JOURNAL: Slowing The Endless War

In another sign that war is going private at an accelerated rate (beyond Iraq), the Pentagon's Counter-Narcoterrorism Technology Program Office recently announced that it was offering $15 billion (over 5 years) -- this is likely to expand as Mexico devolves -- in contracts. While a debate over the efficacy of this would be interesting, it would likely not be fruitful.

A more actionable approach would be to focus on simple stop-gap measures (bureaucratic roadblocks) that may slow the growth in inefficiency, increase the effectiveness of oversight, and reduce the potential of a private standing army. One such measure is to halt the large defense contractors from vertically integrating their current portfolio into private military operations. In essence, if your employees pull triggers or operate vehicles, your company (or a company that owns any portion of your company) cannot bid on DoD/State/etc. contracts that are outside this core operational activity. Another is to put PMC (if it takes US government dollars for operational activities) employees, including foreign nationals, under a modified version of the UCMJ (the military justice system) for the duration of the contract.

UPDATE: Reihan, over at the Atlantic magazine, has some excellent thoughts on the privatization of warfare.

Comments

[Duncan Kinder]

"Another is to put PMC (if it takes US government dollars for operational activities) employees, including foreign nationals, under a modified version of the UCMJ (the military justice system) for the duration of the contract."

This essentially would be a variant of the Letter of Marque system to which I recently referred.

One problem with this entire private warfare system is that it presumes that corporations will assume risk whereas the entire point of corporate organization is to control risk.

[TheDreamer]

By assuming certain corporate investment in PMCs, corporations will be able to control risk far more effectively without having to use an impotent federal government as a middle man.

Problems in Nigeria? Nigeria Government not able to handle it? Just raise a legion of the Royal Shell Expeditionary Force and manage it for profit from afar.

The real kicker is when large scale actions can be taken by corporations without media notice.

[Duncan Kinder]

Excuse me. Let me make myself more clear.

MEND in Nigeria, the various Mexican drug cartels, and similar groups have a demonstrated and annoying habit of shooting back.

So far as corporate risk management is concerned, the wives, children, friends and property of not only employees but also shareholders and other interested parties of PMC's would constitute what John Robb calls a "systempunkt."

Understand?

[TheDreamer]

You have made yourself clear;

however mercs are still cheaper.

[Caelan]

--
One problem with this entire private warfare system is that it presumes that corporations will assume risk whereas the entire point of corporate organization is to control risk.
--

The assumption of risk is not mutually exclusive with the control of risk. A central contract principle worth noting here is that contracts allocate risk to the party most capable of absorbing it.

The state system has reached a point where governments are no longer the party most capable of absorbing the risks of certain types of armed conflict.

A corporate entity only has a constituency of shareholders, customers, suppliers, and regulators. Furthermore, the entirety of the risk is that of the investment made in the corporation, because of the limited liability nature of the organization.

The state's limited liability function, (sovereign immunity) has been effectively terminated because of the much larger and diverse constituency that the state is now answerable to.

The result, of course, is that non-state actors are taking on the high risk activities that were once primarily the purview of states.

[Duncan Kinder]

"A corporate entity only has a constituency of shareholders, customers, suppliers, and regulators. Furthermore, the entirety of the risk is that of the investment made in the corporation, because of the limited liability nature of the organization."

The flaw in your argument is that a PMC's liability - legal formalities to the contrary notwithstanding - is absolute and unlimited. To put it bluntly, Global Guerrillas can and will retaliate against PMC's constituency. You would not want to be a PMC's banker - under any terms. The same goes for shareholders, any or all of whom would be potential targets.

Indeed, the risk posed by PMC's is not insurable because of the Black Swan phenomena John Robb. I would be fascinated to find out what sort of insurance PMC's actually are now getting. ( Of course, you would no more want to be a PMC's insurer than its banker. )

In terms of John Robb's mercenary type scenarios, it might make sense to put together ad hoc, joint venture / partnership type arrangements to fill specific missions.
Indeed the partnership model much more closely approximates the actual risk distributions we are talking about than would the corporation.

[Caelan]

Can you please elaborate on how “Global Guerillas can and will retaliate against PMC’s constituency?” First, I’m not aware of any instance where a non-state entity has attempted to sabotage a corporation’s creditors or shareholders in attempt to affect a ground war. Second, I believe that for your first premise to be correct, you must assume perfect information. By way of digression, I will point out that Blackwater is owned by Prince Group, a closely held corporation. I imagine obtaining the identities of shareholders, creditors, and insurers would be difficult for a non-state entity. Even the known principals are relatively safe, if history is any indicator. Third, for your premise to be correct, you must assume that the non-state entity has the capability of projecting power consistently into a relatively fortified state. The constituency of the PMC that remains in the United States bears little greater increased risk of attack than the standard risk of terrorism faced by a non-constituent U.S. resident.

I am not assuming that a NSE doesn’t have some limited means of obtaining information, and even some limited means of operating within the United States. For all I know, Erik Prince could be shot tomorrow. However, if that did happen, it would not dramatically change the risk characteristics of the market as a whole. Ultimately, for an Iraqi insurgent, such an action is cost prohibitive considering that someone will just take Prince’s place as long as operating a PMC is returning greater profit than other market alternatives. And I imagine as long as the PMC has the advantageous reward to risk ratio as compared to the state actor that I mentioned earlier, there will be a vibrant market in private militaries.

[Duncan Kinder]

"Can you please elaborate on how “Global Guerillas can and will retaliate against PMC’s constituency?"

I suggest you study what is going on in Mexico right now for some idea. And have you never heard of computer hacking, of kidnapping, bribing, of infiltrating? We are not talking about discovery according to the Rules of Civil Procedure. Nor does it matter whether such tactics please the court or not.

"Ultimately, for an Iraqi insurgent, such an action is cost prohibitive considering that someone will just take Prince’s place as long as operating a PMC is returning greater profit than other market alternatives."

This again, resembles how Mexican drug cartels presently operate.

So, if you are saying that the upcoming world enables, encourages drug cartel type style organizations, then you and I are probably not that far apart. But such organizations would bear but passing semblance to the contemporary corporation.