Internet Statement 2003-37


About some new economic developments


- American economy boosted by armament expenditure?
- About some reports by the German business daily "Handelsblatt"

Hartmut Dicke, August 7th, 2003

For years the reports about the allegedly forthcoming upswing have been all the same: it is about to come within half a year or a year. In reality there has been an intense crisis for more than two years, which is an overproduction and sales crisis of the global economy in the very classical meaning. In the August 1st, 2003 issue of "Handelsblatt" there is a headline which has to be seen as an amplification with regard to this economic crisis: "Armament expenditure boosts American economy".

Setting up the capitalist production as a global economy doesn't eliminate the contradictions but reproduces them on a higher ladder. This has become clear especially during the last years. In this world we are experiencing very classical overproduction crises as Marxism describes them. Big countries like China, Indonesia, Brazil, the countries of the south-east Asian region, Southern Africa, Eastern Europe became production centers for the whole world where low and lowest wages are paid, centers of capitalist exploitation in the truest meaning of the word, "classical" examples.
A great number of people produces with lowest income, and an even greater number stands by as an industrial reserve army - all with low and lowest income. But at the same time they are producing under international control in a production marked by an all in all high productivity. Sales are partially done in new emerging markets in Asia or in Brazil, but the bulk of consumption takes place in the strongholds of old capitalism like the US, western Europe and some other countries closely connected to them. The production located in the vast Asian areas, but the main focus of consumption in the US, in Western Europe and in Japan - thus the situation could be described in a slogan-like manner, inserting into the image another contradiction in addition to the basic contradictions of capitalism. Meanwhile competition and the impact of the years of crisis have caused tribute in the "rich countries" for some time now. Capital, supposing to be free from any socialist challenge, now is going to lower drastically the standard of living here, too.

The imagination that Europe and especially Germany could be active above all in the services sector and stand out by high incomes, while the centers of the hard manual work, producing the surplus value, are situated far away from us - this economical imagination, for a long time ruling the fantasy of the bourgeois economists, carries in itself an additional aggravation of the international economy which proves to be insoluble for today’s political and economical system headed above all by the US. All the more we have to pay attention to reports like "Armament expenditure boosts American economy". We are reading:

« "There was a lot of talking about economic recovery in the US - now there are also real signs." says Ethan Harris, US-economist at Lehman Brothers. "The chances for a higher growth in the second half of the year have improved." Though: A large part of the growth is to be owed to Iraq war. Armament expenditures have shot up about 44 % in the second quarter. Since the Korean war in the beginning of the fifties armament expenditures haven't increased so significantly. On the whole, public spending has put on 7,5 %. "That was an one-time-effect", says Harris. "Therefore the figures of growth are not quite as good as they look at the first glance." »

Already once before a war had proved to be a "stimulator of economy", it was the Yugoslavian war in early 1999. Let us repeat briefly the most important of the events of the nineties: during the nineties the Asian market grows to be a new enormous international potential. Together with the development in Latin America and other countries of the former Third World a new international upswing emerges which is just driven forward by the shift of production but also by the development of an own inner market, by the development of capitalism in China. Stocks and profits are shooting up at that time, 1994 to 1997, more or less unbroken. 1997/1998 comes the first severe crisis including Russia as well. At first it is managed to stop that crisis. Not at least the war events in Yugoslavia, the massive change of armament and innovation of armament for the "New World Order" lead already then to new momentum for stirring a change of economy which lasts until about 2000. In 2000 we have again high growth rates in most of the countries. Capitalism indulges in its future prospects. The German government coalition of Social Democrats and Greens floats on the imagination that an all-sided “services economy” is developing, nourished by the profits from the world-wide production. Any “ecologistict” extravagance seems to be affordable. The self-satisfaction of the philistines and the apologists of capitalism knows no limits. They want not only to play lotto but would rather bet on the best securities and thus make a funny game out of the values which originate from the sweat and exhausting work around the globe. Such is the philosophy of the apologists of capitalism in 2000.
But soon the high-altitude flight gets rifts. At the latest in the end of 2000 it already gets clear that now it goes down again, and in July 2001 the global economy crashes down and on the wall the writing about an outrageous crisis begins to appear. And then follows, suiting fine, the event of September 11th, 2001, the attacks in New York and the other airplane attacks in the US of which the US authorities are today admitting themselves that they "didn't take enough care" to avoid them. The ample literature pointing at the connections between those Islamistic terrorist circles and the US imperialists and other secret services lets us suspect a lot in the background. September 11th causes a new war hysteria. Soon the Afghanistan war comes and the Iraq war is heralded and is in fact realized determinedly by the US in March 2003, and they let nobody interfere in their mad adventure. Some politicians in the world like Blair, Aznar and Berlusconi are standing by voluntarily, ready to back every manipulation.

