How Does War Make Money?

WAR RACKET--CATASTROPHE CAPITALISM, 2 Dec 2024

Global Affairs Explained - TRANSCEND Media Service

Wars causes massive death and destruction. People’s lives are torn apart and nations are ruined, sometimes for generations. If you think about war, most people only view the human misery and pain. However, others people see war and view an opportunity. In fact, there are those that can even benefit financially from wars.

There are large profits to be made from armed conflict, but how? How do wars make money? Well, we’ll tell you…

Arms Companies Directly Profit from Wars

A first way that war makes a profit is for companies that develop the weapons used in wars.

All armies need weapons in order to fight. They also need equipment, vehicles, facilities, fuel and a have huge range of other materials so that they may effectively operate. When countries go to war, the needs of their militaries massively increase. Armies, navies and air forces must almost always purchase the supplies they need from private companies. These arms companies profit massively in times of war.

For a country to win a war, it must ensure a regular supply for quality equipment and materials to its military. This means that countries almost spend without limit during war. As a result, arms companies can make enormous amounts of money when a nation goes to war.

As well as profiting during times of war, arms manufacturers often get lucrative government contracts to supply a country’s armed forces during peace time in preparation for conflicts. They also make money by developing new military technologies ready for future wars. This adds further to how they profit from war.

Government at War Make Money by Raising Taxes

A second way that war makes money is because governments at war raise taxes.

Conflicts are enormously expensive. Countries at war must continuously fund their militaries, both through procuring equipment and supplies, and by paying salaries to soldiers. Nations fighting large wars also must fund changes to their manufacturing sector and wider economies in order to support their war effort. In order to raise enough money to fight a war, governments almost always raise taxes.

Raising taxation is one way that governments make money during times of war.

Some governments have also issued war bonds – special financial instruments that the public can buy to help fund the war effort. This further increases the revenue governments make during wars.

When governments raise taxes for wars, they do not always lower them once the conflict is over. Reconstruction, or retooling the economy, are often reasons given for states keeping taxes on their populations high to continue making money even after a war is over.

Militaries Make more Money During War Time

A third way that wars make money is because militaries receive additional funding during times of war.

As we’ve said, wars are incredibly expensive. Militaries need a continuous supply or equipment and material in order to be able fight on. They also need to pay their soldiers, and often onboard additional recruits to bolster their ranks and replace troops wounded or killed. As a result, militaries command significant additional funds during wars, and they almost always receive them.

No government wants to be accused of under funding its military during a war.

Therefore, governments can provide almost unlimited funds to their armed forces when they are at war. This means militaries can make huge amounts of money from conflicts.

In some more corrupt countries, the military can have a range of economic interests. These can include everything from owning military supply companies to restaurants and hotels. In addition, high ranking military staff can personally profit from government contracts awarded to the military. This is a further way that war allows some people to make money.

There Are Economic Gains for Nations That Win Wars

Another way that war makes money is because victorious countries can seize new resources during a conflict.

There are many reasons why countries go to war. Many countries claim they fight wars for their defense, however often countries use this as a pretense to attack other nations. Sometimes, no pretense is given and countries openly invade their neighbors. Either way, a benefit victorious nations have is that they almost always seize territory from the nation they defeat. This can be one way they actually make money by going to war.

There can be major economic benefits by expanding a nation’s territory, especially over the long-term.

These can include taking over new resources, population centers or gaining valuable geographical features such as access to the sea. This is one way that money can be made by going to war. Although counties may face sanctions if they invade another country without provocation, however many see the economic benefits of the territories gained as offsetting this.

Many countries may claim other reasons why they go to war and seize territory from other countries; however, many actually see it as a way to profit economically.

Huge Profits Are Made in Reconstruction after Wars

One way that people profit from wars is because of the reconstruction needed when they end.

Wars cause immense destruction. In urban areas, houses, apartments businesses and infrastructure can all be destroyed. In rural areas, agricultural land and farms can be badly damaged. When a conflict ends, there is often a need for widespread reconstruction. This can cost massive amounts of money. However, the companies that get the contracts to undertake post-war reconstruction can often make huge profits.

When a conflict is over, often the international community steps in to help a country rebuild. This can mean massive amounts of foreign aid pouring into a war-torn nation.

In corrupt countries, this money often goes to select private businesses that make fortunes from reconstruction. Even in less corrupt countries, there is still the need to engage the private sector in rebuilding and this means businesses can compete for lucrative contracts.

The enormous amount of rebuilding needed after a war, combined with the often-large amounts of foreign aid provided, means some people can make a lot of money as a result of a conflict.

Countries That Win Wars Gain Increased Influence

A final way that war makes money is because of the increased influence victorious nations have.

Throughout history, countries that have won wars, especially large regional or global conflicts, have reaped the rewards. These can include playing a major role in reshaping the order of nations following the war.

Victorious countries can use their influence to annex territory, seize resources, redraw borders, cleanse populations and station troops in other countries.

Although these may not all be just uses of a victorious powers position, they are ways that countries that win wars can profit from their military success.

Another way that countries make money by using the influence they gain by winning wars is through shaping the post conflict economics. Countries that lose wars have often had their economies shattered. Victorious powers can step-in and use their influence to reshape the vanquished nation’s economy for their own benefit. This is yet a further way that war can make money.

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Global Affairs Explained is an ongoing project aiming to provide concise guides to world events. Focusing on international relations, history, and geo-politics, it uses original research and data to answer questions often not covered by traditional media.

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