Dr. Peter Lock
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From the Economics of War to Economies of Peace

The dynamics of shadow globalisation and the diffusion of armed violence as an obstacle to build peace

Text to be presented at the Hamburg Winterschool on Crisis Prevention and Peace Support, November 18, 2002

1. The economics of armed conflicts

The economies sustaining, if not causing current armed conflicts have slowly moved to the centre stage of research in recent years. Important multipliers in this evolving debate have been the macro-quantitative studies of Paul Collier, a high-ranking economist at the World Bank and an earlier comprehensive book L'économie de guerre civile edited by Jean/Rufin (1996), two French scholars with a background in humanitarian work. In spite of the differences in their methodological approaches the diverse authors in this on-going academic discourse unanimously report illegal economic transactions of some kind as a pervasive feature pertaining to the current forms of armed conflicts. These transactions link current wars as well as other forms of armed violence with the global economy. Often the economic and financial trails of such transactions start in shadow-economic spheres and emerge only in later stages at their destination in the regular economy where the pursued foreign currency is to be found. These wars are not sustainable without external economic collaboration, either open or hidden, legal or illegal.

However, the coverage in the media and the rhetoric in the political arena are regularly dominated by discourses focusing on identities and ethnic or religious strife. Ideological discourses of such nature are identified as major, if not the dominant stimulants of strategies of violent conflict resolution eventually resulting in internal armed conflicts. These perceptions often guide the political reactions towards on-going armed violence in the international arena. They often impede a timely consensus on rigorous and practical measures which could at least stifle the logistics of armed violence or possibly bring the parties to negotiate a non-violent outcome under international pressure.

Thus, the recognition of the economic circulation sustaining armed conflicts which are of necessity linked to the global economy would enforce a radical rethink of the ways the international community should react to countries engaging in armed conflict. It will be argued in this paper that from this perspective the ways how major actors in the international system currently approach on-going conflicts must profoundly change if policies, with or without an UN-mandate, intended to prevent and resolve armed conflicts are to become somewhat more effective. The long honoured attitude or rather the convenient ideology that business and politics are separate spheres must be reconsidered in the light of irrefutable evidence that, at minimum, barter trade linking armed conflict with the global economic circulation is indispensable for sustaining armed conflict.

The conceptualisation of armed conflicts as manifestations of economic processes weakens many idiosyncratic explanations which often dominate the rhetoric of actors involved in violent conflict. It facilitates an analytical tool allowing to decipher the logic of seemingly irrational violence and atrocities as strategies of economic dominance replacing a regulated market by violence or the threat thereof. This is not to deny the feasibility of dramatic escalations of violence beyond any economic rationale of the actors involved. But to the extent they can be identified, economic drivers of violence provide a leverage for outside actors.

During the evolution of internal wars the economic logic often turns war fighting into a self-perpetuating "mode of production". In such circumstances the task to build peace becomes extremely difficult. Often the agents of war have long since learnt to pursue their basically economic interests with the help of media presentation and have the stamina to cynically adjust their fighting strategies accordingly. In some cases acts of war resembled a stage setting designed to extract support from international actors, including humanitarian organisations. With hindsight evidence abounds that the script of the war in Bosnia was full of staged events. It is documented that parties in this war had contracted London-based public relations agents tasked to favourably influence the public opinion throughout the world. They also halted fighting at many occasions to allow business opportunities across the frontline to be realised by potent traders.

The analysis of the logic underlying the respective strategies of the armed actors is complicated by the fact, that violence is not only orchestrated to exclude the "enemy" from access to resources, but it also serves to prop up the internal control the respective politico-economic leaders wield over "their" group by demonstrating their resolve to prevail by means of violence against perceived potential detractors. In the post-Dayton Bosnia this pattern led to a fragmented society stymied by organised crime commanding international networks and deliberately nurturing rhetoric of ethnic and religious identity as a cover. The politico-military entrepreneurs in former Yugoslavia who enforced the confrontation of identities as a means to stay in or gain power were certified by the Dayton agreement and have successfully consolidated their position in spite of the presence of the UN-administration during the last seven years. It proved extremely difficult, if not impossible for the impoverished population in the various newly formed constituencies based on identity ideologies to wrench back the power from the unscrupulous warriors turned criminal entrepreneurs and political demagogues through the internationally supervised ballot box.

