The orientation of the bourgeois state towards the war economy arises from the sharpening of inter-imperialist rivalry at the global level.

The current phase of imperialism is marked by a sharpening of global competition, where imperialist powers confront one another as representatives of competing capitalist monopolies seeking access to markets, raw materials, and spheres of accumulation. This competition increasingly centers on control over strategic resources and infrastructures, including energy routes, transport corridors, and digital networks that structure global circulation.

Current conflicts clearly reflect this: the war in Ukraine is linked to control over raw materials, energy transit, reconstruction markets and geopolitical corridors; tensions and armed conflicts in the Middle East revolve around pipelines, maritime routes and blockages such as the Persian Gulf, Red Sea and Suez; the growing strategic interest of imperialist powers in ports along the Horn of Africa, including Somaliland, demonstrates the importance for the imperialists of securing control over trade routes and logistical nodes.

The tendency toward the war economy intensifies this struggle by increasingly transforming trade routes, energy supply chains, and logistical infrastructures into strategic assets subject to political and military control. Competition over pipelines, ports, railways, undersea cables, and critical technologies is a central expression of inter-imperialist rivalry. In this context, the dictatorship of monopoly capital is reinforced through the active involvement of bourgeois states in securing conditions for accumulation beyond their national borders, whilst expressing the interest of their own monopolies.

In this context, it must be noted that the emergence of multiple imperialist poles, so-called “multipolarity” does not represent a departure from imperialism, nor does it introduce a more stable or peaceful world order. It is precisely within this framework of sharpening inter-imperialist rivalry that capitalist states require “stable” mechanisms of coordination, expressed in imperialist unions and alliances. Of course, this stability is always temporary as it cannot solve the fundamental contradictions of the capitalist system itself, but only postpone or temporarily downplay them.

In light of these developments, this article examines the strategic drive toward a war economy as an expression of the laws of motion of capital and the political forms these laws currently assume.

Imperialist wars and the militarization of the economy are fundamental instruments in which monopolies safeguard or increase their profits under conditions of the capitalist system in its highest, morbid phase of imperialism, in which the partition of the world in spheres of influence has been completed and a new distribution is being attempted. The essence of this phase since the begining of the 20th century is the final replacement of free competition with the dominance of monopoly, in which the main contradiction of the capitalist mode of production, that between the social character of production and private capitalist appropriation, is pushed to the brink. This is expressed by the vast concentration and centralisation of production and capital, leading to a superabundance of capital in the hands of fewer and fewer dominant capitalist monopolies, whilst more and more workers are linked with each other in the production chain, an expression of the main contradiction of capitalism. 

When there are insufficient opportunities in the economy for accumulated capital to be invested at a satisfactory profit rate, the problem of overaccumulation of capital arises, which exacerbates inter-imperialist contradictions, as it increases the pressure to export capital and “conquer” the market share of competing monopolies and countries, or defend their own market share from these competitors—in economic, but ultimately also military, terms.

Since the counter-revolutionary overthrow of socialism in the USSR and Eastern Europe in 1989-1991, capitalist economies have further entrenched their interdependencies through the export of capital, on the basis of an international imperialist system, where monopoly finance capital now predominates in basically every corner of the world. Also accelerated by the export of capital is the uneven economic and political development, which expresses itself both in the fast catching-up of lesser developed capitalist states or, vice versa, the weaking of formerly strong capitalist powers, as well as in the asymmetric effects of crises in each country, based on the varying capacities of capitalist states to mitigate the impact of the particular crisis. These developments have further sharpened inter-imperialist contradictions, expressed in deeper and more globally synchronized crises, more rapid alterations in the correlation of forces and a tendency towards war.

Under these conditions of intensified inter-imperialist competition, capitalist states further develop the existing transnational mechanisms of coordination through which attempts are made to unify and impose military, economic, and political orientations, most clearly expressed in imperialist unions such as NATO and the European Union, but als other, sometimes looser structures such as BRICS, CIS, and so on.

