The Theory and Practice of Oligarchical Collectivism, by anti-Big Brother subversive Emmanuel Goldstein. An important note here is that Orwell was writing about a fictitious world consisting primarily of three massive, insular superpowers fighting amongst themselves in a series of ever-shifting alliances. Therefore, he depicted the hierarchy as a domestic one holding sway over its own people by keeping them in a state of need that precluded any active resistance. The hierarchy today, much like the coalition aligned against Iraq, is an international one. Of course, it would have been difficult for him to have correctly predicted the parameters of contemporary wars.
Continuous war achieves the purposes ascribed to it in two very simple ways.
First, continuous warfare uses up extra productive capacity that would otherwise lift the general standard of living too quickly, allowing the lower socioeconomic classes to become too comfortable and increasing the chances for unrest among the disenfranchised. Secondly, the proper political atmosphere for a thriving hierarchy is maintained through the constant vague threat of war, albeit in a distant locale, and the ability of the ruling class to rally support through patriotic responses to news from the front. It would be possible, of course, to use up extra productive capacity without raising the average wealth of the citizenry of Earth by simply building things and then shipping them to another factory where they would be dismantled into parts to be shipped to the original factory, but this would eliminate the positive impact of a distant war on domestic morale. The psychological effects of being at war, especially a war with few tangible effects on most of the population of one of the sides tend to bring citizens together against a common enemy, and increase nationalism and support for the ruling regime. In the case of our current war with Iraq, most people never even think of the war, but when they do, it is to rally behind the American government, as will be evidenced below.