MILITARY FEAST, PUBLIC POVERTY
by Michael Parenti
What we have in this country is not just corporate capitalism
but "Pentagon capitalism." Conservatives and "moderates"
in Congress vote titanic sums to that largest of all bureaucracies within
the federal government, the Department of Defense. In eight years Ronald
Reagan spent $2.5 trillion on the military, more than was expended in all
the years since World War II. Defense production grew 300 percent faster
than U.S. industry as a whole. In his four years George Bush budgeted $1.2
trillion for the military. And Clinton is spending money on the military
at about the same pace as Bush proposed, the same rate (controlling for
inflation) as in 1980, a time of great cold war tension.
Military appropriations are a form of government spending pleasing to big
business. They offer a potentially limitless, heavily subsidized, low-risk,
highly profitable production of commodities. The last four secretaries of
defense have pointed out that defense spending creates jobs. So do pornography,
prostitution and narcotics. But there are more socially useful, less wasteful
things on which to spend money. In any case, arms spending is so capital
intensive that it provides proportionately fewer jobs than any other government
expenditure except the space program.
The toll taken by military expenditures on the civilian sector is immense:
the neglect of infrastructure maintenance and improvement, the civilian
loss of scientific talent to the arms industry, the drastic cuts in human
services, and the insolvency of states and cities. What the people of most
municipalities spend on armaments in a few weeks (meaning that portion of
their federal income taxes that goes to arms) would be enough to wipe out
the debts of those municipalities and end their financial crises. In 1992,
the $400 million that conservatives proposed cutting from the WIC program,
which feeds undernourished infants, children, and pregnant women, is equivalent
to what the Pentagon spends in twelve hours. What the federal government
spends on consumer protection services all year is equal to what the Pentagon
expends in two hours.
A People's National Debt
Another thing the empire-builders have given us is record deficits and a
runaway national debt. The national deficit is the money the government
spends each year in excess of the revenues it takes in. The national debt
is the accumulation of yearly deficits. Our national debt consists of money
owed by the people of the United States to creditors, usually rich individuals
and financial institutions, both American and foreign. When Reagan entered
the White House, the national debt was $900 billion. When he left, it was
$2.7 trillion, a tripling of the debt in only eight years. Under George
Bush's administration the debt rose to $4 trillion, not counting the "off-budget"
hundreds of billions for the savings and loan bailout. For all his talk
about reducing the federal deficit, Clinton's first two budgets offered
large deficits and no dramatic reduction in military spending.
As the debt grows in size, it accumulates at an ever greater rate. Since
the early 1980s the debt has been growing faster than the gross national
income. Every year, a larger chunk of the debt payment is on the interest
alone. These interest payments are growing twice as fast as the federal
budget itself. By l994-95, over 80 percent of federal borrowing went to
pay for interest on the debt. In other words, as with Third World nations,
our national debt is assuming a self-perpetuating structural force of its
own, as the government increasingly borrows just to pay the interest on
what it previously had borrowed.
As more of the federal revenue goes into debt payments, U.S. taxpayers get
proportionately less in services. At least 50 cents of every tax dollar
goes for servicing the national debt and the military. Over 140 years ago,
Karl Marx wrote in Das Kapital: "The only part of the so-called national
wealth that actually enters into the collective possession of modern peoples
is their national debt." Those at the top may take away our timber
lands, oil reserves, mineral deposits, pension funds, airwaves, and jobs,
but the national debt always remains safely ours.
Toward 1893
One of the claims made by proponents of voodoo economics is that the federal
government will shrink. This has not happened. Another is that state and
local governments will be revitalized, performing functions that the federal
government had previously preempted. This also has not happened. During
the late 1980s, state and local governments were among the victims of supply-side
economics. The federal government dumped a host of programs upon the states
while simultaneously cutting federal transfer payments to them by as much
as 40 to 60 percent, causing a major fiscal crisis at state and local levels.
This fiscal squeeze brought heartless cutbacks in social services for the
most vulnerable portions of the population.
In recent years the top 1 percent of the nation has increased its wealth
by over 50 percent while the middle and lower classes lost over $250 billion
of wealth (Los Angeles Times, January 16, 1994). Government taxing and spending
policies are a major cause of this growing gap between rich and poor.
The conservative refrain goes something like this: "If only things
were left to the free market and we liberated ourselves from government's
meddlesome regulations, then we would see how beautifully a pure capitalism
works." In fact, we did practice something close to a pure capitalism
in 1893. The result was economic depression and widespread underemployment,
nine-year-old children working fourteen-hour days, typhoid and cholera epidemics
in Philadelphia and other eastern cities, malnutrition and tuberculosis,
and contaminated water and food supplies for the poor. We had uninhibited
environmental devastation and horrible work conditions, no pension programs
or minimum wage, no occupational or consumer safety regulations, no prohibitions
against child labor, and no Social Security, collective bargaining, or industrial
unionism. We had unrestrained monopolies and trusts-and enormously high
profits. Conditions in the United States in 1893 were not unlike what they
are today through much of the Third World.
But for the capitalists of that era, the above dismal list was not seen
as evidence of the system's failure. For them, capitalism in the good old
days was working quite well. Success was measured not by the quality of
food, drinking water, housing, schools, transportation, and health care,
but by the rate of capital accumulation. The function of capitalism then
and now has been to invest capital in order to accumulate more capital,
and in that sense the system has performed superbly, for those who own and
control it.
