Economic warfare

“ Paradoxically, many people think of economic warfare as meaning economic action in which economic considerations are relatively unimportant, and the gaining of political or psychological advantage is dominant. ”

“ Firstly, industry and commerce are world-wide; the remotest countries are bound together by economic ties; invisible cords link the Belgian iron worker with the London docker and the Clyde shipwright, the Californian fruit grower with the Malay tin miner and the German dye worker. The economic effects of modern warfare, therefore, reverberate throughout the whole world, and widespread dislocation ensues. In the next place, the gigantic scale on which war between great powers is conducted, though it tends to shorten the duration of wars, increases the intensity of the shock to human society. ”

“ State intervention is needed in order to restart the economy. An injection of money through a fiscal stimulus, a monetary expansion, a lowering of interest rates, firm support of the financial system, tax and other incentives to consume and to import. Unfortunately, all these goals are best achieved by engaging in warfare. It is often the case: a convenient war reflates the economy, re-ignites the economic engine, generates employment, and increases consumption, innovation and modernization. ”

“ It was Bismarck who said: 'If you will give me a printing press, I will find you the money.' In finding the money required for an exhausting war a nation is driven to all sorts of desperate financial expedients which may very seriously affect its economic life, but if a nation wants to continue fighting and can produce, or be induced to produce, the things that are absolutely necessary for life and warfare, the government will get hold of those things somehow. If it cannot get them in any other way, ultimately it will take them. ”

“ Kitson recently and very effectively showed, economic power is the basis of political power, the root from which all national power, which can be interpreted into force, must spring. “Trade warfare is therefore a struggle for economic power, for the control of men and of all factors of wealth production.” ”

“ The recent cry of the American farmer: "Produce only what you need for your own keep," is a crude effort to imitate the successful tactics of the business world in limiting production to the volume that will yield the greatest possible profit to the owner.
War-menace constitutes another indication of the chaos existing in modern economic society. The purpose of economic activity is to produce wealth. The purpose of war is to destroy it. The two are therefore in direct antagonism; yet the greatest war machines are maintained by the greatest industrial nations. ”

“ It is wholly different with industrial capital. Militarism, war and public debts signify high taxes which the wealthy must assist in bearing, or else the cost of production is increased. War signifies besides this a stagnation in the production of commodities, a break in trade, economic difficulties and frequently ruin. Where the financier is rash, extravagant and violent the industrial manager is frugal, timid and peace-loving. ”

“ His book has the cold steel precision of truth.
He shows that all wars have economic causes, no matter how they are painted over with sentiment. And he demonstrates that one of the most urgent economic incentives to war that has ever existed will be the relative condition of Europe and the United States at the close of the Great War.
Imagine the victors of this gigantic conflict—Allies or Teutons—impoverished in money and resources, with the most colossal public debt in the world's history hanging over them, but possessing an enormous army of trained veterans and a world-beating navy. ”

“ For there exist, in every nation, sources of wealth, sufficient—if equitably distributed and constructively applied for the good of all—to allay that economic unrest which is the main incentive by which modern nations are led into war. ”

“ So far as production is concerned, the only change that war requires is greater speed and greater volume; the difference is one of degree and not at all of kind. It is only in the region of finance that war-time conditions work havoc with economic “laws” ”

“ National culture, economical progress, and the production of wealth are either paralysed or developed in a wrong direction. Therefore, the more the armaments of each Power increase, the less they answer to the objects aimed at by the Governments. Economic disturbances are caused in great measure by this system of excessive armaments, and the constant danger involved in this accumulation of war material renders the armed peace of to-day a crushing burden more and more difficult for the nations to bear. ”

“ We need to know whether an industrial state of society, or the industrial stage of economic development, is especially prone to cause wars, as distinguished from more general political and economic interests. We need to know whether wars, in an industrial stage, do really serve either the interests of industry or countries as a whole. Finally, there is the question whether those who control industry and finance do actually create wars.
In the industrial and financial stages of economic development new conditions arise which certainly must be taken into account in any theory of war. ”

“ The war has dramatically reduced national output and government revenue and has increased external debt. Foreign businesses have curtailed operations due to uncertainty about the outcome of the conflict and because of increased government harassment and restrictions. The war has intensified the impact of such basic problems as an uncertain legal framework, corruption, raging inflation, and lack of openness in government economic policy and financial operations. ”

“ These three phases of competition are accompanied by three forms of war—the economic war, the class war and international wars.
All three forms of war have an economic background. The economic war is the contest for resources, trade, markets, monopolies and investment opportunities. The class war [Pg 155] between the exploiter and the exploited, grows out of the economic relations existing between the owner and the worker. International wars are fought for economic advantage—for resources, trade, markets. ”

“ Statistics of the war measures would show that they are nothing but patchwork, and that economic war-damages can be prevented only when we strike at the root of capitalism. The war-necessity measures are sufficient only to prevent the population from resorting, as best they can, against frightful economic injuries. ”

“ If the war goes badly, either through heavier than expected causalities, protracted bloody urban warfare, massive foreign denunciations, chemical and biological warfare, or major terrorist attacks here and abroad, we may be plunging our economy into unfathomable debt which this nation cannot easily sustain. ”

