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Towards an Acceptable Level of Violence: Institutional Lessons From Northern Ireland

2012; Taylor & Francis; Volume: 24; Issue: 5 Linguagem: Inglês

10.1080/09546553.2011.642907

1556-1836

Graham Brownlow,

Corruption and Economic Development

Abstract Institutional and economic development has recently returned to the forefront of economic analysis. The use of case studies (both historical and contemporary) has been important in this revival. Likewise, it has been argued recently by economic methodologists that historical context provides a kind of "laboratory" for the researcher interested in real world economic phenomena. Counterterrorism economics, in contrast with much of the rest of the literature on terrorism, has all too rarely drawn upon detailed contextual case studies. This article seeks to help remedy this problem. Archival evidence, including previously unpublished material on the DeLorean case, is an important feature of this article. The article examines how an inter-related strategy, which traded-off economic, security, and political considerations, operated during the Troubles. Economic repercussions of this strategy are discussed. An economic analysis of technical and organizational change within paramilitarism is also presented. A number of institutional lessons are discussed including: the optimal balance between carrot versus stick, centralization relative to decentralization, the economics of intelligence operations, and tit-for-tat violence. While existing economic models are arguably correct in identifying benefits from politico-economic decentralization, they downplay the element highlighted by institutional analysis. Keywords: counterterrorismeconomicsintelligenceNorthern Irelandorganizationtrade offs Notes Source: Peter Shirlow and Brendan Murtagh, Belfast: Segregation, Violence and the City (London: Pluto Press, 2006). Source: Adapted from Esmond Birnie, and David Hitchens, "Chasing the Wind? Half a Century of Economic Strategy Documents in Northern Ireland," Irish Political Studies 16 (2001): 3. Figure for 2007 from ONS (Regional GVA NUTS1). Notes: Derived from census reports for 1971, 1981 and 1991; continuous Household Survey data for 1985–7. Source: Kevin Boyle and Tom Hadden, Northern Ireland: The Choice (Harmondsworth: Penguin, 1994), 44. Joel Mokyr, "Intellectual Property Rights, The Industrial Revolution, and the Beginnings of Modern Economic Growth," American Economic Review (Paper and Proceedings) 99, no. 2 (2009): 349. Carrie Kerkes and Claudia Williamson, "Unveiling de Soto's Mystery: Property Rights, Capital Formation and Development," Journal of Institutional Economics 4, no. 3 (2008): 299–325. Likewise, it is recognized that institutional change need not be optimal. The standard work in the new Institutionalist discussion of the concept of path dependence, which draws on Paul David's and Brian Arthur's analysis, is Douglass North, Institutions, Institutional Change and Economic Performance (Cambridge: Cambridge University Press, 1990). Peter Boettke and Christopher Coyne, "Context Matters: Institutions and Entrepreneurship," Foundations and Trends in Entrepreneurship 5, no. 3 (2009): 135–209. Douglass North, John Wallis, and Barry Weingast, Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History (Cambridge: Cambridge University Press, 2009). See page 131. To take just one contemporary example, a HM Treasury consultation document published in March 2011, opens with the observation that the legacy of conflict has continued to take its economic toll on Northern Ireland despite the achievement of a peace settlement in 1998. HM Treasury, Rebalancing the Northern Ireland Economy, March 11 (London: HM Treasury, 2011). For the role of context in the study of terrorism and counterterrorism, which is consistent with economic analysis, see Richard English, Terrorism: How to Respond (Oxford: Oxford University Press, 2009). Equally it has been argued recently by economic methodologists that specific historical context provides a kind of "laboratory" for the researcher interested in real