The Iraq War is a Huge Success

The Economics of Creative Destruction

By Aseem Shrivastava

“If he that shared the danger enjoyed the profit, and, after bleeding in the battle, grew rich by the victory, he might show his gains without envy. But, at the conclusion of a ten years' war, how are we recompensed for the death of multitudes, and the expense of millions, but by contemplating the sudden glories of paymasters and agents, contractors and commissaries, whose equipages shine like meteors, and whose palaces rise like exhalations!

“These are the men who, without virtue, labour, or hazard, are growing rich, as their country is impoverished; they rejoice, when obstinacy or ambition adds another year to slaughter and devastation; and laugh, from their desks, at bravery and science, while they are adding figure to figure, and cipher to cipher, hoping for a new contract from a new armament, and computing the profits of a siege or tempest.” Samuel Johnson

07/29/06 "Information Clearing House" -- - The secret of capitalist success, the great economist Joseph Schumpeter famously argued, is “creative destruction”. The dynamics of capitalist competition generate technological innovations at a rapid clip, each superior method causing the obsolescence of prevailing techniques, old machines giving way to new in a ceaseless cycle of growth and prosperity.

Imperialistic wars, Schumpeter believed, were signs of atavism, harking back to humanity’s more anachronistic, primitive impulses. However, he failed to see that such wars brought forth another form of creative destruction which capitalism finds most handy in its onward march.

The reigning view among most critics of the war on Iraq is that it has been a fiasco. No weapons of mass destruction were found, nor any link with the terrorists who plotted 9 -- 11. Most importantly, more than 3 years after Bush declared the end of the war, the insurgency in Iraq is stronger than ever. Undeclared civil war is threatening to break up the country. Hundreds of thousands of innocents may have been murdered by the American invasion, in addition to the deaths of over 2500 US soldiers, and the end is not in sight. So, it has become a commonplace to suggest that the whole enterprise has been a disaster from all possible points of view.

This is a fundamentally mistaken view, a victim of the red herrings thrown at the public by Washington warlords and their ideologues.

Is there reason to believe that the war, far from being a disaster, has actually proceeded quite well from Washington’s point of view? That the view that the war has been a fiasco is merely a convenient smokescreen of innocence helpful to keep in check public perceptions of the monstrous crimes of leaders in Washington and London?

First, and easily forgotten, the obvious success of the Iraq adventure has been to get rid of that rotten dictator Saddam Hussein. Democracy has dawned on an Islamic land. Thanks to American blessings, people can now elect their own representatives to govern them, even if they get their heads blown off every now and then when they step on to the streets.

Looking beyond that, however, there are some sobering facts. Let’s begin with the lessons history teaches. The dominant view is that the Vietnam War was lost by the US. It was driven out of Vietnam. 58,000 Americans died in the war, apart from the millions of Indo -- Chinese. All this may be true. However, if you look at it from the perspective of American corporate elites, rather than from the perspective of the majority of Americans, Washington succeeded in its primary goal, which was to prevent an alternative model of independent Third World development (something like what Cuba has tried and Venezuela is trying these days) from taking root. Vietnam was not allowed to set an example which might have generated a domino effect across the developing world, much to the loss of the United States, which would have become a less indispensable nation. True to American plans, Vietnam is an open -- market economy today, dependent on a globalized economy led by the US.

Moreover, the military spending on the Vietnam War consolidated the policy framework of Military Keynesianism which had been learnt to be of great economic use since the days of World War II. Key to this approach is the enrichment of weapons manufacturers and reconstruction industries who have an assured market. The military purchases are deficit -- financed by the Federal government at the cost of the tax -- paying public. Reconstruction costs are levied on the tax -- paying public of the destroyed nation. Weapons dealers like Lockheed -- Martin and United Technologies got handsome contracts from the Pentagon. Companies like Kellogg, Brown and Root and The Louis Berger Group (both invited to bid for reconstruction contracts in Iraq) got plenty of business when they were asked to build harbors, roads, bridges, airports and military bases in the period of post -- war reconstruction in Vietnam.

The hidden agenda of the US government in Iraq has been three -- fold. Firstly, to take control of the world’s second largest oil reserves, thereby seizing one of the key oil spigots of competitors like Japan, China and the EU. Secondly, to prevent the dollar -- based world oil market from transacting in Euros, something Iran, Iraq and Venezuela were attempting since 2002, when the Euro was launched. Thirdly, the establishment of permanent US military bases in the strategic heart of the world. (The US has built the world’s largest embassy – employing 5000 people – in Baghdad).

In all three respects, the war has been a resounding success. US oil companies have taken charge of Iraqi oil. In the future it is through them that Japan, China, EU and any other competitors will have to buy oil from the region, something that gives the US formidable leverage. The oil market continues to transact in dollars, fragile as it is as a global reserve currency. Iranian experiments with the Euro Bourse have not taken off.

