Syed Mansoob Murshed presentation ref Afghanistan seminar 2009

HUMAN SECURITY FROM THE STANDPOINT OF AN ECONOMIST-Seminar on Afghanistan Syed Mansoob atMurshed the ISS Institute of Social Studies (ISS) University of Birmingham Centre for the Study of Civil War, PRIO, Oslo, Norway Murshed-30th March 2009 Franklin D Roosevelt’s Four Freedoms Freedom from want  Freedom from fear  Freedom of expression  Freedom of worship I wish to focus on the first two  Murshed-30th March 2009 CONCEPT (1): Freedom from Want  This refers to the quality of life, and economics is originally based on the utilitarian (pleasure-pain) concept  But not in the narrow sense of consumption only As regards the pleasure-pain (utility) principle, John Stuart Mill said: “better to be a Socrates dissatisfied than a fool satisfied” Murshed-30th March 2009 CONCEPT (1): Freedom from Want Also Sen’s capability approach which states that well being emerges from capability, examples of which could be the twin freedoms from want and fear  The two concepts (utility and capability) are not mutually exclusive Murshed-30th March 2009 Why is there so much want? Poverty     Lack of economic growth Unequal distribution of wealth, income, health and education In extremely poor countries redistribution without expanding the economic pie through growth may only equalize misery Growth failure in some of the poorest countries of the world Murshed-30th March 2009 “Happy families are all alike; every unhappy family is unhappy in its own way” Tolstoy, Anna Karenina What is to blame (long-run factors):  Geography: landlockedness: problem in Central Asia, including Afghanistan  Culture (lack of trust) Religion (Islam)   Applies to Afghanistan: highly polarized society with many ethnicities Bad political institutions and mechanisms of governance Murshed-30th March 2009 The salience of institutions: institutional determinism   It is argued that two types of political institutions, (a) formal ones plus (b) informal power, together shape economic institutions of governance In turn these economic institutions determine (a) economic performance such as growth in per-capita income and (b) the future distribution of income  Poor economic institutions create an uncertain climate for sustainable long-term growth producing economic activities Murshed-30th March 2009 What are the conditions for good economic institutions to emerge?    When there are constraints upon the executive and a balance of power between different forces in society -democracy with checks and balances When the enforcement of property rights (necessary to secure investment) are broad based and are not confined to a narrow elite group’s interests—less inequality-strong middle class Otherwise predation will be common When there are few “rents” that can be appropriated by small groups -capturable resource rents Murshed-30th March 2009 The salience of institutions for growth in the long-run  Ergo: Politics and economic decisions are inseparable Murshed-30th March 2009 CONCEPT (2): Freedom from Fear  Violence is an alternative economic activity to peaceful production   Causes of civil war are related to causes of the lack of economic development   Theft is an alternative to a job Applies to Afghanistan Why are peace agreements that allegedly end civil war, so notoriously fragile? Murshed-30th March 2009 Greed and Grievance Explanations for Civil War  Greed (motivation) and the feasibility (opportunities) of rebellion This works best in countries with capturable natural resources like oil, diamonds (alluvial) and drugs   Grievances in polarized societies, relative deprivation and horizontal inequality   Opium in Afghanistan APPLIES TO AFGHANISTAN Ethnically very diverse Ethnicity important to both: powerful organising principle for collective action Murshed-30th March 2009 Causes of Civil war as elucidated by Aristotle more than 2300 years ago Plato, along with his disciple Aristotle, attributed tendencies towards internal conflict in the Athens of antiquity to three factors which still resonate with our modern reality more than two millennia later     They consist of the inequalities within Athenian society the incompetence of the Athenian leadership, the avariciousness in elements of Athenian society Thus, greed and grievance can, and do, exist simultaneously, particularly after the dynamics of conflict are set Murshed-30th in motion March 2009 Afghanistan: Opium    The presence of opium suggests a greed motivation for civil war But opium production really grew after 1980, and doubled between 2002-2007 Conflict causes opium production, rather than the presence of opium being a cause of large scale conflict Conflict results in    Destruction of infrastructure Uncertain investment climate with regard to other long-term economic sectors Political instability and low central law enforcement Murshed-30th March 2009 Just as institutions facilitate economic growth, institutions may be crucial to preventing large scale conflict    The origins of conflict (whether greed or grievance) are immaterial if there are viable dispute settling and resource sharing mechanisms preventing either cause from resulting in full scale war So institutions are important to both growth (poverty reduction) and conflict prevention Call it the SOCIAL CONTRACT Murshed-30th March 2009 Social Contract   Has both an economic and political dimension The state of nature without a social contract is characterised by opportunistic anarchy (absence of contract): bellum omnium contra omnes (Hobbes)   Afghanistan post-1979? Observe that failing or fragile states all have weak institutions contributing to development failure (poverty), as well as an enhanced conflict risk Murshed-30th March 2009 Why are peace agreements so hard to sustain? Commitment problems to peace  An important aspect of the commitment problem is high discount rates, or the short time horizons of the parties involved  Breaking an agreement damages future reputation, but with a high enough discount rate it might pay to renege because the cost comes in the future Murshed-30th March 2009 Donor Engagement in institution building, economic reconstruction and enforcing peace     Civil war destroys institutions as well as physical infrastructure, as conflict entrepreneurs deliberately undermine institutions Economic reconstruction following war must be concerned with re-building damaged institutions Aid can help, but the economic recovery must be broad based Ghani and Lockhart (2008) argue that a functioning state must, at least, be able to meet current government expenditures from domestic revenues andMarch resources Murshed-30th 2009 Donor Engagement in institution building, economic reconstruction and enforcing peace (2)  Some argue in favour of long-term engagement; others spot deleterious effects:    Aid dependence does not always help to reestablish the legitimate authority of the state, particularly given the presence of uncoordinated donor efforts and the diverse practices of both donor agencies and development NGOs, which can undermine the authority of the state Aid dependence discourages domestic resource mobilization March 2009 Both may applyMurshed-30th to Afghanistan? William Easterly (2006): The White Man’s Burden!     He is critical of the ‘white man’s burden’; need for the West to civilize the ‘rest’– harmful, including recent tendencies towards ‘neo-trusteeship’ He demonstrates that self-reliant (hence less aid dependent) states have grown considerably faster; As have nations whose boundaries were not too rigidly defined colonially He argues that although markets, democracy and good institutions are important to development, attempts at foisting them which are not at least partially sui generis are doomed to failure Murshed-30th March 2009 ... -capturable resource rents Murshed- 30th March 2009 The salience of institutions for growth in the long-run  Ergo: Politics and economic decisions are inseparable Murshed- 30th March 2009 CONCEPT (2):... inequality   Opium in Afghanistan APPLIES TO AFGHANISTAN Ethnically very diverse Ethnicity important to both: powerful organising principle for collective action Murshed- 30th March 2009 Causes of Civil... Aid dependence discourages domestic resource mobilization March 2009 Both may applyMurshed-30th to Afghanistan? William Easterly (20 06) : The White Man’s Burden!     He is critical of the ‘white