Peace as a Profitable Business – EconLib

world war, as we know them, has ended. The ideological divisions that have polarized humanity and dictated world wars are behind us. And yet, the number of entrepreneurs and companies selling weapons or military expertise has grown. But war is a more profitable business than peace?

Barbera (1973) argued that war and peace differ not in the objectives pursued but in the means used to achieve them. Although war represents human violence in its most intense form, it is more than just violence. From Clausewitz (1911) defined war as “an act of violence intended to compel our adversary to do our will.”

The style of warfare has changed over time. Although the level of violence has decreased, the world’s forms of warfare seem to have taken on a new complexion, such as economic or trade wars.

A trade war is an economic conflict that leads the warring countries to impose protectionist trade policies through trade barriers. These barriers can be imposed in a variety of ways, including tariffs, import quotas, domestic subsidies, currency devaluation and embargoes.

Another type of trade war is based on weakening an adversary’s fighting power by attacking its supply chain. For example, between 1944 and 1945, Germany had no natural oil reserves, making Germany completely dependent on domestic sources. Repeated bombing of oil plants in the summer of 1944 permanently reduced supplies resulting in an inability to meet demand.

Undoubtedly any kind of war is physical and destructive human resources. However, the impact of war on GDP per capita is unclear. On the one hand, war can increase GDP per capita by reducing unemployment and shifting people from non-market activities to wartime production. On the other hand, war can reduce GDP per capita by affecting total factor and labor productivity by destroying existing physical and human capital and reducing investment in new physical and human capital.

This ambiguity is due to path National Income Accounts Considering the death and destruction caused during war.

The Economic impact of violence The global economy was $14.5 trillion in 2019. This is equivalent to 10.6% of global economic activity or $1,909 per person. Violence continues to have a significant impact on economic performance around the world.

Similarly, the global economic impact of violence can be understood as the costs and economic impacts related to “controlling, preventing and treating the consequences of violence”. Among the indicators that allow the calculation of this effect, the multiplier effect represents the direct cost effects of violence, such as the additional economic benefits that would be derived from investments in business development or infrastructure development, rather than the less effective costs of containing or combating violence.

A dollar spent can generate more than a dollar of economic activity. The multiplier effect is a frequently used economic concept that describes how additional spending improves the overall economy. Thus, resources used to combat and contain violence eventually fade away. Resources invested in peace-building and development multiply.

Given this fact, Hobbs‘ perspective raises an interesting question: can peace be defined simply as the absence of war? (Grieves, 1977). Well, not in this case. We note that, despite the decline in the number of active wars, the rate of global violence has increased.

Violence and instability persist in much of the world, and annual military spending of trillions of dollars is unsustainable, making it necessary to implement alternative methods of peacemaking. A valuable but underutilized resource is the business community. Often understood as business and peace oppositeBut growing evidence of their association suggests that business should not be excluded from the wider range of actors working for peace.

In conflict-affected areas, the focus has been on understanding business as an integral part of the problem, underestimating its value as a potential solution. As engines of economic activity, businesses can sustain peace in multiple ways and facilitate the transition from dependence on social programs to self-sustainable progress.

Businesses play an important role in creating wealth, promoting socio-economic development and contributing (directly or indirectly) to conflict prevention and resolution. As market economies become more expansive and businesses become more important actors than states, their role becomes increasingly important.

The business sector is becoming increasingly aware of how its actions can positively or negatively affect society. Peter Sutherland, Chairman of BP and Goldman Sachs said that “…it is part of building good sustainable business to help build safe, stable and peaceful societies. Business thrives where society thrives”. A truly prosperous and sustainable business sector. Peace is necessary for existence, just as peace requires personal initiative to develop itself.

Peace and conflict prevention have a direct positive impact on business. the peace The private sector represents a set of good opportunities with customers, qualified employees, local suppliers and investors. Businesses can experience a reduction in operating costs as peaceful and stable conditions can reduce some of the major operating costs of businesses such as risk management, security and staff costs.

The business sector’s contribution to peacebuilding is not only a moral responsibility but also a profitable opportunity. Through their management and specific initiatives, companies positively impact peacebuilding by contributing to the creation of inclusive social, political, environmental, and cultural conditions. They contribute to peace by building trusting relationships and promoting peaceful resolution of differences between social, public and private actors.

Recent studies by the United Nations and the World Bank Conclusion the urgent need for the international community to refocus on building peaceful societies and preventing violent conflict; They estimate that this could save $5 billion to $70 billion per year.

A peaceful society allows citizens to manage their life projects. It facilitates free exchange between individuals, which brings with it the growth and development of employment, wealth, prosperity, opportunities and resources that become extremely difficult to access in a violent context.

So it may be agreed that war is a business, but peace is an equal good business.


bibliography

Barbera, H. (1973). Rich nations and poor in peace and war. Lexington Books, Lexington, Mass.

GRIEVES F. (1977) Conflict and Order: An Introduction to International Relations. Houghton Mifflin, Boston.

Institute for Economics and Peace. (2020). Global Peace Index: Measuring Peace in a Complex World, Sydney.

Prince of Wales Business Leaders Forum, International Vigilance, Council on Economic Priorities. (2020). The business of peace.

United Nations and World Bank. (2018). Pathways to Peace: Inclusive Approaches to Preventing Violent Conflict. Executive Summary Booklet. World Bank, Washington, DC. License: Creative Commons Attribution CC BY 3.0 IGO.

US Strategic Bombing Survey (USSBS) (1946). Brief Report (The European War), Washington DC: US ​​Government Printing Office.

Clausewitz, K. (1832) by from war Ferdinand Dumler, Berlin. (English version: “On War”, London, 1911).

This article was translated from its original publication:

https://www.alianzaibero.com/por-que-la-paz-es-un-negocio-rentable-para-la-empresa-privada/


Michel Bernier An attorney specializing in international law and commercial law. He is studying a Masters in Law and International Business with a double degree from Universidad Internacional Iberoamericana and Universidad Europa del Atlantico in Mexico. He is also a part of the inaugural team of Students for Liberty Fellowship for Freedom in India.

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