Tuesday, August 3, 2010

Crime and Insurrection: The Economic Causes

Today the Ann T. Hathaway blog features Paul Collier as an economist in the Crime and World Economics series. Normally, he's at Oxford University. Thanks to book publishing and the Internet, he can be here also. I did write him a fan letter once. He is very gracious.

This paper is based upon Professor Collier'a studies of civil wars across the globe, 1965-1999. Additionally he follows the economies of African states, which have had a good many civil conflicts. He wrote a most sensible chapter in a textbook I read,  based on these years of research:

"Economic Causes of Civil Conflict and Their Implications for Policy" in Turbulent Peace: The Challenges of Managing Internal Conflict. Edited by Crocker, Hampson, Aall. US Institute of Peace Press.

And of course he kept going. He has two books out for mainstream readers.
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He found that the political language of civil conflict pops up everywhere. The reasons for grievance never correlated to actual conflict--in short, everyone complains, but it doesn't always lead to war. Some citizens in some countries have extremely good reasons to complain, and still don't have civil conflict. But research showed that civil war occurs only under consistent economic phenomena. These phenomena were:

1. Dependence on primary commodity imports. (they raise cotton, coffee, diamonds, oil, opium, et cetera, but not enough foodstuffs, or goods used at home).
2. Low national income.
3. The ability of the insurrectionists to finance their disorder.

Organized Crime
Collier says that "economic analysis sees rebellion as more of a form of organized crime." This is not a huge leap for us, because the legitimate government is at least titularly in charge, and creates a state-run justice system (see Thomas Hobbes post from last week). Furthermore, the disorder against life and property is, in a specific sense, against the stability that the state is supposed to confer.

Now he goes on to explain about the language of grievance versus the dry quality of economics:
Imagine, for a moment, that you are a leader of a rebel organization, needing to offer an explanation of your goals. What are the likely elements? Most surely, they will be a litany of grievances against  the government, for its oppression, unfairness, and perhaps victimization of some part of the population that your organization claims to represent. That is, your language will be the language of protest.  You will style your  rebellion as a protest movement driven to the extremity of violence . . . almost certainly, the government will have responded to your insurgency with an incompetent counterinsurgency campaign. "Almost certainly" because counterinsurgency is very difficult. . . . .
Rebellion is large-scale predation of productive economic activities.  . . . However, [the economist's] view is so at odds with the popular discourse on conflict that there is temptation to dismiss it as fanciful. The techniques of economics do not help its arguments: compared with the compelling historical detail produced by histories of protest . . .
In other words, grievance creates a story that can sway the emotions. But underneath it all, there's a way to grab capital and power for the "aggrieved" side, which doesn't sound as good no matter who says it.
Unlike organized crime, rebel movements need good international public relations and they need to motivate their recruits to kill. They need good international public relations because most of them are partially dependent upon international financial support. They need to motivate their recruits to kill because, unlike a mafia, a predatory rebel organization is periodically going to have to fight for its survivial against government forces. A rebel organization cannot afford to be regarded as criminal . . . Grievance is to a rebel organization what image is to a business.
While [grievance] is morally interesting to observers--is the cause just?--it is of no practical importance. .  . . The economic theory of conflict argues that the motivation of conflict in unimportant; what matters is whether the organization can sustain itself financially. . . . Regardless of why the organization is fighting, it can fight only if it is financially viable.
It is the feasibility of predation that determines the risk of conflict.
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So, the question is, can you fund your war?

In Sierra Leone, Angola, and elsewhere, civil conflict is funded by portable, hideable, and valuable diamonds. In Iraq, the insurgency is funded by the very liquid commodity of oil. This has also been true in Chechnya and Dagestan, where Russia is fighting a secessionist movement with some Islamic connections. In Afghanistan, opium pays for terror and Taliban.

In Nigeria, insurrection is funded by oil. It is also funded by the Nigerian scams, diverted but legitimate income from oil companies, shippers, and the like--and by lawsuits. Mostly the oil.

Let's talk about the FARC in Colombia, which Collier (2001) says "has grown to employ around twelve thousand people. . . . The FARC earns around $700 million per year from drugs and kidnapping. . . ."

In Israel and Palestine, in Ulster, conflict is funded by the remittances of rich people living elsewhere.

Mexico
In Mexico, the drug war is taking on overtones of civil war, as police officers and innocent bystanders are massacred. More than one organization is downed only to rise again with new leaders. Each fights for regional control, ruining local stability. But as long as they are fighting among themselves, they are not as busy suborning national government. The civil conflict in Mexico is funded by purchasers of marijuana, cocaine, and methamphetamine. The U.S. is the biggest purchaser because of proximity. However, drugs such as heroin or cocaine sell for a much higher price in Europe, so some illegal trade via Mexico is going there.

