Insights from the Management Theory of the Political Marketplace

In the previous post, I suggested that the language and lens of business management might generate interesting observations about how politics and conflict function in political marketplaces around the world. In this post, I suggest a few such examples.

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Like all businesses, political business managers require reliable revenue streams for their ventures to flourish. Assets generate revenue. These can range from hostages for al-Qaeda, logging and diamond mining for Liberia’s Charles Taylor, narcotics smuggling in Latin America, to more sophisticated and complex sources like high-tech industries and financial centers in the developed world, deep-water oil fields in petroleum states, or international counter-terrorism assistance from, for example, US president Obama’s new $5 billion fund. Each of these revenue-generating assets comes with its own unique profile and competitive advantages. Some, like open-pit mining or logging, are easy to take-over, copy, or undermine. Marketplaces and market players with these assets present low barriers for new entrants. On the other hand, political business managers who control complex assets like industry, deep-water oil, or international legitimacy raise barriers to entry to such an extent as to make it virtually impossible for a significant challenge to power from outside the system. Clearly, the scarcity and sophistication of these assets also makes them particularly lucrative, allowing the astute political business manager to further cement power by building a powerful, well-funded security and governance apparatuses which imposes order and control.

Clearly, as in any business unit, political entrepreneurs and managers must also manage costs – ranging from personnel and communication to public goods and the political budget (the cost of purchasing loyalty). While there are many areas for exploration, one particularly interesting one is the use of child soldiers, a persistent practice in up-start armed groups around the world, despite vocal international condemnation. In short, child soldiers are a logical, low-cost personnel strategy for an armed group willing to trade lethality for affordability. While child soldiers may (?) be less effective fighters, they can be more easily coerced into joining the armed group (lower recruitment costs), they require little/no compensation (and allow for a larger share of loot for leaders), and they relieve the group leader of one of the major worries of political business managers the world over: internal threats to his/her leadership and/or the risk of splintering to form rival groups (e.g. Sudan, DRC).

As in business, political business managers often outsource key functions. Like the tech giant sourcing key components from a Chinese manufacturer, outsourcing allows the political manager to lower costs and reduce complexity of operations on the one hand, while increasing reputational and quality control risks on the other. In the 1980s, faced with economic hardship and an ongoing war with formidable southern rebels threatening his hold on power, Sudan’s president, Omar al-Bashir, provided arms and funding to southern separatists. He, in effect, outsourced the war against the SPLA’s John Garang, allowing his relatively more expensive army to take a less active role in the conflict. As it often does, however, outsourcing created its own set of challenges. Bashir’s militias in Darfur later became too powerful, undermining his power, and further damaged his less-than-sterling reputation through egregious human rights abuses.

Shifting our lens from the individual leader to the political marketplace as a whole, it might be logical for an outside observer to conclude that, in contexts marked by chronic conflict and violence against a long-suffering civilian population, peace and stability are generally desirable outcomes. And, for most of the population, this is likely so. Yet for the political business manager, peace is only desirable to the extent that it is the most profitable outcome. In short, peace must, on balance, guarantee that costs will be substantially lower or revenues significantly higher than in war time. Yet, as de Waal observes, neither of these is usually the case in a competitive marketplace for power. The maintenance of peace generally requires the appeasement of elites and the population through the distribution of loyalty payments and/or public services, both of which are likely lower in time of war. In absence of lower costs, peace agreements often require the prospect of dramatically increased revenues. De Waal notes that, in the cases of South Sudan and Sudan, all peace agreements were signed at the time of an expanding national revenue base. When revenue declined, agreements tended to fall apart. In short, in the absence of a clear military victory which decreases competition in the market, peace is often unaffordable.

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Politics is not business, yet the language and lens of the market and decision-making in a competitive environment – the perspective of a business manager – may often provide some of the most helpful vocabulary for describing how politics actually functions around the world. Even more, like al-Qaeda’s heated discussions about hostage-taking as a strategic revenue source, the language of business is often the language that political actors themselves use in describing their actions and the contexts within which they operate.

Isaac Williams is a recent graduate of the Fletcher School of Law and Diplomacy. He advises companies and governments on investments and operations in frontier and emerging markets and studies the intersection of business management, militancy, and politics.