By Michael Burke
Austerity and war, leavened with racism and authoritarianism is what is now being served up to the bulk of the population in the NATO countries. The Alternative Defence Review (ADR) published by CND has a very different perspective to Britain’s recent Strategic Defence Review (SDR), could hardly be more timely or more pertinent.
A mass of evidence is assembled in the report to make a series of arguments that counter the assumptions and findings of the SDR. Here, the focus will be on the key economic arguments for opposing the war drive.
There is no surprise that the war drive is linked to a renewed austerity drive. It is now even drawing in the US, which had previously declined to follow the failed European austerity model. But then Biden let inflation rip to hammer living standards, especially wages, and Trump is completing that one-two on workers and the poor by more traditional methods. In his ‘great big, beautiful bill’ he will raise military spending and cut taxes for the very wealthiest, funded by a combination of borrowing and cuts. Social welfare programmes, especially Medicaid will be cut by $880 billion, which low-paid and poor Americans rely on for any access to health care at all.
Trump makes the link between his military bonanza and the cuts to social protection explicit. There is also an effort in Britain by campaigners to link the two, through slogans such as ‘welfare not warfare.’
In fact, the linkage between the two areas of government spending is a logical economic imperative. Grasping that logic will only strengthen the anti-war movements in this country and internationally.
There are only two broad categories for production; Consumption or Investment. Of the two, only Investment can augment the means of production, and so create the conditions for an increase in production which is the basis for prosperity – that increased production can then only be directed either towards consumption or towards Investment. Therefore, while the sustainable satisfaction of human needs (consumption) is or ought to be the purpose of economic policy, the necessary means to achieve that is Investment.
The definition of Investment is that it will add to or replace the existing means of production. Anything which adds to level of fixed assets in the economy is properly categorised as Investment (Adam Smith’s term for the level of fixed assets in the economy was simply ‘stock’).
Despite the best efforts of Keir Starmer and others, spending on the military is not Investment, not even military hardware. This is because missiles, bombs and fighter jets are not additions to the means of production. They can only destroy the means of production, as well as people. Military hardware is the opposite of Investment. They are the means of destruction.
As it is not an input into production military spending can only be categorised as consumption. But other items that are categorised as consumption are not only extremely useful but vital to the well-being of the population. These includes spending on health, or education, or social welfare. Not all consumption is equal. Some of it is vitally necessary to human society, other consumption spending is simply destructive of it.
In this country and in many other NATO members there is a great deal of talk about public Investment. But the reality is very different. So, the recent announcement from Rachel Reeves following on from the Treasury’s Spending Review is that there will be £725bn in public Investment over the next 10 years. But this is less per year than the £77.6bn of public Investment in 2024. Public Investment is being cut.
But once the (smaller) envelope for public Investment has been set, that determines the level of funding available for consumption. In the domestic economy as a whole Investment + consumption must equal 100% of the economy. So, public Investment + public consumption must account for 100% of public spending.
The inescapable logic is that this government must choose between types of consumption within the total funds allocated to consumption. The Starmer government has chosen. It chose to cut international aid and to cut welfare in order to increase military spending. Essentially, under the current total allocated to public consumption, the government chose between welfare funding or military funding. It made the wrong choice.
Anti-war campaigners and anti-austerity campaigners objectively have unified interests. There are no additional funds currently available for military spending except by imposing austerity. This also means there is no logic in supporting increased military funding while opposing austerity. The first is not possible without the second.
The Alternative Defence Review has done a great service in raising these issues. The economic argument reinforces the overall campaign against austerity and war, in favour of prosperity and peace.
The Alternative Defence Review can be found here.
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