How American financial capital profits from chaos and wars
Bradley Blankenship
Traders work at the New York Stock Exchange in Manhattan, New York City, U.S., March 7, 2022. /Reuters

Traders work at the New York Stock Exchange in Manhattan, New York City, U.S., March 7, 2022. /Reuters

Editor's note: Bradley Blankenship is a Prague-based American journalist, political analyst and freelance reporter. The article reflects the author's opinions, not necessarily the views of CGTN.

There's been a particularly interesting fact emerging, or re-emerging in a new and more undeniable way, through the ongoing COVID-19 pandemic that "the economy" and the financial market have almost nothing to do with one another. As everyday people, interacting within the economy, have been hit with the worst effects resulting from the pandemic, the financial markets have steadily boomed. 

It goes to show that there is a sort of anti-marketeer system that has its tendrils in the market, feeding off of it, but outside of it altogether. It exists both within and without the normal economy as, think of it, of production and ordinary commerce. 

As anthropologist David Harvey has said, if we can imagine society as a house then "the economy" takes place in the basement while the financial market takes place in the attic. And this corresponds with the fact that financial markets are dominated by those at the top.

In America, a report by CNBC in October 2021 estimates that the wealthiest 10 percent of Americans own a record 89 percent of all U.S. stocks. This concentration of ownership has surged since the Great Recession and, more recently, the COVID-19 pandemic. It goes to show who is living in and profiting from the speculative world of finance, who benefits from it and why it has the character that it does. 

Fundamentally, finance capital returns profit when drastic changes occur, causing large shifts, and shifts in wealth upward. This is exactly why the world's wealthiest have come out on top during the pandemic, boosting their net worth and consolidating markets at the expense of average people, and why the subprime mortgage crisis in America consolidated real estate ownership by the wealthy. 

Of course, a lot of the chaos that benefits financial capital is caused by capital influencing politics, as a sort of investment in itself. The Russia-Ukraine conflict serves as a case point as to how financial capital reinforces the bellicose nature of American foreign policy, which is perhaps the most warlike and chaotic foreign policy in the history of geopolitics. 

One only has to look at the fact that defense contractor shares have soared since the beginning of Russia's "special military operation" in Ukraine and, as well, the fact that these same corporations are kingmakers on Capitol Hill. The defense industry is one of the most powerful lobbying firms in Washington and members of Congress personally benefit from preferential policies they pass since they can and do trade stocks while in office. 

The New York Stock Exchange, New York City, U.S., January 4, 2022. /CFP

The New York Stock Exchange, New York City, U.S., January 4, 2022. /CFP

To get a sense of how endemic this baked-in corruption is, a report by found that House members outperformed the market by almost a full percent in 2021. It notes that Congressman Kevin Hern, who sits on the House Committee on the Budget, bought up to $100,000 in Lockheed Martin shares just two weeks before it was announced the company had won a $10.9 billion contract to modernize the Air Force's F-22s. 

Meanwhile, the shot callers on the outskirts of the political arena have acknowledged that global conflict benefits them. During a January 25 quarterly earnings call, Raytheon CEO Greg Hayes said that his company would see "some benefit" from turbulent events around the world, including, "of course, the tensions in Eastern Europe."

Of course, I'm sure that Hayes is correct since President Joe Biden just announced a budget proposal that requests $813 billion in national defense spending with $773 billion earmarked specifically for the Department of Defense. This money will go toward modernizing the American military and procuring new weapons, meaning to companies like Raytheon. 

Congress will undoubtedly up this figure to keep pace with inflation and for the reasons mentioned above, creating yet another hand-up to the mega-wealthy at the expense of taxpayers. This immense, annual and guaranteed wealth transfer is one of the reasons why defense stocks beat the market. 

As The Intercept found last year, America's top five military contractors beat the stock market overall by 58 percent during the period of the Afghanistan war. This is exactly why stock owners (the wealthy) have their money parked in defense stocks because it is probably the most sure-fire, profitable investment out there. And it's also why the ultra-wealthy buy influence in politics to create a feedback loop of chaos that juices the defense industry. 

(If you want to contribute and have specific expertise, please contact us at Follow @thouse_opinions on Twitter to discover the latest commentaries in the CGTN Opinion Section.)

Search Trends