Russo-Starmerism

My most recent book Vulture Capitalism: Corporate Crimes, Backdoor Bailouts, and the Death of Freedom challenges the idea that capitalism is a free market system; that the state and the market are two separate spheres of power; and that greater state spending weakens capital relative to labour. The book critiques the idea that the neoliberal project was about ‘shrinking’ the state to create free markets free of political influence. Instead, I show that neoliberalism was a political project that aimed to crush worker power, restore order and hierarchy, and augment the power of the ruling class.

The neoliberal movement emerged during a period of disorder and chaos. Social democracy was undergoing a crisis of ‘ungovernability’, as the French sociologist Gregoire Chamayou said of the crisis of the 1970s. Societies all over Europe were being rocked by protest and industrial disputes. Mass movements emerged to challenge the status quo.

Neoliberalism was an elite-led political movement that first and foremost sought to restore the authority of the ruling classes over the rest of society. The policies introduced by neoliberal politicians like Thatcher and Reagan — interest rate hikes, attacks on unions, the centralisation of political power — were intended to remind citizens who was in charge.

To understand the relationship between capital and the state, we need to learn to see the state as a social relation — an approach developed in the 1970s by the Marxist theorist Nicos Poulantzas. When he referred to the state as a social relation, Poulantzas was drawing a comparison with Marx’s description of capital as a social relation.

Inputs like money, machinery, and technology used in capitalist production are ‘earned’ through exploitation, and they are used to expand a production process that relies on yet more exploitation. The capital of the capitalist comes from, and reinforces, an exploitative and unequal social relationship between workers and bosses. In the same way, the institutions of the capitalist state emerge out of historic struggles within capital and between capitalists and workers. Today, what happens within the state is based on the balance of power within society as a whole.

Such an understanding allows us to see that the problem with modern capitalism isn’t that governments aren’t spending enough. The problem with modern capitalism is that working people are insufficiently organised to demand that state power is used in their interests. Military Keynesianism won’t mean more power for workers; it will simply mean greater profits for weapons manufacturers and greater authority for capitalist states.

In fact, the strengthening of the war economy goes hand in hand with ongoing attempts to crush worker power, boost profits, and extend the state’s power over citizens. Just ask the citizens of Russia.

Putin has ruthlessly slashed social spending in an attempt to divert resources towards his war machine. Pensions, salaries, and social security have all been cut. The only parts of the state where wages have been preserved are the military and police, charged with clamping down on any dissent among working people forced to pay for Putin’s war.

Janan Ganesh wrote in the Financial Times a few weeks ago that if Europe wants to build a warfare economy, it’s going to have to shrink the welfare economy. Such an approach won’t help Europe to defeat Russia. It will, however, help Europe to emulate the Russian war economy model.

The Never-Ending War

The war economy is a great example of how capitalism really works. It’s based on deep cooperation between the public and private sectors in pursuit of augmenting the imperial power of capitalist states and the wealth and power of capitalists within those states. Take the case of Boeing — a company that stands to benefit greatly from the expansion of military spending currently underway in Europe.

In 2018 and 2019, two Boeing planes nosedived out of the sky, killing nearly 350 people in what became known as the 737 Max disasters. A piece of software had caused the planes’ noses to tilt down, leaving the pilots unable to rectify the issue. An investigation into the disasters revealed that senior executives at Boeing had known about the problems with the planes before they went to market but covered up the problem rather than stop production.

The 737 Max disasters can be traced back to a culture of cost cutting and corner cutting that came about during the shareholder value revolution of the 1980s. Boeing’s new executives crushed the company’s unions, ignored its engineers, and, instead, inserted layers of middle management to focus on the central goal of cutting costs and maximising value for shareholders.

But the problems with Boeing can’t be reduced to greedy shareholders and executives in need of greater government regulation. In 2019, Boeing was the biggest recipient of corporate welfare in the US. The company received vast sums of money from the government in the form of tax breaks and subsidies. Boeing is an integral part of the military industrial complex. It receives millions of dollars’ worth of government contracts each year.

At the time of the disasters, the regulator that was supposed to be overseeing this company, the Federal Aviation Administration (FAA), was being run according to the principle of ‘self-regulation’. Boeing was being regulated by a unit of the FAA that sat inside Boeing and whose workers were being paid by Boeing. If this philosophy sounds familiar, that might be because it’s the same philosophy that underpinned how the banks were regulated before the financial crisis of 2008.

How was this allowed to happen? The relationship between Boeing and the American state is extremely close. There’s a revolving door between the boardrooms of Boeing and the upper echelons of the federal government. This is how capitalism works. No amount of regulation or more effective separation between state and market can challenge the relationship between capital and the state.

