Defence Spending Lunacy

Boris Johnson has announced that Britain is to significantly increase its military spending, euphemistically described as “Defence Spending”, though given that most of such spending is geared to waging wars, or threatening other countries borders, it has very little to do with defence. Given the state of the UK's finances, given the state of its economy as a result of the idiotic policy of lockdown, and given that the economy could be hit even more badly as a result of Brexit, such a policy is economic lunacy. Johnson claims that it will lead to the creation of many jobs, but the reality is that it will lead to the destruction of many more jobs than it creates, because such spending sucks value and surplus value out of the economy, reducing economic growth and capital accumulation. The talk about making Britain the world's greatest naval power is just ludicrous bravado and posturing designed to appeal to reactionary nationalists and jingoists in the Tory Party, as Johnson prepares once more to capitulate to the EU. 

According to Johnson, 40,000 new jobs would be created. Superficially, this may be true. In other words, if the state spends billions of Pounds on military equipment, then the companies that produce such military equipment will need to produce more, meaning they employ more people, buy in more material, which means the material suppliers employ more people and so on. On the face of it, then, 40,000 new jobs have been created, but that is not the end of the matter. The question is, where, did the government get the money to pay for this military equipment. Some would have you believe it can simply be plucked from the Magic Money Tree, but the truth is that money is simply the equivalent form of value, and to be money its equivalent must also exist, in other words, additional new value must have been created by labour. Otherwise, the fruit of the Magic Money Tree is just worthless paper. 

In reality, the government only obtains additional money to pay for such spending by collecting taxes, and as Marx describes, taxes are a deduction from surplus value. So, if the government spends an additional £20 billion on weapons, it can only get this £20 billion by taking in an additional £20 billion in taxes out of surplus value, i.e. profits. That means that UK businesses have £20 billion less to use to accumulate capital, and, thereby, employ additional workers, build new factories, buy additional machines, material and so on, all of which also require workers to build them. The reality is that the 40,000 “new” jobs in military production is bought at the expense of far more jobs that would have been created elsewhere in the economy, producing socially useful commodities. 

In fact, the situation is worse than that. Take military spending and compare it with some other form of government expenditure such as the construction of roads or railways, or broadband infrastructure. If the government, were to spend £40 billion on these things, its still the case that to get this money, the government must increase taxes, and so drain surplus value by this amount. It could borrow the money, but it still has to pay the loans back, which it can only do out of taxes. So, the same argument about any new jobs created, being at the cost of other jobs that now do not get created. However, money spent on infrastructure is different to military spending. When the government builds a road, railway, broadband infrastructure, or electric charging infrastructure for electric vehicles, sooner or later, all of these things feed value back into circulation. 

Unless it was unnecessary, a road or rail line, is used by businesses to ship goods to their markets. It is a commodity they buy, as providing value for their business. Passengers use the roads and rail lines, and pay to consume this service. These are commodities/use values that enter into circulation, in the same way as any other commodity. Its no different to a van bought by a business to ship its goods. It is a use value, and the value of the van enters into the value of the goods sold by the firm that uses it to distribute its products. Or its like a car bought by an individual. It is a commodity that they consume. The same applies to other bits of infrastructure put in place by the state such as broadband networks and so on. The same is true about hospitals and schools, and the teachers and health workers employed to work in them. These produce new value, in the form of the labour-power they help to produce, and that labour-power itself creates new value as a result of the performance of new labour. 

But, military spending is different. If the state spends £20 billion on weapons, that is dead money. None of the value of those weapons goes back into circulation. If we are lucky, the weapons are not used, and just rust away. As their use value disappears so does their value. If we are unlucky the weapons are used, and instead of representing means of production, they represent means of destruction. The use of weapons means that existing physical capital is destroyed, such as buildings, machines, roads and infrastructure. This physical destruction of capital, means that the potential of society to produce more is reduced, because, now, the surplus value that the workers employed by that capital would have produced can no longer be produced. That surplus value would itself have gone to accumulate additional capital, which would have employed additional workers, who would have produced more value and surplus value, which now does not happen, so that economic growth, and the increase in wealth is, thereby, reduced. The surplus product of society that would have gone to increase production and wealth now has to go simply to replace what has been wantonly destroyed. It represents a tie-up of capital, with a consequent reduction in the rate of profit. 

