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When Winston reads The Book, which O'Brien gives him, he learns that all three governments which have divided up the world operate from the same principle of "oligarchical collectivism." This is a government where the state owns all the means of production (collectivism), but a small group (an oligarchy) runs the state for the benefit of itself. In Oceania, the oligarchy is the Inner Party.
To maintain control over their populations, the three governments engage in perpetual limited warfare. To an extent, the nonsensical slogan, "war is peace" makes sense, for the limited wars prevent an all-encompassing war in which one state tries to completely conquer another, as in World War II, thus limiting damage and bloodshed. As The Book puts it, while looting, raping and enslaving are normal, as is boiling and burying prisoners alive, the damage is contained:
But in a physical sense war involves very small numbers of people, mostly highly-trained specialists, and causes comparatively few casualties.
The wars have another objective: since populations might feel empowered if they had adequate consumer goods, and since the regimes want to keep the factories going, their only option is to create an endless run of goods that will be destroyed without producing any positive social benefit, ie, the tools of war. As The Book states:
For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realize that the privileged minority had no function, and they would sweep it away.
By wasting goods on war, the three world states keep their people in poverty and ignorance so that they can be controlled. The Book is at pains to state that the three rival states have no significant ideological differences and no real need for each other's natural resources, so the sole reason for war is to maintain power over their civilian populations. The real war being waged by the governments is against their own people.
War is Peace is true. The three governments are equally matched, so they would never hope to conquer the other two. The real war is keeping the people working so that society runs smoothly. However, with all this production, there is not an scarcity, and then everyone would be equally wealthy and find no need to continue doing his or her job effectively. War solves the problem by creating the necessary destruction and a general state of scarcity increases the importance of small privileges and magnifies the distinction between one group and another.
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