The Economics of War & Peace

Oct 15, 2024

Economics can either fuel conflict or pave the way to lasting peace, the choice is ours.

Series Featuring

Video

In this seven-part series, Professor James Boyce delivers a deep, thought-provoking analysis of a topic often ignored or labeled as “non-economic” by mainstream economists. The series opens with a historical exploration of both successes and failures in using economics to end wars and sustain peace. Boyce then delves into the complex interplay of greed and grievances in civil wars, drawing from his first-hand experience in post-war El Salvador in the 1990s.

Throughout the series, Boyce critiques conventional economic wisdom, particularly in areas such as efficiency, debt, tariffs, and the taxation of foreign aid in countries transitioning from war to peace. In the concluding episodes, he highlights the critical challenges and dilemmas economists must confront to address the enormous costs of war. Boyce argues that only by reimagining its role and shedding ideological biases can economic theory truly help humanity understand how to invest in lasting peace.

EPISODE 1

Why Care About Wars?

Professor Boyce highlights why too many economists think war and peace are not an “economic” problem.

Traditionally, the arguments are, “If you want to study war, then talk to a political scientist,” or “If economists get markets and the economy to work efficiently, then the chances of social unrest that leads to war decrease, and peace is more likely to be achieved.” Boyce challenges this conventional wisdom by highlighting three key costs of war: human costs, financial costs, and environmental costs. He argues that when we recognize the enormous stakes, it is clear why economists should analyze war and peace. To illustrate how economists can engage in this terrain, he discusses his experience in El Salvador after the 1992 Chapultepec Peace Accords that ended the country's civil war.

After Class

Suggested Reading List

Brown University, Costs of War Project, “Teaching the Costs of War.” Multimedia resources online athttps://watson.brown.edu/costsofwar/teaching.

A. Khorram-Manesh et al., Estimating the number of civilian casualties in modern armed conflicts – a systematic review,’ Frontiers in Public Health, 2021.

KPMG, Post-war Reconstruction of Economy: Case Studies. 2022. [pdf here]

Alvaro de Soto and Graciana del Castillo, “Obstacles to Peacebuilding,” Foreign Policy, March 1994.

James K. Boyce, ed., Economic Policy for Building Peace: The Lessons of El Salvador, 1996.

Guide			Timestamp
Intro			0–1:12
The Costs of War			1:20 - 6:18
Human Costs			1:25
	Global Combat Deaths	1946-2008: PRIO 2009-2022: WB
	Major Military Mortality	Khorram-Manesh et al., 2021	1:40
	Burden on Children	Daily Mail 2015
Financial Costs			2:31
	Photo	Mostar 1994
	Direct and Indirect Costs of War	KPMG 2022
	U.S. Post-9/11 War Spending	Brown 2021	2:41
Environmental Costs			3:24
	Military Greenhouse Gases	Brown 2019	3:30
	Kuwait	National News 2021	4:00
	Oil Field Fires	U.S. Department of Veterans Affairs	4:04
	Landmines		4:17
	Zimbabwe Unexploded Bombs	ADF 2022	4:38
	Vietnam - Agent Orange - Natural Spring	NYT 1974 NYT 2014	5:00
Lessons from El Salvador 1979-91			6:19-13:21
Civil War	Center for Justice and Accountability	CJA	6:36
Farabundo Martí National Liberation Front (FMLN)	American Archive of Public Broadcasting	AAPB	7:17
Farabundo Marí	Oxford	OxRef	7:31
14 Families	LA Times	LA	7:43
Chapultepec Peace Accords, Mexico City	Notre Dame	ND	8:55
Outcomes of Peace Accords	National Civilian Police (PNC) Strengthening of democratic institutions Land Transfer Program (PTT) - land for guns swap		9:49-10:14
El Salvador Report	Adjustment toward peace: An introduction	Boyce, World Development, 1995	11:33
1993: A New Approach			13:21-End
Álavaro De Soto	International Center for Transitional Justice	ICTJ	13:32
Graciana Del Castillo	Carnegie Council for Ethics in International Affairs	Carnegie Council	13:41
Obstacles to Peacebuilding	Foreign Policy	JSTOR	13:47
	Implementation of peace accords and economic policy needed to be harmonized.		15:15
Adjustment Towards Peace Project			15:42
Key Takes Aways	Conventional macro policies failed to take into account the cost of peace agreements.		16:39
	El Salvador very reluctantly agreed to fund peace process programs.		18:17
	World Bank & IMF support was not conditional on funding peace.		20:05

