War

Paul Krugman Mostly Right on War and Authoritarian Adventurism

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Putin On Horse Shirtless
Horse Collaborative

First, please don't hate me. Even a blind pig can find… and all that. New York Times columnist and economics Nobelist Paul Krugman's column today, "Why We Fight," explains why war keeps breaking out in the modern age. Recall that Secretary of State John Kerry admonished Vladimir Putin on ABC News last March for invading Crimea:

"Russia is engaged in a military act of aggression against another country, and it has huge risks, George. It's a 19th century act in the 21st century."

The problem, Mr. Secretary, is that not all countries are actually in the 21st century. (I am looking at you Middle East, North Africa, China, etc.) As Krugman nicely summarizes the history of war:

Once upon a time wars were fought for fun and profit; when Rome overran Asia Minor or Spain conquered Peru, it was all about the gold and silver. And that kind of thing still happens. In influential research sponsored by the World Bank, the Oxford economist Paul Collier has shown that the best predictor of civil war, which is all too common in poor countries, is the availability of lootable resources like diamonds. Whatever other reasons rebels cite for their actions seem to be mainly after-the-fact rationalizations. War in the preindustrial world was and still is more like a contest among crime families over who gets to control the rackets than a fight over principles.

According to economics Nobelist Douglass North and his colleagues John Joseph Wallis, and Barry Weingast in their brilliant book Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History, the first "natural states" evolved in which militarily potent elites running patronage networks offered peace in exchange for monopoly rents. In other words, as Krugman observes, natural states are not so different from criminal protection rackets. North and his colleagues persuasively show that natural states were the only type of state-level social order that existed until the early 19th century when Britain became the first "open-access order" state. In fact, such open access orders reduce social violence even more. Unfortunately, while the number of societies that are open access orders has increased (see Freedom House data), natural states run by rent-seeking elites are still the norm, e.g., Russia, China, Iran, Venezuela, Nigeria, etc.

The authoritarians (gang leaders) who currently run existing "natural states" or want to create one (the so-called Islamic State and its would-be Caliph) need to keep their subjects distracted and appealing to tribalism is a sadly tried and true way to do that – thus war. With regard to the Ukraine/Russia imbroglio Krugman notes…

…that governments all too often gain politically from war, even if the war in question makes no sense in terms of national interests.

Recently Justin Fox of the Harvard Business Review suggested that the roots of the Ukraine crisis may lie in the faltering performance of the Russian economy. As he noted, Mr. Putin's hold on power partly reflects a long run of rapid economic growth. But Russian growth has been sputtering — and you could argue that the Putin regime needed a distraction.

Krugman concludes…

…if authoritarian regimes without deep legitimacy are tempted to rattle sabers when they can no longer deliver good performance, think about the incentives China's rulers will face if and when that nation's economic miracle comes to an end — something many economists believe will happen soon.

Yes.

For more background on Russia and Violence and Social Orders see my 2011 article, "Russia's Natural State of Corruption."