Re: military keynesianism
Source Michael Perelman
Date 01/09/18/03:30

Very interesting Mark. A few remarks. First, I am not sure what
Military Keynesianism means now. It began in an age of industrial
armaments -- tanks, planes .... built in factories by lots of blue
collar labor. Now it is electronics and high tech. Will a trickle down
crank in or will you get the awful maldistribution typical of Silicon
Valley? I am not sure.

Certainly, the bombing give Bush and his gang a green light to feed at
the trough. Missle defense, capital gains cuts .... and no dem. has the
spine to speak up.

I am not sure how deep Bush's support is. The students I encounter are
mad, but confused.

In any case, this note certainly points pen-l in a direction I would
like to see explored, although I don't believe at all that this was a
CIA plot.

Mark Jones wrote:
> The idea has been expressed that the wtc attack opens the door to 'military
> keynesianism'. This, it is argued, will be a more or less conscious,
> premeditated response by the US and other major states, to the looming
> recession/depression. Increased arms spending combined with enforced social
> mobilisation will be a political response to economic crisis. This will go
> in combination with an economic policy of deficit spending, forced
> reflation and an end to 'market fundamentalism'. There will, it is said, be
> renewed state intervention in the operation of markets. Thus the disaster
> of 11 September will be turned to positive effect and the result will be to
> ward off the economic implosion forecast by Wynne Godley and others (*"As
> the Implosion Begins...? Prospects and Policies for the US Economy: A
> Strategic View". )
> Related to this train of thought is the speculation that the CIA and/or its
> political masters actually engineered the attacks, in order to rationalise
> and catalyse necessary but stressful change. The state, some are saying,
> was responsible for, or somehow organised the the suicide bombings on the
> pentagon and wtc, as part of a process of orchestrating mass psychology,
> introducing a police state etc.
> The military keynesian theory, and the CIA conspiracy theory, both make the
> mistake of assuming that the state is more prescient and more powerful than
> it is. They both also assume away many of the consequences and implications
> of recent events. These consequences are so severe and so
> easily-predictable that it is not credible to suppose that President Bush
> would deliberately bring down these calamities on his own head.
> For one thing, the Bush 'war on terrorism' may turn out to really be
> that: a war, one which the USA and its allies and supporters may easily lose.
> The stakes are monumental. First, the suicide attacks have demonstrated the
> real extent of the vulnerability of modern industrial states. This is much
> more serious than many people yet understand. We have seen press photos of
> US popular reaction to the attacks: a pick-up truck with 'Nuke 'Em' painted
> on the rear sums up widespread indignation. But in fact it is much easier
> for terrorists to nuke the USA, then it is for the USA to nuke Afghanistan
> or anywhere else in the Middle East. This truth has yet to dawn in people's
> minds, evidently. (For more on this, see Matt Biven Nation article "Nuclear
> Safety" at:
> )
> (Bivens says: "What happens if a suicide bomber drives a jumbo jet into one
> of America's 103 nuclear power reactors? What happens if a fire fed by
> thousands of tons of jet fuel roars through a reactor complex--or, worse,
> through the enormous and barely-protected containment pools of spent
> nuclear fuel found at every such plant? These questions are even more
> obvious and urgent than they may seem at first glance. Russian television
> reported on Wednesday: "Our [Russian] security services are warning the
> United States that what happened on Tuesday is just the beginning, and that
> the next target of the terrorists will be an American nuclear facility.")
> However slow the general populace is to catch on, the US Administration
> must by now be alive to the dangers. To judge from informed comment in
> London and other European capitals, there is no doubt that political
> leaders in other big capitalist states are now highly alarmed and are
> terrified that any American miscalculation or over-reaction may have
> calamitous, incalculable consequences.
> This danger of igniting a fearsome cycle of revenge attacks by itself may
> explain why Bush's 'war on terrorism' may turn out to be a lot more
> protracted and a lot less productive of satisfyingly atavistic imagery of
> alleged Afghan terror-centres bombed to rubble, than many people suppose.
> The truth is that the civilian populations of all the advanced industrial
> states are hostages penned inside extremely dangerous concentrations of
> chemical, nuclear, biochemical and other volatile industrial complexes. And
> all of us living in the west are vulnerable to attacks by toxic or
> biological warfare agents as well as by suitcase nukes, planes launched at
> reactor buildings etc.
> What's more, all the advanced industrial states are helplessly dependent
> on energy imported from the Persian Gulf oil-producing states. Enormous
