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"Wars are Good for the Economy": The Global Free Trade System

"The international free market was created artificially in the 18th and 19th centuries with the force of the English colonial state and did not develop naturally from the free exchange of goods as neoliberals constantly claim.. Accor-ding to Polanyi, free trade originally meant piracy.."

The Global Free Trade System as a Neocolonial War System

By Maria Mies

"Trade is impossible without war and war is impossible without trade" (Dutch conqueror of East India, 1614, quot. By Chomsky, 1995)

[This article is translated from the German on the World Wide Web ]



That trade is a peaceful affair, that trade and wars exclude one another and that global free trade will lead to something like "eternal peace" in the "global village" are common assumptions. The theoreticians of neoliberal free trade claim that a "level playing field" is created through "free" world trade, that is trade unregulated by governments on which all players, large and small, can peaceably compete with one another and that the great prosperity for all would arise this way. Wars as we knew them would belong to the past.

However our eyes are quickly opened when wed consider the history of global "free trade" and the events of the new neoliberal free trade policy in the last 15 to 20 years. In 1944, Polanyi showed that the international "free market" was created artificially in the 18th and 19th centuries with the force of the English colonial state and did not develop "naturally" from the free exchange of goods as neoliberals constantly claim. According to Polanyi, foreign trade originally had the character of piracy, robbery and belligerent conquest more than peaceful exchange.

In his book on the connection of the economy and violence, Noam Chomsky explains in detail that "Europe's hegemony in the world" was based on the use of warlike force and not on any social, moral or natural advantages. The first global trading system of the world arose in the context of Portuguese, Dutch and British colonial conquests. Unlike the Portuguese, the Dutch and English used force "in a more selective rational way. Force was used exclusively in and for trade... The profit margin decided everything" (Pearson, quot. in Chomsky 1995).

Several historians have demonstrated that the rise of the modern industrial system above all in England was based on the most brutal force against colonized people. One of the better-known cases is the destruction of the Indian weavers in Bengali. Bengali's highly developed textiles were famous all over Europe. In 1757, the year of the battle of Plissť, Clive described the textile city Dhaka, the current capital of Bangladesh as "expanded, densely-settled and rich" as the city of London". The English textile manufacturers and traders saw this flourishing textile industry as a dangerous rival. The English state issued an import prohibition on Indian materials. The Bengalese weavers were forced to abandon their own cotton industry "with monetary fines, cudgels, incarceration, forced promissory notes and so forth" (Chomsky) and ultimately to buy factory goods from Manchester. The results were an unspeakable impoverishment of the population, famines and thousands of deaths from hunger. In 1840, the English historian wrote that the population fell from 150,000 to 30,000. "The jungle and malaria spread rapidly.. From the thriving city of Dacca, the Indian Manchester became a small impoverished city" (Chomsky 1995). Three years later in 1793, England settled permanently as the East India Company. "The poverty is unparalleled in the history of trade. The knees of the cotton spinners colored the Indian ground white" (quot. in Chomsky).

At the same time Bengalese agriculture was converted to export production. The small farmers had to produce indigo, jute and rice for international markets instead of for their own needs. The first phase of the much-praised free trade for Indian small farmers was marked by direct violence, hunger and sickness. This was also true in the colonies of other states.

These times dripping with blood were only part of the "birth hour" of capitalism that came to the world "under blood and tears" as Marx and others were convinced. Marx thought that this period of "original accumulation" would be superseded by real capitalist accumulation, the expanded reproduction of capital. Chirstel Neususs rightly asked how this one "birth hour" could take so long.

Over 200 years after India's conquest, conditions and methods of "original accumulation" still prevail after the political de-colonialization in the countries of the South. Therefore we speak of "continuous original accumulation". Violence, conquest, war and colonization are still the most efficient means of capital accumulation. I hardly see differences between then and today when I consider the present-day methods and results of modern free trade in the South as promoted by the World Bank, the IMF and the WTO.


