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A war profiteer is any person or organization that profits from warfare or by selling weapons and other goods to parties at war. The term can have strong, negative connotations. General profiteering may also occur in peace time. An example of war profiteers were the "shoddy" millionaires who allegedly sold recycled wool and cardboard shoes to soldiers during the American Civil War. The ten highest war profiteers are Lockheed Martin, Boeing, BAE Systems, General Dynamics, Raytheon, Northrop Grumman, European Aeronautic Defense and Space Company EADS, Finmeccanica, L-3 Communications, and United Technologies. These corporations are all directly connected with production of weapons, machinery, vehicles, aircraft, electronics and artillery(including missiles) and as such have significant political influence given their lobbying efforts and campaign contributions to Members of the United States Congress in the promotion of war efforts. In 2010, the defense industry spent $144 million on lobbying and donated over $22.6 million to congressional candidates.
- 1 History
- 2 Contemporary Manufacturing
- 3 The state
- 4 In popular culture
- 5 See also
- 6 Notes
- 7 External links
With ease of massive manufacturing in the Industrial Revolution, the foundations for creating weapons on a massive scale was introduced. The introduction of interchangeable parts and pre-manufactured models was popularized to assemble muskets, making it easier for unskilled workers to produce larger numbers of weapons at a much lower cost. Before the industrial revolution, gun-making was considered a skilled craft as most weapons were handmade, thus making it hard to repair and replace parts.
In 1798, American inventor Eli Whitney received a government contract to manufacture 10,000 muskets in less than two years. After failing to produce a single musket, he was called to Washington to defend his expenditure of the treasury funds before a committee that included both John Adams and Thomas Jefferson. Believing to demonstrate the ingenuity of interchangeable parts, Whitney earned widespread support and has been incorrectly credited with inventing the idea of interchangeable parts. However Merritt Roe Smith concluded that this demonstration was staged by marking the parts beforehand, so they were not as interchangeable as he made them seem. Eventually Whitney was able to accomplish his goal of 10,000 muskets with interchangeable parts at a relatively low cost in the next 8 years, and later produced more than 15,000 in the following 4 years.
The phrase "military-industrial complex" was coined by President Dwight D. Eisenhower in his 1961 Farewell Address. This term describes the alliance between military leaders and arms merchants. Military officials attempt to obtain higher budgets, while arms manufactures seek profit. President Eisenhower warned the American people that going to war might not serve the interest of the nation, rather the institution of the military and weapons-producing corporations. The Iron Triangle comes into play here due to war profiting industries who make financial contributions to elected officials, who then distribute taxpayer money towards the military budget, which is spent at the advantage of arms merchants. The military-industrial complex allows for arms-producing corporations to continue to accumulate significant profit.
A prominent example of the impact arms-producing industries have over American policy is evident in the case of Lockheed Martin donating $75,000 to House Armed Services Committee chair Representative Mac Thornberry (R-TX). Rep. Thornberry later passed a bill through the House of Representatives that would benefit Lockheed Martin. This decision was made as a direct result of the influence of Lockheed Martin. Politico has stated Rep. Thornberry is the "highest overall recipient of contractor contributions among all of the 89 members of the House and Senate Armed Services Committees."
Currently, the United States is the world's largest weapons manufacturer and exporter, followed by Russia, Germany, France, the United Kingdom, and China consecutively.
International arms dealers
Others make their money by cooperating with the authorities. Basil Zaharoff's Vickers Company sold weapons to all the parties involved in the Chaco War. Companies like Opel and IBM have been labeled war profiteers for their involvement with the Third Reich. In the Case of IBM they developed technologies that were used to count, catalog, and select Jewish people whom could then be targeted for efficient asset confiscation, consolidation in ghettos, deportation, enslaved labor, and, ultimately, annihilation.
War usually leads to a shortage in the supply of commodities, which results in higher prices and higher revenues. When it comes to supply and demand in terms of economics, profit is the most important end. During war time, "war-stuff" is in high demand, and demands must be met. Prior to the invasion of Iraq in 2003, oil production was controlled by the Iraqi government, and was off limits to Western companies. As of 2014, foreign owned private firms dominate Iraqi oil production.
