Nobel prize winning economist Joseph Stiglitz one observed, “They [free market policies] were never based on solid empirical and theoretical foundations, and even as many of these policies were being pushed, academic economists were explaining the limitations of markets for instance, whenever information is imperfect, which is to say always”.[i] It is a common unacknowledged implicit assumption amongst mainstream capitalist economists that the negative externalities of the arms trade (facilitated by a thriving military-industrial complex) are unimportant and/or entirely acceptable. This assumption which underpins the neo-liberal capitalist political-economy is flawed at its roots; the emperor wears no clothes. UN Sustainable Development Goal 16, Peace, Justice and Strong Institutions is entirely incompatible with a thriving military-industrial complex, the situation which currently exists on planet Earth today and yet this is rarely, if ever, on the agenda of mainstream politicians. Will Black makes this observation in his insightful book Psychopathic Cultures and Toxic Empires, “British Prime Ministers and other world leaders seem to see nothing wrong in going to arms fairs and acting as cheerleaders for companies wishing to sell weapons to undemocratic, despotic regimes”[ii].
South East Asia since the end of WW II provides us with many examples of the negative externalities of the arms trade & warfare. Such as; The former Laotian capital of Luang Prabang is a wonderful city of great beauty and charm but much of the surrounding countryside is scattered with unexploded ordnance (UXO). I cannot tell the word of a lie; the Americans did it. Per capita Laos is the most heavily bombed country on the planet[iii]. Even today fifty or so years after the bombs were dropped in an undeclared and secret war they are still a health hazard. Scientists, engineers and designers worked very hard to build those bombs and the planes that dropped them; tax dollars were spent; back-handers were accepted; corruption was stoked; men were turned into killers; communism was fought; atrocities were committed; trauma was inflicted; wives were widowed; women and girls were raped; children were orphaned; people (of all shapes, sizes and colours) were relieved of their arms and/or legs. Persons unknown sure were happy to sell the bombs and pocket their blood money safe in the knowledge that politicians would protect them. It was, after all, ‘just business’.
Further examples could be given from the Korean war, the ten-thousand day war (Vietnam), the military junta in Myanmar’s various internal civil conflicts and genocide against Rohingya Muslims (despite having a figure head ‘democratic’ leader in Aung San Suu Kyi). Indonesia’s internal repression and invasion of East Timor under the Suharto regime and The Khmer Rouge nightmare in Kampuchea (Cambodia). Dozens, if not hundreds, of examples in the post WWII period also exist in Latin America, Europe and Africa. The reader is invited to explore any or all of these conflicts that have been facilitated by the global military industrial complex.
When subjecting the international arms trade to a true cost accounting of all externalities, we could set aside any moral judgement and make a purely economic judgement on the arms trade. When we weigh the net revenue generated against the financial cost of the negative externalities we can easily find that while small cliques of well-connected individuals benefit, society as a whole makes a loss. And so even if we were to discount any moral, political, social, spiritual, philosophical or religious views against the arms trade we can still find a purely economic argument against it. What then are the negative externalities of the arms trade? They include but are not limited to:
Loss of limbs (from landmines/UXO or as a deliberate tactic of intimidation)
Increased incidences of torture
Increased incidences of rape and sexual abuse
Increased incidences of child physical, emotional and or sexual abuse
Increased incidences of drug and/or alcohol abuse
Abduction of children to be used as soldiers
Increased incidences of PTSD
Increase in emotional / mental issues for soldiers and civilians in conflict areas
Increase of homelessness or incarceration for soldiers returning from conflict
Greater burden on mental health professional and facilities
Increased demand on health services in general
Loss of skilled personnel to productive activities
The diversion of individuals from productive trades into the armed forces
Increased demand on welfare systems by veterans
Increased rates of homelessness
Destruction of property
Increased number of refugees
Increased pressure on finite material resources
The five permanent members of the United Nations Security Council have been the five biggest spenders on arms for the majority of the post WW II period. Four came in the top five global arms exporters with only China outside the top five, coming in at seventh (Stockholm International Peace Research Institute[iv]). Is it then surprising that the arms issue was not on the global agenda of governments? Simply put, the Security Council are UNinterested in the issue. If a true cost accounting were ever to be carried out, we would objectively see that the arms trade represents a negative development for global society as a whole. As Oscar Arias Sanchez, Nobel Laureate and former President of Costa Rica once observed; “When a country decides to invest in arms, rather than in education, housing, the environment, and health services for its people, it is depriving a whole generation of its right to prosperity and happiness. We have produced one firearm for every ten inhabitants of this planet, and yet we have not bothered to end hunger when such a feat is well within our reach. Our international regulations allow almost three-quarters of all global arms sales to pour into the developing world with no binding international guidelines whatsoever. Our regulations do not hold countries accountable for what is done with the weapons they sell, even when the probable use of such weapons is obvious”.[v]
Since the arms trade has, in fact, been flourishing since the end of WW II the inescapable conclusion that can be drawn is, that those in power have been acting in the interests of those people profiting from arms dealing, either directly or indirectly; by owning shares in companies that sell arms or receiving payments, in whatever form, by representatives of those companies. This was achieved at the expense of local taxpayers, who often foot the bill for underwriting arms deal, and global society as a whole. The negative economic externalities of the arms trade are truly the externalities that dare not speak their name.
The Oxford dictionary of economics defines externalities thus,
“A cost or benefit arising from any activity which does not accrue to the person or organization carrying out the activity. Negative externalities cause damage to other people or the environment, for example by radiation, river or air pollution, or noise, which does not have to be paid for by those carrying out the activity. Positive externalities are effects of an activity which are pleasant or profitable for other people who cannot be charged for them, for example fertilization of fruit trees by bees, or the public’s enjoyment of views of private buildings or gardens. Externalities may be technological or pecuniary. Technological externalities affect other people in non-market ways, for example by polluting their water supply; they create a prima facie case for intervention in the interests of efficiency. Pecuniary externalities mean that other people are affected through the market: for example, the emergence of a new industry may raise labour costs for other employers, or reduce the value of their capital by capturing their customers. Pecuniary externalities do not create any prima facie case for intervention, except possibly on grounds of income distribution.”[vi]
Black, W (2016) Psychopathic Cultures and Toxic Empires Frontline Noir
[i] http://www.azquotes.com/author/14146-Joseph_Stiglitz Accessed 25/9/2017
[ii] Black P.66