War Is a Racket

Smedley Butler Was Right

In 1935, Major General Smedley Butler — then the most decorated Marine in US history — published War Is a Racket. Butler had fought in nearly every American conflict from the Banana Wars to World War I. He won the Medal of Honor twice. And he came home to tell the truth:

“I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903.”

Ninety-one years later, the racket has only gotten bigger. Butler's “Big Business” has become a trillion-dollar defense industry. His “gangsters for capitalism” have become the most powerful lobbying force in Washington. And the muscle men — the soldiers, sailors, and Marines who do the fighting and dying — still earn less in a year than a defense CEO earns in a day.

CEO Pay vs. the People Who Actually Fight

The disparity between those who profit from war and those who fight it is the most obscene feature of the military-industrial complex. Consider:

The Revolving Door: From Pentagon to Profit

According to the Project on Government Oversight (POGO), 672 senior Pentagon officials left government service and became lobbyists, board members, executives, or consultants for defense contractors between 2008 and 2023. The revolving door between the Pentagon and the defense industry is not a metaphor — it is a career path.

The pattern is consistent: serve in government, make decisions that benefit certain contractors, leave government, and join those contractors at compensation packages that dwarf government salaries. The implicit bargain is never spoken but always understood.

Cost-Plus Contracts: Rewarding Failure

The defense industry operates on a business model that would be considered insane in any other sector: cost-plus contracts. Under this arrangement, the government pays the contractor their costs plus a guaranteed profit margin. The more the program costs, the more the contractor earns.

This creates a perverse incentive: overruns are profitable. Delays are profitable. Complexity is profitable. The contractor has zero incentive to deliver on time or on budget — and they almost never do.

The F-35 in 45 States: Political Engineering

The F-35 Joint Strike Fighter is not just a weapons program — it is a political masterpiece. Lockheed Martin has deliberately spread F-35 production across 45 states and 375 congressional districts. This is not efficient manufacturing. It is political engineering designed to make the program impossible to cancel.

When a program has suppliers in 90% of states, nearly every senator has a financial interest in its continuation. When it touches 375 out of 435 House districts, 86% of representatives face job losses if the program is cut. The F-35 doesn't need to work well — it just needs to employ people in the right places.

F-35 supplier states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Wisconsin. That's 45 out of 50 states — 90 out of 100 senators with a political interest in the most expensive weapons program in history.

The Contractor Body Count

One of the least-discussed aspects of America's post-9/11 wars is the role — and the deaths — of private military contractors. According to the Department of Labor and Brown University, more than 8,000 contractors died in Iraq and Afghanistan between 2001 and 2021.

In many years, contractor deaths exceeded military deaths. In 2009, more contractors were killed in Afghanistan than troops. In 2010, the ratio was similar. These deaths are not counted in official casualty figures. They don't get flags on coffins. Their families don't get the same benefits as military families. They are the invisible casualties of privatized war.

At the peak of the Iraq War, there were more private contractors in Iraq than US troops. In 2008, the Department of Defense had approximately 160,000 contractors in Iraq compared to 150,000 troops. Many were performing functions previously done by soldiers — security, logistics, intelligence, even interrogation. The outsourcing of war to private companies reduced political accountability (no draft, fewer “official” casualties) while massively increasing costs.

The Pentagon Has Never Passed an Audit

The Department of Defense is the only federal agency that has never passed a financial audit. In its most recent attempt (2023), the Pentagon failed for the sixth consecutive year. The department could not account for approximately $3.8 trillion in assets — roughly half of everything it owns.

To put this in perspective: a small business that couldn't pass an IRS audit would be shut down. A publicly traded company that couldn't produce auditable financials would be delisted. The Pentagon — which receives $886 billion per year of taxpayer money — simply shrugs and asks for more.

The failed audits aren't just accounting problems — they're evidence of systemic corruption. When you can't track where $3.8 trillion went, it's because you don't want to. The Pentagon's accounting failures provide perfect cover for contractor fraud, cost overruns, and military-industrial complex profiteering.

“War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives.”

The Bottom Line

When Operation Epic Fury launched on February 28, defense stocks surged. Raytheon — maker of the Tomahawk missiles raining down on Tehran — jumped 8% in a single day. Lockheed Martin, Northrop Grumman, and General Dynamics all hit all-time highs. The executives who run these companies will earn tens of millions this year.

The E-1 Private in the Persian Gulf earns $24,072. If they come home with PTSD — and 20% of combat veterans do — they'll spend years navigating a broken VA system. If they come home in a flag-draped coffin, their family gets a $100,000 death gratuity. The CEO of the company that made the missile that started the war earns that in less than two days.

War is a racket. Smedley Butler knew it in 1935. We know it now. The only question is whether we'll ever do anything about it.

The Iran War: Profit Projections

The push for war with Iran isn't just geopolitical — it's financial. Defense contractors are already counting the profits from what could be the most expensive war in American history. Here's what they stand to gain:

• Raytheon: Tomahawk missiles ($2M each), Patriot systems, air defense — projected $50-100B in Iran war contracts
• Lockheed Martin: F-35 combat missions, THAAD systems, satellite intelligence — projected $80-150B
• Northrop Grumman: B-21 bomber missions, Global Hawk surveillance, cyber warfare — projected $40-80B
• General Dynamics: Nuclear submarine operations, IT systems, ground vehicles — projected $30-60B
• Boeing: KC-46 tanker operations, Apache helicopters, munitions — projected $25-50B

A full-scale Iran war could generate $225-540 billion in defense contractor revenue over 5-10 years. That's why presidents can start wars unilaterally — the military-industrial complex has captured both parties.

The Solution: Nationalize Defense Production

The military-industrial complex exists because we've privatized the production of weapons while socializing the costs. The solution is obvious: nationalize defense production. If we need weapons for national defense, produce them in government arsenals with government employees at cost.

This isn't radical — it's how America won World War II. Government factories produced most of the planes, tanks, ships, and munitions that defeated fascism. Private contractors played a supporting role, not the dominant one they play today.

Nationalizing defense production would:

• Eliminate cost-plus profiteering
• End the revolving door between Pentagon and contractors
• Remove the political pressure to start wars for profit
• Reduce weapon costs by 50-80% (no profit margin)
• Focus on defense rather than offense
• Make hundreds of billions available for domestic priorities

Related Analysis

• What $11.6 Trillion Could Have Bought Instead
• AIPAC & War Machine: Who Pushes for War
• Undeclared Wars: Presidents Bypass Congress
• Cost of Empire: $1.3 Trillion Per Year
• Draft & Inequality: Who Fights America's Wars
• Base Nation: 800+ Military Bases Worldwide
• Conflicts Database: Every US War Since 1775