In times of economic hardship, businesses have two basic options to save costs: they can produce more – hoping to sell more – or they can lower expenses.
Let’s say they produce more. There’s a limit to how much people will buy. Twice as much soft drink in the shops doesn’t make you twice as thirsty. Companies can increase sales by advertising, but advertising mostly convinces people to switch brands, not to buy a product that they otherwise wouldn’t.

So companies often use their second option: lowering expenses.

The main area where businesses can save money is wages. They can replace people with new technology. They can use ‘labor hire’ companies to get around minimum wages and conditions. Or they can move production to poorer countries, where wages are much lower.
Whichever they choose, people have less money to spend, so they still buy less. But the original problem was that businesses couldn’t sell their products. With less people buying, this gets worse. Which means that companies have to spend even less on wages. Which leads to people spending less still… and so the economy collapses. This is when the government steps in to help.
A government that said, "we’re going to tax you and give the money to businesses" wouldn’t last very long.
But this is exactly what all governments do. Not many people know how much public money the government gives to businesses. In fact, 'corporate welfare' costs more than unemployment and sickness benefits put together.
Over the last decade the Australian government has given away $60 billion. For example, Holden got $160 million to build a factory. This figure only includes outright gifts – not loans or tax incentives (although this is rarely reported in the 'mainstream media', it was covered by the Sydney Morning Herald in the series "The Companies You Keep").
This has some dangers. Firstly, the companies might use the money to skip to another country, where overheads are lower. When the government gave a $6 million grant to King Gee, they used it to close down their Australian operation and start importing clothes from Indonesia.
But the main danger is that people will find out about it. Most people wouldn’t put up with money being used in this way, when there’s supposedly not enough money in the budget for health, education or welfare.
However, if people think there is a threat to "national security" – or, in times of war – they are happy to have their money taken as tax and given, for example, to military companies. The government has much freer reign on the money that they spend.

. . .

The ‘free market’ needs war to survive. Some people say that bombing Afghanistan would be mad or irrational. It’s not irrational. It’s very good for the people in power.
This is all true in Afghanistan as much as Australia. The Afghan government need war, for the same reasons that the American and Australian governments do. War with America greatly increased Saddam Hussein’s popularity among 'his' people.
The American government has said that their "war on terrorism" could last longer than World War Two. The Australian government says they’ll back them all the way.
This is wonderful news for the people in power. It’s not so good for ordinary people.
Money will be spent on weapons instead of schools or hospitals. The people who own companies don’t need to use public hospitals or send their children to public schools, so cuts to these areas don’t affect them.
We can expect racial violence. A pregnant Moslem woman in North Melbourne has been attacked and hospitalised. In America a Sikh was mistaken for a Moslem and murdered. In Britain a Moslem taxi driver was beaten and left paralyzed from the waist down and a woman was beaten by two men with baseball bats (all these incidents were reported in The Age). This kind of racist violence is still happening. In many areas of Australia, especially the poorer ones, people are fighting each other – that is, not fighting the people in power.

. . .

As long as we have a ‘free market’ economy, and as long as a small elite makes decisions in society, there will be war. To stop war, we need to get rid of the things that cause it.