From: glevy@PRATT.EDU
Date: Mon Nov 01 2004 - 17:55:33 EST
---------------------------- Original Message ---------------------------- Subject: Forces of destruction From: "Jurriaan Bendien" <andromeda246@hetnet.nl> Date: Mon, November 1, 2004 5:36 pm -------------------------------------------------------------------------- An English source for the Marx quote on "forces of destruction" is at: http://www.marxists.org/archive/marx/works/1845/german-ideology/ch01d.htm#d1 Under the heading "forces of destruction" we could include weapons production, but also forms of production which cause ecological damage or which damage human health. As regards the military industries, Rosa Luxemburg additionally commented in 1913: "Finally, militarism is a weapon in the competitive struggle between capitalist countries for areas of non-capitalist civilisation. In addition, militarism has yet another important function. For the purely economic point of view, it is a pre-eminent means for the realisation of surplus-value; it is itself a province for accumulation. (...) Capital increasingly employs militarism for implementing a foreign and colonial policy to get hold of the means of production and labour power of non-capitalist countries and societies. This same militarism works in like manner in the capitalist countries to divert purchasing power away from the non-capitalist strata. (...) The more ruthlessly capital sets about the destruction of non-capitalist strata at home and in the outside world, the more it lowers the standard of living for the workers as a whole, the greater also is the change in the day-to-day history of capital. It becomes a string of political and social disasters and convulsions, and under these conditions, punctuated by periodical economic catastrophes or crises, accumulation can go on no longer. But even before this natural economic impasse of capital's own creation is properly reached, it becomes a necessity for the international working class to revolt against the rule of capital." From: Rosa Luxemburg, The Accumulation of Capital, Modern Reader Paperbacks 1951, p. 454, 466-467. For data on world military expenditure, see: http://web.sipri.org/contents/milap/milex/mex_trends.html For privatisation in the military sector, see: http://www.guardian.co.uk/international/story/0,3604,1103566,00.html Here's some additional notes: "We can't have it both ways. We can't be both the world's leading champion of peace and the world's leading supplier of arms." - Former US President Jimmy Carter, presidential campaign, 1976 World military R&D is, by far, the largest single research pursuit on earth. Few researchers however are researching the economics of the military industry itself. During the 1980s, Elisabeth Sköns notes, world military expenditure was 10 times higher than in 1925-1938. In 1989, the USA spent 36% and the USSR 23% of it. Nevertheless, few governments provide regular and comprehensive information about their national arms industry. I think that in real terms world military expenditure is in 2004 back to the same level as 1988 or has exceeded it. . After 1989, there was a sharp drop in government purchases of military equipment. The global stockpile of nuclear warheads peaked in 1986 at 69,490, equal to an explosive yield of 18 billions tons of TNT, three times the explosive force used in all of world war 2. The Pentagon industry claimed the defense industry laid off 795,000 American workers between 1992 and 1997. The corporations responded to this with "export-led development", involving many offset agreements - incentives provided to foreign countries in exchange for the purchase of military goods and services. More and more weapons are now produced for export, with government assistance. Some "biggies" in the arms business are Lockheed Martin, Boeing, Raytheon, British Aerospace, GEC, Northop Grumman, Thomson, Thomson CSF, General Dynamics, TRW, and United Technlogies. But Daimler-Chrysler, Mitsubishi, Rolls Royce, Tenix, ADI and Lucent Technologies also produce military equipment. The programs often include agreements to manufacture some or all of the products in the purchasing country. So Turkey, for example, bought 160 F-16s from General Dynamics in 1987 (for delivery through 1994) for about $4 billion, on the condition that most of the planes be built in Turkey. In turn, Israel's military industry won its biggest contract ever, upgrading Turkey's Patton tanks. Thus, according to the London-based International Institute for Strategic Studies, while the arms trade declined in 1985-1995, it grew in real terms by 36 percent between 1995 and 1997 through export-led development. Since 9/11 the industry is again growing strongly, and US weapons manufacturers have shown big profits. The five permanent members of the UN Security Council - the USA, UK, France, Russia, and China - are responsible for 90% of reported conventional arms exports. The USA, the UK and France make more money from weapons sales to developing countries than they give them in civilian aid. The top 15 countries in terms of military spending account for over four fifths of total world military spending. Such expenditure estimates of course do not reflect the actual stock of world military hardware accumulated over a longer timespan, and the value of that stock. The total number of smallarms, ranging from pistols and revolvers to shoulder-fired rocket launchers, in civilian and military hands around the world was estimated to have risen to to 639 million in 2001, and the USA accounts for a third of those (Geneva Graduate Institute of International Studies, 2002). 8 million more smallarms are produced every year, so we can estimate the current total world stock at about 660 million smallarms. So there exists one firearm for every 9 or 10 people on the planet. For every four Americans, there are 3 firearms owned by the military or by civilians. According to the United Nations, of 49 major conflicts in the 1990s, 47 were waged with smallarms as the weapons of choice. Smallarms are responsible for over half a million deaths per year, including 300,000 in armed conflict (war fatalities) and 200,000 more from homicides and suicides (in Israel, more IDF soldiers seem to be dying from suicide than from interventions in the West Bank). That's one person in the world killed every minute by smallarms. SIPRI adopts a definition of "world military expenditure" data as all current and capital expenditure used on: (a) the armed forces, including peacekeeping forces; (b) defence ministries and other government agencies engaged in defence projects; (c) paramilitary forces, when judged to be trained and equipped for military operations; and (d) military