Private military contractors, including civilian contractors, are businesses that supply weapons and training to the military, and also handle logistics and base management. While private military contractors may seem similar to mercenaries, they differences is that mercenaries operate illegally. More recently, companies involved with supplying the coalition forces in the Iraq War, such as Bechtel, KBR, Academi (formerly known as Blackwater) and Halliburton, have come under fire for allegedly overcharging for their services. The modern private military company is also offered as an example of sanctioned war profiteering. On the opposing side, companies like Huawei Technologies, which upgraded Saddam's air-defense system between the two Gulf Wars, face such accusations.
A distinction can be made between war profiteers who gain by sapping military strength and those who gain by contributing to the war. For instance, during and after World War II, enormous profits were available by selling rationed goods like cigarettes, chocolate, coffee and butter on the black market. Dishonest military personnel given oversight over valuable property sometimes diverted rationed goods to the black market. The charge could also be laid against medical and legal professionals who accept money in exchange for helping young men evade a draft.
Though war initially had the objective of territorial expansion and resource gathering, the country may also profit politically and strategically, replacing governments that do not fulfill its interests by key allied governments. One example of this is the CIA supporting the Contras with weapons to carry out terror attacks against the Nicaraguan government between the late 1970s and early 1990s.
Political figures taking bribes and favors from corporations involved with war production have been called war profiteers. Abraham Lincoln's first Secretary of War, Simon Cameron, was forced to resign in early 1862 after charges of corruption relating to war contracts. In 1947, Kentucky congressman Andrew J. May, Chairman of the powerful Committee on Military Affairs, was convicted for taking bribes in exchange for war contracts. In 1953 the United States began a covert mission to overthrow the Guatemalan government under Jacobo Arbenez. The process began with the United States labeling the government of Guatemala as a communist government. According to William Blum the reason for the United States’ intervention into Guatemala is that it was pushed by lobbyist from the United Fruit Company. The United Fruit Company had significant holdings within Guatemala and when the government decided to compete with the company this would not be accepted. Numerous officials such as President Eisenhower’s Under-Secretary of State and formerly director of the CIA) Walter Beedle Smith was a candidate for an executive position in the company while at the same time he was helping to plan the intervention. This coup was successful and the United Fruit Company was able to keep its holdings within Guatemala thus ensuring its profits were secure. This is typical of the sort of engagements that the U.S became involved in during the cold war that resulted in war profiteering.
Modern-day war profiteering among politicians has increased with the recent wars in Iraq and Afghanistan. According to an article by USA today in 2011 the top 100 largest contractors sold 410 billion dollars’ worth of arms and services. Within this massive expense of services has evolved what is called the revolving door. This revolving door has not differentiated between the two political parties. An example of this revolving door is the case of William Lynn. In 2010 he was confirmed to serve as the NO. 2 man in the Pentagon after he worked as a lobbyist for Raytheon. This example shows the process of a person joining the government, then being hired as a lobbyist, and back to government. The revolving door is still in existence to this day.
War provides demand for military technology modernization. Technologies originally designed for the military frequently also have non-military use. Both the state and corporations have gains from scientific research. One famous example is Siri, the artificially intelligent "personal assistant" that comes standard on all Apple devices since 2011. Siri was a spin-off of CALO, a project funded by the government military development group, DARPA. CALO is an acronym that stands for "Cognitive Assistant that Learns and Organizes".
In the United States
The Center for Public Integrity has reported that US Senator Dianne Feinstein, who voted in favor of the Iraq Resolution, and her husband, Richard Blum, are making millions of dollars from Iraq and Afghanistan contracts through his company, Tutor Perini Corporation.
Indicted defense contractor Brent R. Wilkes was reported to be ecstatic when hearing that the United States was going to go to war with Iraq. "He and some of his top executives were really gung-ho about the war," said a former employee. "Brent said this would create new opportunities for the company. He was really excited about doing business in the Middle East."
The War Profiteering Prevention Act of 2007 intended to create criminal penalties for war profiteers and others who exploit taxpayer-funded efforts in Iraq and elsewhere around the world. This act was introduced first on April 25, 2007, but was never enacted into law. War profiteering cases are often brought under the Civil False Claims Act, which was enacted in 1863 to combat war profiteering during the Civil War.