In this configuration, NATO amid serious contradictions, functions as the political and strategic centre for imperialist war preparation in the name of promoting the objectives of the so-called Euroatlantic imperialist alliance. NATO defines threat assessments, military priorities, and strategic objectives that member states are expected to adopt. This is concretely reflected in the obligation imposed on member states to align defence spending and force structures with NATO capability targets, culminating in the decision adopted at the June 2025 NATO Summit in The Hague to raise defence and security-related expenditure to 5 percent of GDP by 2035, thereby institutionalizing a long-term escalation of militarization across the alliance.

The European Union operates within this framework as an essential component. It does not determine military strategy, but provides the economic and regulatory instruments necessary to implement it. Through fiscal mechanisms, industrial policy, and procurement rules, the EU organizes the material conditions of militarization and promotes its own "independent" participation in military conflicts. At the same time, competition between the various member states persists over resources, production, and influence. These contradictions are not eliminated by imperialist integration, but administered within a common orientation toward war preparation.

The concept of “strategic autonomy” plays a key ideological role in this process. Presented as a project of independence and sovereignty, it functions in reality as a tool to mobilize consent for deeper integration into the logic of imperialist war preparation, whilst serving to lessen the military dependence on the United States. Imperialist unions based on the economic foundation of monopoly power do not eliminate the contradictions between capitalist states; they try to regulate and organize them under a common orientation serving monopoly capital in all fields.

The growing role of these imperialist structures necessarily reshapes the internal functioning of the bourgeois state, which adapts its political forms to the requirements of permanent militarization. Recent EU defence initiatives and funding schemes for joint procurement and ammunition production demonstrate this role, as supranational financial resources derived from the harsh exploitation and taxation of the people are mobilized to reinforce the economic conglomerates and military capacity while remaining fully aligned with NATO strategic priorities.

In light of the growing imperialist contradictions, it has become apparent that the EU is falling further and further behind both the US and China for many reasons. The multi-year stagnation of the Eurozone economy indicates the large amounts of over-accumulated capital unable to be reinvested at a satisfactory profit rate, as a direct consequence of further concentration of capital.

Centered around the so-called twin green and digital transition, which are marked by contradictions between the various member states of the EU, the EU’s “industrial renaissance” contained a deeply anti-popular agenda aimed at restoring the profitability of European monopolies and postponing the looming crisis of overaccumulation. On the one hand, by leveraging new digital technologies in production to increase the degree of exploitation of employed workers, increasing the surveillance on the workplace and intensifying of work, the stretching of the working-day, and the generalization of flexible labor relations on the basis of a growing reserve army of labor displaced by new technologies. On the other hand, through the controlled depreciation of capital by the phasing out or destruction of certain carbon-intensive sectors and industry alongside supposed “green” criteria. 

Despite various subsidies and legal tools benefitting the profitability of certain monopoly groups, the introduction of new technologies and its replacement of labor in production has only exacerbated the problem of over-accumulation, through the further concentration of capital in fewer and fewer hands and its increasing organic composition, i.e. the replacement of labor power (variable capital) by constant capital in this composition, contributing to the long-term tendency of the rate of profit to fall.

Another capitalist management strategy – in this case one characterized by Keynesian expansionary fiscal and monetary policies to boost aggregate demand and employment – once again proved unable to resolve the laws and contradictions fundamental to capitalist production, confirming the inability of any government to “manage” capital accumulation in a long-term, stable trajectory, and, of course, always at the expense of the popular interests. 

In particular, the 2020 NextGenerationEU (NGEU) recovery package, and its main funding tool the Recovery and Resilience Facility (RRF), making available an unprecedented €723.8 billion in loans and grants for EU Member States, €412.6 of which earmarked for investments in the green and digital economy, has failed to rejuvenate the European economy. The NGEU has neither maintained nor achieved the long-term strengthening and shielding of the EU economy, nor strengthened or even maintained its competitive position vis-à-vis its main competitors, the US and China.

In this context, the EU’s transition to a war economy is not an absolute break with previous capitalist management, but directly ties into the financial and policy instruments of the green and digital transition. For example, tens of billions in “green” funds and subsidies were directed to monopolies in the war industry over the 2021-2025 period, during which “green investments” in shares of companies in the war industry rose from €14.5 to €49.8 billion, with beneficiaries such as the French monopoly Safran (€5.6 billion) and the German Rheinmetall (€4 billion).

