The economic collapse that began in 2008, that was duly declared unpredictable and thoroughly unforeseen across the entire Western media, was, in fact, anything but. Indeed, the capitalist cycle of expansion and collapse has repeated itself so often, over hundreds of years, that its existence is openly accepted across the whole spectrum of economic thought, including in the mainstream – which refers to it, in deliberately understated terms, as the “business cycle”. Only those who profit from our ignorance of this dynamic – the billionaire profiteers and their paid stooges in media and government – try to deny it.
A slump occurs when “capacity outstrips demand” – that is to say, when people can no longer afford to buy all that is being produced. This is inevitable in a capitalist system, where productive capacity is privately owned, because the global working class as a whole are never paid enough to purchase all that they collectively produce. As a result, unsold goods begin to pile up, and production facilities – factories and the like – are closed down. People are thrown out of work as a result, their incomes decline, and the problem gets worse. This is exactly what we are seeing happen today.
In these circumstances, avenues for profitable investment dry up – the holders of capital can find nowhere safe to invest their money. For them, this is the crisis – not the unemployment, the famine, the poverty etc (which, after all, remain an endemic feature of the global capitalist economy even during the ‘boom times’, albeit on a somewhat reduced scale). The governments under their control – through ownership of the media, currency manipulation and control of the economy – must then set to work creating new profitable investment opportunities.
One way they do this is by killing off public services, and thus creating opportunities for investment in the private companies that replace them. In 1980s Britain, Margaret Thatcher privatised steel, coal, gas, electricity, water, and much else besides. In the short term, this plunged millions into unemployment, as factories and mines were closed down, and in the long term it resulted in massive price rises for basic services. But it had its intended effect – it provided valuable investment opportunities (for those with capital to spare) at a time when such opportunities were scarce, and created a long term source of fabulous profits. This summer, for example, saw the formerly publicly owned gas company Centrica hiking its prices by another 18% to bring in a £1.3billion profit. The raised prices will see many thousands more pensioners than usual die from the cold this winter as a result, but gas – like all commodities in capitalist society – is not there to provide heat, but to increase capital.
In the global South, privatisation was harsher still. Bodies like the IMF and the World Bank used the leverage provided by the debt-extortion mechanism (whereby interest rates were hiked on unpayable loans that had rarely benefited the population, often taken out by corrupt rulers imposed by Western governments in the first place) to force governments across Asia, Africa and Latin America to cut public spending on even basics such as health and education, along with agricultural subsidies. This contributed massively to the staggering rates of infant mortality and deaths from preventable disease, as well as to the AIDS epidemic now raging across Africa. But again the desired end for those imposing the policies was achieved, as new markets were created and holders of giant capital reserves could now invest in private companies to provide the services no longer available from the state. The profit system was given a new lease of life, its collapse staved off once again.
The World Bank’s closure of the Indian government’s grain rationing and distribution service, for example, meant that a scheme providing affordable grain to all Indian citizens was closed down, allowing private companies to come in and sell grain at massively increased prices (sometimes up to ten times higher). Whilst this has led to huge numbers of Indians being priced out of the market, and a resulting 200 million people now facing starvation in India, it has also led to record profits for the giant private companies now holding the world’s grain stocks – which is the whole point.
This round of global privatisation from the 1980s onwards, however, was so thorough that when the 2008 crisis hit, there were few state functions left to privatise. Creating investment opportunities now is much trickier than it was thirty years ago, because so much of what is potentially profitable is already being thoroughly exploited as it is.
In Europe, what is left of public services is hastily being dismantled, as right wing political leaders happily privatise what is left of the public sector, and currency speculators use their firepower to pick off any country that attempts to resist. David Cameron, following the path forced on the global South over recent decades, for example, is busy opening up Britain’s National Health Service to private companies, and massively cutting back on public service provision for vulnerable groups such as the elderly and the jobless.
In the global South, however, there is little left for the West to privatise, as successive IMF policies have long ago forced those countries in their grip to strip their public services to the bone (and beyond) already.
But there is one state function which, if fully privatised across the world, would make the profits made even from essentials such as health care and education look like peanuts. That is the most basic and essential state function of all, indeed the whole raison d’etre for the state: security.
Private security companies are one of the few growth areas during times of global recession, as growing unemployment and poverty leads to increased social unrest and chaos, and those with wealth become more nervous about protecting both themselves, and their assets. Furthermore, as the Chinese economy advances at a rate of knots, military superiority is fast becoming the West’s only “competitive advantage” – the one area in which it’s expertise remains significantly ahead of its rivals. Turning this advantage, therefore, into an opportunity for investment and profit on a large-scale is now one of the chief tasks facing the rulers of Western economies.