The argument elaborated in this text is not that armed conflicts are mono-causal events. But the economic dimension is of singular importance to deal with internal wars because it offers hitherto largely neglected possibilities of outside leverage. It also highlights structures of global economic networks in the regular economy which condone armed conflict and utterly corrupt governments as has been the case with the oil industry in Angola for more than twenty years. But the same applies to global networks in the shadow economy, diamonds from Angola are the most publicised case. The operational space of such networks falls unfailingly within the political domain of industrial countries, making them a indispensable party of war economies wherever they emerge. Furthermore, if war economies are indeed embedded in the dynamics of shadow globalisation, they are no longer deviant and discrete configurations within the global economy. They represent rather the extreme end of a continuum of economic configurations prevailing in many states. These states are no longer capable of protecting fair markets and have to surrender often dynamically growing economic spheres to criminal actors. Additionally they have lost full control of cross border transactions which transforms them into an open shadow economy, the flip side of the neo-liberal economic order.

2. Globalisation and Social Polarization

The social reporting of various international agencies, all currently waving the neo-liberal flag, such as, among others, the World Bank and the United Nations Development Programme, whose task is to contribute to the regulation of economic globalisation, cannot obscure the fact that at present, in large parts of the world, globalisation simultaneously brings about economic growth in some cases as well as state collapse in others. It is coupled with social polarization within societies and between states and entire regions.
In this situation of growing latent social tension, armed conflicts and zones of all-out violence begin to take shape within societies. However, there is a surprising consensus among researchers that the absolute levels of poverty are not the hotbed of armed violence, rather greed and frustrated expectations of upward social mobility appear to be associated with armed conflicts and international terrorism in particular. The economic requirements of armed conflicts radiate into the globally intermeshed black markets as the fighting parties are under constant pressure to restock their arsenals. In this way armed conflicts become an integral part of the dynamic networks of illegal trade. Were it not for the robust functioning of shadow globalisation, the proceeds of the war economies could not be laundered nor could the entrepreneurs of violence stash away their loot in foreign bank accounts and buy real estate in prestigious locations.

It has indeed been a matter of protracted controversy within the social sciences whether the violent escalation of conflicts into internal wars is attributable to social inequities and grievances or to the greed of a handful of actors. The answer to this question determines what measures the international community, and in particular humanitarian and development aid organisations, should reasonably take in order to proactively counter different forms of armed violence. Social inequity and greed are not, of course, mutually exclusive as causal factors. But on the basis of our present knowledge, it is the greed of a few actors that would appear to be the driving force in many internal wars. What fosters the formation of black economies, in which economic exchange is ultimately regulated by recourse to violence, is not absolute poverty, but aggressive competition for internationally marketable resources and the prospect of handsome, though unlawful profits.

In a social situation of absolute poverty, the social groups most affected by deprivation have only minimal opportunities to gain access to the means, they would need to enforce a redistribution of income and economic opportunities. They simply do not command sufficient leadership and resources nor do their small-scale activities limited to the informal sector generate the quantities of hard currency needed to empower themselves with arms and be in command of mobility and communication.

Thus, if a member of the poorest of the poor within a society can be identified as an armed fighter in internal conflicts, the obvious question to be asked is who provided the weapons. Since these fighters have no capital of their own, somebody must have invested in their equipment. Hence, for whom the arming of poor men serves as a means to what end? Child soldiers, a pervasive feature in internal armed conflicts in many countries, are a case in point. As arms on the black market are exclusively traded in convertible currency, there must be a criminal entrepreneur in the background who chooses to invest his dollars in the purchase of automatic guns and who then equips and cynically employs child soldiers. We will only understand such atrocious scenarios if we can design an economic simulation showing what circumstances make such an allocation of resources a "rational choice" of investment.

