War and Venture Capitalism

by Norman Solomon

During the Vietnam War, one of the peace movement's more sardonic slogans was: "War is good business. Invest your son."

In recent years, some eminent pundits and top government officials have become brazen about praising war as a good investment.

Thomas Friedman's 1999 book "The Lexus and the Olive Tree" summed up a key function of the USA's high-tech arsenal. "The hidden hand of the market will never work without a hidden fist," he wrote. "McDonald's cannot florish without McDonnell Douglas, the designer of the U.S. Air Force F-15. And the hidden fist that keeps the world safe for Silicon Valley's technologies to florish is called the U.S. Army, Air Force, Navy and Marine Corps."

On Sept. 12, 2003, Secretary of State Colin Powell spoke this way as he defended the U.S. military occupation of Iraq: "Since the United States and its coalition partners have invested a great deal of political capital, as well as financial resources, as well as the lives of our young men and women -- and we have a large force there now -- we can't be expected to suddenly just step aside." He was voicing the terminology and logic of a major capitalist investor.

And so, it was fitting when the New York Times reported days ago that Powell will soon be (in the words of the headline) "Taking a Role in Venture Capitalism." The article explained that Powell is becoming a partner in Kleiner Perkins Caufield & Byers, a renowned Silicon Valley venture firm: "Mr. Powell acknowledged in an interview Tuesday that he has had any number of tempting job offers since leaving the State Department in January, but that the chance to work as a venture capitalist at Kleiner Perkins seemed too enticing to turn down."

Writ large, the balance-sheet outlook of venture capitalism is being widely applied to the current war in Iraq -- even while defenders of the war are apt to indignantly reject any claim that it's driven by zeal for massive profits. But let's take the corporate firms at their own words.

Last year, I went through the latest annual reports from some American firms with Pentagon contracts. Those reports acknowledged, as a matter of fact, the basic corporate reliance on the warfare state.

Orbit International Corp, a small business making high-tech products for use by the U.S. Navy, Air Force, Army, and Marines, had increased its net sales by nearly $2.4 million during the previous two years, to about $17.1 million -- and the war future was bright. "Looking ahead," CEO Dennis Sunshine reported, "Orbit's Electronics and Power Unit Segments expect to continue to benefit from the expanding military/defense and homeland security marketplace." In its yearly report to federal regulators, Orbit International acknowledged: "We are heavily dependent upon military spending as a source of revenues and income. Accordingly, any substantial future reductions in overall military spending by the U.S. government could have a material adverse effect on our sales and earnings."

A much larger corporation, Engineered Support Systems, Inc, had quadrupled its net revenues between 1999 and 2003, when they reached $572.7 million. For the report covering 2003, the firm's top officers signed a statement that declared: "As we have always said, rapid deployment of our armed forces drives our business." The company's president, Jerry Potthoff, assured investors: "Our nation's military is deployed in over 130 countries, so our products and personnel are deployed, as well. As long as America remains the world's policeman, our products and services will help them complete their missions."

The gigantic Northrop Grumman firm, while noting that its revenues totaled $26.2 billion in 2003, boasted: "In terms of the portfolio, Northrop Grumman is situated in the 'sweet spot' of U.S. defense and national security spending."

War. How sweet it can be.