Dr. Lloyd J. Dumas |
The University of Texas at Dallas |
Professor of Political Economy, Economics, and Public Policy |
Political security is primarily a matter of relationships, not military power. This is easy enough to demonstrate: during the Cold War, the American military spent a great deal of effort and trillions of dollars building weapons and structuring forces to deter the Soviet Union from attacking the U.S. or its major allies with nuclear weapons. For much of that time, both France and Britain had enough …
… nuclear capability to deliver a devastating, perhaps terminal attack against the U.S as well. Yet we spent little or no time worrying about a British or French attack. The reason is obvious: the relationship between the U.S. and the Soviet Union was hostile, while the relationship between the U.S. and Britain or France was friendly. And when the Cold War finally ended and the relationship between Russia and the U.S. became much more cordial, very few Americans continued to worry about a Russian nuclear strike. Yet the Russian military remained every bit as capable of destroying the U.S. as it had been during the Cold War. Furthermore, the U.S has never been all that concerned about the nuclear arsenal of Israel, a nation with which it has close ties, but it went to war with Iraq in 2003 citing misguided fears that the hostile government was trying to develop weapons of mass destruction. And today, the U.S. is worried about the possibility that a hostile Iran may acquire nuclear weapons. Clearly, a hostile international relationship is more of a threat to our security than the existence of a nuclear arsenal.
Many specialists in international relations tend to consider force or the threat of force as the most effective way to provide security, because they believe it is ultimately the most effective way of influencing behavior. But economists and businesspeople influence behavior primarily through incentives. Assuming that people are rationally pursuing their self-interest, they will voluntarily modify their behavior when incentives change. People do not need to be threatened or coerced. The key to influencing behavior lies in creating the conditions in which the behavior that is desired is the same behavior that those involved would voluntarily choose in pursuit of their own goals.
This basic approach can be applied to influencing the behavior of nations in the international arena. The challenge is to define a set of conditions that will generate strong positive incentives for nations to keep the peace, and then to work out policies and institutions capable of creating those conditions. That task is at the core of my latest book,The Peacekeeping Economy (Yale University Press, 2011).[1] It should make possible a shift away from relying mainly on the threat or use of military force toward much less expensive and far more effective means of achieving peace and security through economic relationships.
If economic relationships are to contribute to international peace, they must be built on a few basic principles. The first and by far the most important of these is the principle of balance.
Principle I: Establish Balanced Relationships
There has been a longstanding debate as to whether economic relationships prevent or provoke war. In fact, economic relationships can do either; their effect on security depends crucially on the nature of the relationship, not just the extent of the activity. Unbalanced, exploitative relationships tend to increase the number and severity of conflicts, while balanced and mutually beneficial relationships tend to reduce them.
A relationship is “balanced and mutually beneficial” if its benefits flow to every participant and a rough equality exists between the contributions of each member and the benefits they accrue.[2] A balance of benefit implies that those who participate are compensated in a way that truly reflects the value of their contribution rather than merely their bargaining power. Unbalanced, exploitative relationships are thus those in which benefits flow overwhelmingly in one direction and do not correspond to the relative contributions of participants.
Some interesting evidence in the field of experimental economics suggests that people intuitively understand the importance of fairness in economic transactions, if only out of self-interest. The Ultimatum Game (UG) is an experiment in which the Experimenter provides a sum of money (say $100) and one person, the Proposer, makes an offer to divide it with the other person, the Responder, in a specified proportion: say 60%-40%, or 90%-10%. If the Responder accepts the offer, the money is divided in the way the Proposer suggested; if the offer is not accepted, neither participant gets anything.
After running this experiment many times in various countries under various conditions, researchers have noted that rather than trying to get a very lopsided deal, the majority of Proposers offered the Responders 40% to 50% of the sum of money, and about half of the Responders rejected any offer below 30%.[3] We can’t be sure whether most Proposers made a balanced offer out of a belief in fairness or out of pure self-interest. But it is very clear that half the Responders preferred to walk away empty-handed rather than accept an offer they considered too unfair.
Even if everyone is gaining something in an unbalanced relationship, the fact that the vast majority of benefit flows elsewhere is likely to irritate those who receive less than they contribute. In such a scenario, there is little or no incentive for these under-compensated parties to work towards resolving whatever conflicts might occur, economic or otherwise. If they come to see disruption of the relationship as a means for either re-balancing it or replacing it, they will be ready, in extreme cases, to raise the seriousness of these conflicts to the point of war. We need look no further than to the revolution that gave birth to the United States for an example of the power of economic exploitation to provoke antagonisms that can lead to war.
