign oppressor and an indigenous one, the oppressed tend to view the latter as the lesser evil. Moreover, in circumstances such as exist today whereby the world’s most powerful imperialist oppressor is on the warpath against the colonial world, the antagonism between nations like Iraq and Iran is overshadowed by the far greater threat to their interests represented by American imperialism.

That this is a more accurate representation of international relations in the Middle East today was inadvertently confirmed by U.S. Secretary of Defense, Donald Rumsfeld when on March 28 he appeared on television to issue a warning to the Syrian and Iranian governments that if they don’t cease and desist from supplying alleged “illegal” military aid to Iraq, that the U.S. government would respond with appropriate military action.

This episode serves to underscore U.S. underestimation of the long-standing anti-colonialist traditions deeply ingrained among the peoples of the Middle East by more than a century of victimization by world imperialism. It led to the delusion, widely circulated by the U.S. government and the capitalist media monopoly that a U.S. invasion would be greeted by flowers and kisses and regime change would be swiftly achieved.

Instead, as it turned out, the news media has been compelled to report shocking testimony by American troops from privates to non-commission and commissioned officers, all the way up to the rank of General, contradicting official propaganda. Many of these men and women have reportedly expressed their amazement at the sight of wave after wave of Iraqi fighters some in uniform and others in plain clothes attacking U.S. troops protected by heavy artillery, air cover, armored cars and trucks and mighty Abrams tanks. Their weapons are the light equipment common to guerrillas and armies throughout the third world: shoulder-fired rocket-propelled grenades, Soviet-era AK-47 assault rifles, and some small mortars.

“They’re showing a lot of guts,” said Captain Dave Nettles, an intelligence officer with the Seventh Regimental Combat Team. In a similar vein, Colonel Saylor added: “They come, they keep coming. They get up and they come.”… Captain Nettles added, “Maybe they don’t have anything to lose.” (The New York Times, March 28.)

So much for those who believe their own lying propaganda.

The importance of divisions within the ruling minority

The importance of division within the ranks of imperialism should not be underestimated. In the dynamics of war and revolution, along with sudden worsening of working people’s living standards, division among the ruling class are the two most important objective preconditions for revolutionary success.

Moreover effective resistance to social, economic and political injustice by the insurgent victims of exploitation and oppression has the effect of inspiring second thoughts about the course being followed by their leaders among the ruling class itself. As we are now seeing, they begin to wonder what went wrong and whether victory is assured as promised?

That in turn tends to push individuals and factions among the ruling class toward looking for someone to blame for the resulting setbacks. Fingers begin pointing in all directions at those believed responsible for the policies leading to war, its goals and the strategic course chosen by those in central command. And the way things are, when rulers are divided and it begins to show, it raises the morale of the masses and the increasing confidence that is generated among them by their successes tend to reinforce their resolve to defeat their class enemies.

People’s war versus war against the people

Like all things, the nature of war changes and at the same time stays the same in many respects. For instance, unlike the wars between nations before the mid-19th century, in which wars were mainly fought between professional soldiers, symmetrically arraigned against each other on chosen fields of combat, it’s very different today.

While the counterposition of regular armies remains unchanged, modern wars are also fought with whole populations treated as the enemy and thus legitimate targets to be destroyed with ever-more powerful weapons of mass destruction. That’s why World Wars One and Two resulted in scores of millions of dead, wounded and crippled. In fact, even localized wars, such as when the U.S. attacked Korea and Vietnam, resulted in over a million casualties suffered by the people of those nations.

Furthermore, modern wars are fought with more than bullets and bombs. A vital part of today’s wars, in fact, is fought with words. Consequently, propaganda, that is, the war of words, becomes an exceedingly important factor determining the outcome of individual battles and wars. Thus, those on the wrong side of history, whose interests are opposed to that of the great majority on both sides of the conflict, are not able to truthfully and convincingly make a case in support of the goals for which their wars are fought.

On the other hand, those who are indeed on the side of the great majority who are victims of oppression by the very small minority of oppressors, are able to argue the justice of their cause, truthfully and convincingly to the masses on both sides of the conflict—to combatants and non-combatants alike.