Contrary to the idea that capitalism is a ‘free market’ system, these vested interests work together to plan who gets what. Monopolistic corporations and imperialist states have immense control over markets, over workers, over the planet, and over our politics. The aim of capitalist planning is to ensure consistent profits for capitalists, and to crush popular opposition. It is, in other words, about maintaining order and control.

This attempt to maintain order and control over potentially unruly populations is what the war economy is about. It’s also why our elites have worked so hard to shut down dissent over conflict and to crush those protesting the genocide in Palestine. The ruling class has to work hard to make people believe that their power is legitimate, and no amount of protest will challenge their authority. You won’t get what you want because you organise. You’ll take what those at the top decide to give you.

The war economy represents a continuation of this model. It speaks of the failure of the Left to properly educate people about the meaning of austerity that there are some who are welcoming the end of the German debt brake as the collapse of neoliberalism.

As I have written previously in Tribune, government spending does not equal socialism. Governments have been spending lots of money for a very long time. They just haven’t been spending money to support workers. They’ve been spending money on supporting capitalists — whether it was bailing out the banks in 2008 or supporting big business during the pandemic.

The redirection of public resources towards military spending will not increase the power of workers relative to bosses. It won’t even create very many jobs. It will, however, make it easier for political leaders to crush dissent and stoke fear to keep people divided. As former Tribune columnist George Orwell put it, ‘The war is not meant to be won, it’s meant to be continuous.’

Military Keynes

What, then, to do about Russia? The Russian economy is entirely dependent upon the export of fossil fuels. Over the last decade, revenues from the oil and gas industry have accounted for between 30 and 50 percent of the Kremlin’s federal budget. Today, fossil fuel exports account for about 60 percent of Russia’s export revenues. This trade is the source of vital dollars that allow Russia to import crucial military technologies and other important inputs. Without these dollars, the Russian economy would collapse under the weight of hyperinflation very quickly.

The single largest importer of Russian liquefied natural gas is the European Union (EU). Last year, The Guardian revealed that despite its militaristic rhetoric the EU has actually sent more money to Russia in the form of fuel payments than it has given to Ukraine in aid. Instead of wasteful rearmament spending, Europe could direct resources towards decarbonisation, reducing their reliance on fossil fuel–financed autocrats all over the world.

Rearmament spending of the kind we’re seeing today isn’t only destructive, it’s also immensely inefficient. Modern arms manufacturing is not especially labour intensive. Arms companies use capital-intensive advanced manufacturing to produce new weapons technologies. The United Nations Conference on Trade and Development found that green stimulus programmes create three times as many jobs as brown ones.

But Europe’s leaders would much rather spend their citizens’ money on rearmament because doing so supports the interests of their friends in the arms industry. Just look at Keir Starmer’s pledge to cut aid in order to boost defence spending. The greatest beneficiary of this plan will be BAE Systems, which has been mired in numerous corruption scandals, including the notoriously corrupt al-Yamamah deal between Britain and Saudi Arabia.

This kind of corruption is endemic to the arms industry. But the relationships between powerful states and arms manufacturers is also based on a subtler, and more pervasive, form of collusion. European politicians aren’t calling for rearmament because they suddenly care about the living standards of their citizens. They want their defence companies to be strong and powerful so they can beat other defence companies.

Investing in decarbonisation would not only represent a far more effective use of public resources; it would also help to tackle the single greatest threat the planet — and Europe — faces. The Atlantic Meridional Overturning Circulation (AMOC), sometimes referred to as the Gulf Stream, is the system of currents that bring warm water to northern Europe. These currents could break down as early as 2050 thanks to changes in the ocean’s salinity and temperature due to melting ice.

The result of a breakdown in the AMOC would be utterly catastrophic for northern Europe. Some parts of the continent could see winter temperatures fall by thirty degrees: on average, London would cool by ten degrees and Bergen by fifteen degrees. The impact that these changes would have on infrastructure and economic activity is hard to imagine.

Climate breakdown is the single greatest threat to Europe’s security. Yet its leaders refuse to dedicate the resources required for decarbonisation, instead channelling billions into a wasteful and polluting rearmament project — all while sending billions to their alleged enemy in order to purchase fossil fuels.

This situation is absurd from a rational or ethical perspective. But from the perspective of capital, and its allies within the state, it makes complete sense. Military Keynesianism boosts profits and strengthens the state. More importantly, the threat of war helps to keep people scared and divided, making them much less likely to fight back against this corrupt and broken system. Just ask the Russian peace protestors jailed by Putin’s militaristic regime.