Wednesday, November 18, 2009

6 Ways Corporations Profit from War

The Obama administration will soon decide on sending tens of thousands of additional troops into Afghanistan
-- further expanding a war and occupation with no end in sight.

Why the US engages in war after war, decade after decade is due to no single reason.

A major reason is profit earned by various business corporations that influence government policies – corporations that benefit both abroad and at home from war during every step of the process. The same is true for other nations as well.

There are 6 major ways business corporations profit from war.

1. Control of strategic resources. Gold, silver and slaves (defined as property not persons) used to be the preferred resources of pillagers. Today oil, natural gas, and other physical resources (water in the future) are the aim of business corporations to either control or gain access to. US- and UK-based transnational energy corporations initiated the drive for war in Iraq for oil and in Afghanistan for natural gas. It’s hardly surprising that Exxon-Mobil, Chevron and other energy corporations have enjoyed record profits over the last several years.

2. Building weapons. Plans, tanks, guns, bullets, food, and bases are among the many items supplied to governments by Lockheed Martin, Boeing, General Dynamics and other military contractors to wage wars and indefinitely occupy foreign countries. Military contractors benefit from “cost-plus” contracts – contracts that guarantee a certain percentage profit. The more expensive the military item, the greater the profit.

3. Waging wars. No longer are government-paid troops the only soldiers waging wars and occupying cities and villages. The Iraq war saw an explosion of business corporations receiving US government contracts to hire soldiers. Paid mercenaries provide an ever-increasing role in fighting “enemies” and protecting people and property.

4. Reconstruction. After corporate-made bombs blow up buildings, governments pay other corporations, such as Bechtel corporation, to rebuild buildings. Sometimes it’s the same corporations (i.e. Halliburton corporation). This cycle is akin to those who criticized some New Deal depression-era programs of paying people to dig holes and then to fill them back in. The military economic prime-pump equivalent, however, is no myth but is much more lethal and expensive.

These are the more obvious ways business corporations profit from wars and occupations. There are 2 other paths to profits that are not as widely acknowledged – but at least as devastating economically and democratically to nation-states.

5. Debt. Waging wars costs more money that what governments have in their treasuries. This requires taking out loans. This takes the form of selling government bonds that are purchased by central banks (the Federal Reserve in the case of the US) and private banks. The government allows banks to literally create money out of thin air to purchase US Treasury notes. Governments are on the hook for not only the principle of the loans but interest. Thus, banks profit from receiving interest payments and whatever principle may be repaid for money they never had to begin with. This is profit of glorious proportions to banking corporations. Wars, thus, create government dependency to banks – which explains why throughout history banks have encouraged Kings and other royalty to war with each other. Governments lose sovereignty when they lose their ability to shape their own budgets. More of our federal budget goes to debt service each and every year. Not all of US debt is war-incurred – the trillions for bank bailouts is another major cause. But the truth remains the more money set aside for war that can’t be paid for yields more debt…and bank profits. This was the reason President Lincoln scorned British and US banks and created interest free US money, called Greenbacks, to pay for the Civil War – saving billions in interest payments that would have been paid to banking corporations.

6. Privatization/corporatization of domestic public assets. Greater public debt eventually leads to an inability to fund domestic needs. Governments are left with two choices – raise taxes or sell off public assets to fill budgetary holes. If debts soar due to further war spending and too-big-to-fail bank bailouts, we can expect to see a massive sell off of public assets to business corporations – with massive corporate profits and loss of public control. The drive to “privatize” social security and Medicare are likely to intensify as our federal debt explodes. Financial corporations eager to invest our retirement savings in the market and insurance corporations more that willing to set up private health savings accounts would be huge winners.

Wars are costly in many ways to most of us here and abroad – but oh so profitable for a very few.


  1. Greg wrote "3. Waging wars. No longer are government-paid troops the only soldiers waging wars and occupying cities and villages."

    Actually, governments have always used mercenaries to wage wars. During our own War for Independence against King George III, those wearing Red Coats were often not British, but German mercenaries (Hessians) hired in Europe and shipped to America to quell our rebellion against the government.

    To read the history of how our colonial ancestors, disorganized and disunited, managed to throw off the shackles of British Empire largely through no more than sheer determination not to submit gives the reader an idea of how much Afghanis and Iraqis also love their freedom.

    That said, I don't know why we Yanks are helping the British to do Empire in those longtime British colonial quagmires instead of helping the postcolonials in their resistance? How did we come full circle to join up with British Empire again? Greg has put his finger on it when he shows the power elite can fleece our pockets whilst waging wars.

  2. yes the money from our taxes could go instead to a peace economy,
    regional jobs, ecological practices; fund life not death.

  3. Thanks for this info.

  4. Not true that there are 3 political status options for Puerto Rico

    The United States (US) government has made Puerto Ricans believe that there are 3 political status options for Puerto Rico. That is a lie. The purpose for that is to have Puerto Ricans fight amongst themselves. The plan has been a huge success! Puerto Rico has been a colony of the United States for 116 years, and judging by the 80% voter turnout in the colonial elections, the majority of us has not realized that we have been lied to.

    In reality, there is only one option. The United Nations (UN) in 1960 determined that colonialism is a crime against humanity. Therefore, the only thing that Puerto Rico can do is to become her own nation. That means that the US must give Puerto Rico the sovereignty that the US illegally took away from her by virtue of the July 25, 1898 military invasion.

    Thus far, the US government has ignored the 33 UN resolutions asking it to immediately decolonize Puerto Rico. Instead, it has tried to hide these petitions, and at the same time appear to believe in democracy by pushing for plebiscites so that Puerto Ricans could decide between colonialism, being a US state, or independence (decolonization as required by the UN).

    The problem with the US pushed plebiscites are that they:

    1. don’t comply with international law that prohibits a nation to have a colony.
    2. don’t comply with international law that requires the empire to give the sovereignty it illegally took away to its colony.
    3. don’t comply with international law that requires that to have free elections, that country must be free first.
    4. have 2 options that are not permitted by international law- continuing being a colony and becoming a state of the country that has the colony. For the option of becoming a state of the country that has the colony to be considered, the colony must first become her own nation (decolonized).

    This is why we have to peacefully protest 3 times a year until the US government complies with the UN resolutions for Puerto Rico decolonization.

    José M López Sierra