EPISODE 2

Lessons From History

Professor Boyce discusses what we can learn about economics from earlier wars.

The wars of conquest of the colonial era are prime examples of plunder, in which the occupiers benefit from resource extraction and the monopolization of trade. The settlement terms after World War I helped to set the stage for World War Two, which in turn helped to set the stage for the Cold War. The legacies of these conflicts include ongoing plunder in developing countries, the growth of a permanent arms industry, and proxy wars fought in Latin America, Africa, and Asia. Boyce reminds us that while violent conflict brings suffering to many, it also brings profits to some, and that international actors are often deeply involved in “civil wars” and, by implication, in their resolution.

After Class

Suggested Reading List

John Maynard Keynes, The Economic Consequences of the Peace, 1919.

Cheryl Payer, “The Transfer Problem,” in Lent and Lost: Foreign Credit and Third World Development, 1991, chapter 4.

Gar Alperovitz, “Historians Reassess: Did We Need to Drop the Bomb?” in Kai Bird and Lawrence Lifschultz, eds., Hiroshima’s Shadow, 1998, pp. 5-21.

Guide			Timestamp
Intro			0-0:24
Plunder - Wars of Conquest			0:31-2:49
Rubber plantation Belgian Congo, 1899		Alamy
The Kimberley diamond mine, Dutch Colonial South Africa, 1872		Britannica
Enslaved Africans in the USA and Brazil 19th century
Native American labor in mines of Spanish America	.
Plunder, as a part of Primitive Accumulation, became the rule of law.
Monopolization of Trade			2:50-3:57
English East India Company in South Asia		Britannica
Dutch East India Company in now Indonesia		Britannica
Wars of Independence			3:58-11:05
World War One			4:10
Fatalities			4:36
Armenian Genocide, ANI			4:44
Spanish Flu, National Archives			4:55
Treaty of Versailles, OTH			5:00
John Maynard Keynes, HET The Economic Consequences of the Peace, 1919			5:24
World War Two			6:11
Marshall Plan, National Archives			7:17
General George C. Marshall, HOOSD			7:19
Why was the Marshall Plan so generous?	Avoid saddling countries with crippling debt. Repayment of loans would have required trade surpluses with US, endangering full employment.		8:25
“Vast Power of Allocating and Withholding Money” Haberler 1948			9:27
Take-home lessons:	Perils of debt for borrower and lender alike Conditionality as an inherent feature of post-conflict aid.		9:52
Postwar Land reforms in East Asia			11:06-12:54
East Asia Miracle World Bank WB 2007			11:17
Postwar Land reforms in East Asia
Nagasaki and Hiroshima Bombing			12:34
The Cold War			12:55-15:57
	General Dwight D. Eisenhower: Atom bomb ‘completely unnecessary’	Hiroshima’s Shadow - Bird & Lifschultz 1998
	Fleet Admiral William Leahy	The Atlantic 1950
Repercussions	Development of a permanent arms industry		14:29
	Proxy wars fought in former colonies in Latin America, Africa, and Asia		14:40
Eisenhower’s Farewell Address 1961 & Military Industrial Complex. Watch: HERE Text: HERE			14:54
Proxy Wars in Global South			15:58-19:12
Central America (El Salvador, Nicaragua, & Guatemala)			16:10
Angola War of Independence (1961-1975) Britannica			16:24
Vietnam War (1955-1975) History.com			16:51
“Beyond Vietnam” 1967. Watch: HERE, Text: HERE
The Afghan War (1978-1992), Britannica			17:44
Take-home Lessons	War brings suffering to many but profits to some. International backers are often deeply in “civil wars” (and also, by implication, in their resolution)		19:13-End

EPISODE 3

Greed, Grievance, & Civil Wars

Professor Boyce discusses the roles of greed and grievance in the emergence and persistence of civil wars.