> damage was done to Iraqi and Kuwaiti oilfields during the 1991 Gulf War. A
> repetition might result in more permanent damage to the oilfields, and to
> the overthrow of the Saudi regime, which would be an unthinkable strategic
> catastrophe for western geopolitical interests. In short, the loss of
> Persian Gulf oil,either because of physical damage to pipelines and
> infrastructure, or because of the political collapse of Saudi Arabia, Egypt
> and the Gulf states, would not only plunge the capitalist states into
> permanent darkness, it might of itself deal such a crushing blow to the
> global economic system that US hegemony would be fatally damaged. (Since
> the US, Europe and Japan are 50-70% dependent on energy imports, such a
> sequence of events would not merely destroy their economies, it would
> represent a serious threat even to the biological survival of these nations).
> It is starkly clear that (a) the capitalist states are extremely vulnerable
> to attacks which may of themselves result in devastating loss of life,
> damage to property and destruction of complex and irreplaceable technical
> and material networks, systems and productive assets. And (b), despite all
> the bravura talk in western capitals about waging merciless war on
> 'terrorism', in practice the hands of the military will be tied when it
> comes to large scale military operations in the Middle East. Putting it
> bluntly, they didn't get rid of Saddam last time. This time the stakes are
> much higher, and the possible downside much steeper.
> If it is not at clear in what sense the capitalist states can 'win' the war
> against terrorism, it is obvious that they can *lose*. The same processes
> of concentration and centralisation of capital which have produced
> prosperity and growth in the west, have also produced unprecedented levels
> of technical and social vulnerability. Means of mass destruction are
> cheaply and widely available. The vast outflow from the ex-USSR of nuclear
> physicists, weapons and nuclear material since 1991 has seen ex-Soviet
> military engineers, weapons system designers and nuclear bomb-makers
> relocate to North Korea, Iran and many other places. In short, anyone who
> wanted it, now has the bomb and the means of delivery, and some clearly,
> have the will to use it. Thus the western world is more vulnerable than
> ever in its history. Despite the vast military spending of the US and its
> allies, capitalist states are revealed as colossi with feet of clay,
> incapable of defending their wealth except at a vast and probably unpayable
> price.
> Clearly, arguments from historical precedent no longer apply. For the first
> time in 250 years, since the industrial revolution gave the west unlimited
> military superiority over all its enemies and victims, the West has
> decisively lost that military advantage, and we are therefore entering new
> and uncharted waters. A new era in world history has been opened, and it is
> clearly a transitional era, an epoch of contestation in which the
> traditional advantage enjoyed by the capitalist states is no longer so
> certain as it was.
> If it is clear that the Bush Administration has much more to lose than to
> gain from recent events, it is also clear that military keyenesianism is
> also not going to work. It may be tried, but it cannot succeed. People seem
> to forget why keyenesianism was abandoned in the first place: because
> it failed to deliver. After 1973, keynesian demand-management began to
> fail. It was this that led to 'market fundamentalism' (firstly in its
> monetarist guise) becoming the norm. The reason was simple: throughout the
> long postwar economic boom, keynesian demand-management successfully
> modulated the business cycle, smoothing out recessions and cyclical
> overheating. But by the early 1970s deficit spending and so-called
> pump-priming did not produce reflation, it only triggered runaway inflation
> coupled with budgetary imbalances and the so-called fiscal crisis of the
> state. Economic stagnation and growing dole queues continued to plague the
> capitalist economies. This "stagflation" (inflation + stagnation) was
> evidence of an underlying malaise. Since this underlying malaise has never
> been cured, renewed attempts at keynesian manipulation of markets, deficit
> spending and economic pump-priming can only produce palliative and
> very-short term benefits, if any.
> The savage deflationary forces unleashed by market fundamentalism have
> eaten away at the fabric of peripheral countries, destabilising and
> devastating whole regions and directly leading to narrative of failed
> states and barbarised societies which are the seedbeds of so-called
> terrorism, are now attacking the core states themselves, the heartlands of
> capitalism.
> In context, the phrase 'militarised keynesianism' is anyway a contradiction
> in terms. The essence of John Maynard Keynes' philosophic outlook, and the
> traditional rationale for keynesian policy in practice, was to create a
> world of greater justice, greater solidarity and reduced social inequality.
> Economies suffering from overproduction and a lack of effective demand were
> to be stimulated by putting money in the pockets of the multitudinous poor.
> A virtuous cycle of high employment, buoyant economies, and greater
