Tuesday, January 24, 2012

On War's Utility

It's long been an article of faith among America's Rightists and Reactionaries that FDR's New Deal policies didn't get us out of the Great Depression, it was World War II that did it. The corollary is that War is necessary to maintain Americans in the prosperity to which we were once accustomed.

While the Rightist/Reactionary catechism on these matters has an element of truth, it is far too simplistic to serve as a policy formulation; nevertheless it does.

War -- or its semblance and especially the preparation for it -- is seen by our policy-makers as a necessity for prosperity. This was a profound lesson learned from the experience of the Great Depression, World War II, and its subsequent continuation by other means throughout the Cold War.

The New Deal was not for nothing, despite the R/R mythology about it; whether it prolonged the Depression or not is utterly beside the point. But the New Deal did not end the Depression. It could not do so; it was too small, too narrowly focused, and too beset by opposition from the get-go.

What the New Deal did was ameliorate the dire economic conditions of enough people for long enough to prevent a coup or a revolution. It was initially a stop-gap that stabilized the political situation enough to "save capitalism" and it provided the outline of an economic stabilization program through Social Security, Unemployment Insurance, and public works.

Make no mistake. These were very modest efforts, and they did not "end the Depression." They made it bearable for a sufficient number of people to keep the lid on discontent, and they provided "hope" for the rest that otherwise would have been absent.

The preparations for World War II and then the War itself are what transformed the situation, transcended political animosities, and got us out of the Depression in very spectacular fashion.

It's a lesson our policy-makers have neither learned nor forgotten. Permanent War became the centerpiece of American prosperity and policy following WWII, but it appears that the lesson of what happened and why it worked -- and why the New Deal didn't -- during and after WWII has never quite been understood by those same policy-makers who can't quite figure out why the various wars and dominance principles and practices of recent times not only didn't prevent economic catastrophe, they've arguably made it worse.

How could that have happened? And why hasn't any economic or war policy adopted in recent times made things better for more than a tiny handful of the super-rich?

If you go back to the New Deal, you should be able to see why the current policies are such stunning failures: The New Deal provided extremely modest levels of government funded temporary relief for some out of work individuals and households, instituted temporary programs of public works that employed some of those who were out of work and paid them very modest wages for their efforts, and it instituted long term programs like Social Security and Unemployment Insurance that were paid for through taxes on workers and their employers.

Wages and prices were stabilized -- to keep them from falling even further -- and unions were, for the first time, empowered and protected by government to bargain on behalf of workers for better wages, benefits, and working conditions; this was paid for in a sense by continuing high unemployment, however, which had the effect at the time of cancelling out any overall benefit to workers.

Banks were barred from engaging in the kinds of speculation, gambling, and chicanery that had been the precipitating cause of the financial collapse. Depositors' funds were guaranteed up to a certain relatively modest ceiling by the government.

These policies and programs stabilized the country economically and politically, and by instituting New Deal stabilization programs, FDR "saved capitalism" from itself. These programs and policies didn't necessarily prolong the Depression, but they did not reverse it, either. They were far too modest to do that. Even at the time, it was widely recognized that though the New Deal helped overcome the worst of the Depression, it was far too modest, underfunded, and in some cases, wrong-headed.

Something much more massive was necessary.

In Europe, the Fascists and the Nazis led the way with "something much more massive." In Asia, Japan was leading the way. Initially, that was not their later wars of aggression.

And then there was the Soviet Union, which stood apart from all the nonsense economic "solutions" in the West and East and went its own way.

The key which the Soviets, Fascists, Nazis, and Japanese Imperialists discovered was that full employment and economic security were the fundamental necessities for economic revival. Together with full employment, economic progress required enforced savings, by suppressing consumerism to an essentially subsistence level or by other means including confiscation of financial surpluses. These savings were then invested in research and development and expansion of manufacturing capability, infrastructure, and other general necessities.

Unfortunately, that included preparations for -- and then precipitation of -- wars of aggression, starting with the Japanese in Manchuria and China. The Japanese expansion into China was simple enough to understand: they wanted access to and control of markets, resources, and eventually slaves to maintain their expansionist economy.

It worked very well initially; why not continue, then, indefinitely?

In Europe, expansionist economic policies were combined with ethnic determinist policies to enable Germany to absorb Austria and Czechoslovakia, Italy to expand its interests and colonies in Africa, and so on.

The Soviet Union was isolated, but was doing astonishing things with very little financial wherewithal to create an entirely new social/political and economic system out of what was at hand.

The United States and most of the rest of the English-speaking world was way behind in comparison, limping along at best. All that changed, though, when the United States began serious preparations for war in 1938; unemployment began dropping, and by 1941, it was for the first time since 1930 under 10%. Of course, beginning in 1942, practically everyone who could work was employed either in the war effort or in civilian support capacities.

While many more people were collecting (still relatively modest) paychecks during the War, there was very little beyond bare necessities to buy, so workers bought War Bonds and Stamps, effectively saving a relatively large portion of their earnings. These savings were then invested in research and development, war materiel, and so on. Nukes! Yay! Jet planes! Yay! Television! Yay! Radar! Yay! On and on.

At the end of the War, many people had a surprising amount of money in savings, and there was so much pent up demand -- for many Americans, fifteen years of denial -- that the economy went on a growth binge that just went on and on and on. It wasn't at all like prior boom and bust economies; the post war American economy was very stable, growing incrementally, predictably, and this growth was paralleled by unprecedented social progress.

While the accumulated savings of Americans was the chief impetus to the economic growth after WWII, the United States remained on a war footing after V-J Day, having transferred the designation of "enemy" from the Axis powers to the Communists. "Minor Wars" -- in Europe, Asia, Africa, the Middle East, and so on -- were constant. The draft continued. The military-industrial complex prospered -- and it was considered at the time both a danger and a benefit that it did so. The danger was that it could consume us all, but the benefit was that its secure prosperity was a stabilizing influence on the whole economy.

Post WWII, the policy was to maintain as close to full employment as possible because it was understood to be the most stabilizing social and political force, and full employment was key to economic growth. "Small wars" were engaged in continuously in order to counter the "Soviet threat" -- and to keep the forces limber and employed.

War's utility was largely a matter of domestic political stabilization and economic growth -- and international competition with Our Rivals in Russia.

The mobilization against the Vietnam War really did shock the older generation; they could not understand why my generation was so opposed to it, when to the older generation, the War ethic and economy are what saved them. It was not only how the nation had survived, WWII was for most Americans who lived through it, the most profoundly and deeply emotionally fulfilling thing they'd ever known.

Korea and the "small wars" of the 1950's were a continuation of that fulfillment, and when they got bigger in Indochina in the 1960's War was still seen as a blessing.

Opposition was deeply disturbing to that mindset.

With the end of the Vietnam War, the American War Economy shuddered and eventually collapsed.

The efforts to revive it after 9/11 have failed in part because the War Economy now only involves a very small segment of the population; there isn't even a hint at attempting to achieve full employment -- in fact, the ongoing economic policy is to maintain high unemployment levels indefinitely -- and for all intents and purposes, tens of millions of Americans have simply been made irrelevant and redundant. The War Economy now is meant only for the profit of the few, the government's owners and sponsors.

War still has a utility but not for the masses, who are more and more being left to fend for themselves, as even the inadequate New Deal programs and policies are successively dismantled.

You would think Our Betters would know better. But they don't.

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