Greed, the “quest for loot,” is a socially perverse variant of individually rational behavior. Grievance stems from injustice, exclusion, and high degrees of inequality. While distinct, the two are not mutually exclusive: both can be part of the same story. Moreover, they are mutually reinforcing, as excesses of greed (i.e., oligarchy, kleptocracy) lead to grievances, which in turn lead to opportunities for greedy leaders to capitalize on discontent. The role of greed and grievance as both drivers and consequences of war helps to expose the inadequacy of the usual “shrug and smug” reactions of economists to violent conflict.

After Class

Suggested Reading List

Mats Berdal, “Beyond Greed and Grievance,” Review of International Studies, 2005.

Frances Stewart, “Horizontal inequalities,” World Social Science Report 2016 (UNESCO) chapter 7. [pdf here]

Léonce Ndikumana and Kisangani Emizet, “The Economics of Civil War: The case of the Democratic Republic of Congo,” in Paul Collier and Nicholas Sambanis, eds., Understanding Civil War, Vol. 1: Africa, 2005, chapter 3. [pdf here]

Adam Hochschild, “It Takes a Villa,” The New Yorker, March 24, 199.

Guide			Timestamp
Intro			0-1:32
Greed versus Grievance
“He may be a son of a bitch, but at least he’s our son of a bitch”
“Good Governance”, World Bank, WB
Doing Well Out of War	Paul Collier	WB 1999	1:35
Economics of Civil War			1:55-
“Ancient Ethnic Hatreds”			2:02
Greed			2:59-5:23
Definition: a socially perverse variant of individually rational behavior or “quest for loot.”			3:12
Proxy for Greed: Share of primary commodity exports in the country’s GDP			3:46
“Blood Diamonds”			4:37
Policy Prescription: Strengthen the rule of law and good governance			4:44
Grievance			5:24-9:01
Definition: Centered on injustice, exclusion, and high degrees of inequality as the drivers of discontent, rebellion, and civil war.
Policy Prescription: Distributional Justice and Inclusion.			5:48
Measurement: Gini Coefficient of income distribution. Inequality 101			6:35
3 Problems: Notoriously poorly measured. Inequalities in other variables (i.e., political voice) Gini measures vertical, not horizontal, inequality			7:07
Horizontal Inequality: Inequalities of wealth, income, and power between social groups (race, ethnicity, religion, language, region)			8:29
War & Music Bob Marley Song: HERE Lyrics: HERE			8:40
Greed and Grievance			9:02-11:00
Key Points
Not Mutually Exclusive: both can be part of the story in the same conflict. Mutually reinforcing: Excesses of greed (oligarchy, kleptocracy) → grievances → opportunities for greedy opportunists to capitalize on discontent.
Zaire: A Case Study In Greed and Grievance now known as the Democratic Republic of Congo (DRC)			11:01-15:15
Africa’s Odious Debts, Boyce & Ndikumana, 2011
Mobutu Sese Seko, Britannica, BMJ 2008			11:21
Zaire Capital Flight, Boyce & Ndikumana 2022			12:23-15:16
On the Trail of Capital Flight from Africa			15:17-End
The Paradox of Plenty			16:12
Take-home Lessons	Economic forces include Greed and Grievance. They are drivers of conflict and result in economic consequences of conflict Economists conventional response is to “Shrug and Smug”

EPISODE 4

War-to-Peace Transitions: Balances of Power

Professor Boyce presents the first installment of an examination of transitions from war to peace by examining the impacts of economic policies on balances of power.