Moreover, the far-reaching nature of war in the age of thermonuclear guided missiles and other weapons of mass destruction touches everyone in one-way or another. And since the great majority of the world’s people also have nothing to gain and much to lose by unjust wars, it is they that will ultimately prove to be the decisive force in the coming Armageddon between good and evil incarnated in the world’s oppressed and oppressors.

As a matter of fact, the impact of world public opinion is clearly already having a profound effect on the outcome of the U.S. war on Iraq and its impact on the future of humanity. The more than 10 million protestors who turned out for a global march against the American war on Iraq on the weekend of February 15-16, and the millions that have been protesting since that time, stand as convincing evidence that genuine, grass roots public opinion—not the ersatz variety manufactured by the big business-owned and controlled mass media monopoly—is already making a difference that will affect the outcome of an ongoing global war in which Iraq is only the latest field of battle.

Why America’s imperialist allies dissent

France and Germany, because they each had once been a dominant imperialist power, know what they might do if they were in America’s shoes today. Once the American ruling class decided to oust the Saddam Hussein regime and consolidate their victory by stationing an army of occupation in Iraq, sophisticated observers also realized that such a military force must also be capable of suppressing potentially revolutionary resistance throughout the Middle East and elsewhere.

As old hands at the business of imperialist conquest, Western Europe’s two most powerful countries had good reason to oppose the U.S. plan to grab control over Iraq’s vast oil wealth. In the first place it would be a mortal threat to their imperialist interests in Iraq and in the surrounding region—whether or not the Americans were victorious. If the U.S. suffers even a partial defeat imperialist control over the entire colonial world would be seriously undermined

If the U.S. succeeds in its conquest, there would be little that America’s rival imperialists could do to stop the American superpower from gradually taking control over all the natural resources in the oil-rich nations of the Middle East.

Western Europe’s imperialists know that a near-monopoly over the vast supplies of oil in Iraq and nearby oil-rich nations would give the American superpower a corner on the world’s oil. It would give the Americans control over the price of oil everywhere—including the price of oil produced by their competitors not yet directly under U.S. control. Even more important, control over this exceptionally strategic commodity, also known as Black Gold, would give American imperialism a decisive lever of control over the economic life of the entire world whose industrial infrastructure would be crippled if the price of oil to drive its machines and power houses made its industrial products too costly on the world market.

Capitalist America would then have the power to price oil low enough to drive all oil-producing competitors into bankruptcy, or to raise the price of oil high enough to drive the producers of competing goods—not just the many products derived from petroleum—out of the marketplace. If the U.S. succeeds in its conquest of the Middle East, their competitors fear it might give the U.S. the ability to solve its very serious economic problems at their expense and, of course, at the expense of the victims of imperialist exploitation and oppression everywhere.

To be sure, such a solution would not be permanent, but assuming it were realizable, which is more than doubtful, it could give American imperialism a somewhat longer extension of its lease on life.

In other words, from the viewpoint of America’s imperialist competitors, they have good reason to fear that if the world’s greatest-ever economic and military power succeeds in its objectives, it would not be an “equal-opportunity exploiter.” It would share its success with its imperialist rivals only to the extent that they would slavishly accept the new world order it fully intends to impose.

Even Great Britain, formerly head of an empire upon which the sun never set, having thrown its lot in with the Americans, would remain in a subordinate relationship and entirely at the mercy of the irresistible power of its American partner. And in time, its American friends would ultimately swallow up British capitalism and subordinate its interests to their own.

In any case, whether or not American imperialist plans for reshaping the world succeed, it is hardly a foregone conclusion. Or as the Scottish poet, Bobby Burns, famously said, the “best-laid plans of mice and men often go astray.”

The economic causes of imperialist division grow

A particularly grating irritant fueling opposition to current U.S. policy in Iraq by some of its most powerful imperialist allies was indicated in a report that appeared in the “Money&Business” section of the March 23, New York Times. The article in question, “Who Will Put Iraq Back Together?” reports lucrative contracts being handed out only days after the war began for the job of reconstructing Iraq. The authors write:

War began last week. Reconstruction starts this week…. These contracts will be financed by the taxpayer, although senior administration officials have hinted broadly that Iraqi oil revenue will also be used to rebuild the country.