world economic phenomena. For a recent methodological discussion of the role of historical context in economic research see Randall Morck and Bernard Yeung, "Economics, History and Causation," NBER Working Papers, Working Paper 16678 (Cambridge, MA: National Bureau of Economic Research, 2011) and Roger Backhouse, The Puzzle of Modern Economics: Science or Ideology? (Cambridge: Cambridge University Press, 2010). A by no means exhaustive list of relevant surveys would include the following: Bruno Frey, Dealing with Terrorism—Stick or Carrot? (Cheltenham: Edward Elgar, 2004); Walter Enders and Todd Sandler, The Political Economy of Terrorism (Cambridge: Cambridge University Press, 2006); Todd Sandler, "The Past and Future of Terrorism Research," Revista de Economia Aplicada 50 (2009): 5–25. For a particularly insightful recent survey see Michael Intriligator, "The Economics of Terrorism," Economic Inquiry 48, no. 1 (2010): 1–13. Steven Plaut, "Misplaced Applications of Economic Theory to the Middle East," Public Choice 118, nos. 1–2 (2004): 11–24; Efraim Inbar, "Review of Frey, Dealing with Terrorism," European Journal of Political Economy 22, no. 2 (2006): 343–344. Paul Frijters, "Review of Frey, Dealing with Terrorism," Economic Record 81, no. 253 (2005): 183–184; Anthony Yezer, "Dealing With Terrorism-Stick or Carrot?," Journal of Homeland Security and Emergency Management 2, no. 2 (2005): 1–4. Bryan Caplan, "Terrorism: The Relevance of the Rational Choice Model," Public Choice 128 (2006): 91–107; William Shughart, "An Analytical History of Terrorism, 1945–2000," Public Choice 128 (2006): 7–39. Peter Boettke, "Review of Bates et al. Analytical Narratives," Constitutional Political Economy 11, no. 4 (2000): 377–379. Given the vital need for secrecy in pursuing current security operations, historical studies of counterterrorism may be the best source that economists and other policymakers can hope to find. Yezer (see note 11 above), 4. Gary Becker, "Crime and Punishment: An Economic Approach," American Economic Review 76, no. 2 (1968): 169–217; William Landes, "An Economic Study of U.S. Aircraft Hijacking, 1961–1976," Journal of Law and Economics 21, no. 1 (1978): 1–31. The equating of deterrence with counterterrorism has dominated political and academic discourse. Alan Dershowitz, Why Terrorism Works (New Haven: Yale University Press, 2002); Bruno Frey and Simon Luechinger, "Three Strategies to Deal with Terrorism," Economic Papers 27, no. 2 (2008): 107–114. For a recent game theoretic examination of some of these issues see Kevin Siqueria and Todd Sandler, "Terrorist Backlash, Terrorism Mitigation, and Policy Delegation," Journal of Public Economics 91 (2007): 1800–1815. Frey and Luechinger (see note 16 above), 108. Enders and Sandler (see note 9 above), 84–110. Frey, Dealing with Terrorism—Stick or Carrot? (see note 9 above); Frey and Luechinger, "Three Strategies to Deal with Terrorism," (see note 16 above); Bruno Frey and Simon Luechinger, "How to Fight Terrorism: Alternatives to Deterrence," Defence and Peace Economics 14, no. 4 (2003): 237–249; Bruno Frey and Simon Luechinger, "Decentralization as a Disincentive to Terror," European Journal of Political Economy 20 (2004): 504–515. Bruno Frey and Simon Luechinger, Terrorism: Deterrence May Backfire (Zurich: University of Zurich, Mimeo, 2002). Frey and Luechinger, "How to Fight Terrorism" (see note 19 above), 240. For instance, Frey and Luechinger propose a general principle: allowing terrorist groups access to the legal political process will raise the opportunity cost. They have also observed that in nearly all cases a benevolence strategy, based on creating institutions that promote political and economic decentralization, is the most effective way of reducing the marginal benefits of insurgent groups. Frey and Luechinger, Terrorism: Deterrence May Backfire (see note 20 above), 9–11. For example, Roy Mason, Secretary of State for Northern Ireland between 1976 and 1979, justified his focus on security and employment by observing the failure of political initiatives, such as Sunningdale and the Constitutional Convention, under