A recent article in the Guardian noted that British private security firm Group 4 is now “Europe’s largest private sector employer”, employing 600,000 people – 50% more than make up the total armed forces of Britain and France combined. With growth last year of 9% in their “new markets” division, the company have “already benefited from the unrest in north Africa and the Middle East.” Group 4 are set to make a killing in Libya, following the total breakdown of security, likely to last for decades, resulting from NATO’s incineration of the country’s armed forces and wholesale destruction of its state apparatus. With the rule of law replaced by warfare between rival gangs of rebels, and no realistic prospect of a functioning police force for the foreseeable future, those Libyans able to manoeuvre themselves into positions of wealth and power will likely have to rely on private security for many years to come.
When Philip Hammond, Britain’s new Defence Secretary and a multi-millionaire businessman himself, suggested that British companies “pack their suitcases and head to Libya”, it was not only oil and construction companies he had in mind, but private security companies.
Private military companies are also becoming huge business – most famously, the US company Blackwater, renamed Xe Services after its original name became synonymous with the massacres committed by its forces in Iraq. In the USA, Blackwater has already taken over many of the security functions of the state – charging the Department of Homeland Security $1000 per day per head in New Orleans after Hurricane Katrina, for example. “When you ship overnight, do you use the postal service or do you use FedEx?” asked Erik Prince, founder and chairman of Blackwater. “Our corporate goal is to do for the national security apparatus what FedEx did to the postal service”. Another Blackwater official commented that “None of us loves the idea that devastation became a business opportunity. It’s a distasteful fact. But that’s what it is. Doctors, lawyers, funeral directors, even newspapers – they all make a living off of bad things happening. So do we, because somebody’s got to handle it.”
The danger comes when the economic climate is such that the world’s most powerful governments feel they must do all they can to create such business opportunities. During the Cold War, the US military acted (as indeed it still does) to keep the global South in a state of poverty by attacking any government that seriously sought to challenge this poverty, and imposing governments that would crush trade unions and keep the population cowed. This created investment opportunities because it kept the majority of the world’s labour force in conditions so desperate they were willing to work for peanuts. But now this is not enough. In slump conditions, it doesn’t matter how cheap your workforce is if nobody is buying your products. To create the requisite business opportunities today – a large global market for its military expertise – Western governments must impose not only poverty, but also devastation. Devastation is the quickest route to converting the West’s military prowess into a genuine business opportunity that can create a huge new avenue for investment when all others are drying up. And this is precisely what is happening. David Cameron is, for once, telling the truth, when he says “Whatever it takes to help our businesses take on the world – we’ll do it.”
As The Times put it recently, “In Iraq, the postwar business boom is not oil. It is security.” In both Iraq and Afghanistan, a situation of chronic and enduring instability and civil war has been created by a very precise method. Firstly, the existing state power is totally destroyed. Next, the possibility of utilising the country’s domestic expertise to rebuild state capacity is undermined against by barring former officials from working for the new government (a process known in Iraq as “de-Ba’athification”). Linked to this, the former ruling party is banned from playing any part in the political process, effectively ensuring that the largest and most organised political formation in each country has no option but to resort to armed struggle to gain influence, and thereby condemning the country to civil war. Next, vicious sectarianism is encouraged along whatever religious, ethnic and tribal divisions are available, often goaded by the covert actions of Western intelligence services. Finally, the wholesale privatisation of resources ensures chronically destabilising levels of unemployment and inequality. The whole process is self-perpetuating, as the skilled and professional sections of the workforce – those with the means and connections – emigrate, leaving behind a dire skills shortage and even less chance of a functioning society emerging from the chaos.
This instability is not confined to the borders of the state which has been destroyed. In a masterfully cynical domino effect, for example, the aggression against Iraq has also helped to destabilise Syria. Three quarters of the 2 million Iraqi refugees fleeing the war in their own country have ended up in Syria, thus contributing to the pressure on the Syrian economy which is a major factor in the current unrest there.