These include balances within warring parties between pro-peace and pro-war factions; distributional impacts on vertical and horizontal inequality; and the role of the “fiscal compact” between government and citizens in state building. Boyce illustrates with case studies of El Salvador’s civil war (1979-1991), the Bosnian war (1992-1995), and the war in Afghanistan (2001-2021), analyzing how these played out differently in each and the lessons of these experiences for economists as they contemplate the economics of peacebuilding.

After Class

Suggested Reading List

James K. Boyce, Investing in Peace: Aid and Conditionality after Civil Wars, 2002, chapters 1-3.

OECD, Do No Harm: International Support for Statebuilding, 2010. [pdf here]

James K. Boyce and Madalene O’Donnell, eds., Peace and the Public Purse: Economic Policies for Postwar Statebuilding, 2007.

Guide			Timestamp
Intro			0-1:02
3 Issues			1:04
Balances of Power: What are the incentives Distributional: Impacts of economic policies on vertical and horizontal inequality Statebuilding: the “fiscal compact” between government and citizens
1. Balances of Power			1:26-14:01
How Wars End Negotiated settlement vs. Winner-take-all outcomes
Negotiated Settlements: End violence sooner. Reduce the risk of spillover and contagion Reduce the risk that grievances embers into a renewed war.
Between Warring Parties: neither is tempted to resume war either to pursue all0out victory or to avenge grievances. Within warring parties: between pro-peace and pro-war factions (hardliners or spoilers).			1:26
International Community Toolkit			2:56
Diplomatic pressures. Sanctions (countries and individuals). Military interventions: Peacekeepers or Blue Helmet. External assistance and associated conditions.
Balances of Power between Parties in El Salvador			3:34
External assistance: International donors could funnel resources through the UN Development Program (UNDP) rather than the government. Balance of power was maintained between the government and FMLN.
Bosnian War (1992-1995)			7:12
Srebrenica massacre mass grave (11-19 July 1995)			7:55
Peace Talks, Dayton, USA, 10-14 August, 1995			8:30
Conditions of Assistance			8:45
Taking down hate propaganda Ensuring people could move back into their former homes Making sure children of refugees were able to attend school Resettlement money used as a carrot
Mostar, Bosnia			10:35
Hans Koschnick, EU administrator of Mostar			11:05
Power station administration should have representatives from both sides Power should be distributed to both sides Before the EU releases funds, an agreement on how the two sides will cooperate would have to be made.			12:05
2. Distributional Impacts of Economic Policies in Afghanistan			13:36-19:33
War in Afghanistan, 2001-2021
Fiscal Policy			14:02
Revenue Side: Who will pay taxes? Income Taxes Property Taxes (real estate, land) Consumption taxes Trade taxes → Tension with business-as-usual prescriptions, e.g., with regard to tariffs. Expenditure Side: who will receive public goods and services? Basic needs: food, housing, health care Infrastructure: roads, water supplies, electricity Employment → Tension with business-as-usual prescriptions, e.g., maximize growth and assume benefits will trickle down (aka “betting on the strong”) Horizontal Inequality On Vertical & Horizontal Inequalities Direct Budget with Dual Control Local Procurement, when Feasible
Horizontal Inequality			16:47
Inequality across population subgroups: Urban vs. rural areas Contending parties to conflict. Regions Youth Gender
Peace and the Public Purse, Boyce and O’Donnell 2007			17:55
The Budget as the Lynchpin of the State: Lessons from Afghanistan Ghani 2007 (chapter in the above book)
Ashraf Ghani, President, Afghanistan, 2014-2021			18:30
3. State Building			19:34-End
The ‘fiscal contract’ is the economic component of an effective and legitimate state: a virtuous circle. The government provides public goods and services → Public pays taxes Or Vicious Circle External Assistance - foreign aid - can prime the pump, crowding in state fiscal capacity. Without deliberate and sometimes difficult efforts, there is a substantial risk that aid will crowd out state fiscal capacity instead.