his Labour and Conservative predecessors. These failures ensured that Mason wanted in his own words "[to place] the whole issue of constitutional change on the back burner." Roy Mason, Paying the Price (London: Robert Hale, 1999), 161. Frey (see note 9 above). There was in the 1980s and 1990s some notable work produced by economists on the connections between Northern Ireland's political and economic situation; more recently there has been little further work in this area. Some of the best work on the connections between Northern Ireland's polity and economy published during the 1980s and 1990s would include: Bob Rowthorn, "Northern Ireland: An Economy in Crisis," Cambridge Journal of Economics 5, no. 1 (1981): 1–31; Bob Rowthorn and Naomi Wayne, Northern Ireland: The Political Economy of Conflict (Cambridge: Polity Press, 1988); Paul Teague (ed.), Beyond the Rhetoric: Politics, the Economy and Social Policy in Northern Ireland (London: Lawrence and Wishart, 1987); Colin Jennings, "An Economistic Interpretation of the Northern Ireland Conflict," Scottish Journal of Political Economy 45, no. 3 (1998): 294–308. The closest recent example of an attempt by economists to link the political and economic can be found in Portland Trust, Economics in Peacemaking: Lessons from Northern Ireland (London: Portland Trust, 2007). In addition, Cunningham's work considered from a political viewpoint the role of economics within broader policy. See Michael Cunningham, British Government Policy in Northern Ireland 1969–2000 (Manchester: Manchester University Press, 2001). English (see note 8 above), 56. Ibid., 58. On the possible practical security lessons that have been suggested that arise from the Northern Irish experience and which can (and cannot) be applied to radical Islamic violence see Peter Clarke, Learning From Experience: Counter Terrorism in the UK Since 9/11 (London: Policy Exchange, 2007). By way of illustration, the opinions of four (later five) "wise men" (two of whom were economists) were already being sought by autumn 1970 concerning long-term security, constitutional, and economic policies. NA CJ4/1906 "Northern Ireland: possible approaches to problems; papers commissioned by Sir Philip Allen, Permanent Under Secretary, Home Office," 1970 Oct 02–1977 Feb 17. Touche Ross, Has Civil Disorder Affected Manufacturing Industry in Northern Ireland? (London: Touche Ross, 1971). Report conducted for Northern Ireland Ministry of Commerce. Produced June 1971 and held in file NA CJ4/217 entitled "Disturbances in Northern Ireland 1969/70—statistics and costs." Frey (see note 9 above), 115. John Whyte, Interpreting Northern Ireland (Oxford: Clarendon Press, 1991). Roy Foster, Modern Ireland, 1600–1972 (Harmondsworth: Penguin; 1989), 582–592; Joseph Ruane and Jennifer Todd, The Dynamics of Conflict in Northern Ireland: Power, Conflict and Emancipation (Cambridge: Cambridge University Press, 2006). Ibid.; Anthony T.Q. Stewart, The Narrow Ground: Aspects of Ulster 1609–1969 (Belfast: Blackstaff Press, 1999 [1977]). English (see note 8 above): 69–71. Henry Patterson, "Sectarianism Revisited: The Provisional IRA Campaign in a Border Region of Northern Ireland," Terrorism and Political Violence 22, no. 3 (2010): 337–356. It has been noted for example that a slight majority of IRA killings were of security forces. This kind of violence they suggest was not directly a "tit-for-tat" phenomenon. I should thank an anonymous referee for alerting me to this line of argument. However, we need to be careful with this argument. For reasons see the discussion in ibid. Moreover see Brendan O'Leary, "The IRA: Looking Back; Mission Accomplished?," in Marianne Heiberg, Brendan O'Leary, and John Tirman (eds.), Terror, Insurgency, and the State: Ending Protracted Conflicts (Philadelphia: University of Pennsylvania, 2007), 189–229. Robert White, "The Irish Republican Army: An Assessment of Sectarianism," Terrorism and Political Violence 9, no. 1 (1997): 20–55. See also Mike Morrisey and Marie Smyth, Northern Ireland After the Good Friday Agreement: Victims, Grievance and Blame (London: Pluto, 2002), 60; John