From the viewpoint of the investor, capitalism is not least but most successful
in impoverished Third world countries, where production costs-especially
labor costs-are much lower and the value added by labor is several times
higher than in the USA. "Value added" is a capitalist term meaning
roughly the same as what Marxists mean by "surplus value." It
is the value that workers create by their labor in excess of what they are
paid. As measured by the value added, the Third World offers more successful
forms of capitalism than the social democracies with their strong labor
unions, higher wages, and numerous social benefits. Such democratic gains
cut into corporate profits and are seen by the capitalists as threatening
to the free-market system.
Life conditions under capitalism are most humane in those countries where
democratic forces have organized and won some important victories against
corporate power, as in the Benelux countries, West Germany, Austria, Sweden,
Norway, Canada, and even the United States. Capitalism is most successful
in Guatemala, Thailand, Turkey, Nigeria, Indonesia, the Philippines, Paraguay,
and other such places where the capital accumulation rate is dramatically
higher than in the First World.
Today, the conservative goal is the Third Worldization of America, to reduce
the U.S working populace to a Third World condition, having people work
harder for less. This includes a return to the "free market,"
free of environmental regulations, free of consumer protections, minimum
wages, occupational safety, and labor unions, a market crowded with underemployed
labor, so better to depress wages and widen profit margins. Conservatives
also seek the abolition of human services and all forms of public assistance
that give people some buffer against free-market forces.
Underemployment is a necessary condition for Third Worldization. Alan Budd,
professor of economics at the London Business School candidly observed (Observer,
June 21, 1992) that the Thatcher government's cuts in public spending were
a cover to bash workers: "Raising unemployment was a very desirable
way of reducing the strength of the working classes. What was engineered-in
Marxist terms-was a crisis in capitalism, which recreated a reserve army
of labor, and has allowed the capitalists to make high profits ever since."
With underemployment and poverty come the return of tuberculosis, homelessness,
and hunger, and a sharp increase in the number of people who work at nonunion,
low-paying, dead-end poverty-level jobs. Real wages have declined at least
10 percent in the last decade.
We are not all in the same boat during hard times. Many people fall overboard
and splash about desperately. Others try to stay afloat in leaky skiffs.
And still others cruise along in tax-deductible yachts. In 1930, during
the depths of the Great Depression, Henry Ford made $30 million and commented
that depressions were not all that bad. In the last quarter of 1991, a year
designated as the worst recession year since 1939, dividend payments to
stockholders hit a record high-causing the president to announce that the
economy was doing fine. In fact, the corporate economy was doing fine; only
the people were suffering.
From 1980 to the early 1990s, there was a continual shift from production
capital to finance capital. The record gains in the stock market were gains
in speculative investment, not a growth in productive concentration. Some
people would balk at this image of a parasitic class, arguing that corporate
investments providentially create new jobs. But according to a report by
Working Assets Money Fund, (Winter 1991), the number of new state-side jobs
created by the Fortune 500 between 1980 and 1990, after deducting the cutbacks
and layoffs, was zero.
Given the size of the national debt, the government can no longer spend
its way out of a recession. The national debt is the financial ozone hole
in the political economy. We now have record deficits and record spending
without creating much impetus for a more vigorous economy.
Inflation has slowed down since the 1970s, but prices are still climbing,
especially for essentials-on which the poor spend the bulk of their money.
The media have conveniently overlooked this phenomenon. A news report on
National Public Radio noted: "If you take food, fuel, and housing out
of the equation, inflation has been really quite moderate." To be sure,
and if you remove a few other major items, it disappears altogether.
A key reason why the United States is becoming increasingly like the Third
World is because corporate America is literally going Third World, not only
downgrading jobs and downsizing, but moving whole industries to Asia, Latin
America, and Africa.
The aim of modern imperialism is not to accumulate colonies nor even just
to provide outlets for capital investment and access to natural resources.
The overall purpose is to turn Third World nations into economic appendages
of the financial classes of the world, encouraging the growth of those kinds
of economic activities that complement the advanced capitalist economies
and thwarting those kinds that might compete with them.
The investor class also tries to reduce its own population to a client-state
status. The aim of imperialism is not a national one but an international
class goal, to exploit and concentrate power not only over Guatemalans,
Indonesians, and Saudis, but Americans, Canadians, and everyone else.
Presidents and plutocrats always tell us not to be negative about the economy.
In 1930, after the economy sank into the Great Depression, and ten million
people were thrown out of work, William Crocker, president of the First
National Bank of San Francisco, said that conditions compared favorably
with those existing before the crash: "People are in an unnecessarily
negative frame of mind and have stopped buying things, and this has caused
everything to tailspin." President Bush came to the same conclusion
about the 1990-91 recession, urging us to go out and do more shopping.
Both Crocker and Bush were reducing economic reality to a subjective psychological
condition, thereby reversing cause and effect. Recession is not caused because
people suddenly become less inclined to buy. It is the other way around:
people buy less because their jobs are abolished or downgraded and they
have less buying power. One would think that point is evident enough. More
than one hundred and fifty years ago Karl Marx predicted that depressions
would continue to occur because workers are not paid enough to buy back
the goods and services they produce. He knew more about the future than
our presidents and plutocrats want us to know about the present.
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