Balanced economic relationships have the opposite effect. Since everyone gains benefits that are at least equal to their contribution, pure self-interest dictates that no participant wants to see the relationship disrupted, let alone to take deliberate action to disrupt it themselves. When conflicts occur, partners of a balanced economic relationship will seek to settle them amicably. If one participant comes under external stress, the others have an incentive to help relieve, rather than aggravate the pressure. In this situation, every participant is more secure.
Furthermore, a equitable distribution of economic gains of an economic relationship stimulates the economic growth and development of all participants. Resources are more effectively used; producers become more productive; the size of the market grows. As a result, all parties offer more to each other as time goes by, both as sources of products and as sources of profits. Unbalanced, exploitative economic relationships are a zero sum game. But balanced relationships do not simply divide up the pie, they help the pie to grow; the advantages of balanced relationships increase over time.
Beyond this, when two nations are engaged in an expanding web of balanced, mutually beneficial economic interactions, more and more people in both countries have increasing contact as a natural result of this economic activity. They need to exchange emails, talk on the telephone, and even meet face-to-face to conduct business. At first these contacts may be stiff, formal and focused on the business at hand. But people are people, and eventually their social interactions will lead them to begin to know each other better. They may spend more time in each other’s country and almost inevitably become more familiar with each other’s life circumstances. Sometimes they won’t like each other. But more often than not, this increased contact will melt away stereotypes and lead to a greater understanding and empathy. Some friendships will be made, and long-held suspicions–even enmities–are likely to slowly disappear.
Even when gains are balanced, if the process involved in making key decisions is unbalanced, those with less input and control are likely to feel uncomfortably dependent on the good will of others. If participants believe that the terms of the relationship are subject to arbitrary, unilateral change, then their commitment could weaken, creating insecurity. When decision power is more equally shared though, everyone involved has ownership in the relationship. Every participant will therefore be motivated to take care of the relationship and to insure its continuation and success. This cannot help but strengthen the incentives for all participants to find peaceful ways of settling their conflicts with each other.
When decision power is balanced in a relationship, all participants have a sense of security because they know that they will be directly involved in any decision to change the rules or character of the relationship.[4] This will not necessarily prevent all changes that at least temporarily reduce their gains or increase their costs. But it will assure them that no changes will occur without their input, and (depending on the agreed decision rules) their consent. It is easier for anyone who has been a full partner in deciding to make a change to accept it without undue hostility, even if it hurts. Painful change that is coerced or imposed is an entirely different thing. Consider again the American Revolution, whose famous slogan was not “No taxation,” but rather “No taxation without representation.”
So there are two key aspects to achieving security through balance in international economic relationships: 1) balance of benefits; and 2) balance of decision power. The balance of benefits has more impact on the ability of international economic relationships to keep the peace, but the balance of decision power is what makes all participants in these relationships see themselves as partners, rather than subordinates.
Economic relationships that are balanced in both of these senses create strong self-interested incentives for participating nations to settle their conflicts peacefully.[5] As those conflicts are dealt with successfully time after time, the idea of allowing them to fester to the point of violent confrontation comes to seem more and more absurd. The thought of threatening to go to war against valued economic partners slowly recedes, and war itself ultimately comes to be seen as unnecessary, undesirable, and inherently counterproductive.
The ability for mutually beneficial, balanced economic relationships to keep the peace is illustrated by the development and growth of today’s European Union (EU). The EU began as the European Coal and Steel Community formed by six nations shortly after World War II (1952), with the deliberate purpose of trying to build economic bonds (especially between France and Germany) to make the outbreak of war among them less likely.[6] By the mid-1980s, the dozen nations that belonged to the EEC included Belgium, France, Germany, Great Britain, Italy, the Netherlands, Portugal and Spain. Think about this group of nations: they had fought countless wars with each other over the centuries, including World Wars I and II. They were also the major colonial powers that militarily dominated and exploited much of the rest of the world. Yet today, if you were to ask the leaders (or the citizens) of any of these countries what the odds of a war breaking out in their midst in the next fifty years, they wouldn’t even consider it a sensible question.
It is not as if these countries no longer have conflicts with each other. They currently face very serious problems, economic and otherwise. In the last few years alone, there were major disagreements over the banning of British beef by other EU member states because of “mad cow” disease in Britain; a sharp split over the 2003 invasion of Iraq (with Britain, the Netherlands and Spain strongly in support and France, Germany and Belgium strongly opposed); and more recently, serious conflicts over how to deal with the financial crisis.
But the EU nations understand that the network of balanced, mutually beneficial economic relationships they have created gives them a strong stake in finding ways to manage, if not to resolve, the conflicts they have with each other. They simply have too much to lose to let their disagreements get out of control. So they debate, they argue, they shout. But they no longer threaten, or even think about threatening each other militarily, let alone actually going to war. It is precisely success of this experiment in economic peacekeeping led to the European Union being awarded the Nobel Peace Prize in 2012. Even with all of its problems, the EU is proof that properly structured economic relationships can be used to build and keep peace even between former enemies.
