AUKUS and Military Keynesianism

Mar 23, 2023
Prime Minister Rishi Sunak during a meeting with US President Joe Biden and Prime Minister of Australia Anthony Albanese at Point Loma naval base in San Diego, US, to discuss the procurement of nuclear-powered submarines under a pact between the three nations as part of Aukus, a trilateral security pact between Australia, the UK, and the US. Picture date: Monday March 13, 2023.

The nexus between war and capitalism has been extensively explored by historians, particularly those on the political left such as Gabriel Kolko. It is one of the reasons why the term state capitalism, rather than market capitalism, is a more accurate description of the economic structures of advanced industrial societies. War, or more often the threat of it, has long been a necessary economic stimulus.

In the twentieth century, the term military Keynesianism was coined to describe the transfer of public funds to privately owned military contractors who were largely shielded from market competition for the weapons of death they manufactured.

However, pump priming the economy in this way requires a credible military threat, one that renders the public scared, dependent on the state for protection from immanent dangers, and therefore supportive of significant military spending. During the Cold War, Soviet Communism and alleged allied threats posed by China, Vietnam and North Korea, played the role of a seemingly permanent enemy for the West. Since the 1990s the pretexts have become more flimsy though equally effective: Iran, Libya, Iraq, Afghanistan and Islamist terrorism. More recently, the Russia threat has been revived after it invaded Ukraine.

Given the Australian Government has now decided to transfer $368 billion taxpayer dollars to privately owned American and British armaments manufacturers (such as BAE), a convincing justification for such extravagance had to be found. China, nuclear armed and Australia’s most important trading partner, became the obvious choice after the ground had been carefully prepared by the Morrison Government and a compliant media, following three years of racism and Sinophobia.

“Chinese aggression”, its military build-up, plans to “invade Taiwan” and accusations of cyberattacks and other forms of meddling in Australia’s internal affairs, are the context for the AUKUS submarine announcement last week. Without a credible threat of this kind, the entire enterprise would be exposed as needlessly provocative and a costly waste of money.

Thanks to critiques of the decision by former Prime Minister Paul Keating and others not known for their strategic intemperance, the Albanese Government must now struggle, both to sustain the credibility of the China threat and justify its extraordinary response to it. Five points are worth noting.

(1) No matter how vociferously it is denied by Defence Minister Marles and others in the Government, the deployment of Australian submarines with US naval personnel takes Australian defence policy well beyond “interoperability” with our ally across the Pacific. It effectively subcontracts Australia’s defence sovereignty to the Pentagon. This constitutes a retreat from any residual thoughts of an independent foreign policy and meaningful strategic engagement with the Asia-Pacific region. The AUKUS submarine decision should be understood as a manifestation of US defence policy in East Asia, with Australia as a willing “sub-imperial” accomplice.

(2) Instead of locking Australia into a US-led adversarial posture with its most important commercial partner, including the rotation of increasing numbers of US marines through Darwin, cultivating a better diplomatic relationship with China and the region could be achieved at a fraction of the cost of this proposal. A better resourced DFAT is long overdue. Such an entity might have advised the Government that Australia, the US and most of the world recognise Taiwan as Chinese sovereign land and going to war against a nuclear-armed state that wants to “invade” its own territory would be illegal and catastrophic, regardless of what role Washington expects Canberra to play.

It would be difficult to find a better illustration of Australian ministers being socialised into Washington’s strategic world view. It seems the country has abandoned the “defence of Australia” policy and reverted to “forward defence” under its current euphemism “impactful projection”. This is little more than US naval policy masquerading as the modernisation of Australia’s military forces.

(3) China’s military build-up is being presented as an inexplicable threat, as if one can directly impute strategic intentions from military capabilities. China’s rise as a Great Power has been built on astonishing economic growth over three decades. It has more money to spend on military hardware, so it is doing what every Great Power – communist or capitalist – has always done. This makes China more capable, but has no necessary bearing on its strategic ambitions – which have never been coherently explained by Australia’s Sinophobes.

Given the US spends more on defence than the next ten countries combined, and has surrounded China with dozens of hostile military bases, no-one should be surprised that Beijing has responded to a growing sovereign threat which Australia now seems determined to inflate.

Despite all evidence to the contrary, China’s motives are deemed nefarious and the West’s are assumed to be benign. How many independent states has China invaded over the last thirty years? How many has it illegally occupied? How many tyrants, autocrats and satraps has it maintained in foreign countries. How many overseas military bases does China have? How many foreigners has it murdered with drones? Compare the answers to these questions with Washington’s record and ask which state constitutes the gravest threat to world peace?

China has never expressed an intention to attack Australia or any other country. It doesn’t need to, unless it is recklessly provoked by the hostility of the West. Given its successful commercial and trading outreach, aggression would only endanger China’s economic rise. This submarine deal must therefore rank as one of the most expensive boondoggles in modern history.

(4) With better and cheaper conventional alternatives, wasting billions of dollars on baroque defence technologies that we don’t require, will soon be obsolete may never be built and which constitute an environmental danger, this decision will provide the next ten federal governments with a perfect excuse for not spending money on what the Australian people actually need and want.

What an extraordinary gift the so-called “left” of the ALP has bestowed on its political opponents, at the same time shackling any remaining ambitions it might still have for economic and social reform.

(5) The lack of any public consultation and the speed with which Albanese said “me too” to Morrison’s AUKUS commitments is a worrying breakdown of considered policy development and formulation. The ALP seems reflexively scared of product differentiation in foreign or defence policies. Bipartisanship in this highly contested area of public policy has again robbed the public of meaningful political choices.

Paradoxically, Wong and Albanese are suggesting there is a growing China threat at the same time they are taking credit for “stabilising” the relationship after its collapse during their predecessor’s reign. This will be a difficult circle to square, especially given the Sinophobia of the Morrison years was hysterical in at least two definitions of that word.

Military Keynesianism is also justified to taxpayers for its domestic economic benefits. Unsurprisingly, Albanese is selling the deal as an “investment” in “jobs” rather than detailing the nature of a threat which requires such an unprecedented and extravagant response. Here lies the Government’s weak spot. It needs to convince the Australian people that it must transfer $368 billion to privately-owned military-industrial businesses in the US and UK to protect them from the very same country which, through a mutually lucrative trading relationship, holds the key to their future economic prosperity. To suggest this will be a hard sell fails to fully capture the enormous challenges the government has now surprisingly set for itself.

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