The destruction of Libya will also have far reaching destabilising consequences across the region. As the recent United Nations Support Mission in Libya stated, “Libya had accumulated the largest known stockpile of Manpads [surface-to-air missiles] of any non-Manpad-producing country. Although thousands were destroyed during the seven-month Nato operations, there are increasing concerns over the looting and likely proliferation of these portable defence systems, as well as munitions and mines, highlighting the potential risk to local and regional stability.” Furthermore, a large number of volatile African countries are currently experiencing a fragile peace secured by peacekeeping forces in which Libyan troops had been playing a vital role. The withdrawal of these troops may well be damaging to the maintenance of the peace. Similarly, Libya, under Gaddafi’s rule, had contributed generously to African development projects; a policy which will certainly be ended under the NTC – again, with potentially destabilising consequences.
Clearly, a policy of devastation and destabilisation fuels not only the market for private security, but also for arms sales – where, again, the US, Britain and France remain market leaders. And a policy of devastation through blitzkrieg fits in clearly with the big three current long term strategic objectives of Western policy planners:
- To corner as large a share as possible of the world’s diminishing resources, most importantly oil, gas and water. A government of a devastated country is at the mercy of the occupying country when it comes to contracts. Gaddafi’s Libya, for example, drove a notoriously hard bargain with the Western powers over oil contracts – acting as a key force in the 1973 oil price spike, and still in 2009 being accused by the Financial Times of “resource nationalism”. But the new NTC government in Libya have been hand picked for their subservience to foreign interests – and know that their continued positions depend on their willingness to continue in this role.
- To prevent the rise of the global South, primarily through the destruction of any independent regional powers (such as Iran, Libya, Syria etc) and the destabilisation, isolation and encirclement of the rising global powers (in particular China and Russia).
- To overcome or limit the impact of economic collapse by using superior military force to create and conquer new markets through the destruction and rebuilding of infrastructure and the elimination of competition.
This policy of total devastation represents a departure from the Cold War policies of the Western powers. During the Cold War, whilst the major strategic aims remained the same, the methods were different. Independent regional powers in the global South were still destabilised and invaded – and regularly – but generally with the aim of installing ‘compliant dictatorships’. Thus, Lumumba was overthrown and replaced with Mobutu; Sukarno with Suharto; Allende with Pinochet; etc, etc. But the danger with this ‘imposed strongmen’ policy was that strongmen can become defiant. Saddam Hussein illustrated this perfectly. After having been backed for over a decade by the West, he turned on their stooge monarchy in Kuwait. Governments that are in control can easily get out of control. However, for as long as these strongmen were needed for the services provided by their armies (protecting investments, repressing workers struggles, etc), they were supported. The crisis now underway in the economies of the West, however, calls for more drastic measures. And the development of private security and private mercenary companies mean that the armies provided by these strongmen are starting to be deemed no longer necessary.
Congo is a case in point. For three decades, the Western powers had supported Mobutu Sese-Seko’s iron rule of the Congo. But then, in the mid-90s, they allowed him to be overthrown. However, rather than allowing the Congolese resistance forces to take power and establish an effective government, they then sponsored an invasion of the country by Uganda, Rwanda and Burundi. Although these countries have now largely withdrawn their militias, they continue to sponsor proxy militias which have prevented the country seeing a moment’s peace for nearly fifteen years, resulting in the biggest slaughter since the end of the Second World War, with over 5 million killed. One result of this total breakdown of functioning government has been that the Western companies that loot Congo’s resources have been able to do so virtually for free. Despite being the world’s largest supplier of both coltan and copper, amongst many other precious minerals, the total tax revenue on these products in 2006-7 amounted to a puny £32 million. This is surely far less than what even the most useless neo-colonial puppet would have demanded.
This completely changes the meaning of the word ‘government’. In the Congo, the government’s best efforts to stabilise and develop the country have so far proved no match for the destabilisation strategies of the West and its stooges. In Afghanistan, it is well known that the government’s writ has no authority outside of Kabul, if there. But then, that is the point. The role of the governments imposed on Afghanistan, Iraq and Libya, like the one they are trying to impose on Syria, is not to govern or provide for the population at all – even that most basic of functions, security. It is simply to provide a fig leaf of legitimacy for the occupation of the country and to award business contracts to the colonial powers. They literally have no other function, as far as their sponsors are concerned.
It goes without saying that this policy of devastation is turning the victimised countries into a living hell. After now more than thirty years of Western destabilisation, and ten years of outright occupation, Afghanistan is at or very hear the bottom of nearly every human development indicator available, with life expectancy at 44 years and an under-five mortality rate of over one in four. Mathew White, a history professor who has recently completed a detailed survey of the humanity’s worst atrocities throughout history, concluded that, without doubt, “chaos is far deadlier than tyranny”. It is a truth to which many Iraqis can testify.