EPISODE 5

War-to-Peace Transitions: Peace and Public Purse

Professor Boyce challenges traditional economic thinking by proposing three unconventional methods to mobilize domestic revenues in countries emerging from violent conflict.

The first is by means of tariffs, which although indiscriminately disparaged by mainstream economists in the name of trade liberalization offer the most administratively feasible way to raise revenue. In particular, Boyce recommends tariffs on luxury goods such as automobiles, private airplanes, and yachts. The second is taxing the post-conflict aid boom, rather than giving across-the-board exemptions that send the message that the rich should not pay taxes. Third, he advocates treating natural resources as sovereign wealth, protecting the country from foreign and local rent-seekers and treating mineral and forest resources as belonging in equal measure to all citizens. Boyce then turns to the expenditure side of the equation, focusing on distributional impacts and on who sells goods to the government.

After Class

Suggested Reading List

James K. Boyce, Investing in Peace: Aid and Conditionality after Civil Wars, 2002, chapters 1-3.

OECD, Do No Harm: International Support for Statebuilding, 2010. [pdf here]

James K. Boyce and Madalene O’Donnell, eds., Peace and the Public Purse: Economic Policies for Postwar Statebuilding, 2007.

Subject	Reference	Link	Timestamp
Intro			0-0:47
4 Dilemmas Humanitarian Corruption Debt Legacy Partition			0:48
Humanitarian			0:55-8:57
Potential negative effects on vulnerable populations: Political taxation of aid War in Cambodia (1970-1991) Goma, DRC (1994-1996) Fungibility of aid - frees warring parties to devote more of their resources to arms. A veneer of engagement instead of more decisive action Aid as bait – an illusion of safety
Smart Aid Donors can choose what to provide, how much to provide, to whom to provide it, & with what conditions attached. In the face of tradeoffs like these, an intuitively sensible strategy is to weigh the good against the harm and choose the best (or least bad) alternative. This cost-benefit approach becomes more difficult when multiple criteria are involved–e.g., Protecting lives vs. human rights vs. justice.			6:16
Humanitarian Exemptions Rather than pursuing optimal smart-aid decisions, a second-best approach—exempting humanitarian aid from conditionality altogether—may be justified. That is, apply the smart-aid approach to other types of assistance—reconstruction and development aid—but not humanitarian assistance. How to draw a line between humanitarian and non-humanitarian aid? The fact that decisions are difficult does not mean they can be avoided. Definition: Assisting civilians is easier than protecting them from violence. “The Specter of the Well-fed Dead.”			7:18

Corruption			8:58-13:40
Definition: Do extra-legal payments to government officials and their associates grease the wheels or corrode state legitimacy? Short-term vs. long-term view - grease or sand in the gears? Corruption by whom and enabled by whom? Petty vs. Grand Petty Little payment to lower-level officials (bribes to traffic cops). Become the day-to-day functioning of the socioeconomic system. Grand Involves those at the top of the power pyramid – presidents, generals, and their families and associates Translational networks of enablers: Bribers & Bagmen “It takes two to corrupt; the corruptor and the corrupted.” Mobutu Sese Seko			10:07
Debt Legacy Dilemma			13:41-21:59
Debts are large and difficult or impossible to service, let alone repay, without diverting scarce resources from other pressing post-conflict needs Debts are of questionable legitimacy on ethical and legal grounds Default results in: Withholding of new credit Sanctions Asset seizures In the case of international financial institutions (e.g., the IMF), new loans cannot be provided until old debts are cleared. Typical response is ‘muddling through’- rescheduling, bridge loans, write-offs The country is left with a substantial if somewhat reduced, burden of debt. Alternative strategy, often discussed but rarely invoked: Selective unilateral repudiation based on the doctrine of odious debt
Odious Debt Spanish-American War, April 21-December 10, 1898			16:58
Havana, Cuba 1898 Peace Negotiations, Paris, December 19, 1898, LOC			17:17
Doctrine of Odious Debt Debt did not benefit the people Debt was contracted without their consent Creditors knew or should have known these facts			18:14
Toppling of Saddam Hussein’s Regime, 9 April, 2003 Iraq war (2003-2011) ‘Haircut’ debt - 80% was written off during the Iraq War The onus has to be on the creditor institutions to accept selective defaults on debt.			19:20
Partition			22:00-26:39
Is dividing territory into separate, stand-alone entities a recipe for self-determination or perpetual conflict?
Palestine and Israel “Two-state Solution.” Separate Parties into Different States Again, a trade-off between short-term expediency and long-term consequences Risks selecting against leaders who are strongly in favor of reconciliation and making way for political leaders who demonize the other side			23:08
Short Run = Expediency and seems attractive Long Run = Prognosis. Demonizing the other state that used to be one state. Recipe for perpetual conflict and aggression that leads to war. Oslo Accords, 1993, OTH			24:48