While this redirection of funds showed that the ongoing inter-imperialist war in Ukraine and the short life cycle of arms has functioned to create a temporary outlet for capital initially mobilized by the green and digital transition, a more long-term military industrial strategy was already constructed on the backs of the “European Defence Action Plan” (2016) and the “European Defence Fund” (2019), promoting the trajectory of economic militarization beyond the cycle of imperialist wars and peace in building the EU’s Defence Technological and Industrial Base (EDTIB).

In fact, as the carving up and reconstruction phase of the imperialist “peace” plans in Ukraine were taking shape, the European Commission launched the unprecedented ReArm Europe Plan (2025), aimed at leveraging over €800 billion in war spending through various legal and financial instruments. As argued by the Commission: “The combined effect of a massive level of investment and such an aggregation of demand is expected to result in a very substantial defragmentation of the EDTIB and in a very significant increase of its manufacturing capacities. […]There is currently or in the foreseeable future no other instrument at EU level with sufficient financial firepower to trigger such a demand signal to industry.”

In an attempt to overcome the structural crisis of overaccumulation that is ingrained in the functioning of the capitalist system, the European bourgeoisie is resorting to the century-old Keynesian formula of stimulating aggregate demand through massive investments in the war economy to create a temporary outlet for capital. Having a huge historic precedent in the capitalist war economies leading up to the imperialist Second World War, today again, war preparations and the ReArm Europe spending package serve this purpose. 

The ReArm Europe programme in particular consists of the robbery of the peoples’ standard of living, their incomes and social rights for the benefit of the profit rates of the monopolies involved in the war economy lies at the core of the treacherous ReArm Europe Plan. In addition to the reorientation of existing funds and the extended lending scope of the European Investment Bank (EIB) towards the needs of the war economy, the following dirty tricks anti-labor tools are used by the European bourgeoisie:

First, the Stability and Growth Pact’s national escape clause (NEC) increases fiscal flexibility and loosening of rules for EU Member States, with the specific purpose to open up €650 billion in additional defence spending. Since this spending is still debt- and tax based, governments are incentivized to cut social spending in order to maximize the new fiscal space, integrating austerity directly into the logic of the war economy. 

Second, the Security Action for Europe (SAFE) loan instrument allows the Commission to secure demand for the war economy by borrowing €150 billion in funds directly on capital markets on behalf of the entire EU, backed by the EU and member states or other states that will submit relevant investment projects budget. By “socializing” risks and “privatizing” profits, the people are turned into a collective debt guarantee for the profits of investors and the war monopolies, facing the burden of future austerity as a repayment lever. 

Finally, in order to mobilize private capital for demand, funds are directly stolen from the people’s personal wealth through the Savings and Investment Union. The hard-earned savings and pensions of working people are pooled into a harmonised European capital market, to be funneled towards investments in the war economy, removing even any notion of public guarantee or safety-net by making working people personally bear the investments risks that safeguard the profits of the war monopolies.

Under conditions of a tendency toward war economy, the bourgeois state openly reveals its true character and its function as a political instrument of monopoly capital. In this context, parliamentary activity is increasingly reduced to the formal ratification of decisions taken elsewhere, eroding and making bourgeois democracy itself increasingly reactionary. Parliament continues to serve the interests of the ruling class, but in a less formalized and increasingly indirect manner, as decisions concerning militarization, security priorities, and the allocation of resources are removed from parliamentary deliberation and determined through executive and transnational policy processes, in the framework of imperialist alliances as seen in the accelerated approval procedures used in several EU countries to adopt military spending increases and arms packages with minimal parliamentary debate following NATO and EU decisions. 

The permanent invocation of emergency and security provides the political justification for restricting popular struggles and accelerating decision making in line with the requirements of capital. Under the horizon of permanent danger, measures that would otherwise face people’s resistance are presented as unavoidable necessities. For example, the defence budget in the Netherlands has grown with 74% since 2023, adding billions to the budget, whilst attempting to recruit young people into the professional army, aiming at a target of 14.500 new soldiers.