Even setting aside this role of weapons as means of destruction, the fact that a shell explodes puts no value back into circulation. A road or a railway as constant capital, transfers a part of its value to the commodities transported along it, and so puts that value back into circulation. But, when a shell explodes or a bullet is fired, that is the end of the matter. Its use value goes up in a puff of smoke without having transferred any of that value to anything useful, and so its value also goes up in a puff of smoke with it. So, in announcing that he intends to increase military spending by nearly £20 billion, what Johnson has actually announced is that he is effectively piling up all this money, and putting a match to it, because once spent that is the end of the matter. It is £20 billion that has been sucked out of the economy uselessly; £20 billion that could have gone to accumulate additional capital productively, to employ workers in car factories, in the production of consumer durables, in the production of computer games, CAT scanners for hospitals and so on, all of which would have actually fed value back into the economy, and thereby facilitated the increase in wealth, of economic growth and future prosperity. 

And, that Johnson has decided to inflict this economic damage by sending £20 billion up in flames at a time when the economy is suffering the economic damage inflicted by the Tory lockdowns is even more idiotic. That economic damage itself has sucked hundreds of billions out of the economy, and begun to destroy capital, as businesses close down. In the end the amount of capital that will have to be put back into the system will run into trillions, not just hundreds of billions of Pounds. Raising that capital whether done by firms themselves via share and bond issues, or by governments bailing them out, means that the level of borrowing is going to go sky high even compared to the current astronomical levels. That means that interest rates are bound to rise sharply, with a consequent effect on asset prices, which as with 2008 will undoubtedly flow over into a credit crunch, and severe economic contraction, at least in the short-run, unless the state intervenes to stop it, by ensuring that the payments mechanism continues to function. No wonder Bitcoin is on a tear at the moment, even though it is another worthless asset that is a disaster waiting to happen. 

Military spending is always destructive of potential growth, and as Bukharin showed, it can even cause negative growth, where the value it sucks out of the economy is greater than the surplus value accumulated as new capital. At the present time, the effect of lockdowns has already diminished the mass of surplus value available for accumulation, and consequently, sucking further surplus value out of the economy to finance military spending could well result in the kind of negative expanded reproduction that Bukharin describes, which results not in a progressive growth of the economy, but a progressive shrinkage. Yet again, this is the imposition of more economic damage by Johnson on top of Brexit, and the idiotic lockdowns. 

It may be that Johnson has applied the fallacious theories of Keynes, and the so called Permanent Arms Economy nonsense as the grounds for squandering such a vast sum of money, in the mistaken belief that it will promote economic growth rather than promoting further economic contraction. But, more likely is that, it is a cover for his next capitulation over Brexit. Reports indicate that there is growing panic in the Tory ranks, especially amongst those new Tory MP's in northern seats, where the effects of Brexit will be first and most harshly felt, and where it is the most vulnerable who will be most badly affected by it. But, we have also seen that in the Cabinet itself, Gove and Sunak are now frequently changing their underpants as a crash out Brexit, and its dire consequences rushes towards them. No wonder Farage is warning of a sell-out, as Cummings and Cain have gone, and the true feelings of Frost have been exposed. 

The EU is openly preparing for a Crash Out Brexit which will have minor effects on the EU, but which will be devastating for Britain, particularly Northern Ireland, and Northern Britain, which are both already suffering as a result of the effects of Tory lockdowns. Johnson must know that the Brexit gig is up, and that all his talk about oven ready deals have been shown up as hot air. Brexit still has not been done, and nor will it. Johnson knows that he will either have to make the kind of demeaning concessions he did last year, and in January to get a deal, which means at best Brexit in Name Only, or else he will have to find a basis to extend the Transition Period. But, there is no reason for the EU to give him the benefit of the doubt now in any such negotiations, because the duplicity over the last deal, and the introduction of the UK Internal Markets Bill, shows that he and his Ministers cannot be trusted. 

EU businesses are now openly calling on the EU to produce their proposals for dealing with a crash out Brexit, so that they know where they stand. That means they, unlike British business, is ready for it. The pressure is now all on Britain to capitulate once more, and Johnson is throwing this red meat on the table to distract his backbench and association Neanderthals, whilst he gets on with the business of selling their reactionary, petty-bourgeois dreams of Brexit down the river.