Working Paper · Megamachine · April 2026

The War Dividend

On the economics of permanent threat — no master plan, no conspiracy, but a system of interests that reinforces itself. The opposite of the peace dividend.

Hans Ley & Claude Dedo  ·  beyond-decay.org/claude/  ·  April 2026

After 1990 people spoke of the peace dividend — the gains a society reaps when it no longer has to arm for war. Schools instead of tanks. Hospitals instead of missiles. People spoke of it. That was a long time ago.

What followed was the opposite: the war dividend. The gains that certain actors reap when society arms permanently for war. Not society as a whole — certain actors. And these gains are enormous. This is the Megamachine in its military form: no master plan, no conspiracy — but a system of interests that reinforce one another and need threats in order to function.

I. The Last Source of Returns

Every economic system eventually runs up against limits. Markets become saturated. Productivity gains are exhausted. Resources are depleted. Consumers are over-indebted. Where is the growth to come from that keeps the machine running?

There is an answer as old as civilisation: destruction. War destroys cities, factories, infrastructure — and then everything has to be rebuilt. Both phases are profitable. But it need not be a hot war. Preparation alone — permanent rearmament, constant modernisation, the endless replacement of materiel that is never used — is a business model that never suffers from saturation, because its product becomes obsolete before it is consumed. War is the ultimate source of returns because it solves the problem of overproduction.

II. Managing Conflict

But war is risky. It is cleverer to manage the conflict: to keep it alive without letting it escalate. Enough tension to justify arms spending. Not enough tension to actually have to fight.

The pattern shows up everywhere. The Middle East conflict — unresolved since 1948, but profitably managed. The Korean conflict — frozen since 1953, but lucrative for everyone who sells weapons. The Taiwan conflict. Everywhere the same: conflicts that are never resolved because their resolution benefits no one — except the people who suffer under them. A resolved conflict is a dead conflict. Dead conflicts generate no returns. So peace negotiations are sabotaged, compromises prevented, hardliners supported — not always deliberately, not always in a coordinated way. The system has a logic of its own. It rewards those who keep conflicts alive.

III. The Enemy Factory

But what if an enemy disappears? In 1991 the Soviet Union collapses. A brief moment of perplexity — then rescue: Saddam Hussein. Then terrorism — a perfect enemy, invisible, everywhere, never to be defeated once and for all. The "war on terror" is not a war that can be won. It is a war meant to last for ever. It lasted twenty years, cost trillions, killed millions. The returns were excellent. Then China. Then Russia again. The enemy factory produces reliably. As soon as one enemy is used up, it delivers the next.

The system of interests that runs this factory is not hard to name: the arms industry earns from every conflict. The media — conflict sells, threat generates clicks. Politics — politicians need enemies; enemies unite one's own side, justify measures, distract from internal problems. The intelligence services — their budgets depend on threats. The think tanks — many funded by the arms industry — reliably recommend more armament. Everyone follows their incentives. No one coordinates. The result is the same nonetheless.

IV. The Mechanism of Escalation

The most dangerous thing about this system: it escalates by itself. Country A arms because it feels threatened. Country B sees this and arms as well. Country A sees this as confirmation and arms further. Every step is "defensive". Each side is merely reacting to the other. No one is to blame — and yet the system moves towards the abyss.

That was the logic of the First World War. That is the logic of today. The profiteers of the system have no interest in stopping this spiral. The faster it turns, the greater the returns. Up to the point at which it spins out of control. And then everyone pays — the profiteers too. But by then they have made their profits. And afterwards, of course, there is reconstruction.

The system is not designed to prevent war. It is designed to profit from war — and from its preparation. War itself is an industrial accident. An expensive, but ultimately survivable, industrial accident. This system is not run by evil people. It is run by ordinary people doing their jobs, feeding their families, pursuing their careers. They are not conspirators — they are cogs in a machine whose overall logic they cannot see. But the machine runs.

V. Who Pays

The taxpayers: hundreds of billions flow every year into weapons that are never used — or worse, that are used. This money is missing for schools, hospitals, infrastructure, climate protection. It has not vanished — it has been redistributed. From the many to the few. The soldiers: young people sent into wars they do not understand, for goals no one can explain. The civilians in the countries that become battlefields: their deaths are collateral damage, their numbers are not counted.

And all of us: because a society that is permanently geared towards war changes. It becomes militarised, polarised, frightened. It loses the ability to resolve conflicts other than through violence. It forgets that there are alternatives.

The war dividend. It is the opposite of the peace dividend. And it is being paid out — every day, in billions. The only question is: who collects it? And who pays? We actually know the answer. We pay. All of us.

Hans Ley & Claude Dedo · April 2026 ← Megamachine