Military Keynesianism: The Welfare State for the Rich

Biblo Baggins being tempted by the one ring of perpetual emergency powers

The Polar Blast || The political economy of advanced capitalism is undergoing a decisive structural reconfiguration, marked by a strategic pivot from the post-war welfare state to a militarised security state. This transition represents not a sudden rupture but the culmination of decades of neoliberal policy, accelerated by the profound and persistent crisis of stagnation that has gripped the mature capitalist core since at least 2008.

Where the Keynesian welfare state managed social risk and stimulated demand through collective provision and public investment, the contemporary model seeks to sustain accumulation through two primary, interconnected channels: the financialisation of essential domestic assets and the escalation of geopolitical military expenditure.

To appreciate the depth of this pivot, one must first place it within the exhausted landscape of neoliberal capitalism. The post-Cold War consensus, built on hyper-globalisation, financial deregulation, and the retreat of the state from direct economic stewardship, has entered a period of terminal decay. The model fuelled profits through wage suppression, asset inflation, and global labour relocation, but in doing so it gutted the foundations of mass consumer demand, productive investment, and social stability.

The result is a condition of stagnation with chronically weak investment outside of speculative bubbles, saturated consumer markets, stagnant productivity, and interest rates trapped near historic lows. Traditional fiscal stimuli, such as tax cuts or civilian infrastructure spending, face significant political headwinds and are viewed as offering diffuse benefits that do not directly or immediately bolster corporate profitability.

Moreover, the vulnerabilities of extended global supply chains, starkly revealed during the pandemic and through geopolitical tensions, have been re-framed as national security crises, demanding a state response. It is within this context of economic malaise and perceived vulnerability that military spending is resurrected not as a regrettable necessity but as a proactive economic strategy.

Military Keynesianism operates through distinct economic channels that render it uniquely attractive to state managers and capital. Firstly, it generates direct, guaranteed, and non-cyclical demand. Defence contracts provide multi-year, high-value revenue streams to a tightly integrated ecosystem of prime contractors, subcontractors, and affiliated research institutes. This demand is often counter-cyclical, gaining political potency during economic downturns as a form of job creation. Secondly, it functions as a de facto industrial policy, particularly in politics ideologically allergic to overt state planning.

By funding high-risk, frontier research and development in areas like artificial intelligence, semiconductors, cybernetics, and hypersonics the state socialises the immense cost and uncertainty of innovation. The private sector subsequently captures the intellectual property and commercial spin-offs, a historical process that gave rise to the internet and GPS, thus socialising risk while privatising reward. Thirdly, the sector is structurally geared towards high profitability. The prevalence of cost-plus contracts insulates major contractors from market competition, guaranteeing margins.

However, this economically seductive model confronts a profound problem of political legitimisation. In societies with democratic pretensions, the permanent allocation of vast public resources to armaments, especially amidst austerity in social spending, requires a justification more compelling than mere economic efficiency or regional employment. The rationale of “national security” possesses a unique potency, capable of securing bipartisan consensus, muting substantive debate, and commanding a privileged claim on the government’s revenue and spending.

Yet, for national security to function as an open-ended imperative, it must be personified. Abstract notions of systemic rivalry or strategic competition lack the emotional resonance required for mass mobilisation. The body politic, and the political class that reflects it, requires a tangible enemy, an adversarial other whose actions and very existence can be portrayed as an existential threat to the prevailing social and economic order.

This structural requirement for an enemy converges with real geopolitical friction to produce the sustained and amplified vilification of a designated “authoritarian axis”. Russia, China, and Iran have been cast in specific, complementary roles within this narrative architecture. Russia fulfils the function of the classic military threat. Its invasion of Ukraine provides a visceral, media-genic drama of territorial aggression that easily invokes historical memories of twentieth-century continental wars, thereby justifying the rapid expansion of conventional NATO capabilities and framing rearmament as a moral defence of democracy.

China is constructed as the peer competitor and civilisational rival. Its economic scale, technological prowess, and alternative governance model present a more complex, long-term challenge, justifying not only naval and missile build-ups but restrictions on technology transfer, and massive state-led investments in competing infrastructure. Iran serves as the perennial source of asymmetric and proxy threats, legitimising sustained military engagement in the Middle East and the maintenance of a global force apparatus.

This vilification is not a pure fabrication but a process of selective amplification and decontextualization, where the complex motivations of these states are stripped away, diplomatic off-ramps are marginalised, and they are portrayed not as rational actors with competing interests but as inherently expansionist and pathological regimes. This framing creates a perpetual state of emergency, a condition in which extraordinary budgetary and security measures become normalised, and critique is dismissed as naïve or disloyal.

