Required Reading for Development Practitioners: Peace Economics
A year and a half ago on this blog Lex Rieffel wrote that “we know how to stop bad governance before conflict breaks out,” and we know how to “restore a semblance of order,” but “what we do not know is how to establish good governance in a post-conflict country.” In Peace Economics: A Macroeconomic Primer for Violence-Afflicted States, Jurgen Brauer and J. Paul Dunne begin to answer that question. Their text, the first in USIP’s Academy Guides series, offers a readable review of the key economic concepts peacebuilding and development professionals need to know in the field and concludes with 12 principles for designing sustainable peace. Although the text is not a complete solution on its own, Brauer and Dunne articulate the principles (rather than the systems or policies) for a foundational segment of society – the economy – that are critical to reducing, preventing, or healing from violence.
Peace Economics is certainly an economics text, written by economists. But the book’s value to peace and development practitioners and policymakers lies in its clarity of purpose and its framing of economic considerations. Brauer and Dunne make a clear case for engaging the “commercial sector” and economic policymakers in peace processes. Comparing the world output losses of the 2009 economic crisis to losses from the presence of violence – 0.5 and 9 percent respectively – and the level of policy response to each, they write, “the ongoing, annual violence crisis is a much more severe economic problem and demands at least equally extraordinary policy attention and intervention.” And, they provide peace professionals with the tools to do so. The authors articulate the critical mechanisms of a functioning, nonviolent economy in ways non-economists can quickly grasp. Drawing on relevant examples and incorporating cases in each chapter, the text reads like an interesting review of your favorite college macroeconomics class (or the Cliffs notes if you skipped it). Concepts like real vs. nominal GDP, aggregate demand, and currency exchange – concepts we’ve all encountered but may not have fully mastered – are laid out easily in context and re-capped in the useful glossary.
But beyond the practical merits of the text, Brauer and Dunne surpass the traditional economics classroom by presenting a more complete view of both economic activity and the context in which it exists. Right up front they introduce the “three economies,” noting that the most oft-discussed exchange economy is only part of the whole. Reality beyond the textbook also includes the grants economy and the appropriation economy. And while the exchange economy “encourages production” and efficiency, and the grants economy includes remittances and foreign exchange and is based on love and mutual aid, the appropriation economy is based on coercion and fear. “The economics of fear,” they write, “is a crucial driver of behavior before, during, and after war.” This recognition of the full economic reality – rather than assuming peace and overemphasizing the positive effects of exchange – is carried through to the framing of foreign aid as an element of fiscal policy, the assessment of the extent of and prerequisites for market benefits, and the characterization of macroeconomic policy as a tool “to promote society’s orderly development and well-being,” not just the stabilization it is commonly used for.
Where the book falls short, and likely because the field does, is in letting the analysis lean more toward how violence and peace affect economics than how economics affects peace and violence. The authors do present examples of how sound economic policy mitigates or prevents violence, and of the opposite. But they more fully address why economic growth is served by avoiding violence. Currently, and as mentioned in reference to the case studies, peace economics as a field of analysis is limited in terms of the collected data and the quantitative techniques for understanding “the structure of peace and peacemaking.” The case studies look largely at the economic outcomes of war, with only a few addressing the peace outcomes of economics. Fortunately the definition of peace economics cited, which Brauer has worked with Raul Caruso to develop and publish, is “the economic study and design of political, economic, and cultural institutions, their interrelations, and their policies to prevent, mitigate, or resolve any type of latent or actual violence or other destructive conflict within and between societies.” This definition is forward-looking, calling on the field to define in the future what we are only beginning to understand today. The foundations presented in Peace Economics, and the authors’ expressed hope that more data will further illuminate their principles, lays important groundwork for our collective progress. (And a second edition).
 For detailed content and purchasing information about the book which is available for purchase now, visit the U.S. Institute of Peace Press page here.