Moreover, criticism of the tendency of militarization and warmongering is presented as at best naive, at worst a form of treason or collaboration with forces that are competing with the Euroatlantic alliance such as Russia or China, by intensifying state repression. 

In this process, state power is actively used to the containment of class contradictions and class struggle in favour of capital. The priorities of monopoly capital increasingly determine political priorities and the allocation of social resources, while the working class is politically constrained and subordinated to the requirements of competitiveness, “security”, and war preparation. Taken together, these developments express an intensification of the dictatorship of monopoly capital, exercised not through the abolition of parliamentary forms, but through their transformation into increasingly empty opresive and antipopular instruments of executive rule serving monopoly capital. This is, of course, not an absolute trend per se, and does not preclude the parallel whitewashing of bourgeois democracy by certain bourgeois and opportunist critics of the erosion of democratic rights, as part of the very same effort to stablise capitalism.

The creation of exceptional debt instruments, the exemption of military expenditure from fiscal constraints, and the simultaneous restriction of social spending are, in this context, not technical adjustments, but expressions of the state’s role in enforcing the requirements of imperialist competition. Through these measures, the bourgeois state proclaims militarization as a general necessity while shifting the burden of adjustment onto the working class. War finance thus appears as a means through which the state secures the material conditions of imperialist rivalry at the expense of social necessities for the people.

Contrary to government expenditure programs in the public sector and the civil economy aimed to boost demand by raising private consumption levels, investments in the war economy are unique in that the bourgeois state functions as an exclusive buyer and creator of demand for arms material. In particular, products of arms companies enter the production process only once, to be consumed by the state, either to lay idle under the guise of “maintaining a credible deterrence”, or to be used up in the battlefield.

This reliance on the state demand creates challenges for the reproduction of capital, requiring extraordinary levels of intervention in the war economy and a far-reaching industrial policy. In particular, early developments towards a war economy are characterized by significant hurdles to boost private investment and boosting investment in sectors related to military preparation or “dual-use” applications, with government support highlighting the lack of economy-wide stimuli and spill-overs of government investment beyond filling the pockets of monopolies directly involved in the arms industry. 

A good example is found in a 2025 government-backed advisory report laying out the militarization plans for the Dutch economy, which stresses that in light of low private capital investment and lack of private consumption, creating “predictable government demand is crucial to enable scaling up” of the Dutch Defence Technological and Industrial Base. The transition to a war economy, as pointed out in the report, does not only concern the production of weapons, but involves adapting the entire economy and all functions of the state to the needs of war preparation.

The war economy relies on the bourgeois state not only as a buyer-investor, but also for its interventionist commanding role in the economy. Through subsidies, legal regulation or simply by decree, the state creates linkages between the arms industry and other civil sectors of strategic importance, creating new markets and investment opportunities for monopolies in areas such as manufacturing, transport, infrastructure, space, aerospace, telecommunication, etc. 

In particular, through civil-military cooperations in so-called “dual-use” projects, the state allies with domestic monopolies or monopolies within the framework of the EU and NATO, to create temporary, profitable outlets for overaccumulated capital in the war economy. As a striking example, the VDL Group - a Dutch monopoly active in the manufacturing industry with over one hundred subsidiary companies involved in metalworking, high-tech systems, car assembly, and bus construction - has entered into a collaboration with the Dutch Ministry of Defence to enable production of military equipment such as drones or combat vehicles in the Netherlands.

Bourgeois propaganda presents the logic of war preparation as a unified “national defence effort”, in which state institutions, industry, and society allegedly converge around a common interest. This characterization disguises the persistence and the sharpening of contradictions between the military needs of the bourgeois state and the requirements of profit accumulation of monopoly capital. Far from disappearing, the anarchy of production is intensified under war preparation.