Principle II: Emphasize Development
The poverty and frustration of so many of the world’s people is a fertile breeding ground for violent conflict. There have been more than 150 wars since the end of World War II, taking more than twenty million human lives. Nearly all of them have been fought in developing countries. People in desperate economic straits tend to reach for extreme solutions. They are much more easily manipulated by demagogues. Therefore, emphasizing inclusive and widespread development is an important part of inhibiting the outbreak of war.
There are many reasons why war erupts, and therefore few grounds for believing that, by itself, even a great improvement in everyone’s material well-being would put an end to war. But encouraging inclusive and widespread development is an essential measure in giving the largest possible part of the world’s population a direct, obvious, and personal stake in avoiding disruptive explosions of violent conflict. Development helps keep the peace by strengthening resistance to the outbreak of war, as well as by reducing one key factor that can lead to war: the frustration and hostility of those who are economically deprived and politically marginalized.
An emphasis on development can inhibit both interstate and intrastate war. It is also a useful counter-terrorist strategy. Even though many terrorists are neither poverty stricken nor uneducated, all of them depend on others to support their cause if not directly participate in their tactics. They have to recruit operatives, travel, coordinate activities, take care of logistics, and find secure places to train and to store material. Such support is much easier to find when there is widespread disenfranchisement and dissatisfaction.
To recruit reliable operatives and build support networks, terrorist groups must have a cause that can convince “normal” people to engage in or support horrible acts of violence they would not otherwise condone. Unfortunately, there seem to be a number of causes that can perform this function. Most, if not all, involve calls to the service of a disadvantaged group or to a force greater than the individuals being recruited or solicited for support. If people can be made to feel that by engaging in (or supporting) terrorism they become the avengers of a great wrong done to those they consider “their people”, they can be made not only ready but eager to carry out or support horrific acts of violence against innocent people who have never directly done them any harm.
Development can be an effective counter-terrorism approach, not because terrorists or their financial supporters are necessarily economically desperate, but because raising the economic well-being and political status of the larger group that terrorists and their supporters feel part of makes it harder for them to recruit and weakens support. Development can help dry up both the pool of potential terrorists and the wider support for terrorist groups that is vital to their operations.
The best way to deal with terrorism in the short run–and the only way to deal with the terrorism that arises from individual mental illness or group psychosis–is not development, but rather first-rate intelligence and police work. But economic and political development is an effective way to undermine crucial elements of terrorist support systems in the long run.
Principle III: Minimize Ecological Stress
There is no question that competition for depletable resources generates conflict. The desire to gain, and if possible monopolize, access to raw materials and fuels was one of the driving forces behind the force-based colonization of centuries past. This competition continues to bring nations and groups within nations into conflicts of the most dangerous kind: those in which at least one party believes that the continued economic well-being, political sovereignty, or even survival of its people is at stake.
There is little doubt that conflicts in the Middle East would be much less likely to lead to military action by the major powers if it were not for oil. The considerable difference among the reactions of international powers to slaughter in Rwanda, aggression in Bosnia, hostility in Iraq and brutal war in Liberia may have a variety of causes, but the presence or absence of oil is certainly one of them. In the 20th and early 21st century the most contentious resource conflicts might have been over oil, but in the mid to late 21st century it may be that they will be over water.
Pollution that crosses borders has also generated considerable conflict and could generate much more. There has been widespread international hostility over the failure of the world’s biggest “greenhouse gas” polluters to take seriously the threat posed by pollution and climate change, which impose potentially enormous long run costs on the global economy. Every additional source of tension contributes to the strain on the international system and therefore to the likelihood that other sources of conflict will lead to the eruption of violence.
Some have argued that the expansion of economic activity itself is inconsistent with maintaining environmental quality. While there is some truth to this, the levels of economic well-being to which the people of the developed countries have become accustomed can be maintained, improved and extended to the people of the developing nations without even generating current levels of environmental damage. Accomplishing this feat requires: 1) a great deal more attention to the efficient use of natural resources; 2) the development and extensive use of pollution-reducing technologies and procedures; and 3) a substantial shift toward qualitative, rather than quantitative economic growth, particularly on the part of the developed countries.
Using natural resources more efficiently requires more intensive and widespread recycling, improvement in the design and operation of energy-using systems, and a greater reliance on ecologically benign, renewable energy and material resources. The development and use of improved pollution control technologies and procedures means better filtration, waste treatment and other after-the-fact cleanup. But it also means the development and use of less environmentally damaging production and consumption technologies. Finally, continuing to think of economic growth mainly in quantitative terms is foolish and unnecessary. Standards of living are also raised by improvements in the quality of goods and services. Shifting attention to qualitative growth will allow the developed nations to reduce their appetite for nonrenewable resources, helping to make their continued growth indefinitely sustainable. It will also reduce environmental pollution and create space for the quantitative expansion of goods and services still required in many developing nations.
