As soon as it became clear that the US-UK war against Iraq was on, stock markets around the world rocketed upwards by as much as 20% and the price for a barrel of crude oil fell back sharply. Capitalism was convinced that the overwhelming firepower of the US military backed up by the more puny forces of the British army would quickly overwhelm the Iraqi army, which would melt away or even hand over Saddam in a coup. The war would be over by Easter at the latest and maybe a lot earlier.
Well, it's a week in and all that bravado has faded. The stock markets have started to slip back and the oil price has moved up again. And now the real costs of this imperialist adventure are beginning to come out. For the Iraqi people, the cost is measured in death, dismemberment and destitution. For Americans and Brits, it is going to be measured in debts and deficits. The monetary costs of this war are going to hit the living standards of working families across the board significantly.
The US administration has warded off any questions about how much the war was going to cost. They couldn't say, they said, because they didn't know how it was going to pan out. With the war a week in, President Bush finally had to ask for some more money, $75bn in sum.
At first sight, this is not much when measured against an economy that produces nearly $11trn a year - it's just 0.7% of GDP. And it is not even much compared to the overall annual budget expenditure of the US government, of around nearly $4trn. The Second World War cost the American taxpayer 130% of its annual GDP back in the 1940s. The Vietnam War cost 12% of GDP. So maybe this war is just a pinprick on the American economy.
But that's wishful thinking. First, every war leader underestimates its cost. Why tell the bad news on money when you want people to fight and use their resources without question? Abraham Lincoln forecast that the cost of the American civil war would be 7% of GDP in the 1860s. It turned out to be closer to 100%.
And Bush's request for extra money is just the start. There have been a lot of estimates on the cost of the war in Iraq recently. In summary, it seems that the war will cost at least $50bn in military action. But then the costs of occupying Iraq with military forces and employing a huge civil and military service for several years ahead would add another $500bn. And then there is the so-called reconstruction of the Iraqi economy post-Saddam. Already the US is handing out contracts for ports, transport, water and of course oil. This reconstruction could cost another $100bn.
And it's clear that all this is going to have to be paid for by Americans. In the last Gulf War most of the cost was paid for by oil revenues from Iraq and by payments from Saudi Arabia and Kuwait. Not this time. No help from the likes of Germany or France. And it is by no means likely that a post-Saddam Iraq is going to allow the US to take all its oil revenues to pay for US occupation as they are supposed to be improving conditions for the people. And anyway, Iraqi oil production could be way down if the war keeps the pumps quiet and damages well-heads and refineries over the next weeks and months.
And that's not the end of the cost for US working people. Continued US occupation will mean a backlash in the Middle East. Problems could arise for neighbouring Arab dictatorships that have backed the US like Saudi Arabia. Any instability there will drive oil prices higher.
If oil prices stay as high as $30/barrel, where they have been recently, then US petrol and heating prices will continue to be at record levels. If American families have to spend more on fuel, they will cut back on other things. So the US economy will continue to slow. Indeed, these economic effects of the war have been calculated to cost up to 15% of GDP. At the very least, the cost of even a short war (plus a long occupation) could be worse than the Vietnam War!
And here's the problem. Already the US economy has been crawling. That has meant tax revenues have not matched expectations and the federal government has started to go into deficit to the tune of about 2% of GDP. The same thing has happened in the 50 states. Compounding this deficit is the Bush administration headlong desire to boost spending on arms and the 'defence' forces, as well as cutting taxes for the rich. As always, it is socialist handouts for the rich and capitalist efficiency cuts for the poor, under capitalism! Defence spending was set to rocket whether there was a war in Iraq or not.
The result is that the US budget deficit is set to reach record levels over the next few years. To pay for this, the government will have to issue more bonds (debt). It will have to borrow more and suck up some of the hard-earned savings of the American public to pay for more tanks, planes and missiles. That means less money to invest in more productive sectors like technology, education, health and industry. Imperialist ambition will mean economic recession.
In a smaller way, British capitalism mirrors the same process as in the US. The Blair government is matching the Bush administration in hiding how much it will have to spend on the war. Gordon Brown has allocated just Â£1bn, or about 0.1% of GDP. Most analysts reckon it will be at least 3 times more than that at the end. And the government's budget is also slipping into a significant deficit at a rapid rate, as the UK economy starts to slow down to a halt.
It may be death and destitution for Iraqis, but deficits, debts and destruction of wealth and incomes will be the outcome for Americans and Britons, whatever the outcome of the war.