Some people dispute the claim that the US attack on Iraq is motivated – at
least in part – by the desire for Iraq’s oil. What can we say about them?
They may be hopelessly naďve about the public sector in general. Some of
the same people who are pleased to finger greed and avarice as the root
cause of all accounting problems on Wall Street are loath to consider that
similar impulses might inspire politicians and bureaucrats as well.
It could also be that those who deny an oil connection aren’t reading the
newspapers. After all, it was the New York Times that carried no less than
two large articles on Iraq’s oil resources in its prominent "Week in
Review" section (November 3), one of which contained a map of reserves. The
reporter noted: "112 billion barrels of proven reserves is also something
nobody can overlook.… Iraq’s ‘ability to generate oil’ is always somewhere
on the table, even if not in so many words."
Or consider the MSNBC story that ran on November 11, "Iraqi Oil, American
Bonanza?," which says: "Iraq’s vast oil reserves remain a powerful prize
for global oil companies…. Such a massive rebuilding effort represents a
huge opportunity for the companies chosen to tackle it…. It’s unlikely that
American firms will be left empty-handed if the U.S. follows through on
threats of military action."
What does oil have to do with the Bush administration? The MSNBC reporter
gives the reader that information too: "American oil companies are also
hoping to benefit from the industry’s unusually strong ties to the White
House. President Bush, himself the former head of a Texas oil company, has
pursued a national energy policy that relies on aggressively expanding new
sources of oil. Vice President Dick Cheney is the former CEO of oil
services giant Halliburton. National security adviser Condoleezza Rice is a
former director of Chevron."
Was Lenin Right?
The connection between the war on Iraq and the desire for oil raises an
important ideological consideration. Millions of college students are
taught the Leninist idea that capitalist economies are inherently
imperialistic. This is supposedly because exploitation exhausts capital
values in the domestic economy, and hence capital owners must relentlessly
seek to replenish their funds through grabbing foreign resources. It takes
war to avoid the final crisis of capitalism, in this view.
College students might be forgiven for thinking there is some basis for
this in the real world. In American history up to the present day, the
onset of war tends to track the onset of economic doldrums. Might war be
just the ticket to revive a moribund capitalist class? Recall that it was
then-secretary of state James Baker who said the first Iraq war was all
about "jobs, jobs, jobs." The line between the owners of capital and the
warfare state has never been that clean in American history, and it has
arguably never been as conspicuously blurred as it is today.
The view that sustaining capitalism requires aggressive war is usually said
to originate with V.I. Lenin as a way of rescuing Marxism from a serious
problem. The problem was that capitalism was not collapsing in the 19th
century. It was growing more robust and more productive, and the workers
were getting richer, not poorer – all facts that weighed heavily against
the Marxist historical trajectory. The Leninist answer to the puzzle was
that capitalism was surviving only thanks to its military aggression. The
prosperity of the West originated in blood.
Capitalist Imperialism
But was Lenin really the originator of the theory? Not at all. The
capitalists beat him to it. As Murray N. Rothbard explains in his History
of Money and Banking in the United States (2002), the idea began with a
group of Republican Party theoreticians during the late Gilded Age, who
were concerned that the falling rate of profits would end up crippling
capitalism and that the only salvation was a forced opening of foreign
markets to US exports. These were the brain trusters of Theodore Roosevelt,
who ended up heralding US aggression against Spain in 1898.
The fear of falling profit stemmed from the mistaken embrace of the theory
of David Ricardo that the rate of profit is determined by the stock of
capital investment. In fact, the rate of profit, over the long run, is
determined by the rate of time preference in society. All else being equal,
as savings rise, profits fall, which doesn’t at all spell disaster for
capitalism. It could in fact be an indication of a robust, competitive
economy in which no business interest can count on a sure thing in the
marketplace.
But the theorists of imperialism didn’t believe it. Economist Charles
Conant developed the theory in a series of essays beginning in 1896,
including "The Economic Basis of Imperialism" which appeared in the North
American Review in 1898. In this piece, Conant argued that there is too
much savings in advanced countries, too much production, and not enough
consumption, and this was crowding out profitable investment opportunities
for the largest corporations.
The best way to find new consumers and resources, he said, is to go abroad,
using force, if necessary, to open up markets. He further said that the US
industrial trusts then dominant on the landscape could be useful in
promoting and waging war. This would further cartelize American industry
and increase profits. Hence, said Conant, "concentration of power, in order
to permit prompt and efficient action, will be an almost essential factor
in the struggle for world empire."
Yes, that sounds exactly like the version of reality given to us by Lenin,
only the judgment is reversed. While Lenin found imperialism for profit
morally wrong, Conant found it praiseworthy, an inspiring plan of action.
