House of War

From The Christian Science Monitor:

Uncle Sam is adding 60,000 barrels of oil a day to giant underground caverns in Texas and Louisiana to be used for the proverbial ‘rainy day. Is it raining yet? … Proponents of the government taking action to ease the crunch say that storing oil at a time of soaring prices, in what is called the Strategic Petroleum Reserve (SPR), does not makes sense. Some want some oil released in the hope that it will drive down prices. Opponents counter that using the SPR would probably have little impact. In fact, they maintain, as does President Bush, that there is no emergency.

I have just read a (very good) paper by Macartan Humphreys of Harvard University, Economics and Violent Conflict, which is basically a literature review of econometric research into the impact of violent conflict on economic functionality. In it he explicitly rules out an idea I explored in an earlier blog post, namely, that “war makes the state”, and that in preventing developing nations from making war, the international community prevents strong state formation. Humphreys notes that,

In some instances, conflict has helped to strengthen taxation systems as a result of the state’s increased need for revenues, its inability to access revenues from external sources and its enlarged mandate to intervene in the economy. Canada for example introduced income taxes in 1917 to help pay for its war efforts and succeeded in maintaining this revenue source after the end of the war. Similarly, wars fought by Britain in the 18th century and by the United States in the 19th and 20th centuries are often held to explain the development of institutions of domestic taxation. Conversely, some scholars argue that the lack of a military threat to contemporary developing nations helps to explain the weakness of those states. One implication is that the present rise in civil wars may be what is needed to strengthen states, and in Edward Luttwak’s phrase we should give war a chance. This conclusion, however, is problematic. While there is considerable evidence for relations between international war and state formation, particularly in Europe, there is little evidence that the logic holds for contemporary civil wars. Possible reasons for the differences are suggested by sociologist Miguel Angel Centeno’s study of war and taxation. Drawing on the Latin American experience, Centeno suggests that conflict does not lead to developments in institutions of taxation when state administrative capacity is low, when state control over its own territory is weak and when states have access to “external” sources of revenue. All three conditions are likely to hold for poor, natural resource-dependent states undergoing civil war. It is inappropriate then to expect that states presently undergoing civil war will repeat the European experience and become stronger as a result of their conflicts.

Ever get the feeling that you’ve been here before?