Take-home Lessons Short Run vs Long Run Humanitarian Corruption Debt Legacy Partition Economists can’t use traditional cost-benefit analysis, but this short-run vs. long-run trade-off can better analyze elements of war.			26:40-End

EPISODE 6

Dilemmas

Professor Boyce outlines four basic dilemmas in the economics of peacebuilding.

The first is the humanitarian dilemma: how to ensure that aid meant to relieve suffering does not have the unintended effect of perpetuating conflict. The second is corruption, which is sometimes seen as a cost of getting things done, but can fatally corrode state legitimacy, especially when it takes the form of “grand corruption” of high-level government officials. The third dilemma is how to handle legacies of external debt, maintaining access to credit without diverting scarce resources from other pressing post-conflict needs. As one way to address this dilemma, Boyce advocates for selective repudiation based on the doctrine of odious debt in international law. The final dilemma involves partition between the warring sides, which although often seen as a short-term solution can be a recipe for perpetual conflict in the long term. All four dilemmas force policy makers to confront trade-offs between short-run expediency and long-run impacts, trade-offs that conventional cost-benefit analysis is ill-suited to handle.

After Class

Suggested Reading List

Mary B. Anderson, Do No Harm: How Aid Can Support Peace – or War, 2010.

James K. Boyce, Investing in Peace: Aid and Conditionality after Civil Wars, 2002, chapter 4.

David Keen, Useful Enemies: When Waging Wars is More Important than Winning Them, 2012, chapter 2.

Ventura, Rosemary. “Adapting Anti-Corruption Strategies in Fragile and Conflict-Affected Settings: A Literature Review.” Corruption Justice and Legitimacy Program: The Fletcher School, Tufts University, December 2021. [pdf here]

Jai Damle, “The Odious Debt Doctrine after Iraq,” Law and Contemporary Problems, 2007. [pdf here]

Radha Kumar, Divide and Fall? Bosnia in the Annals of Partition, 1999.

Subject	Reference	Link	Timestamp
Intro			0-0:47
4 Dilemmas Humanitarian Corruption Debt Legacy Partition			0:48
Humanitarian			0:55-8:57
Potential negative effects on vulnerable populations: Political taxation of aid War in Cambodia (1970-1991) Goma, DRC (1994-1996) Fungibility of aid - frees warring parties to devote more of their resources to arms. A veneer of engagement instead of more decisive action Aid as bait – an illusion of safety
Smart Aid Donors can choose what to provide, how much to provide, to whom to provide it, & with what conditions attached. In the face of tradeoffs like these, an intuitively sensible strategy is to weigh the good against the harm and choose the best (or least bad) alternative. This cost-benefit approach becomes more difficult when multiple criteria are involved–e.g., Protecting lives vs. human rights vs. justice.			6:16
Humanitarian Exemptions Rather than pursuing optimal smart-aid decisions, a second-best approach—exempting humanitarian aid from conditionality altogether—may be justified. That is, apply the smart-aid approach to other types of assistance—reconstruction and development aid—but not humanitarian assistance. How to draw a line between humanitarian and non-humanitarian aid? The fact that decisions are difficult does not mean they can be avoided. Definition: Assisting civilians is easier than protecting them from violence. “The Specter of the Well-fed Dead.”			7:18

