“There are no winners in war”, well, there are.

Delving into the business of war and understanding the Military Industrial Complex.

A scene from the movie ‘War dogs’ written and directed by Todd Philips.

Most of us, have been made to believe in the fallacy of morality (an inter-subjective concept), which gives rise to the rather odd general notion of war not being ‘profitable’. Here, one needs to remember that while talking about war being profitable, we are looking at it through a purely economic sense. Obviously, the sacrifice of countless men and women who lose their lives fighting these wars and more so the innocent civilians who are killed in the crossfire cannot just be brushed off. Indeed, we cannot come up with a monetary sum that could justify such deaths.  Yet, the sad reality of today is that such deaths, particularly of the civilians, are rampant and are termed “collateral damage”. The term itself gives us a glimpse of the inhumane and detached principles on which the global political order functions. The global political order, with the United States at the centre of it, has and will continue to thrive by direct and indirect war profiteering.

Recently, after the October 7th Hamas attack on Israel, thousands of people have been killed on both sides of the border, albeit more on the Palestinian side. Now, although the conflict has led to immeasurable human loss, one country, or at least a sector of the economy of a certain country, seems to have benefitted from this, i.e the United States. Commonly referred to as the ‘military industrial complex’, it includes giants such as Lockheed Martin, Boeing and Northrop Grumman which are the major suppliers of military equipment such as a fighter jet, an Unmanned Aerial Vehicle or even a Tomahawk (cruise missiles). For instance, a few days after the Hamas attack in Israel, Lockheed Martin on October the 9th recorded its most substantial non-earning day since the pandemic (Outlook, 2023). Similarly, Northrop, BAE systems and the stocks of other major western defence contractors rallied in the wake of the October 7th attack. This is a pretty chronologically sequenced reaction as American firms take care of the majority of the needs of the Israeli military. The war declared by Israel in retribution was expected by experts around the world as it has been a tradition of the country to launch counter-offensive strikes against Hamas and other separatist outfits. The scale of the October 7th attacks gave the Israeli government the opportunity to wage a full-scale war against Gaza/Hamas with impunity. The increase in the demand of weapons from Israel led to increase in stock prices for the above-mentioned defence giants. It is a pretty basic concept, “Feeding the demand”, which shall naturally increase revenue and profit for companies. (Perez, 2023)

Another interesting point that needs to be looked at, is the economic(GDP) growth of a wartime economy and compare it to growth numbers during the peace time. Here, I would like to stress again that this is definitely an inhumane and in fact a short-term unsustainable solution for increasing a country’s GDP and the difference in the numbers does raise some questions about the way a particular economy is functioning. Nonetheless, it has been noticed, in the case of the United States (using the same country as an example as the mentioned country has been the largest economy for more than a century, and for a more coherent argument), that the country witnessed a healthy economic growth during the second World War and even bore witness to double digit growth in the post-war period (Amadeo, 2022). This can be attributed in part to the Bretton Woods agreement and the Marshall Plan which were a result of a geopolitical shift in global affairs as the European powers were still dealing with the aftermath of the great war (WWII). But it can mostly be ascribed to the increase in military spending and government investments, domestic and international, including the above-mentioned Marshall Plan wherein the US government infused massive amount of capital to rebuild Europe. One other reason for the growth can also be attributed to the attitude shift of the populace post war. The same was witnessed in India when India grew by an impressive 9 percent YoY after the stringent Covid-19 lockdown which saw India’s growth rate drop and settle at a negative 5.83 for the financial year of 2020 due to the changing social attitudes towards investments and savings. Though the pent-up demand of the pandemic also has a role to play (Pandey, 2023).

The point that is being made here is that wars might not be a bane but a boon, under certain circumstances. The profits that the US economy made by directly funding its companies via defence deals during wartime and supposed peacetime (Cold War) had a trickle-down effect for the whole economy.

I would like to now conclude this article by using the quote –

“War: a massacre of people who don’t know each other for the profit of the people who know each other but don’t massacre each other” – Paul Valery.

REFERENCES –

·      “US Defence Stocks rally as Israel-Hamas War Sends Shock Waves through Markets”. Business Outlook India, October the 10th, 2023.

·      Perez, Andrew. “Military Contractors are framing the Israeli War on Gaza as a Win for Investors”. Jacobin, October the 28th, 2023.

·      Amadeo, Kimberly. “U.S GDP by Year, Compared to Recessions and Events”. The Balance Money, May the 26th, 2022.

·      Pandey, Radhika; Sinha, Pramod.”How did Indian economy perform during Pandemic & after? Turns out, not as badly as was estimated”. The Print, March the 3rd, 2023.