“ During the war, production for civilian use was limited by war needs and available manpower. Economic stabilization required measures, to spread limited supplies equitably by rationing, price controls, increased taxes, savings bond campaigns, and credit controls. ”

“ The indirect pecuniary cost of the war is caused, first, by diverting some 150,000 men, engaged in the war directly or remotely, from the works of productive industry, to the labours of war, which produce nothing; and, secondly, by disturbing the regular business of the country, first by the withdrawal of men from their natural work; then, by withdrawing large quantities of money from the active capital of the nation; and, finally, by the general uncertainty which it causes all over the land, thus hindering men from undertaking or prosecuting successfully their various productive enterprises. ”

“ Those who profited on the rising markets, without being able to avoid so doing if they would, lost, equally helplessly, on the decline. Only a few got out at the top and stayed out. The war produced an unbalancing of economic equilibrium, which is too complicated an affair for anything but nature to regulate. ”

“ In fact, industry of all kinds would gain by establishing within our borders the cheapness so essential to enable us to carry on victoriously the industrial warfare with foreign countries,—a struggle as deadly as that of arms. ”

“ Private interests manipulate government.
There is created in every country an economic force [102] in private hands directly interested in war and in the preparation for war; directly interested in assisting to bring about a general atmosphere advantageous to an industry which, were wars to cease or the expenditure on armaments to be substantially reduced, would suffer accordingly. What the successful prosecution of an ordinary commercial undertaking requires this industry also requires. The demand for the article must be created. ”

“ They had put the burden of direct economic waste on the French and deprived them of economic supplies, while the psychologic value of driving home to the enemy population the ravages of war is considered important by military leaders. ”

“ They discussed the economic side of war and demonstrated that peace is necessary to business stability and prosperity, that war directs and masters men, money, and measures, diverts them from the legitimate channels of industry and concentrates effort upon destruction instead of the constructive processes which are essential to public and private welfare. ”

“ All the conditions of our life impel nations, like individuals, to advance economically, to fructify labour, to gain. If, however, the nation in its struggle for new wealth clashes with other nations, intent also upon gain, if {20} these mobilised, economic ambitions necessarily lead to destructive wars, then we must cease declaiming against war's immorality, and seek instead to discover whether economic readjustments cannot circumscribe or even prevent wars. ”

“ This war has been such a jar to industrial conditions that many manufacturers are reducing their daily output considerably, while others who have a capital are afraid to invest, and are hoarding it in the banks. ”

“ When the men of the world return to work, there will be a great fall in prices because of the greater amount of productive work, and it may result in a fall, at least a temporary fall in wages, though wages will [Pg 102] increase after things are once more established. This war may be a boon to the financial and industrial life of our country and give us many new marts of trade in commerce, but while the war lasts it will mean financial strain and hard times in many industries. It certainly will cripple European life, civilization and culture for fifty years. ”

“ Thus while, from the outbreak of the war, the central powers were in a great measure cut off as export markets for the United States, the needs of the allies were so greatly enhanced as to vastly more than counteract the partial loss of the export market for the central powers. ”

“ Just imagine sixty million dollars a day or twenty-one billions and nine hundred millions of dollars a year of new trade created by the war suddenly have to stop when peace is concluded! Where in this world can Europe and America look for a market to consume this enormous saving from the war? ”

“ Apart from selling our liquid capital assets in return for foreign goods, and apart from borrowing from foreign countries for the same purpose, our power to provide our own army and navy with all they want and have any surplus over for our Allies has indeed depended entirely on our extraordinary efforts in production—not in normal production, but in war production—and also on the extent to which we have been able to reduce our civil consumption of all kinds. ”

“ The nett tendency is towards the disappearance of a reality holding class and the destruction of realities in warfare, and the appearance of a vast rentier class in its place. At the end of the war much material will be destroyed for evermore, transit, food production and industry will be everywhere enormously socialised, and the country will be liable to pay every year in interest, a sum of money exceeding the entire national expenditure before the war. ”

“ All the belligerents have been forced to alter their economic life in the direction of concentrating industry upon the one work of producing munitions of war. This concentration having been successfully effected, unemployment has been avoided, and with an inflation of the currency varying in the different belligerent countries, internal solvency has been almost everywhere maintained. ”

“ Main headquarters authorizes you to use these credits to an unlimited extent for the purpose of destroying factories, workshops, camps, and the most important centers of military and civil supply belonging to the enemy. In addition to the incitement of labor troubles, measures must be taken for the damaging of engines and machinery plants, the destruction of vessels carrying war material to enemy countries, the burning of stocks of raw materials and finished goods, and the depriving of large industrial centers of electric power, fuel and food. ”

“ War makes business active in one direction and in one only, that of army and navy supply, of the manufacture of the implements of destruction, of vast quantities of explosives, of multitudes of death-dealing weapons. Food supplies need to be diverted in the same direction, the demands of the soldier being considered first, those of the home people last, the latter being often supplied at starvation prices. There is plenty of work to do—of its kind. But it is of a kind that injures instead of aiding the people of the nations. ”

“ This may be called the financial and political effect of "commerce destroying," as the modern phrase runs. In military effect, it is strictly analogous to the impairing of an enemy's communications, of the line of supplies connecting an army with its base of operations, upon the maintenance of which the life of the army depends. Money, credit, is the life of war; lessen it, and vigor flags; destroy it, and resistance dies. ”