Indeed, many of his contemporaries also did. Boston’s US Investor argued
that war is necessary to keep capital at work. An "enlarged field for its
product must be discovered," and the best source "is to be found among the
semi-civilized and barbarian races."
By the turn of the century, this view had largely caught on in the
economics profession, with even the eminent theorist John Bates Clark of
Columbia praising imperialism for providing American business "with an even
larger and more permanent profit."
Today's Profits of War
Today the same creed is captured in the pithy if chilling mantra of the New
York Times columnist Thomas Friedman: "The hidden hand of the market will
never work without a hidden fist" (The Lexus and the Olive Tree, p. 464).
Lenin himself couldn't have said it better. Joseph Nye of Harvard fleshes
out the point: "To ignore the role of military security in an era of
economic and information growth is like forgetting the importance of oxygen
to our breathing."
Brink Lindsey of the Cato Institute puts a different spin on the same line.
His goal in Against the Dead Hand is to convince military imperialists that
international trade can be an important ally in the fight for global
dominance. Instead of seeing trade across borders as the extension of
voluntary exchange among individuals, he sees global trade as a weapon to
use against foreign states that do not conform to the DC ideal. In
Lindsey's view, foreign trade, managed by the US through treaties and
bureaucracies, is merely a way to wage the fight against terrorism "with
maximum effectiveness."
Historian Robert Kagan is even more brutally clear: "Good ideas and
technologies also need a strong power that promotes those ideas by example
and protects those ideas by winning on the battlefield."
So there you have it: if you want to use a cell phone, you have to be
willing to send your son to die for the US imperium in a war against Iraq!
And if you do lose your son in battle, know that this was necessary in
order to shore up US domination of the world economy. This is the creed of
the global social democrats who champion both military and economic
globalization.
How far we've come from George Washington's "great rule of conduct for us,
in regard to foreign nations": extend commercial relations but avoid
political connections. He continues: "Harmony, liberal intercourse with all
nations, are recommended by policy, humanity, and interest. But even our
commercial policy should hold an equal and impartial hand; neither seeking
nor granting exclusive favors or preferences; consulting the natural course
of things; diffusing and diversifying by gentle means the streams of
commerce, but forcing nothing."
Peace and Freedom
With the communists and capitalists agreeing that war and profit are
mutually dependent, how is a believer in peace and freedom to respond?
While war can result in profit for a few, it is not the case that the
entire system of a free economy depends on such wartime profiteering.
Indeed, war comes at the expense of alternative uses of resources. To the
extent that people are taxed to pay for armaments, property is diverted
from its most valuable uses to purposes of destruction.
Indeed, the idea that commerce and war are allies is a complete perversion
of the old liberal tradition. The first theorists of commerce from the 16th
century through the 18th century saw that a most meritorious aspect of
commerce is its link to freedom and peace, that commerce made it possible
for people to cooperate rather than fight. It made armaments and war less
necessary, not more.
What about the need to open foreign markets? The expansion of markets and
the division of labor is always a wonderful thing. The more people involved
in the overarching business of economic life, the greater the prospects for
wealth creation. But force is hardly the best means to promote the
cooperative and peaceful activity of trade, any more than it is a good idea
to steal your neighbor’s mower to improve lawn care on your block.
Bitterness and acrimony is never good business, to say nothing of death and
destruction.
In any case, the problem in Iraq is not that Iraq is somehow withholding
its oil from the market. For ten years, and even before the first war on
Iraq, its oil supplies have been available to the world. In one of the
great ironies of modern war history, the first Bush administration waged
war, it said, to keep Iraq from withholding its oil resources from world
markets. The US then proceeded to enforce a decade of sanctions that
withheld most of Iraq’s oil reserves from the market (thereby increasing
prices and profits for US firms).
We are somehow not permitted to say this, but the solution to Iraq is at
hand. Repeal sanctions immediately. Trade with Iraq. Oil prices would fall
dramatically. Hatred of the US would abate. The plight of Iraq could no
longer be used as exhibit A in terrorist recruitment drives. The only
downside, of course, is that US companies connected to the Bush
administration would not be the owners of the oil fields, but instead would
have to compete with other producers in supplying consumers with oil.
Well, so be it. The idea of free enterprise is that everyone gets a chance,
and no one industry or group of producers enjoys special privileges.
Through competition and cooperation, but never violence, the living
standards of everyone rise and we all enjoy more of the life we want to
live. It’s not hard to understand, except in the corridors of the Bush
administration, where theorists have linked arms with Leninists in the
belief that war is always good, and always necessary, for business
http://www.lewrockwell.com/rockwell/capitalistwar.html