Now it's the war boom again what is to bring about the needed impetus temporarily. But how long will that last for this time? The Iraq war, anyhow, is bringing increasing difficulties and malaise for the US, as every rational person has predicted. So, what will the US do when the trouble will go on brewing? Anyhow, the economic upswing will only come about as a short lasting stuttering process, after that there will be new delay. But in the background the armament spending is forced up extremelya

In a former issue of "Handelsblatt", of July 29th, 2003 there was a headline:

« American armaments companies are earning massively. Thanks to the orders from the Pentagon, the branch makes a record turnover. »

The armament groups of the US, Northrop Grumman (NG), Carlyle Group, United Defense Industries, Lockheed Martin and Raytheon, in fact turn out to have earned billions by the US’ armament, which is known to be without any precedent and largely surpasses anything else, whereas the rest of the economy is walking on crutches.

So it reads:

«Northrop Grumman (NG), the worldwide largest supplier of warships, can look back for a successful second quarter: The net profit climbed compared with the previous year more strongly than expected by analysts by 13% to 207 m. $, primarily thanks to the purchase of the producer of satellite technology TRW. The third largest arms company of the USA from whose production comes the stealth bomber B 2, among other things, also increased its profit forecast yesterday for the year, and it doesn't stand alone with that: the complete U.S. industry which announces its quarterly figures within these days can lean back repletely ».
. . .
«The private investment firms which during the lull took over arms companies cheaply also can let the champagne corks bang: they cash in their profits. Leading Carlyle Group, incorporating the former Pentagon boss Frank Carlucci and former Secretary of State James Baker in its all-star management, announced to bring another 10.8 m. shares of the United Defense Industries (UDR) to the stock exchange. UDI, which repairs warships and supplies the Bradley tanks used in Iraq, reported an increase in turnover of 74% and a net profit of 36.1 m. $ for the second quarter ».

This shows how strongly the profits grow and how strongly the USA place the bet on the armament. An article standing just aside this one shows that it doesn't look much different in Europe. The aeronautics and space firm of “EADS pushes the development of the military branch”, we learn.

«The air and space firm EADS wants to strengthen its arms branch, primarily in the USA. The European enterprise is in permanent conversations with other companies about a cooperation, head of the board Rainer Hertrich said yesterday.»

Up till now it still holds:

«EADS makes the largest portion of the complete profit with Airbus jets till now. » But: «In the two years to come the armament turnover is also to climb from the present 6 billion Euros to about 10 billions. »

Besides this there also are of course immediate, own European armament projects. It is also very characteristic, however, that the European arms companies are also engaged on the American arms market. The arms market, though, is always a line of business which doesn't flow back into the production by itself, except for some technical innovations, its task consisting in exerting force, in the present situation against those who are “unwilling” regarding the leading imperialistic powers, and in securing the domination. EADS has already taken part in deliveries for the war against Iraq.

Pepping up the international economy by arms orders can always cause only further wars and must lead to their application. We aren't supporters of the theory of the military industrial complex which is said to cause this belligerent politics taken for himself. The war is caused by imperialism itself and the armament is the result, not the cause, of this imperialism. Such economic flashes in the pan, though, can result in between times. It was written in the above-mentioned article on August 1st, 2003:

«The Americans might keep their shopping mood also in the third quarter, as economists expect, primarily thanks to the tax reductions. Last week the government has started spending checks with tax credits in the volume of 14 bn $. Stephen Roach, economist with Morgan Stanley, sees a problem in these public injections of money, though: during the past two and a half years the government had established a program for economic stimulation in the volume of almost 5% of the GDP, the key interest rates in addition sinking by 550 basic points. The course for further 1 to 1.5% of a macroeconomic stimulation which might develop their effect within the next 12 to 18 months, was set. Therefore for Roach the dynamics of the U.S. economy is at best a cyclical upward movement of poor quality.»