The bourgeois state requires rapid, standardized, and reliable military production, as well as cost control and long-term planning. Monopoly capital, by contrast, operates according to profitability, pricing power, and shareholder interests. Even under sustained militarization, arms monopolies retain their autonomy and exploit their strategic position to impose inflated costs, delays, and technical constraints on the state. This contradiction is openly acknowledged within the military establishment itself. At the AUSA 2025 conference in October 2025, U.S. Army Secretary Dan Driscoll publicly criticized the Army’s acquisition system for high costs and inefficiencies linked to longstanding procurement practices and dependence on major defense contractors, and called for major reforms to speed innovation and reduce waste.

War therefore does not suspend capitalist production relations. The war economy and preparations are part of capitalist normality and reproduce capitalist relations of production. Monopoly capital relies on the state as a guarantor of demand, subsidies, and political protection, yet it is never fully subordinated to it. The result is a conflictual unity in which monopolies extract maximum profit while inefficiencies and costs are socialized i.e. pushed onto the people as a burden.

As mentioned, despite its rhetoric of unity, the European Union remains marked by deep contradictions between various member states. A coherent collective military and industrial strategy cannot be realized because each national bourgeoisie and bourgeois state continues to defend its own monopolies and strategic sectors. Competition reappears at every level of European militarization, particularly in struggles over contracts, production sites, and technological advantages. The Franco-German MGCS program, launched in 2017 to produce a next-generation armored system, for example, has been characterized by industrial and political disagreements and timetable uncertainty, reflecting the difficulty of reconciling national industrial interests within a supposedly joint European project.

Similar contradictions emerged in attempts to coordinate ammunition production for Ukraine: member states proclaimed joint European targets while continuing to prioritize national suppliers, limiting integration and reinforcing rivalry. The allocation of EU defence funds follows the same pattern, as subsidies intended to strengthen collective capacity are largely captured by dominant national arms monopolies in France, Germany, Italy, and Spain.

These conflicts are expressions of uneven development under imperialism. Each state remains the political instrument of its own monopolies, which cannot renounce national advantages even within supranational structures. The EU is unable to overcome inter-imperialist rivalry. It institutionalizes and manages it while directing unity outward against external competitors and downward against the working class and other oppressed strata of the population. What appears as fragmentation is in fact the normal form through which competing monopoly interests coexist inside an imperialist union.

The tendency toward war economy also accelerates the further reactionary transformation of bourgeois parliamentary forms, serving monopoly capital. Arms monopolies intensify their penetration of political institutions through lobbying, financing, and direct influence over legislation and procurement. The case of Rheinmetall in Germany is illustrative: the company has expanded its lobbying activity, strengthened ties with governing parties, and redirected production from civilian sectors toward military output, demonstrating the growing subordination of political decisions to the interests of the military-industrial complex.

Following the law of profit maximization, the monopolies in the war economy pursue productivity developments in order to obtain extra surplus value, owing to the obtainment of superior technological improvements and machinery before their generalization in the industry by competitors. In the short term, productivity increases in the war industry to therefore alter the distribution of surplus value among capitalists to the benefit of the technologically most advanced monopolies. In the long-term, the redirection of new digital technologies, such as those related to AI and quantum, to the efforts of the war economy as a means to boost productivity and price competitiveness, contributes to the growing organic composition of capital and the subsequent squeezing of the profit rate.

“Military Keyensianism” distinguishes itself from historic Keynesian attempts to boost the consumption of workers, since the private consumption by individual workers does not represent a factor in the creation of demand in the war economy. That is, commodities of the war industry are not consumed by workers, nor play a role in supplying the implements for the production of consumer goods relevant for the worker’s subsistence.

Since the increase of productivity does not lead to a reduction of the necessary labor time for the production of the worker’s means of subsistence as a source of relative surplus value, the war economy is dependent on absolute surplus value production by increasing the degree of exploitation, restricting wages, and intensifying and elongating the work-day. Therefore, as a compensation mechanism for the long-term profit rate squeeze, productivity investments in the war industry are not only aimed to boost price competitiveness, but they are used to cheapen labor costs and deepen the total degree of exploitation in the war economy. Productivity developments are meant to be funded at the costs of the wage budget and structural anti-worker labor market reforms.