“We’re going to use the assets of the people of Iraq, especially their oil assets, to benefit their people,” said Secretary of State Colin L. Powell on Friday….

The companies that have been invited to bid on the work include some of nation’s largest and most politically connected construction businesses. Among them are Halliburton, where Vice President Dick Cheney served as chief executive from 1995 until mid-2000; the Bechtel Group, whose ranks have included several Republican cabinet alumni; and Fluor, which has ties to several former top government intelligence and Pentagon procurement officials….

Administration officials said they moved swiftly because they needed to line up contractors with proven track records and high-level security clearances.

“The prime contractors are American, and there’s a reason for that: in order to work on Iraq you have to have a security clearance, and the only companies that have security clearances are a certain number of American companies that have done this work before in war settings,”
Mr. Natsios said. [Emphasis added.]

This prioritization of American business interests will surely irritate those that refused to join the “coalition of the willing”—reinforcing their opposition to U.S. high-handed and self-serving policies. Neither will its significance fail to be noticed by American imperialism’s willing partners in crime and those still on the fence.

Economic collapse creeps closer

Let’s take a closer look at the present state of the global economy to see where it’s going, since that is inextricably connected with what drove Washington toward a war for Iraqi oil. Most serious bourgeois economists who strive to see things as they are, rather than what they wish them to be, are genuinely concerned with the frightening parallels between the contradictions in the global capitalist economy just before the great stock market crash of 1929 and today.

The latest to touch on the similarities between then and now appeared in an op-ed article in the March 24 New York Times. The author happens to be one of those economic experts who make their living advising well-heeled investors on where to put their money. The author, James Grant, is identified by the Times as editor of the influential Wall Street publication, Grant’s Interest Rate Observer.

Mr. Grant focuses his comments on the failure of the Federal Reserve and others engaged in the making of monetary policy to make a convincing case for proposals now circulating in those circles for curing the “three-year decline in stock prices and the hot-and-cold-running economy.” He goes on to say, that the problem didn’t originate from the war but “have their roots in prosperity…”

He goes on to explain what he calls the “paradox” of a three-year decline “rooted in prosperity.” But that is no revelation in light of the fact that “boom-bust” cycles of capitalist production are widely recognized as characteristic of the profit system, by its supporters as well as its opponents. It will become clearer why he finds it necessary to make a reference to this “paradox” after we look more closely at what he has to say on the matter. He writes:

The paradox is easily explained. High stock prices invite capital investment. Ultrahigh stock prices invite redundant capitalist investment. Stock prices higher even than those on the eve of the 1929 crash invite titanically redundant capital investment. No wonder, then, that business spending on new plant and equipment has been so weak for so long: The sky-scraping stock market of the late 1990s (which indeed commanded valuations higher than those of 1929) induced enough corporate spending to sate demand and cause a recession.

Mr. Grant goes on to say that the recession that began in March 2001 is probably over by now, but that “the recovery is heavy footed and faint hearted.” He goes on to describe the irrationalism of investors when swept up in a speculative bubble, which is at the heart of boom-bust capitalist economics:

In the manic phase of the bull market, capital was essentially free. … It happened inadvertently, through investing: in telecommunications equipment, semiconductor manufacturing plants, computer servers, power generators, office furniture, Internet initiatives, etc. We invested more than we should have—in fact more than we had. We borrowed to invest, from creditors both domestic and foreign.

The editor of Grant’s Interest Rate Observer then describes the course by which all booms inexorably become busts. He writes, “More productive capacity spurred higher output, which led to more intense competition and—no surprise—to lower profit margins. And those things led to lower stock prices, which in turn, led to a crash in capital investment.”

Although pundits like Mr. Grant (and I would venture to guess that he was no exception) argued at the time that the boom of the 1990s was something new. But whatever his view on the matter was then, he now declares: “There was no new economy after all. Now almost one-quarter of corporate productive capacity is lying idle. All too many job-seekers find themselves in the same predicament.”