This political economy generates a powerful, self-perpetuating feedback loop. Increased military expenditure demands an intensified threat narrative to sustain public acquiescence. This amplified narrative, reflected in policy and rhetoric, provokes countermeasures from the designated adversaries, whose reactions are then cited as empirical validation of the original threat assessment, thereby justifying further spending and escalation.

This classical arms race dynamic is now elevated to the level of full-spectrum economic and technological competition. The loop is powered by a formidable constellation of entrenched institutional interests – the military-industrial complex with its direct material stake; a national security bureaucracy whose influence expands with the scope of the perceived threat; and media ecosystems that find the lucid drama of confrontation more lucrative than the complexities of diplomacy.

The consequences of consolidating this warfare-state model are profound and corrosive, representing a fundamental reorientation of the state’s purpose. To grasp the magnitude of the shift, one must contrast it with the welfare-state model it supplants. The post-1945 Keynesian welfare state was a class compromise, forged in the shadow of depression and war. Its economic logic was one of domestic, socialised investment.

The state acted as a stabiliser and source of effective demand through the provision of a social wage (healthcare, education, pensions), large-scale investment in public infrastructure, and counter-cyclical fiscal management. Its legitimising ideology was social citizenship; political legitimacy was derived from the state’s role in guaranteeing a minimum standard of welfare and a shared, if often illusory, sense of national prosperity. The social contract promised security from the cradle to the grave in return for productive labour and political quiescence.

This model was dismantled from the 1970s onward under neoliberal pressure, citing a crisis of profitability and a fiscal crisis of the state. The promise of social citizenship was replaced by the promise of individual asset ownership, particularly in housing, as the new basis of security. However, this asset-based model generated its own crises of inequality and precarity. Faced with the long-term stagnation and failing legitimacy of this neoliberal settlement, the state has pivoted to a different form of Keynesianism, one that avoids the redistributive politics of the old welfare state.

The warfare state’s economic logic is one of securitised, non-competitive expenditure. Its core spending is directed towards defence procurement, intelligence, and surveillance, not hospitals or schools. Its relationship to capital is not as a moderator or constrainer, but as a direct partner and client. The legitimising ideology is no longer shared prosperity but national security in a state of perpetual emergency.

This represents a fundamental redefinition of citizenship itself. The citizen is no longer a bearer of social rights entitled to care, but a stakeholder in national defence, whose duty is vigilant patriotism. Political discourse shifts from debates about the adequacy of healthcare to debates about the adequacy of missile defence. Military spending achieves a remarkable bipartisan consensus that welfare spending could never muster, as questioning its scale is framed as a sign of weakness or disloyalty. This creates a stable political environment for long-term, lucrative contracts, free from the volatile demands of democratic redistribution for social goods.

The shift, in essence, marks the final stage of the neoliberal transformation – the privatisation of social welfare alongside the socialisation of warfare. The state sheds its role as guarantor of collective well-being and reinvests its fiscal and ideological power into being the prime contractor for a securitised economy. This is a more stable model for capital. Welfare spending empowered workers and citizens, strengthening their hand and creating expectations of rights. Military spending empowers contractors, tech firms, and the security apparatus; it creates dependencies, not emancipatory rights. It manufactures a compliant populace through fear rather than a demanding populace through entitlement.

The ramifications are dire. Firstly, it constitutes a catastrophic misallocation of social resources, diverting capital, scientific talent, and political energy away from addressing the existential crises of climate change, public health decay, and deepening inequality. Secondly, it actively deforms democracy, cultivating secrecy, expanding executive power, and marginalising dissent within a narrowed spectrum of acceptable debate. Thirdly, it makes the world immeasurably more dangerous by framing international relations as a zero-sum civilisational struggle, increasing the likelihood of miscalculation and direct conflict.

Ultimately, the turn to militarised economics and the vilification of strategic adversaries is a confession of systemic failure. It signals that capitalism in its current form can no longer generate stable, equitable, or legitimate prosperity through peaceful means. Having exhausted the potentials of consumer debt and financialised asset inflation, it now reaches for the oldest and most destructive stimulant – organised violence and the fear that justifies it. The enemy is thus a structural requirement, a protagonist in a drama scripted by the internal contradictions of late capitalism.

A drama that provides purpose for the security state, profits for the defence contractor, and a unifying narrative for a fractured polity, all while diverting attention from the deepening social decay at home. To challenge this trajectory is to insist that true security lies not in the endless accumulation of weapons and enemies, but in the radical reorganisation of a political economy that has become dependent on their perpetual manufacture.