Honestly, the phrase "war profiteering" usually makes people's skin crawl. You've probably seen the headlines or the movies—shady characters in suits getting rich while soldiers are in trenches. It feels wrong. It feels like someone is making a buck off of human misery. But if you look at how the global economy actually functions, there is a weird, uncomfortable side to the story. Some economists and historians argue there is a legitimate merit to the use of war to profit, or at least a practical necessity that we can't just ignore.
Money makes the world go 'round, even when that world is on fire.
The Brutal Logic of Incentives
Let’s be real for a second. If a government needs ten thousand drones by next Tuesday, they don't just ask nicely. They pay. High prices aren't just about greed; they’re about speed. In 2024 and 2025, we saw this play out in real-time with the surge in defense spending across Europe and the U.S. Companies like Lockheed Martin and RTX (formerly Raytheon) didn't just stumble into billions; they scaled up because the financial "merit" was there. Without the promise of a massive ROI, why would a private company pivot its entire assembly line?
They wouldn't.
It's a harsh truth. When we talk about the merit to the use of war to profit, we're often talking about the only mechanism that works fast enough to keep a nation from losing. During the American Civil War, "shoddy millionaires" were vilified for selling cardboard-soled shoes to the Union Army. That’s the dark side. But the flip side is the massive mobilization of the North’s industrial base, which eventually won the war. Profit was the fuel for that engine.
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Innovation Under Fire
War is a terrible, violent teacher. But it’s also a relentless innovator. You like your microwave? You can thank World War II. That tech came from the cavity magnetron, a device developed for radar to help spot enemy planes. If there wasn't a massive pile of cash waiting for the engineers who could perfect it, we might still be heating up leftovers on a wood stove.
Technological "spillovers" are a huge part of why some people defend the war-profit cycle.
- Penicillin: Mass production was a pipedream until the U.S. government threw money at it to save soldiers in 1944.
- GPS: Originally a military navigation system, now it's how you find the nearest taco truck.
- The Internet: Started as ARPANET, a way for the military to keep communicating if the nukes started flying.
Joseph Schumpeter, an economist you might've heard of, called this "Creative Destruction." Basically, the old, slow ways of doing things get blown up (sometimes literally) and replaced by faster, better tech. It's messy. It's often tragic. But it’s how we got the ENIAC, one of the first general-purpose computers.
The Merit to the Use of War to Profit: Economic Stability or Just Greed?
A lot of folks assume war just drains a country dry. Sometimes it does. But look at the U.S. after the Great Depression. World War II basically killed unemployment. It dropped from nearly 15% to about 1% in just a few years. Why? Because the government was paying private firms to hire everyone they could find. Women—"Rosie the Riveter" types—entered the workforce in droves because the profit motive made it necessary to expand.
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The Military-Industrial Pipeline
There's this "revolving door" that people talk about. High-ranking generals retire and then show up on the boards of major defense contractors. In the last five years, from 2020 to 2024, the Pentagon handed out roughly $2.4 trillion in contracts. That is a staggering amount of money. Over half of the Pentagon’s budget goes straight to private firms.
Is this a "merit"? Some say yes, because it maintains a "defense industrial base." Basically, if you don't keep these companies profitable during peacetime, they won't exist when you actually need them. You can't just build a fighter jet factory overnight. You have to keep the lights on and the engineers paid.
The "Excess Profits" Argument
Historically, governments have tried to tap the brakes on this. During World War I, the U.S. passed the War Revenue Act of 1917, which taxed "excess profits" at rates up to 60%. The idea was that you can make a profit, but you shouldn't get filthy rich off the blood of others. It’s a delicate balance. If you tax too much, the innovation stops. If you tax too little, you get a class of "war millionaires" while the rest of the country suffers through rationing.
Honestly, the morality of it is a grey area. Is it "merit" if a pharmaceutical company develops a life-saving trauma bandage because they know the military will buy millions of them? Most would say yes. Is it "merit" when a company lobbies for a war just to boost their stock price? That’s where the argument falls apart for most people.
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Actionable Insights for the Curious
If you're trying to wrap your head around how this affects the modern world, here’s how to look at it:
- Watch the "Cost-Plus" Contracts: This is where the government pays a company for their costs plus a guaranteed profit. It's efficient for getting things done fast, but it’s notorious for "gold-plating"—making things more expensive than they need to be.
- Follow the R&D: Look at what DARPA (the Defense Advanced Research Projects Agency) is funding today. That’s usually a preview of what you’ll be buying at Best Buy in ten years.
- Check the "Dual-Use" Factor: The most "meritorious" war profits usually come from tech that has a civilian life after the conflict. Think drones for delivery or AI for medical scans.
- Diversification is Key: If you're looking at this from an investment perspective, the companies that thrive long-term aren't just selling bombs; they're selling logistics, cybersecurity, and communication.
At the end of the day, war is a catastrophe. Nobody sane wants it. But as long as it exists, the profit motive will be the engine that drives how it's fought and, eventually, how it's won. The "merit" isn't in the destruction, but in the desperate, high-speed progress that happens when the stakes are literally life and death.
Understanding this doesn't mean you have to like it. It just means you're seeing the world as it actually is, not how we wish it would be. The intersection of money and conflict is as old as civilization itself, and it isn't going away anytime soon.
Research the "Defense Industrial Base" reports from the Department of Defense to see which sectors—like microelectronics or hypersonics—are currently receiving the most "incentivized" funding. Review the historical records of the Truman Committee, which investigated war waste and profiteering in the 1940s, to see how the U.S. has historically tried to separate genuine innovation from simple price gouging.