> equality and opportunity, were supposed to flow from these policies. In the
> modern globalised economy, a keynesian approach ought presumably to involve
> a massive redistribution of wealth, power and income from the North to the
> South, from the rich capitalist states to the deprived and pauperised
> peripheries. The architecture of this new and nmore enlightened form of
> world capitalism would presumably rest upon a new social contract between
> wealth and privilege on one hand, and poverty and social affliction on the
> other. The Golden Billion living in the capitalist states would give up a
> little of what they have, in order to stimulate economic growth and
> relative prosperity in the peripheries. In exchange, the rich states would
> gain not only renewed economic growth themselves and a greater demand for
> their products, but the priceless gift of real security. The only real way
> to 'defeat terrorism' is to remove its causes, and these lie in such
> obvious social ills as poverty, unemployment, and the lack of justice,
> freedom and opportunity of many in the South. Achieving a fairer, juster
> world would be the real fruits of such a policy, if it could be applied.
> But it cannot. There can be no new global social contract under capitalism,
> no new globalised keynesianism, military or otherwise. Partly this is
> because the political will does not exist. As Kissinger said today on a BBC
> interview (paraphrasing), 'changing your policy as a result of terrorist
> outrages would be to send out the wrong signal. The terrorists would only
> be encouraged to commit more crimes.' The implication, if you buy into
> Kissinger's warped logic, is that it is better to persevere in the same
> evil, wrongheaded and unjust policies which led to social desperation and
> the emergence of terrorism in the first place. But in any case, it is not
> just a matter of there being no political will to implement keynesian
> policies based on accepting a need for more social justice. There are more
> fundamental reasons why it wouldn't work. In a nutshell, capitalist crisis
> is not just because of overproduction and/or lack of effective demand; it
> is also because radical constraints have emerged which block the
> accumulation process. These are manifest in primary zones of production,
> from food supply to water availability to lack of energy and other inputs.
> The 'war on terrorism' itself is precisely a result of a growing global
> conflict of increasingly-scarce petroleum reserves. The oil crisis has been
> a constant factor since at least 1973, and it had and has implications for
> all industrial societies, not just for capitalism. The collapse by half of
> Soviet oil production after 1987 immediately led to the collapse of the
> Soviet economy and the entire Soviet system. Absent the discovery of vast
> and cheap new sources of energy supply, this bottleneck will remain. World
> oil production has peaked or plateau'd. If social justice means growth in
> China, India and elsewhere, then it is already unattainable. If keynesian
> policies were applied on a global scale and with the intention of uplifting
> the global economy and creating new prosperity in the so-called developing
> world, the only possible result would be and inflationary debacle and a
> still more serious slump.
> 'Military keynesian' is anyway not premised on any such enlightened social
> programme: its core idea is to wage annihilatory war on the poor of the
> world. It is a programme of black and vengeful nihilism, it is the ultimate
> logic of exterminist capitalism which has nowhere else to go, which is at
> the end of its tether, which is locked in its own dark nightmare and must
> be liberated from without (as has happened more than once before in the
> history of capitalism), because it cannot liberate itself: it will be
> precisely the harrowed and hunted poor of the world who will have to
> liberate us all from exterminist capitalism.
> Keynesianism in any case was never more than ersatz socialism, and never
> got to the real roots of the problem. Today, the world economy is warped
> warped by huge disproportionalities afflicting its technostructure,
> networks and systems, and its social and material bases. Capitalism has
> entered a profound historical impasse. The social, technical and economic
> life of the big capitalist states, above all the USA, is radically
> unsustainable and will have to be restructured from the roots. The urban
> geography and social and normative order of the petroleum economy will have
> to be rebuilt from the ground up. The political institutions and ruling
> elites of the capitalist states are not capable of carrying thru this
> transformation or even of understanding the need for it. They cling with
> increasingly desperate stubbornness to a conceptual universe and a moral
> order which is untenable and which is already collapsing.
> The shock of the coming transformations in these societies will be very
> great and will produce huge and sometimes unbearable stresses and strains.
> But not to embrace the necessity for change is to sleepwalk off a cliff, it
> is to invite a final and terrifying catastrophe.
> Mark Jones

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