The war has also achieved some other remarkable, unmentionable goals for Washington. Firstly, it has managed to demonstrate the “credibility” of its military intentions of gaining full -- spectrum dominance in the post Cold War world. It has been, as one journalist puts it, a successful “global experiment in behaviour modification.” Secondly, the war industry has made huge profits as military orders have grown, Bush repeatedly asking Congress for more, almost $ 0.3 trillion having already been spent on the war. Nobel -- Laureate Joseph Stiglitz estimates the war to cost (and the weapons manufacturers to get) between $1 and 2 trillion over the next several years. Thirdly, firms from the reconstruction industry have been having a field day, the costs of reconstruction (which are effectively benefits for the US corporations, at the expense of the Iraqi public: “we destroy, we rebuild, you pay”) are estimated at somewhere between $10 and $60 billion over the next several years, most of it to be levied – with typically imperial justice – on the tax -- paying public of Iraq, the punishment for enduring a CIA -- installed dictator for decades.

The Economist had described Iraq sometime back as “a capitalist dream.” Senator John McCain had called it “a huge pot of honey that’s attracting a lot of flies.” The Halliburtons and the Bechtels, as much as venture capitalists have been dipping greedily into the pot for sometime already, their access cleared and guarded by the US military. After a long period of economic seclusion under Saddam Hussein, followed by the decade of UN sanctions that strangled the country, the resources, the markets and the labor of the country have been put at the disposal of “the international community” (that is, Americans, occasionally including the British).

Among those who know, the accepted view is that Iraq has suffered two assaults, the military and the corporate , both filling the coffers of Washington’s patron corporations at the expense of epic human misery. Reviewing the enormous corruption and the no -- bid contracts handed out to companies like Halliburton and Bechtel, The Boston Globe recently suggested that the American involvement “amounts to two invasions. First the bombs. Then the banks. This is robbery, not reconstruction.” To add insult to these injuries, all US oil corporations operating in Iraq have been granted total legal immunity from prosecution for any crime -- involving labor, human rights or environmental law or any other violations -- under an Executive Order issued by the President a few years ago. For all that the “international community” cares about human rights and the environment, Exxon -- Mobil or Chevron -- Texaco could use slave labor or spill their oil off the coast of Basra without having to worry about any sort of prosecution whatsoever. Rule of law in the new, democratic Iraq.

In yet another, sinister, sense the war has been a remarkable success from Washington’s angle. It may succeed in dividing forever the three main communities in Iraq, Shia, Sunni and Kurds, enough to sustain the justification for a permanent US military presence in the country. Keeping a devastated nation on the brink of chaos may be part of a more or less conscious (if obviously secret) strategy to secure the long -- term benefits of military and economic occupation. This is an old -- divide and rule -- tactic of colonial powers, aimed at making the country ungovernable from within. The Americans have learnt it from the British. The logic was often given in the case of Hindus and Muslims in India by the British in the early part of the last century, Churchill always eager to point out that Indians will not be able to govern themselves in the absence of the British. All imperial powers are devilishly driven to create vacuums which they alone can occupy.

Other little successes have been notched up. Security corporations -- with their hired mercenaries from all over the world -- have been used on an unprecedented scale. Poor young men from regions as far afield as the Far East, South Asia and Central America have been tempted with dollars and possibilities of US citizenship to fight white men’s wars. The racism and the cowardice are old. The corporate technique is new. Global security is one of the fastest growing industries today. It is already $100 billion in size and growing at 7 -- 8% annually, expected to double in size by 2010.

From Washington’s point of view, perhaps the most significant success of the Iraq venture is that the experiment with the two-pronged --destroy and reconstruct -- approach to enriching US corporations has worked with even greater success than in Vietnam. Now this cash -- generating capitalist module can be deployed with as much profit elsewhere. Iran? Venezuela? The more oil the country has, the better from the US point of view.

Neither the loss of lives, American or otherwise, nor the unprecedented fiscal crisis in Washington is going to stop the empire from enlarging the scope and scale of its global operations. No imperial overstretch yet, it seems. The US Federal Reserve can be, literally, banked on to print the necessary currency to finance any number of wars – and get the American and world public to pay for them. A great, but little -- known secret about the Federal Reserve, America’s central bank, is that it is ultimately owned and controlled by shareholders belonging to large, private commercial banks (several of them non -- American) like Lehmann Brothers and Rothschilds. So while private bankers make huge amounts of money by merely printing and lending it to the government, the ignorant tax -- paying public must keep footing the bill of war expenses: a long -- standing, built -- in mechanism for organized graft.

Loss of American lives can be minimized – and the dreaded Vietnam syndrome be avoided – by using the hired guns of security corporations from other countries, whose deaths do not even have to be reported. Money for more wars can be borrowed from East Asians and others too, who don’t look like they are going to stop their purchase of US Treasury bonds anytime soon.

The day is not far when, as the American historian Theodore Roszak has recently suggested:

“The American imperium becomes a private, for profit, off -- the -- shelf, regime -- change industry. There will be firms standing ready to fight the wars, organize the occupation that follows, rebuild the ruined infrastructure that results from the wars, recruit new governments, and manage the post -- war economy. There may even be private educational services hired to train the conquered population in the rudiments of high -- consumption democracy, and hoards the evangelical true believers eager to save heathen souls from damnation.”

Aseem Shrivastava can be reached at  aseem62@yahoo.com