Friday, September 01, 2006

Defence economics: The unfolding of miscalculations

When it comes to academia, departments of political science, philosophy, English, chemistry, international development studies, and even gender studies offer something vital and modern that most economics departments do not: course offerings in the area of defence, peace and security. Unfortunately, defence economics has been left to military institutions and generally has not found its way to civilian-attended universities. As a reflection of this there are only a handful of defence economists today, my favorites being Todd Sandler and Keith Hartley (these two seem to be behind just about everything good about the field).

Two things strike me on this topic.
The first I've already alluded to. Even though defence economics can be considered an umbrella subject encompassing so many disciplines, it really is vastly ignored in the civilian academic sector. The serious thought in defence economics is being done by defence institutions (with a few universities in the UK being the exceptions), and the knowledge-sharing appears to stop there.
The second thing that strikes me is the appearance of vast discord on the application of defence economics, likely related to the lack of economists devoted to the subject. The disarmament theories that have been given serious thought over time range from utopian visions, to game theories, to some fairly modern theories of resource reallocation. They are voluntary or compulsory; global and/or regional. Some are based on the notion that disarmament reinforces peace, and some paint disarmament as a panacea. Others are hybrids.
The lack of consensus doesn't just imply that disarmament theory is altering over time. Take for example Africa today and the lack of consensus evident amidst an on-going disarmament program. The program involves the collection of arms in exchange for cash payments. It's a mess!
Let's make an example of this particular program. The first challenge it faces is inflation, which seems self explanatory.

Second, a gap in military capability is growing between two factions. This would be defined in defence economics as a threat. By increasing the threat to a large degree, factions are essentially concerned about committing social suicide, at a minimum. The dilemma is worse though: they could be left unable to protect themselves against threats from those who don't commit to the voluntary program.

A third problem of the cash for arms program is one pointed out in a Toronto Star article:
The handouts can also lead to feelings of hostility from non-fighters. "They feel you're rewarding impunity," Isima said. "They say ... 'They've killed our families and now you're giving them money?'"
My intention here isn't to criticize the program in itself (it has its merits), but to point out that disarmament is a complicated issue that should raise flags to economists; this is not “development as usual,” as Graciana del Castillo would say.

Mark Thoma recently pointed to a paper: The Rules of Reconstruction, by Graciana del Castillo, Project Syndicate:

When wars end, countries confront a multi-pronged transition. Violence must give way to security for inhabitants; lawlessness and political exclusion must give way to the rule of law and participatory government; ethnic, religious, or class/caste polarization must give way to national reconciliation; and ruined war economies must be transformed into functioning market economies that enable ordinary people to support themselves.

These multiple tasks make economic reconstruction fundamentally different from “development as usual.” To succeed, the transition to peace requires demobilization, disarmament and reintegration of former combatants, as well as reconstruction and rehabilitation of services and infrastructure.

Indeed, this is not “development as usual.” Del Castillo's entire paper is well worth reading.
So, when civil war exists all over the globe, why does economics not follow the lead of other academic disciplines? If the demand exists in other departments, what's stopping it from existing in civilian-attended economics departments?
In The Guns of August (1962) Barbara Tuchman said, “War is the unfolding of miscalculations.” It's unfortunate when a botched plan for peace is the unfolding of miscalculations, too.

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