A similar free trade lie is the lie about creating a "level playing field" between individual "global players". There is enough empirical evidence today "that shows that inequality within countries and between `poor' and `rich' countries was never greater than in the period after 1990 when neoliberalism established a worldwide hegemony. This is admitted by the UN in its development reports, the World Bank and even by president Clinton at the last World Economic Forum meeting in Davos. Free trade produces more and more losers who face a minority of global winners and the gap between them is becoming ever greater. "52 of the 100 largest economies of the world are corporations, only 48 are countries. The wealth of the three richest men of the world, all from the US, is greater than that of 50 percent of the poorest countries." In its 1997 Trade and Development report, the UNCTAD wrote that the personal income in the rich G7 countries in 1965 was 20-times greater than in the seven poorest countries. In 1995, this gap was 39 times greater. UNCTAD blames the liberalization policy for the growing inequality.

The losers are not only in developing countries. Poverty has returned even in the richest countries since the end of the 1980s, in England, the US and Germany as a 1999 study of the Caritas association demonstrated. The gap between the richest and poorest has also widened here.

For the US, a study of the Institute of Policy Studies reveals "that the top managers of American corporations earn 419 times more than simple workers on average today." According to Kevin Philips, the top ten percent of Americans increased their income 16 percent in the eighties, the top five percent around 23 percent and the top one percent around 50 percent. The opposite befell the poorer classes. The lower on the social ladder, the greater the income losses. The 10 percent at the lower end lost 15 percent of their meager income in the same time period. In 1977 the income of the top one percent of the population was 65 times greater than the income of the poorest 10 percent. In 1987 the top 1 percent were 115 times richer.

John Gray, the former advisor of Margaret Thatcher who introduced neoliberalism in England, reports something similar from England. "Thatcher's policy enormously advanced the economic inequality in the country. Since 1977 the population that manages with less than an average income has tripled. The income of the richest fifth of the population was 45% higher in 1984-85 than at any time after World War II.

This rising inequality between and within the countries is not accidental but a necessary structural element of neoliberal globalization. For corporations, this inequality is used as a "comparative cost advantage" in their competition for the cheapest workers and the most lax environmental conditions.

In addition the main principles of global free trade, namely globalization, liberalization, privatization and universal competition work toward the Hobbesian war of all against all, not toward a general equality and satisfaction. How can peace prevail in such societies?


The described inequalities and the general economic competition lead to social conflicts and belligerent disputes. Today we can see the connection between neoliberal policy and wars much more directly when we regard the consequences of the development policy of the World Bank, the IMF and the WTO. These three so-called Bretton Woods institutions were called the "unholy trinity" or the "murder trinity" in September in Prague. For years, they have protected, spread and consolidated the neoliberal free trade policy in the interest of mammoth corporations and banks. The consequences of their policy were felt first in Africa and Asia and then in the countries of the former eastern block. These aftereffects include the collapse of their whole financial- and economic systems, a neocolonial dependence of these countries on the Club of the Rich as in Asia and later Russia, a growing mountain of debts, increasing poverty of the majority of the population, more hunger, poorer health care and poorer school education. In Prague, the heads of the World Bank and the IMF, Mr.Wolfensohn and Mr. Kohler are in reality the fathers of poverty as critics say with their structural adjustment programs (SAP) that they have stylized or whitewashed as Poverty Reduction programs.

At the meeting of the World Bank and the IMF in September 2000 in Prague, the Globalization Challenge Initiative distributed a report on the effects of the SAPs on Tanzania. According to this report, child mortality rose to 85 per 1,000 children. While 80 percent of the children attended elementary school in 1980, only 50 percent are now attending. The government spends four times more for debt service than for elementary schools. Per-capital income in the seventies was $309. This income fell to $160 in the nineties since the introduction of SAPs in 1985. Life expectancy is only 48 years today. 66 percent of the population suffers in AIDS but the government only spends one percent of its budget on health.