space activities. The aggregate includes: (a) military as well as civil personnel, including retirement pensions of military personnel and social services for personnel; (b) operations and maintenance; (c) procurement; (d) military research and development; and (e) military aid (in the military expenditure of the donor country). Excluded are (1) civil defence and current expenditures for previous military activities, such as for veterans' benefits, demobilization, conversion and weapon destruction, (2) military expenditures by non-state organisations such as armed opposition groups (more difficult to estimate, also). On this basis, using CPI deflators, SIPRI calculated world military expenditure in the calendar year 2002 was $794, accounting for 2.5% of world GDP valued at $31.8 trillion, and $128 per head of the world population. Cuba spends about $30 per Cuban citizen and the USA slightly more than $1,000 a year for each American citizen. SIPRI previously converted military expenditure using Purchasing Power Parity exchange rates, whereas now market exchange rates (MERs) are used for all countries, giving considerably lower dollar figures for the countries in question. If PPP rates, which better reflect the actual volume of goods and services that can be purchased in each country with its currency, are used, then the US remains the top spender by far, but the next three are then China, India and Russia. This is because MER dollars tend to undervalue the purchasing power of money in developing countries and economies in transition. However, lack of reliable PPP dollar data meant that SIPRI chose to use MER dollars to convert all currencies to US dollars. Yet world GDP is normally estimated in PPP dollars, although, the World Bank now uses an Atlas Method. Let's take a closer look at the SIPRI total. If we just take the total expenditure of the top 15 countries in military spending, the discrepancy between MER dollar and PPP dollar valuations is 28.7%, a difference of $256.6 billion, which basically means that, in reality, military expenditures are more than a quarter higher, if adjusted for real buying power, i.e. more bangs for bucks. This big discrepancy is for the most part due to the currency differentials applying to China, Russia and India. In 2002 MER dollars, these countries spent respectively $31.1 , $11.4 and $12.9, a total of $55.4 billion for those three countries, but if you convert that to PPP dollars, then military spending of these three countries works out actually five times higher. If I estimate SIPRI world military spending in PPP terms, I arrive at a figure equivalent of about one trillion US dollars, or, given a world population of 6.2 billion, a military expenditure value per head of the world population in 2002 which is equivalent to about $161 in real terms. The World Bank estimate of world GDP in 2002 was US$32.3 trillion and world GNI was US$31.5. In that case, it would be more correct to say that in truth, world military expenditure using SIPRI's definition is about 3.3% of world GDP, and not 2.5% as SIPRI suggests (3.4% of world GNI). In other words, it's about 0.8% higher than the SIPRI measure suggests. A rather trivial difference you might say, but in reality it's gigantic, because we're talking about the total new value added by world production in 2002, i.e. a value of nearly 260 billion dollars. The world GDP measure for 2002 implied by SIPRI itself is actually slightly lower than the World Bank measure, in which case real expenditure works out at nearly 3.4%. Let's extrapolate linearly that world GDP for 2004 will be approximately $33.9 trillion, then we are on pretty safe ground if we estimated that world military expenditure in 2004 using the SIPRI definition will be around the $1.1 or $1.2 trillion mark in real terms. That's about the same as the total value of the world oil market, or the same as the combined income of half the people living on earth. SIPRI says the USA in 2002 accounted for 43% of world military expenditure in MER terms. The USA, Japan, the UK, France and China in MER terms accounted for 62% of the world total, and the top 15 countries account for 82%. If I substitute the PPP dollar values for China, Russia and India only, then the total 2002 expenditure is bumped up to $964.5 billion. In that case, US military expenditure would represent only 34.8 percent of the world military expenditure, i.e. about a third, in real terms. The military spending of the USA plus close allies (NATO countries, Australia, Japan and South Korea) spend more than the rest of the world combined, i.e. two thirds of all military spending and approximately 57 times more than the seven "rogue states" included in Bush's "axis of evil". For 2002-2003, SIPRI calculated that world military spending using their measure had increased by 18% in real terms, to reach $956 billion (in current dollars) in 2003. So really, whatever valuation measure you use, it can be said confidently that the military industry is a trillion dollar a year business. In SIPRI data, various items are not included. As the researchers themselves indicate, in their calculations the value of veterans' benefits paid out and demobilization costs (regarded as transfers in GDP), conversion costs (partly included and partly excluded from GDP) and weapons destruction costs (partly included and partly excluded in GDP) are excluded in the SIPRI world total for military expenditure, because they are expenditures in respect of military activities that took place in the past. Yet it is "military expenditure". Elisabeth Sköns notes that military expenditure should be a measure of the total cost of maintaining a defence establishment, but that in reality government data only cover part of those costs. Private armies and opposition movements are also not yet included in the figures. Another issue concerns procurement of military equipment (ranging from weapons and weapons systems to vehicles, clothing, support services and the like - arms procurement usually accounts for only 20-30% of the military budgets of the larger arms-purchasing countries, while the largest portion is normally spent on operations, maintenance and personnel; world arms sales are only about $20-25 billion, it is the military apparatus that consumes the big money). Government money spent on obtaining weaponry and weapons systems doesn't really adequately represent the value of the net output of GDP defined industries producing military equipment. So, by just striking a ratio between government military expenditures and GDP, we probably understate the real economic significance of military industries. Jurriaan
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