Chapter 23. A Grand Strategy for World Peace and Prosperity

To hell with the [peace] dividend. The Pentagon can keep it. We want the principal. — David McReynolds, “The Words and the Will to Talk about Change”

Since WWII, the military expenditures of NATO and Warsaw Pact nations have consumed and/or forgone production of about four-times the value of everything manufactured and built in the United States (excluding clothes). Thus the wasted capital of the industrialized world during the Cold War is enough to have built homes, cars, and every other amenity of a modern country for 20% of the world or for 100% if a respectable, secure living were the goal as opposed to that of a consumer throwaway society:

Without considering the full social cost to the American community, the combined Pentagon budgets of 1946—1981 represent a mass of resources equivalent to the cost of replacing just about all (ninety-four percent) of everything manmade in the United States [excluding the land but including every house, railroad, airplane, household appliance, etc.]. But when we take into account both the resources used by the military as well as the economic product forgone, then we must appreciate the social cost of the military economy, 1946-1981, as amounting to about twice the “reproducible assets” of U.S. national wealth. What has been forgone for American society is a quantity of material wealth sufficient to refurbish the United States, with an enormous surplus to spare.1

Almost $1-trillion a year was being spent on arms worldwide when the Soviets collapsed in 1990.2 With the end of the Cold War, that annual cost dropped to $700-billion by 1998 but by 2005 was rapidly headed higher. The world has wasted many trillions of dollars building arms since Professor Melman of Columbia University made these calculations.

An economy structured to eliminate subtle monopolies siphoning wealth to the powerful and creating fictional values would provide these societies with a quality living using a fraction of the per-capita resources and energy used in America. The two lifestyles are not even measurable. Some in the developed world have given up the “rat race,” gone back to a quiet relaxed lifestyle, and prefer it. Depending on one’s guidelines, the quality of life of a world society not based on an automobile/throwaway economy could exceed U.S. standards. Witness the Indian state of Kerala: it is one of the poorer regions of India and may have that nation’s highest average quality of life.3

A more just paradigm for the world requires a recognition of quiet days and evenings spent with the family watching TV, playing chess, and so forth while working two days per week.4 Many recognize this would be a far higher quality of life than driving $40,000 cars and piloting $150,000 pleasure boats to the detriment of the entire world. Experts in the field judge, by avoiding a throwaway economy, a secure, quality living can be attained while consuming roughly 20% per-capita of what the United States currently consumes.5

Compounding Sustainable Industrial Development

At the close of the Cold War, the United States had $21-trillion worth of reproducible social capital and $1-trillion worth of industrial capital (1990 dollars). Subtracting military and other wasted industry leaves a ratio of approximately one unit of civilian industrial capital to 30 units of social capital.6 At that ratio, the developed world would only have to provide the developing world one-thirtieth their needed wealth, those all-important industrial tools with which they would produce their social capital.

Currently less then 50% of U.S. industrial capacity is producing for essential consumer needs.a We are estimating the world’s sustainable development level as 20% that of the U.S. throwaway economy. So rational planning would consider industrializing the developing world to 14% of the U.S. level. As in a balanced economy only 3.3% of a developed society’s total wealth is industrial capital producing for the civilian economy, the developing world would still have to build the remaining 96.7% of wealth that is social capital.b

Roughly 20% of the world’s population having attained the living standard of America’s throwaway economy and another 40% the living standard of a bicycle/mass transit economy testifies to the feasibility of this thesis. The 60% of the world that is currently above poverty need only turn their minds to a quality lifestyle without waste and the remaining 40% of the world only needs the industrial technology and training to produce that same quality lifestyle. As unlikely a scenario as this is, the only other choices besides sustainable world development are the continued violence of fascist control of world resources and the struggles of suppressed people to gain their economic freedom.

World War II alone cost at least $10-trillion (1990 dollars), three-times enough to have industrialized the world at the current population level and six-times enough at the prewar population level.7 The developing world and the developed world together have spent about $17-trillion on arms (converted to 1990 dollars) since WWII.8 That is five-times enough to have industrialized the developing world to a sustainable level over the past 50 years. The $3.15-trillion needed for developing world industries would have left $13.85-trillion to provide training to run the machines and society; to install initial communications infrastructure to reach the populations with that training; to guarantee food until a country was able to produce its own; to search for, catalog, and develop resources; and for environmental protection.

Capitalizing the world would have been a much simpler job than waging all those wars, to say nothing of eliminating the reason for them. After all, under democratic-cooperative-(superefficient)-capitalism there would have been the cooperation of those societies instead of their battles attempting to gain or retain their economic freedom. With the developing nations using these industrial tools, and production compounding (this is what compounding interest is supposed to do), they could have built their own social capital. The history of the last 75 years could then have been one of superefficient capitalism with world peace, prosperity, and care for the soil, water, and air, instead of intrigues, trade wars, covert wars, cold wars, hot wars, dispossessions, poverty, and ecological destruction.

