What is War Profiteering?

Introduction

A war profiteer is any person or organisation that makes unreasonable profits from warfare or by selling weapons and other goods to parties at war.

The term typically carries strong negative connotations. General profiteering, making an unreasonable profit, also occurs in peacetime. An example of war profiteers were the “shoddy” millionaires who allegedly sold recycled wool and cardboard shoes to soldiers during the American Civil War. Some have argued that major modern defence conglomerates like Lockheed Martin, Boeing, BAE Systems, General Dynamics, and Raytheon fit the description in the post-9/11 era. This argument is based in the political influence of the defence industry, for example in 2010 the defence industry spent $144 million on lobbying and donated over $22.6 million to congressional candidates, as well as large profits for defence company shareholders in the post-9/11 period.

Brief History

American Revolution

There were a number of food riots during the American Revolution against profiteering merchants, there were more than thirty riots in the period between 1776 and 1779. In 1777 a mob of Boston women beat the merchant Thomas Boylston and confiscated his stock for hoarding coffee and sugar to drive up the price. In East Hartford, Connecticut a mob of twenty women and three men took 218lbs of sugar from a Mr. Pitkin’s. In Beverly, Massachusetts a mob of 60 women and some additional men forced local merchants to charge the same price for sugar in American paper money and gold coin.

Industrial Revolution

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.

Military-Industrial Complex

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.”

Contemporary Manufacturing

Currently, the United States is the world’s largest weapons manufacturer and exporter, followed by Russia, France, Germany, China and the United Kingdom respectively.

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 labelled war profiteers for their involvement with the Third Reich. In the case of IBM they developed technologies that were used to count, catalogue, and select Jewish people whom could then be targeted for efficient asset confiscation, consolidation in ghettos, deportation, enslaved labour, and, ultimately, annihilation.

Commodity Dealers

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.

Civilian Contractors

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, the difference 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-defence system between the two Gulf Wars, face such accusations.

Black Marketeers

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 and nascent politicians evade a draft.

The State

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 fulfil 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.

Politicians

Political figures taking bribes and favours 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 labelling 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 Bedell 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 US 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 J. Lynn III. In 2010 he was confirmed to serve as the number two 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.

On the 19 January, 2021, the UK’s Conservative government narrowly won a motion preserving the right to trade with countries committing genocide. Members of Parliament voted 319 to 308 to remove an amendment to the Trade Bill which would have forced ministers to withdraw from deals with nations the UK High Court ruled guilty of mass killings. Under the proposal, minorities alleging they have been the subject of genocide would be able to apply to the High Court of England and ask for judges to determine if a country trading with the UK has perpetrated genocide. If the court makes a preliminary ruling against that country, Britain’s government would be forced to revoke bilateral trade agreements.

Scientific Research

War provides demand for military technology modernisation. 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” programmed into Apple devices since 04 October 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 Organises”.

In the United States

Companies such as Halliburton have been criticized in the context of the Iraq War for their perceived war profiteering.

Steven Clemons, a senior fellow at the New America Foundation think tank, has accused former CIA Director James Woolsey of both profiting from and promoting the Iraq War.

The Centre for Public Integrity has reported that US Senator Dianne Feinstein, who voted in favour 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. Financial disclosure forms indicate that, as of January 2020, 51 members of Congress and their partners own between $2.3 and $5.8 million of stock in the top 30 corporations that sell goods and services to the US military.

Indicted defence 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 25 April 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 American 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% 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, rumours, 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 rumours and to encourage the continued contribution of socks. He offered $1,000 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 433,000 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.

Fictional character Lieutenant Milo Minderbinder in the novel Catch-22 has been called “perhaps the best known of all fictional profiteers” in American literature.

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.

Bertolt Brecht wrote the play Mother Courage and Her Children as a didactic indictment of war profiteering.

In the 1985 film Clue, Colonel Mustard was a war profiteer who sold stolen radio components on the black market.

The film The Third Man features a war profiteer named Harry Lime, who steals penicillin from military hospitals and sells it on the black market.

The film Lord of War (2005) is a fictional story based on the war profiteer named Viktor Bout, who illegally sold post-Soviet arms to Liberia and other nations in conflict.

The Suicide Machines released their 2005 album, entitled War Profiteering Is Killing Us All.

In the 2011 film Sherlock Holmes: A Game of Shadows, Professor Moriarty acquires shares in many military supply companies and plots to instigate a world war and make a fortune.

The song “Masters of War” by Bob Dylan is about war profiteering and the military–industrial complex.

In the film Star Wars: The Last Jedi (2017), Finn, Rose Tico and BB-8 travel to Canto Bight, a coastal city catering to the galaxy’s rich and elite. Finn is initially mesmerised by the city’s glitz and glamour until Rose informs him that most of the city’s inhabitants are war profiteers, having made their fortunes selling weapons and ships to the First Order and the Resistance. Also, the character of DJ shows Finn that the owner of the ship they are on made his profit selling weapons to the good guys (the Resistance) and the bad (the First Order). DJ then tells Finn that “it’s all a machine” and that he should “Live free, don’t join.”

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