Arms manufacturers make a killing on imperialist rearmament

“War is a terrible thing? Yes, but it is a terribly profitable thing,” Lenin once remarked. The ongoing aggravation of inter-imperialist conflicts and proxy wars is once again proving Lenin entirely right. As thousands are being butchered in Gaza, Ukraine, Congo, Sudan and elsewhere, and as defence spending is rocketing globally, a handful of capitalists are lining their pockets. The working class is having to foot the bill for this deadly spending spree.

Rising tensions between the main imperialist powers and new proxy wars have prompted capitalist governments to boost military spending to unprecedented figures.

In 2022, total global military expenditure increased by 3.7 percent in real terms to a new high of $2.24 trillion. NATO allies are being pressured to increase defence spending to a minimum of 2 percent of GDP, with all underachieving members scrambling to meet this target. But who is getting all this taxpayer money?

According to the Financial Times, the leading 15 arms manufacturers (euphemistically referred to as ‘defence contractors’) are forecast to record free cash flow of $52 billion in 2026, with five US companies (Lockheed Martin, RTX, Northrop Grumman, Boeing, and General Dynamics) accounting for more than half this figure.

Investors are jumping on the bandwagon, with Europe’s Stoxx defence stocks up by more than 50 percent in 2023. The shares of companies such as Aselsan, Hindustan Aeronautics, and Rheinmetall have gone up by as much as 340 percent since 2022.

Capitalists are shoving so-called ethical considerations to one side to get their snouts in the trough of this splurge. In the words of a manufacturer cited by the Financial Times in 2022: “[Some] months ago people wanted to ban us, to say that this industry is a very bad industry. It’s a totally different world now”.

These companies are striking juicy deals with western governments to arm Ukraine, Israel and Taiwan, but also for stockpile replenishment and to strengthen their own militaries. These new tanks, missiles, and shells are thus being used to destroy houses and murder poor people in Gaza, Lebanon, Donbass, or Kivu, or, at best, are destined to rust slowly in army warehouses in the US or Western Europe.

Massive weapons stockpiling and new, barbaric wars are and will become increasingly the norm / Image: NATO, Flickr

However, these astonishing figures do not match actual increases in industrial output. Companies face serious bottlenecks. Europe’s largest arms manufacturers have a combined backlog of more than $300 billion in orders. And they are in no rush to address this problem.

What is the reason for this? Capitalists have been wary to invest in industrial capacity. They give different excuses for this, pointing to “persistent supply chain disruptions and labour shortages” or to the concern that this demand will eventually plateau. As a defence consultant cited by the Financial Times put it, “politics can change and security assessments can change and so can defence demand”. Where is all their talk about ‘entrepreneurial risk taking’ now?

In fact, massive weapons stockpiling and new, barbaric wars are and will become increasingly the norm as the scramble of imperialist gangs for markets and spheres of influence intensifies. There’s undoubtedly a tidy profit to be made from ramping up the production of new means of destruction. But there are other, easier ways to make a profit.

If only a small fraction of this money is presently being invested in production, where is the rest going? A cynical consultant provides the answer as to where this cash is presently being stashed: “Companies typically don’t like holding large amounts of cash on their balance sheets… so what do they do with all that money? Share buybacks and dividends are one way”.

To speak plainly, this means the billions that are being syphoned off from the state coffers are going straight to the pockets of a handful of capitalists. Why invest when you can just pocket the cash?

Western bourgeois governments have been very lenient with the extravagance of the arms manufacturers. But in February, US Navy Secretary Del Toro issued a rare public warning to the industry (unreported in the mainstream media) that reveals the political anxieties of the ruling class amidst this state of affairs:

“Defence contractors are too focused on stock buybacks and other gimmicks that line their pockets and not enough on investing in shipyards or shoring up the defence industrial base.

“You can’t be asking for the American taxpayer to make greater public investments while you continue to goose your stock prices through stock buybacks, deferring promised capital investments”.

Del Toro then laments that in the 1980s “someone decided that it’s a wonderful idea to leave naval shipbuilding to the market”, with the result being that China came to concentrate much of the world’s shipbuilding in its own hands.

“The marketplace took over and China started investing in naval shipbuilding, commercial shipbuilding, and they had all the advantages. Cheap labour, no regulation”. Of course, Del Toro is criticising arms manufacturers from the reactionary perspective of US imperialism, which needs a powerful army to plunder the rest of the world. But unintentionally his comments reveal the inefficiency, wastefulness, and corruption of the capitalist market. These defenders of the market system have been hoist by their own petard.

Who pays?

The capitalists are making a killing. But who pays for all this? The working class! It does so directly, through its taxes, as US Navy Secretary Del Toro admits. But it is also footing the bill indirectly.

Capitalist governments never have money for healthcare or education, but mysteriously they always find billions for tanks and missiles / Image: public domain

It does so, firstly, because while military expenditure is going up, social services are being cut to the bone. Capitalist governments never have money for healthcare or education, but mysteriously they always find billions for tanks and missiles.

Portugal, for example, a minor imperialist country that plays second fiddle in world affairs, ramped up its military budget by 14 percent in 2023, all while healthcare spending increased by merely 10 percent, at a time when its NHS is tottering on the brink of collapse and needs desperate new investment. The current Portuguese government has set military spending targets for the end of this decade whereby three times more money will be spent on the military than on higher education! Arms spending is helping pile up debt, which will necessitate new austerity measures in the future.

But secondly, war, geopolitical tensions, and sanctions have aggravated inflation, cutting into workers’ real wages. In short, the working class is being robbed from all sides to fund the warmongers' plans. And it goes without saying that whenever wars break out, it is the workers and the poor that die and suffer: in the Middle East, the Sahel, Ukraine, Russia, and everywhere.

A revolutionary way out

Communists oppose these increases in military spending, which are being paid for by the working class, all while generating tremendous profits for a handful of capitalists. We want books, not bombs! We want hospitals and schools, not missiles and tanks!

However, we also warn that this spending spree is not just an ‘ideological choice’ of this or that government but reflects the rottenness of the capitalist system. The crisis of capitalism leads to the intensification of inter-imperialist conflicts, because the pie of the world market is shrinking and, therefore, inevitably, the struggle to carve it up intensifies. This turns rearmament into a pressing need for all capitalist governments. Consequently, our struggle against militarism and imperialist wars is also a struggle against capitalism, for the world socialist revolution.