McGarry and Brendan O'Leary, Explaining Northern Ireland (Oxford: Blackwell, 1995). Cillian McGrattan, Northern Ireland 1968–2008: The Politics of Entrenchment (Basingstoke: Palgrave Macmillan, 2010). Ibid. Ibid. Richard Bourke, Peace in Ireland: The War of Ideas (London: Pimlico, 2003), 114–115. Michael Smith, Fighting for Ireland? The Military Strategy of the Irish Republican Army (London: Routledge, 1997), 101. Four months preceding internment there had been a combined total of eight deaths. The four months after the introduction of internment saw the deaths of thirty soldiers, eleven police members, and seventy-three civilians. The longer-term impact of this increased violence associated with internment was perhaps even more damaging to the effectiveness of counterterrorism. It was after all the case that internment begat anti-internment rallies and this led to the tragedy of Bloody Sunday. Many joined the IRA as a result of Bloody Sunday igniting further violence. Malachi O' Doherty, The Trouble With Guns: Republican Strategy and the Provisional IRA (Belfast: Blackstaff, 1998), 87. David Fielding, "Investment, Employment and Political Conflict in Northern Ireland," Oxford Economic Papers 55, no. 3 (2003): 512–535; Graham Brownlow, "The Causes and Consequences of Rent-Seeking in Northern Ireland, 1945–72," Economic History Review 60, no. 1 (2007): 70–96. Nicholas Crafts, "The Golden Age of Economic Growth in Post-War Europe: Why Did Northern Ireland Miss Out?," Irish Economic and Social History 22 (1995): 5–25; Portland Trust (see note 25 above), 9. Cormac Ó Gráda, A Rocky Road: The Irish Economy Since the 1920s (Manchester: Manchester University Press, 1997), 135–136. Vani Borooah, "Symposium on the Economic Implications of Peace in Ireland," Journal of the Statistical and Social Inquiry Society of Ireland 37 (1995): 133–144. Clive Lee, Regional Economic Growth in the United Kingdom Since the 1880s (London: McGraw-Hill, 1971), 247. Portland Trust (see note 25 above), 9. Oxford Economics and ERINI, Cutting Carefully—How Repairing UK Finances Will Impact NI: A Report for NICVA July 2010 (Lisburn: Oxford Economics and ERINI, 2010), 6. Portland Trust (see note 25 above), 26. A variety of good summaries and arguments on the issue of discrimination can be found in the following: Graham Gudgin, "Discrimination in Housing and Employment Under the Stormont Administration," in Patrick Roche and Brian Barton (eds.), The Northern Ireland Question: Unionism, Nationalism and Partition (Aldershot: Avebury, 1999), 97–121; Robert Cormac and Robert Osborne, Discrimination and Public Policy in Northern Ireland (Oxford: Clarendon Press, 1991); Paul Teague, "Discrimination and Fair Employment in Northern Ireland," in Paul Teague (ed.), The Economy of Northern Ireland: Perspectives for Structural Change (London: Lawrence and Wishart, 1993), 140–171. Denis Barritt and Charles F. Carter, The Northern Ireland Problem: A Study in Group Relation, Second Edition (Oxford: Oxford University Press, 1972); Bob Rowthorn, "Northern Ireland: An Economy in Crisis" (see note 25 above). Rowthorn (see note 25 above), 8. NA FCO 87/591, "Foreign and Commonwealth Office: Republic of Ireland Department," Northern Ireland: Economy, January 1, 1976–December 31, 1976. Ibid. Esmond Birnie and David Hitchens, Northern Ireland Economy: Performance, Prospects, Policy (Aldershot: Ashgate, 1999). These anti-discriminatory measures have been identified as a major determinant of a closing of the religious unemployment gap between 1991 and 2004. Portland Trust (see note 25 above), 13. PRONI D/4127/7/2/3, 1994, "Research Papers: Kilfedder," 20. Cunningham (see note 25 above), 161–162. McGrattan (see note 40 above). Cunningham (see note 25 above), 153. Space does not permit a full review of this case. The most comprehensive study of the rise and fall of DMCL is Ivan Fallon and James Srodes, DeLorean (Sevenoaks: Coronet, 1984). Mason (see note 23 above), 164–165. Ibid., 205 and 218. Ibid., 205. Ibid. Ibid., 219. Ibid., 220. PRONI DED/21/6/1 "DeLorean Motor Company press cuttings," 1981–1984. Ibid. Northern Ireland Audit Office (NIAO), Department of Enterprise, Trade and Investment DeLorean: The Recovery of Public Funds (HC287) (Belfast: Stationary Office, 2004). Recently released files put the total cost, which include the money associated with riot damage and compensation, at between £83.9 million and £84.3 million. (Even these figures underestimate the cost to the taxpayer. By way of illustration, McKinsey's were hired by the Northern Irish Department of Commerce to provide advice on the operation of DCML. The costs of these and other consultants do not appear in the official figures. Furthermore, industry insiders observed that even if only £60 million (at 1978 prices) was the total cost of the venture to the taxpayer this still ensured that the cost per job was (at £30,000) three times the Department of Commerce's usual cut-off point for industrial promotion. See Ibid and PRONI DED/21/6/1 (see note 72 above). NA FV22/125, "Ministry of Technology and successors: Vehicles and Mechanical Engineering Products Division and successors," DeLorean Motor Company: Northern Ireland car assembly project, January 1, 1980–December 31, 1981. PRONI DED/21/6/1 (see note 72 above). Ibid. NA FV/22/125 (see note 76 above). Jon Hayes and Paul O'Higgins (eds.), Lessons from Northern Ireland (Belfast: SLS Legal Publications, 1990). Cunningham (see note 25 above); Michael Connolly and Sean Loughlin (eds.), Public Policy in Northern Ireland: Adoption or Adaptation? (Belfast: Policy Research Institute, 1990); Frank Gaffikin and Mike Morrissey, Northern Ireland: The Thatcher Years (London: Zed, 1990). Cunningham (see note 25 above), 65. For the claim that security considerations prevented privatization in the area of transport see Richard Needham, Battling for Peace (Belfast: Blackstaff, 1998), 144–145. On the role of such calculations in the privatization of Northern Ireland Electricity (NIE) see ibid., 301–315. Northern Ireland Economic Council (NIEC), The Economic Implications of Peace and Political Stability for Northern Ireland (Belfast: NIEC, 1995), 12. A.R. Oppenheimer, IRA: The Bombs and the Bullets (Dublin: Irish Academic Press, 2009). Ibid., 289–324. Ed Moloney, A Secret History of the IRA (London: Penguin, 2002), 161. Oppenheimer (see note 86 above). Moloney (see note 88 above), 156. Richard English, Armed Struggle: the History of the IRA (London: Macmillan, 2003), 213. Moloney (see note 88 above), 154–155. Ibid., 149. Oppenheimer (see note 86 above), 295. The nickname given to the internal security unit was the "Nutting Squad." After 1977 it has been suggested that 70% of all IRA informers were killed. Moloney (see note 88 above), 155. Smith (see note 44 above), 188. Ibid. Ibid. Cunningham (see note 25 above); O'Leary (see note 37 above). Chief of the General Staff, Operation Banner: An analysis of military operations in Northern Ireland, Army code 71842, May (2006), 8–3. DETI and Invest NI, Independent Review of Economic Policy (Belfast: DETI and Invest NI, 2009). HMT (see note 7 above). For a good textbook discussion of the IS-LM framework see Brian Hillier, The Macroeconomic Debate (Oxford: Blackwell, 1991). Ibid. English (see note 8 above). Frey, Dealing with Terrorism—Stick or Carrot (see note 9 above), 136. Elinor Ostrom, "A Behavioral Approach to the Rational Choice Theory of Collective Action: Presidential Address, American Political Science Association," American Political Science Review 92, no. 1 (1998): 1–22; Elinor Ostrom, "Beyond Markets and States: Polycentric Governance of Complex Economic Systems," American Economic Review 100, no. 3 (2010): 641–672. Ibid. Ostrom, "A Behavioral Approach to the Rational Choice Theory of Collective Action" (see note 107 above). Axel Dreher and Justina Fischer, "Government Decentralization as a Disincentive for Transnational Terror? An Empirical Analysis," International Economic Review 51, no. 2 (2010): 981–1002. Additional informationNotes on contributorsGraham Brownlow Graham Brownlow is a lecturer in economics at Queen's University Management School, Queen's University Belfast, and a research associate of the Queen's University Centre for Economic History (QUCEH).