Silvia Federici (1999) and Michel Chossudovsky (1997) showed that the "economic medicine" of the World Bank and the IMF led to these consequences and that regular wars and a recolonization are the results of the "Poverty Reduction program" fore different countries of Africa and Eastern Europe. Silvia Federici who worked in Nigeria and other African countries for a long while analyzed how the SAPs of the IMF led to wars, flight and genocide. She writes: 1. the structural adjustment programs led to war and wars on their part completed the work of the structural adjustment programs by making impacted countries dependent on international capital and the powers representing capital, beginning with the US, the EU (European Union) and the UN. In other words, to paraphrase Clausewitz: structural adjustment is war with other means".

Federici analyzed the studies of this process of the modern colonial predatory economy in the example of Mozambique, the case in point or classic example for the new colonial wars.

Firstly, the Mozambique National Resistance Army (RENAMO) was financed by the US and South Africa to fight against the socialist regime in Mozambique. RENAMO "systematically terrorized people through massacres, dreadful mutilations, enslavement and expelled them from the land. RENAMO destroyed bridges, hospitals and schools and changed millions into refugees (more than a million persons were killed in this war).'

Secondly, food aid was then brought into the country to keep the expellees from starvation. This food aid ruined the small farmers and destroyed their own food supply.

Thirdly, the national decision-making processes were taken from the state and put in the hands of international organizations and non-governmental organizations (NGOs).

Fourthly, a so-called peace process was introduced with impossible conditions of "reconciliation" and "distribution of power" between RENAMO and the government.

According to Federici, the destruction of the social and physical infrastructure of a country, its capacity for independent economic reproduction can occur in a direct "bloodless" way by the SAPs. The SAPs set conditions for countries seeking credit in which they must open their economy to the free world market. These conditions include: promotion of export production, devaluing their currency, cutting state expenditures in the social area (health care, schools, income support, subsidized food), wage cuts, dismissal of state employees, deregulation of workers' rights, abolishing subsidies for small farmers and small enterprises, opening the country for luxury imports and consumer articles for the middle class (cars, television, videos etc.). Weapons can also be obtained without problem in these countries. Women and children are the main victims of the SAPs since the economy of these countries should be "reformed" according to the principles of free trade. "The SAPs produce poverty and poverty has the face of a woman," said Emily Sikazwe from Zambia's "Women for Change". "What would the IMF say if it were charged with genocide by the Hague tribunal?"

Prostitution is left for women when their own capacity for subiste3nce is destroyed. Youths and young unemployed men can get handguns and join one of the rival armies arising everywhere as a result of the SAPs.

Tribes and groups that earlier lived side by side in peace are now "deadly enemies". Western observers usually ascribe the nascent wars to ethnic or religious rivalries that supposedly have divided these tribes since time immemorial. However we hardly hear that these wars become opportunities for the North's further economic colonialization of these countries.

This was clearly addressed at the Africa Tribunal in Los Angeles (February 2000). At this tribunal, the IMF, the World Bank, the US, the EU, France and Great Britain were charged with establishing a neocolonial slave system in Africa.


As long as these wars occurred in Asia or Africa, people in the North could ignore them or categorize them as "tribal wars". However the same pattern that Federici described for Mozambique was also applied in the NATO war in Kosovo. The UCK was also systemically supported from the outside. Germany provided the UCK with weapons from DDR (East German) inventories. That the NATO countries felt called to a "humanitarian intervention" was new. This "humanitarian justification" is the trick that will be used in other future "crisis-reaction-engagements". Constitutional law and UN international law can be conveniently pushed to the side with this trick.

In 1999 Michel Chossudovsky analyzed how the free trade policy of the World Bank and the IMF drives many countries of the "third world" into ruin. The economic and political disintegration of the Yugoslavian republic was causally connected with the macro-economic restrictions forced on the Serbian government by the Bretton Woods institutions and foreign creditor banks. The 1990 IMF agreement already contained a package of SAP "conditions" with the goal of introducing neoliberal market structures into socialist Yugoslavia. These SAPs led the economy that didn't function well after Tito's death into collapse. "The budget cuts necessitated the rededication of federal tax revenues away from Belgrade's transfer payments to the partial republics into debt service. The process of political Balkanization and secessionism was promoted... Real wages fell 41% in the first six months of 1990. Inflation amounted to more than 70% and rose to 937% in the course of 1991 and 1,134% in 1992/93.

