The economist Paul Samuelson noted that the Second World War was the “economists war.” The US came to realize that economic planning, the role of the Federal Reserve and mobilization of the civilian sector were crucial in times of war.
What the role of geoeconomics, and also automation, signals now is the complete triumph of “total mobilization.” That is, that scarcity and economic wealth become the de facto drivers of foreign and domestic policy. The culmination of this realization is the triumph of Donald Trump’s “realpolitik.”
The 19th-century liberal view of “non-zero-sum” “quid pro quo” was the Adam Smith idea that the benefits of trade led to economic and political advantages for all concerned.
However, the increasing mobilization of resources (both natural and human) led to the idea, put forward by Hirschmann in 1945 [1], of the “zero-sum” concept of winners and losers.
The trajectory of events of WW2 made liberal free trade rhetoric obsolete. The prevailing tendency was what economists call “mercantilism.”
This was the idea that increases in wealth mean greater power – to the detriment of the other. Therefore, geopolitics and geoeconomics became intertwined.
The emphasis in mercantilism is the feature of one or two “hegemonic” powers. Therefore, in the 20th century this was assured for the US through the suspension of the Bretton Woods agreement in 1972. The abolition of the convertibility of gold to dollars set in motion a new hegemony for the US.
The world had changed for a few dollars more. The fiat currency of the dollar had replaced gold. Hegemony is policed through, for example, global payment systems, sanctions, etc. Mercantilism is back in vogue. We can see it in Donald Trump’s protectionism and China’s soft loans creating Chinese dependency in Asia.
The implementation of geoeconomics, and the need to establish hegemony leads to inevitable conflict. This is endemic to the “third revolution”, that of technology. The Industrial Revolution began the process of mobilization of the standing reserve of the earth’s resources, that of raw materials and labor.
The move towards automation and AI, however, means that labor as the predominant factor in capital creation will be overtaken by technology and automation.
This will heap pressure on the rate of return on capital and profits. Now, the post-war settlement with labor led to trade unions, the welfare state, etc. This was a negative “zero-sum” outcome for capital.
What the new world now offers is a maximization route of capital and resource accumulation. All regimes have effectively abandoned liberal democracy and exist on a sliding scale of authoritarianism: the most efficient model for the implementation of “Deathenomics.”
This, incidentally, is not a value judgment on whether liberalism is right or wrong – it is a de facto genealogy of history.
The new world order rests on the diminishing importance of labor as seen in its traditional mode. Robotics and AI will replace human labor. In fact, in the not-so-distant future, human beings will be peripheral to world economies.
Imagine the cost savings of a robotic workforce. According to Techcrunch:
Broadly speaking, robotics benefited from the pandemic. Staffing shortages led to an influx in investments and a kind of renaissance in industrial automation. More recently, an explosion of interest in generative AI has further accelerated the industry and the push toward “general-purpose” robots.[2]
In this brave new world, Elon Musk estimates there will be demand for 20 billion robots. Considering a one-off price of US$20,000-30,000 per unit, this is a win-win for capital.
Yet what of labor? Whilst initially robots would be the workforce of factories and automated processes, the future will abandon labor in all areas such as administration, retail, nurses and even agriculture.
The problem with Keynesian ‘Deathenomics’ is that it will ultimately eradicate the consumer. The laborer was traditionally a consumer. What prolonged advanced capitalism was the constant re-creation of consumer demand, what Marxists call the “fetishization” of the economy characterized by endless needs.
The future of this new world will mean a dichotomy between tech/machine-owning elites and a surplus lumpen proletariat. In a world where surplus value of the worker is eliminated, value is replaced by machines. Human beings will thus become dependent on the state for sustenance.
The trajectory, already underway, will be a massive increase in indolent populations without work. National economies will be effectively irrelevant to the majority.
The new economy will be oriented towards war in a competition for tech resources, raw materials and minerals. Disputes as to extraction and rights will lead to war and a Keynesian cycle of demand. War and economy will become intertwined in “Deathenomics.”
In Russia, a dead son is worth a $130,000 payment. According to a BBC report this is called “coffin money”; it is enough to transform family lives from poverty[3]. Widows of dead husbands have developed a vogue for expensive hair dryers.
Putin has instituted a program called “Time for Heroes,” wherein returning soldiers are fast-tracked into governing and business positions. Keynesian war is one of the few remaining growth areas.
National security spending in the US has increased 50% since 2000. The problem with military defense spending, whose logic is now exported to the Europeans in a panic about security, is that resources are drained from any other economic areas.
It creates a dependence by workers on defense industries. It creates short-term profit booms for defense stocks. It means the US spending beyond 5% of GDP on the military.
Yet some analysts, such as those at the Rand think tank, have criticized this US dominant position in an increasingly multi-polar world[4]. They maintain there is a need to abandon the Cold War mentality.
Yet that assessment forgets the nature of the military economy. For example, contractors are not focussed on production capacities or R&D. Their main concern is return of profit. Hence the majority of this profit is not reinvested or orientated to efficiency but given to shareholders.
A 2023 Pentagon study showed an increase of cash to shareholders of 73%[5]. Therefore, state money is funneled directly into the defense shareholdings of the wealthy. This is what Milton Friedman called “shareholder capitalism.” The emphasis is on shareholder returns.
This is a problem for some sectors, however. Hence privatization of health and defense will orientate capital to private wealth. Weaponized economies negatively effect other parts of the economy. In fact, there is no boost to other sectors of the economy as seen by the decline of the manufacturing sector in the US.
Therefore, defense spending works as a short, but not long-term, boost to the elite economy. The other side of the coin is the compounding delusion that military spending is the only way to conduct geopolitics. (US interest payments on its national debt in 2024 will be greater than the Pentagon’s budget.)
The new world era of Deathenomics requires the total accumulation of resources, both material and human, to an endless circle of war. The new times require governments to act as private businesses. The state and civil society become one. Leaders must be dressed in suits. And, of course, war is an extension of business.
Notes:
[1] Hirschman, Albert. 1945. National Power and the Structure of Foreign Trade. University of California Press
[2] https://techcrunch.com/2024/07/23/elon-musk-sets-2026-optimus-sale-date-heres-where-other-humanoid-robots-stand/
[3] https://www.bbc.co.uk/programmes/w3ct5mv5
[4] David A. Ochmanek, Anna M. Dowd, Stephen J. Flanagan, et al., Inflection Point: How to Reverse the Erosion of U.S. and Allied Military Power and Influence https://www.rand.org/pubs/research_reports/RRA2555-1.html.
[5] U.S. Government, Department of Defense, “Contract Finance Study Report,” (Washington, D.C.: DOD, 2023) 18, https://www.acq.osd.mil/asda/dpc/pcf/docs/finance-study/FINAL%20%20Defense%20Contract%20Finance%20Study%20Report%204.6.23.pdf#page=18.
Brian Patrick Bolger studied politics and economics at the London School of Economics. He has taught political philosophy and applied linguistics at universities in the UK and Czech Republic. He is an adviser to several think tanks and corporations on geopolitical issues.
