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.