Chossudovsky writes that 1,137 state firms declared bankruptcy in less than two years. More than 600,000 workers became unemployed, mostly from Serbia, Bosnia-Herzegovina, Macedonia and Kosovo. This bankruptcy program was intended by the IMF to bring state-owned firms into private ownership. The old party-cadres could be utilized in this process.

This economic collapse led to secessions - encouraged by Germany - beginning with Croatia and Slovenia and finally to the diverse wars that did not end despite the NATO war in Kosovo. These wars made the whole region economically and politically dependent on the NATO powers, the EU and the US.


The sentence "War is good for the economy" comes from the economist Hazel Henderson. She coined it in her analysis of the Gulf war. The Gulf war drew the US out of the recession of the 1980s since billions of dollars from the allies of the Gulf war flowed into the treasuries of the US. New jobs were financed out of these billions. The industrial-military complex that had no meaning any more after the fall of the Berlin wall was strengthened and new wars became a normal "engagement" of the "peace-loving" nations within NATO.

A rapid increase of the militarization of our societies has occurred since the Gulf war of 1991 and especially since the NATO war against Yugoslavia in April 1999. This militarization is very closely connected with the globalization of the economy. On the social-psychological plane, this militarization leads to an unbridled ramboization of men who prevail violently in everyday life today. This begins with the soldier-uniforms as normal clothing for young boys, weapons in the hands of children, violence in the school and on the street up to radical rightwing violence. The new picture of the man is the warrior bristling with weapons and ready for combat.

The speed of the conversion of the so-called peace dividend into new subsidies for the arms industry after the end of the Cold War is alarming. Not accidentally a new NATO doctrine was proclaimed just after the beginning of the Kosovo war on the occasion of the 50th anniversary of NATO. This NATO strategy is exactly suited to the requirements of globalized capital that provokes crisis situations everywhere in the world as in Africa or Yugoslavia. These "crises" must then be solved by "crisis-reaction-forces". These are small, professional, highly technical and highly specialized units of NATO that can be flexibly deployed all over the world. NATO according to this new strategy isn't a defensive alliance any more in the old sense. The new crisis-reaction-forces - in the jargon of the German army - have the function of defending the interests of NATO countries, literally the mammoth corporations of these countries, everywhere in the world.

The new NATO strategy has led to a rapid increase of US armament expenditures and a radical re-restructuring of the armed forces of the largest NATO countries in Europe, France, England and particularly Germany.

The so-called Weizsacker paper (commission of the German government "The Common Security and Future of the German Army) involves the re-structuring of the German army into a global military force. There we read: "In the future, the Germany army will be deployed for the defense of German interests outside all geographical borders even in a war of aggression if necessary and no longer for territorial defense. The future trouble-spots for these actions are identified in this paper: the Balkans, North Africa, the Middle East, the Gulf states, the Caucasus, the Turkish border to Iraq, the Baltic countries, the Chinese border to Russia and all the successor states of the Soviet Union. "European or German interests" are defined as "security for our oil supply". However in a globalized economy whose "provision security" in relation to food, clothing, shoes and electronic equipment largely depends on "free" world trade, German interests could be impacted when "our" bananas, "our" clothing, "our" shoes and "our" soy are no longer delivered as cheaply as in the past or when the "European identity and our values" are endangered for example through Islamic fundamentalism.

The BSE-scandal (mad cow disease) of these days shows the dilemma into which European countries have maneuvered with the liberalization of their agricultural markets. I fear that wars to defend "our interests" will be waged in the future even for healthy food and water.