Maximizing energy efficiency, developing renewable, ecologically benign energy and material resources, and recycling will not only improve the quality of the environment, but also reduce international conflict and strain on our ability to keep the peace.
Making it Happen
Besides laying out the core principles of economic peacekeeping, The Peacekeeping Economy also suggests some practical strategies for building this system in the real world. These include actions that can be taken by business, government, and ordinary citizens, as well as ways of modifying international institutions such as the UN, the World Bank, and the World Trade Organization to better support this new security system. There is also a discussion about how to smoothly handle the transition from present security systems based mainly on military force to ones based mainly on economic peacekeeping.
I will briefly illustrate plausible implementation strategies by focusing on what ordinary consumers can directly do to help establish peacekeeping principles. During the 1990s, a number of organizations called for a consumer boycott of Nike, the international sports clothing company, charging that the company and its subcontractors were operating sweatshops, a violation of Peacekeeping Principle I. After years of battling the boycotters, the company’s CEO publicly announced in 1998 that they would no longer operate sweatshops nor tolerate such practices among their suppliers. In 2007, after nearly a decade of protest against Home Depot’s environmentally questionable practices as the world’s largest buyer of construction material, a violation of principle IV, the company announced it was changing its practices to better promote energy conservation and sustainable forestry. Under similar pressure only two years earlier, Wal-Mart, the world’s largest retail firm, made a commitment to reduce energy use in its stores, improve the fuel efficiency of its trucks, and minimize packaging.
In addition to consumer boycotts, some have suggested using consumer “buycotts”, organized campaigns to preferentially buy goods from companies that are doing things right. In any case, organized consumer actions can put enormous pressure on firms to behave in ways that are more consistent with peacekeeping economic practices. They do not have to have a huge impact on company sales to be effective. Even a chance of only a few percent will certainly be taken seriously by the firm and its competitors.
Conclusion
If we insist on continuing to define security primarily in narrow military-oriented terms, we will be burdened with the enormous expenses of equipping and maintaining very large military forces that have in recent years proven less than completely effective, if not counterproductive, in the attainment of our national interests. Even if we are doing the best we can under existing circumstances, we will miss the chance to realize the enormous security gains that could be achieved at much lower cost by using economic peacekeeping to strengthen international relationships. We simply cannot allow ourselves to be trapped by an unwillingness to think broadly and act boldly.
Economic peacekeeping is not a guarantee, but then no security strategy works all the time. Certainly strategies that rely primarily on the threat or use of military force to keep the peace have failed repeatedly, as is made clear enough by the long history of armed confrontations that have sooner or later erupted into war. But in the daily operation of the European Union we see evidence that economic peacekeeping is a practical and effective strategy for building security and keeping the peace.
If we put aside the idea that force and threat of force are the most effective tools of diplomacy and consider instead that incentives and opportunities for mutual gain exert more of an influence on international behavior , we can create a web of international economic relationships that not only serves our material needs but also provides strong positive incentives to make and keep the peace. And instead of perpetuating a world of deepening inequality and growing insecurity, we can build a world that is at once more equitable, peaceful, prosperous, and secure.
[1] Dumas, Lloyd J., The Peacekeeping Economy: Using Economic Relationships to Build a More Peaceful, Prosperous, and Secure World (New Haven: Yale University Press, 2011) includes much more discussion and analysis of the principles of economic peacekeeping, how to implement them, and the kinds of institutions that would be useful in supporting them.
[2] This concept of balance and benefit is consistent with Aristotle’s dictum that “the well-being of every polis depends on each of its elements rendering to others an amount equivalent to what it received from them”, though in a very different context. (See Aristotle, Politics, translated by Earnest Barker. London: Oxford University Press, 1958, p.41).
[3] Kapstein, Ethan, Economic Justice in an Unfair World: Toward a Level Playing Field (Princeton, New Jersey: Princeton University Press, 2006), pp.35-36.
[4] The sole exception, of course, is that any party to a purely voluntary relationship, unconstrained by contractual requirements to the contrary, is free to end their participation without anyone else’s consent.
[5] The strength of that incentive depends on the salience of that relationship to the parties involved. Even if a relationship is balanced, if it is of little significance to either party, the incentive it creates to avoid conflict arising from other causes will be weak.
[6] The formation of the ECSC was the result of a proposal by Robert Schuman, the Minister for Foreign Affairs of France. This proposal was based on provisions in the Marshall Plan, the American plan that assisted European economic reconstruction after WWII. Rittberger, B. “Which Institutions for Post-War Europe? Explaining the Institutional Design of Europe’s First Community”, Journal of European Public Policy (2001: 8(5)), pp.673-708.