Then the author of the Times Op-Ed piece takes up what I consider to be the Achilles Heel of post-war capitalism’s amazing and unprecedented more than half-century of uninterrupted economic equilibrium. He writes:

The United States at the millennium is an historical oddity, not only a great power but also a great debtor. It consumes much more than it produces. It imports much more than it exports. And it owns much less of foreign assets than foreigners do of American assets ($2.3 trillion less, as of the end of 2001.) In 2002, Americans imported about $500 billion more than they exported—that being the size of the current account deficit, a comprehensive measure of the net flow of goods and services between the United States and the rest of the world. It is useful to think about this deficit in terms of the current defense budget: it is 35 percent bigger….

Up until now, the rest of the world—America’s creditors—has been more than happy to exchange its merchandise for our currency, a currency they have coveted both as a medium of exchange and a store of value. So the dollars have made fast round trips, from American consumers to foreign producers and back as investments in America.

Then the author begins to address a problem that no doubt prompted his contribution to the Times. Referring to the worrying trends he is addressing he points to a highly unorthodox monetary proposal being floated by Federal Reserve officials:

And because desperate debts and falling stock prices conjure up the fear of a general decline in wages and prices, the Fed has pledged radical additional action. It has promised, if necessary, to make dollars superabundant—in effect reducing their purchasing power on purpose. In so many words, it has promised that there will not be no inflation. [Emphasis added.]

In a Nov. 21 speech, Ben S. Bernanke, a Federal Reserve Board governor, tried rhetorical shock therapy. Using a device called a “printing press,” he carefully explained, the government can “produce as many U.S. dollars as it wishes at essentially no cost.” Many central bankers have had the same thought. Few have dared to say it out loud. Another who did, a month after the Bernanke speech, was none other than Alan Greenspan, chairman of the Federal Reserve Board. If need be, said Mr. Greenspan, the Fed could hammer down long-term bond yields just as it has repeatedly cut short-term interest rates….

Now the debtor, putting the needs of its own economy and financial system first, has promised to do what, pre-bubble, few self-respecting nations did. It has promised to crank up price inflation just a little bit. To reach this goal, the Fed is running the printing presses, buying Treasury securities with credit it creates out of thin air.

There we have before us evidence of the desperate state of mind of those in charge of the largest and most productive economy in the world. They appear ready to set in motion a radical monetary policy that only those who see no tried and tested way out of the unfolding economic crisis would contemplate. The solution being floated by those empowered to maintain the health of the monetary system and the economy is not far removed, as we shall see, from medieval medical practices such as “curative” bleeding of the mortally ill—which also is a product of desperation when they know no other way to “help” the dying.

Lunacy of another kind

However, whether this is intended to be a “radical” solution to the worsening economic and monetary crisis, or merely a mistaken interpretation of what is really intended to be a prediction of things to come, will soon be clarified by objective events.

In any case, let’s take a look at the folks selected by the powers that be to lead them out of the wilderness. It’s not very long ago that those selected to be in charge of history’s most powerful empire had been characterized by members of the capitalist establishment as the lunatic fringe of political conservatism.

That earlier assessment has been confirmed by their record since rising to their current position of authority: They are largely responsible for the War on Terrorism, the war on Afghanistan, the war on civil liberties and for accelerating the war on the living standards of the American working and lower middle classes—and now the war on Iraq and tomorrow wars elsewhere in the Middle East, North Korea and who knows where next?

But it only seems that lunatics have somehow suddenly gained control over the richest and most powerful country in the world. Why, because all the evidence proves conclusively that they are executing the decisions of the dominant sections of the U.S. ruling class. Included among their supporters are the most authoritative mouthpieces of capitalist America from the New York Times down to the run of the mill tabloids and the entire range of the electronic media.

However, while I don’t believe that those at the commanding heights of power in the United States are mentally ill, I do believe they are lunatics of another kind. It is the kind of lunacy that has engulfed the ruling classes of every dying social order that has preceded capitalism.

The stage of dementia that afflicts human beings in their declining years—providing they live long enough—can also affect social organisms and other complex living systems as well. When the time approaches when there appears to be no rational means for extricating themselves from a series of mortal crises, those in charge of the institutions of state power are compelled to adopt hopelessly irrational means of self-preservation!

It fits right in with the well-known saying: Those whom the gods would destroy, they first make mad!

1 Carl Clausewitz, Prussian military theorist on the political economy of war.





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