The counter-insurgency is also funded by the U.S. in part. Agencies lend expertise and dollars to a huge effort to knock these cartels down. It would not be good for us to have a failed state with a long border adjacent to us.

The only thing missing is the language of grievance. Until that political language enters, it is states versus markets. And when grievance comes in, we'll call it civil war--but it's still states versus markets. The market is definitely strong enough to fund civil conflict in the Caribbean, Colombia, and Mexico. As we see.

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It is interesting to note for funding civil conflict: the worldwide drug trade, as of 2003, earns an estimated 1% of world GDP. That's more than enough to tip toward civil conflict in states that do not have other industries--see condition 1 above. In states such as Afghanistan, Kyrgyzstan, Jamaica, and Colombia, or in pockets thereof, these make up close to 100% of national or local GDP. These states are all failing.

Just as these things relate to world trade, they also relate to local trade. I'll talk about that tomorrow, using some of Professor Collier's principles.

Two articles below go international! Look beyond our borders to see what's universal!
The third and fourth feature Mr. Collier himself.
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5 comments:

Bob G. said...

Ann:
Collier has some very interesting observations and facts, and you've provided much food for thought.

I'm familiar with the issues in Sierra Leone, and Nigeria.
The DRUGS, INC series on NAT-GEO chronicled the problems in Colombia, Chile, anand Afghanistan.

I can't help but see an honest analogy lurking in there somewhere else, though.

Sounds like part (if not most) of OUR economic issues might, in fact, have basis in a lot of third world "markets"...

QUite interesting indeed.

Makes me wanna (virtually) go "search the stacks" for more information.

Ann T. said...

Dear Bob,
You are definitely right. Really, ever since we industrialized, we have relied on the third world for something--immigrants who helped build our rail systems, iron ore, and so forth. We did have a lot of useful commodities ourselves, for instance, oil, lumber, and coal. Now we get anywhere from all to a significant percent from overseas.

Any of that is liquid to fund crime or legitimate business. For instance, Indonesia's protected forests are poached all the time for old-growth rare woods, and may fund further crime or terrorism. Or legally lumbered goods might be pirated.

So in essence we have always traded in the third world. The problem for nations is scale. It used to be that borders counted for more. Now in many poor states, big corporations can buy rights--the demand for some goods is so huge that people will sell whether a corporation is the middleman or not.

Illegal or legal, where there is demand, supply will increase. It is the market that drives this stuff.

States are fighting hard to keep laws in place, when market laws have become more compelling than state laws. That's true for legal as well as illegal goods. Of course the illegal trade bothers us a great deal more.

Thanks for reading this whole thing! I think it's really important, but I also think it's a tough slog for August reading.

I need to be a little more entertaining--however, that's not what's on my mind these days.

Have a great day!
Ann

Christopher said...

I would add that all conflicts at the state level, whether civil or global, are economic in nature. And it doesn't matter if we are talking about the Crusades the Civil War, or the US invasion of Iraq. Ideology comes into play, surely, but only secondary, and generally only as a means to persuade the masses.

What I like about Collier's analysis of civil conflicts is his identification of the three requisites. And I believe that more than provide us answers, those requisites lead us to ask the right questions; namely, why is it that those conditions make a state ripe for civil conflict? Answering that question, we probe deeper in how decisions, conscious and sub-conscious, are made on a societal level.

Ann T. said...

Dear Christopher,
We could probably write a book on those causes--at least one!

It reminds me a little of the Civil War in that countries with a one-note economy (such as cotton) plus low-technology are dependent on other people's supplies for daily living.

That means the distributors of those supplies get to call the shots. Thus there is serfdom such as in parts of Latin America (dependency theory) and slavery in the American South prior to 1865.

Then as you say, justifications are written for this. What it really is, capital accretion has stopped with the land-holders (agriculture or mining or whatever).

Income will always? nearly always? be low in those countries.

It is fascinating how it all fits together, isn't it? Scary too. It seems as inevitable as the sun.

Thanks for a great comment. Had you read Collier before?

He was my absolute favorite in my studies.

Ann T.

christopher said...

I've not read Collier before, but based on his statement in the video you posted, his thoughts have piqued my interest.

On an only mildly related note, I just finished reading Ghengis Khan and the Making of the Modern World by Jack Weatherford. I couldn't put it down, and definitely recommend it.