The World can be developed to a Sustainable Level and Poverty eliminated in Forty-Five Years

We have calculated that a society can be well cared for at 20% of the American consumption rate, or with as little as 14% of U.S. per-capita industrial capacity at the peak of the Cold War. As of that date (1990), the value of industrial tools stood at about $5,600 per person in the United States. (Homes, cars, roads, bridges, electric power, water systems, sewers, et al., are social capital. Steel mills, factories, and so forth are industrial tools.) By the above calculation, one would consider 14% of that—or under $900 industrial capacity per person—as adequate for an efficient, peaceful society.c Allowing 3.5-billion people without modern tools, $3.15-trillion of industrial capital is needed to develop the world to a sustainable level. That is 18.5% the amount spent on arms by the world since WWII.9

Assuming it would require 45 years for the developing world to be educated and to build social capital as it was being given industrial capital, and assuming a doubling of the developing world’s population in that time span, it would require $6.3-trillion. That larger figure would be only $140-billion annually, or 14% of the $1-trillion spent on arms each year worldwide at the time of the Soviet collapse. That is only 28% of that spent by the West to win the Cold War (48% of that spent annually by the United States).d

Modern industries can spit out industrial tools just as fast as they can cars, refrigerators, airplanes, tanks, guns, or warships. (In all those unneeded tanks, guns, and warships there is more than enough steel to produce the industrial tools.) Since capital reproduces its value every 10 months, if one-forty-fifth of the required industrial capital were installed each year and used by the developing world to build social capital, by the 45th year of this mutual support policy of democratic-cooperative–(superefficient)-capitalism, the entire world would be industrially and socially capitalized to a level that would provide a secure lifestyle for most of the world’s citizens and within the capacity of the earth’s resources and its ability to absorb waste.

This is not meant to outline either the exact methods or timetable for implementation. If engineers are authorized to proceed and are given access to productive capital, they can easily solve these problems. It is reasonable to assume the developing world can train workers, build the infrastructure (businesses, homes, roads, sewers, water, electricity, et al.), absorb this industrial capital, and produce the necessary social capital over a period of 45-to-50 years.

Society is a Social Machine producing its Needs

Industrial society is a machine; and every road, railroad, electric grid, water system, and sewer system et al., makes this machine more efficient. Newly industrializing countries cannot compete in world trade until such time as their internal communication (Wi-Fi is the way to go), production, and transportation systems (a major part of society’s social capital) are equal to those of the developed nations. Even conservative economists have calculated that in the United States—with its highly developed, but deteriorating, infrastructure—returns on such “public core investment would average 50-to-60% per year.”10 Investment in the infrastructure of a relatively undeveloped country would see far greater increases in efficiency, thus far greater profits to that society.

The $170-billion (1990 dollars) Marshall Plan, with which the United States financed the reconstruction of Europe in five years, documents this plan’s credibility.11

Once Industrialized, Industrial Production can be cut back

Let us assume a newly developing country produced a very good tractor and a full range of farm equipment. Because the useful life of most farm machinery is over 10 years, once its agriculture is capitalized less than 10% of normal production would provide replacements. There would be no place within its economy to sell 90% of what it could produce. If that production were exported that would destroy the machinery industry of another country. Capital will have destroyed capital.

The same principle holds true for capitalization of any economic sector of any society. When the home market is capitalized, the manufacturer must export or shut down much of the industry that produced those products. This is the primary reason capital looks for markets abroad. Certainly those industries can retool and enter another market, but their success in that market only means someone else must go out of business and again capital will have destroyed capital.

The Tragedy of the Commons

Like everything else standing in the way of residual-feudal exclusive title to nature’s wealth, the common use of nature’s wealth has been given a bad name. Periodically a researcher of economic history will run into the fable “The Tragedy of the Commons.” This fable uses the example of pastures used in common as an inefficient economic, legal, and social structure. Each farmer has rights to pasture his cattle. To earn more money, self-interest dictates that some will turn more cattle onto that pasture than their allotment. The pasture is overgrazed, the soil erodes, and everyone loses.

The truth is the opposite of the fable. During the Great Depression, bankrupt farmers on the prairies of the American West were occasionally organized into “grazing districts” which are lands grazed in common. Each has an allotted number of cattle they can pasture and any excess cattle are confiscated. The fable ignores that these ranchers have equal rights and none have superior rights. The result, private land with unrestricted title are typically overgrazed as ranchers maximize their income by mining the topsoil through overgrazing while the soils of the commons, the grazing districts, are conserved.

Where did that fable come from? As addressed in Chapter six, corporations today fund think-tanks to build society’s “framework of orientation” that protects their wealth and power. In the same manner the fable of the “Tragedy of the Commons” was promoted by the powerful centuries ago to justify the reduction of others rights and the increase in their rights through the privatization of the commons. The three centuries of the establishment of the British enclosure acts is only one of many examples of structuring inequality of rights into law through enclosure of the commons. The imposition of Adam Smith free trade philosophy, discussed in Chapter three, is another example of inequality being structured into philosophy, custom, and law for the past 200 years. It was then, and still is today, a philosophy for continued enclosure of the commons. We will next address how, as opposed to the fable, a modern commons is many times more efficient than the current subtle-monopolization of nature’s bounty.