The tendency toward war economy cannot be sustained through economic measures alone: it requires ideological mobilization and the political neutralization of opposition of workers’ and people’s struggle. In the superstructure, bourgeois ideology shifts to legitimize militarization and present imperialist priorities as matters of "national interest" and collective survival. Arguments such as “security”, “resilience”, and “national unity” function to obscure the class character of war preparation and to align broad social strata behind the strategic needs of monopoly capital.

This ideological shift is accompanied by a reactionary hardening of the political sphere. Anti-communism is intensified, dissent against militarization is delegitimized or criminalized, and historical revisionism is employed to normalize imperialist alliances and erase the revolutionary traditions of the working class. Across the EU, demonstrations against arms shipments and military expansion have increasingly been restricted or framed as threats to public order and national security.

Under these conditions, the working class is called upon to sacrifice in the name of the “national interest” and the alleged urgency of imminent external danger. Wage restraint, intensified control over labour, and the redirection of industrial priorities toward military needs are justified as necessary responses to external threats: the political restriction of the independent action of workers, union integration into state militarization policies, suppression of disruptive labour struggle, and the subordination of employment and production to defence priorities under ideological pressure.

Trade unions are institutionalized into the class-collaborative “social partnership” structure and integrated into the war consensus. In this process reformist unions subordinate class struggle to the defence of national production and employment, thereby objectively adapting to militarization. Union leadership, often led by social-democrats, whitewash the increased military production as “pro-worker” since it supposedly defends “the preservation of jobs”, and accept state-defined economic and political priorities. In Germany, the IG Metall trade union has supported state-backed industrial strategies linked to defence conversion, while in Italy the major confederations channel labour demands into institutional negotiations under the same pretext of “defending employment” even where production becomes increasingly tied to militarized supply chains, subordinating workers’ interests to the logic of competitiveness and capitalist stability.

Migrants and youth occupy a particularly vulnerable position within this process. They are increasingly used as precarious labour reserves in militarized industries and logistics. 

Overall, the transition toward the war economy therefore deepens the exploitation and oppression of the working class in the interests of capital.

The tendency toward war economy poses the question of political orientation with renewed urgency. For the communists, this question must be approached with a concrete class analysis of imperialism and the bourgeois state.

First, the communists must take a clear position against against the domestic bourgeoisie and all imperialist camps. No support can be given to NATO, the European Union, Russia or any imperialist force, regardless of their ideological justifications or internal differences. Imperialist war is not a deviation from capitalism, nor the result of bad leadership or policy errors. It is the normal and necessary result of imperialism. Choosing between imperialist alliances, blocs or states means aligning with the bourgeoisie against the working class. The experience of the First imperialist World War, when the parties of the Second International supported their own bourgeoisies and voted for war credits, remains the clearest historical demonstration of where opportunism and chauvinism lead.

Second, the communists must reject all illusions in imperialist unions. The EU and NATO cannot be reformed, democratized, or transformed into instruments of peace. Their function is structurally tied to the organization of imperialist power, militarization, and class domination. They must therefore be exposed, opposed, and fought against politically, not presented as capable of serving peaceful or democratic aims. Similar capitulations can be observed today in reformist and social-democratic forces across Europe that justify NATO and the EU and support military policies under the pretext of defending democracy and stability.

Finally, the communists must reaffirm proletarian internationalism. Against mobilization and war propaganda, it must work for the unity of workers across borders and oppose the militarization imposed by capital in the name of national interest. The only consistent response to imperialist war is the transformation of war into class struggle and revolutionary rupture with the capitalist system.

The war economy is not a temporary policy choice or an exceptional response to crisis. It represents the political form assumed by decaying capitalism under conditions of intensified imperialist competition. As long as capitalism persists, wars will recur and repression will deepen, regardless of the specific configuration of alliances or institutions.

The alternative is not peace within capitalism which is paves the way for the next imperialist war, but the revolutionary overthrow of capitalism itself. Only the abolition of imperialism and the socialist transformation of society can eliminate the material roots of war. Socialism-communism is the only road to peace.