What frightens me most in the propagation of this new NATO- and German army doctrine is not only that belligerent force has become socially acceptable but also that the German army now allows women in its fighting troops and that this is justified as a contribution to our emancipation. To have equal rights, it is not enough that women give and preserve life. Whoever can kill has equal rights. This has been the patriarchal logic for 5,000 years. Whoever kills exists. Since the Kosovo war, this whole process of the ramboization of society is celebrated as "the growing adult German nation".

The Kosovo war was a kind of transition rite from boy to man. As I have often heard and read, "Germany is now grown up." This means, a man is a man when he wages war and kills. According to patriarchal logic, war is the father of all things. This is also still the last word of the neoliberal economy. That women with a different understanding accept this logic doesn't solve the problem.

The general militarization of our societies and the brutalization of everyday life continue unchecked. As Terry Wolfwood writes, militarization is "the context of our life. The sports industry and the entertainment industry glorify violence.. Violence in the families and sexual molestation in the community are greater dangers for women than hostile nations."

The normalization of the warrior logic appears today in a conscious mixture of civilian and military areas. Civil society is militarized and the military is "civilized". This means: the armed forces on the NATO- and German army planes are re-structured according to neoliberal principles. That the armed forces collaborate with the civilian realm, especially with the economy, is part of this re-structuring. In Washington's declaration on the 50th anniversary of NATO, we read: "The cooperation between the civilian and military spheres rests on mutuality. Military means are requested to support civilian authorities. Civilian support of military operations is simultaneously important for logistics, communication, medical support and publicity." (Bulletin Nr. 24, May 3, 1999, Information Service of the German Army).

The close partnership between the military and industry/economy is also emphasized in the re-structuring of the German army. The paper "The German Army Secure in the 21st Century: Cornerstone for a Renewal" says: "The economy, industry, trade and the German army enter into a strategic partnership. The German army adjusts to the challenges of the future and develops its armed forces and military administration. It utilizes the efficiency of the German economy and exploits new investment possibilities under changed competitive conditions. In this way, efficiency and good management will permanently increase in the armed forces and its administration."

A similar partnership with associations and departments is sought. "Both partnerships fit seamlessly in the efforts of the German government to make Germany one of the most modern and efficient garrisons. The cooperation contributes to the innovative development of our country, improves efficiency and good management and simultaneously guarantees the planned social security of members of the German army." Didn't the war against Yugoslavia also "open up new investment possibilities"?

This far-reaching militarization of society is also occurring in the scope of the EU intent on building its own "security system". The fact that the Secretary General of the UN, Kofi Annan, is now instrumentalizing the United Nations for the interests of powerful corporations is even more scandalous than these economic-military partnerships pursued by NATO, the EU and the German army. UN organizations should now enter special partnerships with the arms industry (Wolfwood 2000).

If we don't want to silently accept this development, the peace movement cannot limit itself to military strategies, weapons exports and peace appeals. The economic causes of wars should be probed far more than in the past, above all in the connection between the global free trade policy in agreements like NAFTA, the MAI, GATT, TRIPS, GATS and others, protected by the WTO, the World Bank and the IMF and the new wars all over the world that are euphemistically called "crises" and the new global war strategies. The new role of the military is no longer the defense of national borders but opening and protecting "investment possibilities" for industry.

If the peace movement really wants to do something against future wars, it must also fight against this neoliberal global economic system. The peace movement must be present at protests against globalization like those in Seattle in November 1999, in Prague in September 2000 and December 7, 2000 in Nizza.

Most importantly all friends of peace must reflect on economic systems whose basis is not universal competition, destruction of the environment, global trade as an excuse for the profit maximization of transnational corporations and the transformation of all things into commodities. What Silvia Federici wrote about the destruction of Mozambique's reproduction foundations shows the direction of our search for an alternative economic design. First of all, all countries must regain control over their own subsistence capacity. This means rejection of neoliberal global free trade controlled by corporations. Only this way can long-term peace be secured.

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