Corruption			8:58-13:40
Definition: Do extra-legal payments to government officials and their associates grease the wheels or corrode state legitimacy? Short-term vs. long-term view - grease or sand in the gears? Corruption by whom and enabled by whom? Petty vs. Grand Petty Little payment to lower-level officials (bribes to traffic cops). Become the day-to-day functioning of the socioeconomic system. Grand Involves those at the top of the power pyramid – presidents, generals, and their families and associates Translational networks of enablers: Bribers & Bagmen “It takes two to corrupt; the corruptor and the corrupted.” Mobutu Sese Seko			10:07
Debt Legacy Dilemma			13:41-21:59
Debts are large and difficult or impossible to service, let alone repay, without diverting scarce resources from other pressing post-conflict needs Debts are of questionable legitimacy on ethical and legal grounds Default results in: Withholding of new credit Sanctions Asset seizures In the case of international financial institutions (e.g., the IMF), new loans cannot be provided until old debts are cleared. Typical response is ‘muddling through’- rescheduling, bridge loans, write-offs The country is left with a substantial if somewhat reduced, burden of debt. Alternative strategy, often discussed but rarely invoked: Selective unilateral repudiation based on the doctrine of odious debt
Odious Debt Spanish-American War, April 21-December 10, 1898			16:58
Havana, Cuba 1898 Peace Negotiations, Paris, December 19, 1898, LOC			17:17
Doctrine of Odious Debt Debt did not benefit the people Debt was contracted without their consent Creditors knew or should have known these facts			18:14
Toppling of Saddam Hussein’s Regime, 9 April, 2003 Iraq war (2003-2011) ‘Haircut’ debt - 80% was written off during the Iraq War The onus has to be on the creditor institutions to accept selective defaults on debt.			19:20
Partition			22:00-26:39
Is dividing territory into separate, stand-alone entities a recipe for self-determination or perpetual conflict?
Palestine and Israel “Two-state Solution.” Separate Parties into Different States Again, a trade-off between short-term expediency and long-term consequences Risks selecting against leaders who are strongly in favor of reconciliation and making way for political leaders who demonize the other side			23:08
Short Run = Expediency and seems attractive Long Run = Prognosis. Demonizing the other state that used to be one state. Recipe for perpetual conflict and aggression that leads to war. Oslo Accords, 1993, OTH			24:48


Take-home Lessons Short Run vs Long Run Humanitarian Corruption Debt Legacy Partition Economists can’t use traditional cost-benefit analysis, but this short-run vs. long-run trade-off can better analyze elements of war.			26:40-End

EPISODE 7

Investing in Peace

Professor Boyce discusses impediments to reorienting economics to the goal of building a durable peace.

He identifies four major obstacles to investing in peace. The first arises from the competing objectives of decision-makers, whose commercial and geopolitical aims are not necessarily congruent with the demands of peacebuilding. The second arises from the internal incentive structures of aid agencies, where the “approval and disbursement culture” can militate against the careful calibration of incentives to advance the peace process. The third comes from ideological biases, including the misplaced preoccupation with “efficiency” manifested, for example, in antipathy to tariffs. The final obstacle comes in the form of objections in the name of “national sovereignty,” invoked for rulers in the quest for money without peace conditions attached. Confronting these obstacles requires rethinking economic theory and practice in light of the risks and enormous costs of war.

After Class

Suggested Reading List

James K. Boyce, “Aid Conditionality as a Tool for Peacebuilding: Opportunities and Constraints,” Development & Change, 2002. [pdf here]

Susan L. Woodward, “The IFIs and Post-conflict Political Economy,” in M. Berdal and D. Zaum, eds., Political Economy of Statebuilding: Power after Peace, 2012.