Also other economists judge similarly. To sum it up, some U.S. economists themselves see the flash in the pan and the temporary character of the economic stimulation by arms orders.


The US’ concept to help capitalism to get a further development allegedly by opening up new markets and destroying old structures, such as the regime of Saddam Hussein or the Islamistic regimes in Central Asia, proves to be a Fata Morgana, because the US themselves are everywhere connected to the reactionary forces and the forces of destruction, and nobody buys their alleged role of a democratic development. This lies in the nature of imperialism itself.

The high debt policy of the US, her policy of continuously concentrating human and capital resources upon herself, shall actually further intensify the contradictoriness of capitalism and imperialism which we today can see as in a picture book. Hegemonism is itself an additional superstructure on top of the capitalist system which intensifies its contradictions. Its existence isn't coincidental. The existence of such hegemonic powers is necessary to give capitalism a frame, so to speak. Nonetheless it carries the core of terrible destruction within itself.

The question arises: how long will the effect of the war against Iraq last this time? Too much isn’t to be expected here, and what comes then, is the question. What is next on the menu of the imperialistic moloch? The US instigates many countries to join in, hoping for a participation in the profits, but it may easily happen that many a country being wooed as an ally today will be the victim of the machinations tomorrow. Remember Saddam Hussein once having been an ally of the US himself. Europe, too, has every reason to be on alert. Germany’s economic policy and likewise the European economic policy in general which is characterized by great shifts and can count only on a few remaining lines of production, is carrying the danger of collapses; and it isn't that wrong at all if sometimes circles from the USA reproach Germany for being an industrial brake. It is even correct in a certain way.
However, one cannot disregard the role the US and Great Britain have played in this restructuring of continental Europe themselves. - Today's situation of unemployment in the west and east, which first of all is the result of the willful and purposeful release of big masses of salaried workers, heeds at all events any amount of causes for conflict.
The undermining of the European nations, the possibility of Lebanonisation in Europe should be noticed. One is about to create a European confederation which doesn't have any actual common political basis. There are hundreds of contradictions here which can be taken up.
Rightist politicians in the European countries, in particular also in Germany, place their hopes to molt upwards, so to say, under the still existing US’ hegemony and to be able to take part in a rapacious policy, e.g. in Eastern Europe or other parts of the globe, simultaneously hoping that the US will some day break down under the burden of its own rule and dictatorship. Also these plans are criminal ones which aren't better than those of the USA.


The great internationalisation of production, its socialisation at a higher level is a basic feature of the whole industrial sector today. What else is it if nowadays any stylish and practical bag, commercialized in gigantic numbers internationally, is made at different production centres, if its planning, projecting, development of design etc. all happen at quite different places of the world. All of this shows that we have a socialisation today which comprises the whole globe. We must tie to it. Besides this there also are forms of the isolated small scale economy and even the subsistence economy which in the poor regions secure survival for quite a lot of people belonging to the industrial reserve army. It is the task of all leftist and revolutionary organisations to uncover the fundamental character of the capitalist and imperialistic society and its contradictoriness; to fight every fabrication of illusions that it could be possible to persist in an earlier stage of capitalism or the small scale production, or to return to it. And it has to be shown that only the joint action of the workers of all countries, as well as the cooperation of all nations which are threatened, depressed or directly suppressed by hegemonism or imperialism, prepares the solution to the tasks. Every strike movement, every international approach of a trade union movement, every cooperation of revolutionary forces in the world is of great use today. Simultaneously we shall have to respect, promote and support all the movements which out of the necessities, too, must at first develop locally.
To the phony boom, though, which gets clear at different points of the capitalist literature, we must give attention, in so far as it may temporarily shut the eyes of a number of people and arouses false hopes.