To begin, what is the role of the military in capitalist society? Since its earliest days, the capitalist world system has always been both international and rigidly hierarchical, with a complex web of exploitation down through the hierarchy. B+S use the terms ‘metropolis’ for the exploiters, ‘colony’ for the exploited, and ‘empire’ for the totality of a metropolis’ colonies. The size of military required to enforce an empire varies depending on its size, and the current intensity of imperialist competition. From the dawn of capitalism, the hierarchy’s pinnacle was held by the Spanish, Dutch, French, and British. Napoleon’s final defeat lead to Britain’s firm hold on global power for the rest of the 1800s. Germany and Japan threatened this hold, leading to the two world wars, before the eventual post-WWII ascendancy of the USA's to the imperial pinnacle. 

Freshly atop the global capitalist system in 1945, we need to now recognize what effect a growing rival global socialist system had on American military spending. The USA claimed it had to ‘protect the free world’ from ‘Soviet and Chinese aggression.’ This despite the fact that no serious security or military analyst ever really believed in this threat. History bears out that Soviet policy was defensive (especially to the time of this book). Western commentators love comparing the Soviets and Nazis as ‘totalitarian states,’ but this comparison lacks substance. The real similarities are between the Americans' imperialist conquest of Indigenous land, and the Nazis’ failed attempt to do the same in Eastern Europe. So rather than ‘protecting the free world from the commie threat,’ the USA’s imperial military machine was the threat, to the expansion and existence of socialism anywhere on earth (which it continues to be to this day).  

The implementation of the American post-war anti-communist plan (the Truman Doctrine), required the quick revitalization of Europe’s devastated capitalist powers (including the Axis Powers). This was done through the Marshall Plan, and the establishment of NATO in 1949. A similar process took place with Japan as well. The USA also needed a more concrete global imperial military presence, to match its industrial and financial power. This period marked the birth of the system of hundreds of American bases, and thousands of American troops, surrounding the empire's socialist enemies. 

A common description of American Empire is as crazy, irrational, a rabid dog. Proponents of this idea claim that the empire (and capitalism) would stabilize and demilitarize if only sound minds were put in control. But this is false. Imperialist capitalist strategists recognized socialism as a legitimate threat to their interests. From this perspective, the enormous imperial military build-up that followed was in fact quite rational, in terms of the long-term survival of capitalism. 

The capitalist concern with socialism cannot be explained simply by the mere existence of socialist states. These states have always been willing to trade with capitalist states, which means socialism doesn’t necessarily prevent ‘free trade.’ So what is at the root of the capitalist fear of socialism? The threat to corporate profit (rather than trade flows themselves) caused by doing business with socialist states. Socialism spread almost exclusively in exploited colonies. Colonial profit rates were almost invariably higher for corporations than in their domestic (metropole) markets. 

To showcase the importance of overseas operations to these corporate entities, B+S use a case study of Standard Oil of New Jersey, America’s biggest corporation at the time. In 1958, their operations were divided as follows: North America (67% of assets, 34% of profits); Latin America (20% of assets, 39% of profits); Eastern Hemisphere (13% of assets, 27% of profits). Domestic assets are twice as big as foreign assets, but domestic profits are half as big as foreign profits. Jersey Standard sold its products in 100+ countries, with subsidiaries in 52 of them. Rather than exporting capital to these new regions (the basis of the capitalist claim of ‘colonial development’), Jersey Standard’s expansion was financed by the immense profits of its other foreign operations. Let’s see how this works. 

In 1962, total profits were $841M, of which $538M were paid as dividends to the primarily American shareholders. The other $303M was invested into the company’s domestic and foreign operations. Profits from domestic operations were $309M, which is $229M less than the dividends paid. So ~40% of dividends plus whatever amount was reinvested domestically were actually capital imports from Jersey Standard’s foreign operations. Jersey Standard was sucking revenue from the colony back to the metropole. 

But was Jersey Standard a typical giant corporation? Or an outlier? Up until the Depression, Jersey Standard was an outlier, one of the few truly multinational giant corporations, with most others focused primarily on the domestic market. In the post-war period, however, this reliance on foreign profit rates outpacing domestic profit rates became commonplace. Corporations in most other industries became more like Jersey Standard. The expansion and maintenance of American capitalism now increasingly relied on foreign operations. 

That’s why socialist revolutions that cut capitalist corporations off from foreign markets are so dangerous. Like when Jersey Standard’s Cuba property was nationalized without compensation by Fidel, Che, and the Cuban people. While Cuba continued trading with other capitalist states like Britain and Canada after the revolution, the USA instituted its (still-standing) economic blockade. This shows us that the imperial lead, atop the hierarchy, wants monopolistic control of the terms of trade, or it will refuse to engage. It doesn’t want trading partners; it wants running dogs, ready and eager to demean and exploit their people for whatever Washington or Wall Street deems necessary at a given moment. 

Cuba’s crime was, and remains, choosing to assert sovereign control over its resources, to benefit its people. Cuba is so enraging to American imperialists precisely because it is so close, so small, yet so resilient. To prevent another Cuba from occurring, the USA uses military aid and training to the point that ‘each [client regime’s] country is being occupied by its own army,’ the ultimate counterrevolutionary force. 

Now we’ve seen how the ‘protection’ of foreign markets against the rising tide of socialism was the real use for the USA’s gigantic military machine. Next, B+S turn to the effect that fulfilling this need had on both the oligarchy and the country’s class structure. 

In Chapter 6, we saw how private interests always eventually fight back government-funded alternatives to private sector goods and services. But what about in the military sphere? In the conditions outlined so far in Chapter 7, we can see the massive and consistent demand for weapons, which offers private military corporations a basically risk-free business, without any real public sector competition. The revolving door between government and industry has always been especially smooth in regards to the military, giving both sides huge incentives to always sell/buy more weapons. Therefore, there is virtually zero resistance from the oligarchy to the ongoing expansion of state spending on military goods and services. 

Rather than undermining oligarchic power and privilege, military spending reinforces the authority, hierarchy, and at its core, physical power of the ruling class, along with the reactionary social forces that militarism fuels. Even for the chronically underemployed working class under monopoly capitalism, high military spending means more and better jobs, (albeit in employment to the imperial death machine). The material benefits of empire come to the metropole as profits from foreign (colonial) operations. They fatten the pockets of oligarchic shareholders. They even increase employment opportunities in the metropolitan industries that produce the weapons for enforcing this system. All that is needed to keep this cycle running is a public campaign against the ‘threat’ facing ‘the free world.’ With this, the military spending increases can continue unabated. 

However, there are two limitations on the effectiveness of using this method to control an economy: one economic and one military, both stemming from the nature of modern technological weaponry. 

• The economic reason is that technological progress has made war a business of machines and science rather than one of masses of humans who need goods and services. Empire is able to wield a wider, more devastating footprint, with a decreasing number of people and machines. This makes increasing employment and mobilizing stagnant resources more difficult. War's mechanization dampens the surplus absorption capability of state spending on which we’re focused. 

• The military reason is that, in the case of two roughly even states with incredible military build-ups (especially in the age of nuclear weapons), more military spending actually makes the state less likely to survive a war. For this reason, B+S call this military spending as such fundamentally irrational. It is not effective even on its own terms (i.e. protecting the state). Arms races are self-defeating, as the military and scientific experts below the public, political levels of these irrational programs always know.