Major General Smedley Butler, USMC, criticized war profiteering of US companies during World War I in War Is a Racket. He wrote about how some companies and corporations increase their earnings and profits by up to 1,700 percent and how many companies willingly sold equipment and supplies to the US that had no relevant use in the war effort. In the book, Butler stated that "It has been estimated by statisticians and economists and researchers that the war cost your Uncle Sam $52,000,000,000. Of this sum, $39,000,000,000 was expended in the actual war period. This expenditure yielded $16,000,000,000 in profits."
In the American Civil War, concerns about war profiteering were not limited to the activities of a few "shoddy" millionaires in the North. In the Confederacy, where supplies were severely limited, and hardships common, the mere suggestion of profiteering was considered a scurrilous charge. Georgia Quartermaster General Ira Roe Foster attempted to increase the supply of material to the troops by urging the women of his state to knit 50,000 pairs of socks. Foster's sock campaign stimulated the supply of the much needed item, but it also met with a certain amount of suspicion and backlash. Either the result of a Union disinformation campaign, or the work of suspicious minds, rumors, which Foster denied as a "malicious falsehood!", began to spread that Foster and others were profiteering from the socks. It was alleged that contributed socks were being sold, rather than given freely to the troops. The charge was not without precedent. The historian Jeanie Attie notes that in 1861, an "especially damaging rumor" (later found to be true) had circulated in the North, alleging that the Union Army had purchased 5,000 pairs of socks which had been donated, and intended for the troops, from a private relief agency, the United States Sanitary Commission. As the Sanitary Commission had done in the North, Foster undertook a propaganda campaign in Georgia newspapers to combat the damaging rumors and to encourage the continued contribution of socks. He offered $1,000.00 to any "citizen or soldier who will come forward and prove that he ever bought a sock from this Department that was either knit by the ladies or purchased for issue to said troops."
Iraq War profiteers
One of the top profiteers from the Iraq War was oil field services corporation, Halliburton. Halliburton gained $39.5 billion in "federal contracts related to the Iraq war". Many individuals have asserted that there were profit motives for the Bush-Cheney administration to invade Iraq in 2003. Dick Cheney served as Halliburton's CEO from 1995 until 2000. Cheney claimed he had cut ties with the corporation although, according to a CNN report, "Cheney was still receiving about $150,000 a year in deferred payments." Cheney vowed to not engage in a conflict of interest however, the Congressional Research Office discovered Cheney held 433 Halliburton stock options while serving as Vice President of the United States. 2016 Presidential Candidate, Rand Paul referenced Cheney's interview with the American Enterprise Institute in which Cheney said invading Iraq "would be a disaster, it would be vastly expensive, it would be civil war, we'd have no exit strategy...it would be a bad idea". Rand continues by concluding "that's why the first Bush didn't go into Baghdad. Dick Cheney then goes to work for Halliburton. Makes hundreds of millions of dollars- their CEO. Next thing you know, he's back in government, it's a good idea to go into Iraq." Another prominent critic is Huffington Post co-founder, Arianna Huffington. Huffington said, "We have the poster child of Bush-Cheney crony capitalism, Halliburton, involved in this. They, after all, were responsible for cementing the well."
In popular culture
The term 'war profiteer' evokes two stereotypes in popular culture: the rich businessman who sells weapons to governments, and the semi-criminal black marketeer who sells goods to ordinary citizens. In English-speaking countries this is particularly associated with Britain during World War II. The image of the 'businessman profiteer' carries the implication of influence and power used to actively cause wars for personal gain, rather than merely passively profit from them. In the aftermath of World War I, such profiteers were widely asserted to have existed by both the Left, and the Right.
The Adventures of Tintin comic The Broken Ear features an arms dealer called Basil Bazarov who sells arms to both sides in a war. He is a recognisable example of this "type" and is specifically based on Basil Zaharoff.
In the 1985 film Clue, Colonel Mustard was a war profiteer who sold stolen radio components on the black market.
In the anime Yu-Gi-Oh! Duel Monsters, Gozaburo Kaiba was not known to truly do this (while considered a villain, all his known actions as an arms supplier were legit) but the villain Dartz disguised himself as Gozaburo and sold weapons to the army opposing one that the real Gozaburo was financing, making several victims of the conflict believe he was engaged in war profiting.
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|Wikisource has the text of the 1922 Encyclopædia Britannica article Profiteering.|