Footnotes

1. Twenty percent is producing arms, 30% is idle, and we have yet to measure the waste of the current horribly inefficient monopoly system as addressed in this author’s Cooperative Capitalism: A Blueprint for Global Peace and Prosperity and The World’s Wasted Wealth 2.
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2. We are calculating sustainable development at the level of technological efficiency of the year 2000. Paul Hawken, Amory Lovins, and L. Hunter Lovins, in there pathbreaking work Natural Capitalism: Creating the Next Industrial Revolution, point out that increased efficiencies of technology will eventually be able to produce “four, ten, or even a hundred times as much benefit from each unit of energy, water, materials, or anything else borrowed from the planet and consumed.” (Paul Hawken, Natural Capitalism: Creating the Nest Industrial Revolution (New York: Little Brown and Company, 1999), p. 8. See also Brian Milani, Designing the Green Economy: The Postindustrial Alternative to Corporate Globalization (New York: Rowman & Littlefield, 2000). Back to text
3. That is about $3,600 worth of industrial capital and $100,000 worth of social capital per family (1990). Back to text
4. When one includes the National Security Agency, the CIA, and weapons programs carried out under the umbrella of the Atomic Energy Commission and Energy Department, the military budget was at least $350-billion (and rising to $450 billion), as opposed to the $292-billion official military budget we are using. Between $4-trillion and $5-trillion was spent on nuclear arms alone, mostly under cover of the Energy Department, since 1945 (Jonathan S. Landay, “Study Reveals U.S. Has Spent $4-Trillion on Nukes Since ‘45,” The Christian Science Monitor, July 12, 1995, p. 3). See also David Moberg, “Cutting the U.S. Military: How Low Can We Go?” In These Times, February 12-18, 1992, p. 3; “U.S. Becomes Biggest Dealer of Arms in Worldwide Market,” The Spokesman Review, October 15, 1992, p. A2; William D. Hartung, “Why Sell Arms?” World Policy Journal (Spring 1993), p. 57. Back to text

Endnotes

1. Seymour Melman, Profits Without Production (New York: Alfred A. Knopf, 1983), p. 151, emphasis added. Back to text
2. Ruth Leger Sivard, World Military and Social Expenditures (Washington, D.C.: World Priorities). Back to text
3. Richard W. Franke, Barbara H. Chasin, “Power to the (Malayalee) People,” Z Magazine, February 1998, pp. 16-20; Bill McKibben, “The Enigma of Kerala,” Utne Reader, March/April, 1996, pp. 103-112; Harry Magdoff, “Are There Lessons To Be Learned?” Monthly Review (February 1991): p. 12, analyzing Richard W. Franke, Barbara H. Chasin, “Kerala State, India: Radical Reform as Development,” Monthly Review (January 1991), pp. 1-23. Back to text
4. J.W. Smith, The World’s Wasted Wealth 2 (http://www.ied.info: Institute for Economic Democracy, 1994). Back to text
5. David C. Korten, When Corporations Rule the World (West Hartford, CT, Kumarian Press, 1995), p. 35; Jeremy Rifkin, Entropy: Into the Greenhouse World (New York: Bantam Books, 1989), p. 233; Richard J. Barnet, John Cavanagh, Global Dreams: Imperial Corporations and the New World Order (New York: Simon & Schuster, 1994), pp. 177-178. Back to text
6. Statistical Abstract of the U.S., 1990, pp. 463, 734, charts 752, 1295 (check gross stock, total; value added by manufacture; gross book value of depreciable assets). These statistics demonstrate that each factory reproduces its value every ten months and that there is approximately $21 trillion worth of reproducible social capital and $1 trillion worth of industrial capital. Professor Seymour Melman, probably the leading authority on military waste; Mr. Greg Bishak, of the National Commission for Economic Conversion and Disarmament; and William Greider, Who Will Tell the People? (New York: Simon and Schuster, 1992), p. 370, judge U.S. industry wasted on arms at roughly 20%. Back to text
7. Henry Wallace, Towards World Peace (Westport, CT: Greenwood Press, 1970), p. 12; Barry Bluestone and Irving Bluestone, Negotiating the Future (New York: Basic Books, 1992), pp. 33-34, 36. Back to text
8. See endnote 6. Back to text
9. Sivard, World Military and Social Expenditures. Back to text
10. David Moberg, “Can Public Spending Rescue the Infrastructure? A Tale of Three Deficits,” In These Times, February 13-19, 1991, p. 11. Back to text
11. Lester Thurow, Head to Head: The Coming Economic Battle Among Japan, Europe, and America (New York: William Morrow, 1992), p. 94; Paul Kennedy, The Rise and Fall of Great Powers (New York: Random House, 1987), p. 360; ABC News and NBC News, June 4, 1987; Michael Barrat Brown, in Fair Trade (London: Zed Books, 1993), p. 96, puts the Marshal Plan at $200 billion in 1987 dollars. Back to text

This is a chapter from the book, Economic Democracy; The Political Struggle for the 21st Century. Visit that link for more information about the book.