Alvaro de Soto and Graciana del Castillo, “Obstacles to Peacebuilding Revisited,” Global Governance, 2016.

World Bank and United Nations, Pathways for Peace: Inclusive Approaches to Preventing Violent Conflict, 2018. [pdf here]

Guide			Timestamp
Intro			0-0:43
4 Obstacles of Investing in Peace The Competing Objectives of Decision Makers Internal Incentive Structures of Agencies Ideological Biases Objections in the Name of “National Sovereignty”			0:44-

Competing Objectives of Decision Makers			0:55-7:49
Peace in principle may be the main objective, but in practice others may intervene: Geopolitical interests - e.g. blind eye during Cold War Economic & Commercial Interests Competition for Contracts and Access to Resources Prioritizing profit for one’s own country, and conflicts with other concerns. Refugee Repatriation: Dayton Peace Agreement → 300k Bosnians in Germany. Bosnia Aid that divides rather than reconciles can be part of the problem


Internal Incentive Structures of Agencies			7:50-9:39
Focus on approval and disbursement neglects careful calibration of incentives to ensure commitment to the peace process.


Ideological Biases			9:40-16:24
“Efficiency” Above All Cost-benefit analysis is about evaluating ends as well as means Neglects the distributional concerns - who gets the money and who bears the cost Antipathy to tariffs A source of revenue To protest domestic producers, e.g., agricultural producers Tariffs are relatively easy to collect Tariffs can protect vulnerable economic sectors Protect local producers
Objections in the Name of “National Sovereignty”			16:25-20:00
Aid itself, with or without conditions, is an intervention Sovereignty has already been compromised by external resources altering politics and the economy Nations are Not Unitary Actors Diluting the sovereignty of some may strengthen that of others. It is a means, not the end Individual sovereignty and human well-being are the ends.
Take-home Lessons			20:01-End
Reconstruction of Economics Rethink economic theory and practice in light of the risks and costs of war Conflict sensitivity analysis/conflict impact assessment More and more questioning of traditional ways of economic thinking Reimagine the institutions whose job it is to implement pro-peace economic policies.

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After Class

To allow students, researchers, and the general public to advance their understanding and to promote future research on war and peace, INET Video has put together a set of online supplementary resources, After Class, for those who wish to dig deeper into the topics and references in Dr. Boyce’s lectures. To further help you follow along, we have also compiled a reading list and reference page on Zotero.

Reading List

About Your Instructor

James K. Boyce is an author, economist, and senior fellow at the Political Economy Research Institute at the University of Massachusetts Amherst, where he is also Professor Emeritus of Economics. He has written for Harper’s, Scientific American, Politico, The New York Times, The Los Angeles Times, and numerous scholarly journals, including Proceedings of the National Academy of Sciences, World Development, Environmental Research Letters, and Climatic Change. Jim received the 2024 Global Inequality Research Award, the 2017 Leontief Prize for Advancing the Frontiers of Economic Thought, and the 2011 Fair Sharing of the Common Heritage Award from Project Censored and the Media Freedom Foundation.

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The Economics of War & Peace

EPISODE 1

Why Care About Wars?

EPISODE 2

Lessons From History

EPISODE 3

Greed, Grievance, & Civil Wars

EPISODE 4

War-to-Peace Transitions: Balances of Power

EPISODE 5

War-to-Peace Transitions: Peace and Public Purse

EPISODE 6

Dilemmas

EPISODE 7

Investing in Peace

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After Class

About Your Instructor

The Economics of War & Peace

EPISODE 1

Why Care About Wars?

EPISODE 2

Lessons From History

EPISODE 3

Greed, Grievance, & Civil Wars

EPISODE 4

War-to-Peace Transitions: Balances of Power

EPISODE 5

War-to-Peace Transitions: Peace and Public Purse

EPISODE 6

Dilemmas

EPISODE 7

Investing in Peace

Share your perspective

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