It is also evident that were these problem-areas isolated by an environment of 'watertight', legally operating economies, the criminal business-operators at the core of current conflicts would have no chance to succeed, no chance to earn hard currency and in turn to operate as buyers on the illegal small arms markets to replenish the arsenals of the fighting parties in on-going conflicts. The economic circulation sustaining the logistics of armed violence would simply implode if it were embedded in a lawful environment of fully regulated economies. In the real world, however, globalisation is made up of three interconnected spheres, through their interfaces they facilitate a broad range of unregulated and often criminal transactions.

3. Three economic spheres: a heuristic tool to interpret the current process of globalisation

The representation of economic activities in official statistics is but partial and economic policies effectively regulate only a fraction of the global economy. The daily economic endeavours of large sections of the global population to secure their survival are not accounted for in economic statistics, while many important productive activities are deliberately kept from public accounting, because they are considered illegal and take place in hiding. With this in mind a three-sector model of globalisation will be developed, in order to provide a more inclusive scheme of the functioning of the current global economy. Though this model does not lend itself to a precise quantification, it helps to elucidate the social dynamics of globalisation and its linkages to various forms of social violence. Three sectors are distinguished: the regular, the informal and the criminal sector

The regular, legally operating economy: This is the only sphere properly studied and statistically fully registered by economists. Economic research is rarely concerned with a comprehensive study of all economic undertakings, it comprises a much limited part of all human productive endeavours. The older German terms for what is today the trade of economists "Nationalökonomie" (national economy) and "Volkswirtschaft" (people's economy!) still convey a more comprehensive notion which has largely been lost in the dominant discourses in the current academic discipline.

In relation to the reproduction of the state the customary boundary of modern economics is relevant however, it delineates the sphere of regular markets where the law protects the actors and where taxes can be levied. But taxes, it should not be forgotten at any time, form the basis of statehood, in short without taxes – no state. But under the pressure of the prevailing neo-liberal doctrine national economies are being increasingly transformed to become part of a single global financial market. This development undermines the state-based nature of national economies and societies. One important factor fostering this trend is the fact that governments are forced to compete for foreign "inward" investments with a virtually unlimited number of other potential locations by lowering the tax rates and offering other advantages and subsidies. The regulatory capacity of states is structurally diminished by the ensuing downward spiral of tax revenues.

In this course of events the security sector is often weakened to such an extent as an indirect result of diminishing tax revenues, that the police and the military are not properly paid and cease to provide the stable and secure environment required for the economy to perform well. Private security services emerge as an alternative and provide islands of order and security for those who can afford to pay for the service, including foreign owned industrial compounds. Current trends in many countries suggest that these features have turned into a process of causal circularity

The informal economy: This term describes the extensive spheres in which the majority of the world's population is forced to organize its survival. This half of the world's population lives in a state of constant legal and physical insecurity. The state monopoly of the legitimate use of force offers them little or no protection, it does not apply to their living environments. In turn these excluded social groups pay little or no taxes. The social contract between state and citizen, expressed by the payment of taxes among others, is not operational in the vast informal sectors around the world. In the ensuing vacuum the monopoly on force is usurped by criminal groups at local levels, while corrupt state officials are perceived as menacing intruders. This view is based on experienced or observed violence and extortion[1]. Security turns into an expensive commodity in what amounts to "markets of violence"[2]. Communal efforts to provide mutual security stand little chances to succeed against criminals who impose their violence-based social control in the vacuum left by the state.

The informal economy generates high levels of economic migration as well as migration caused by the pervasive violence (refugees), which continuously reinforces one of the most dynamic spheres within the current process of globalisation. Migration massively manifests itself in the twilight areas of all societies and has created huge labour markets sustained by push and pull factors. These markets are illegal, but have at the same time become an indispensable, often very large part of the economy in the host societies. They engender important remittances and are part of transnational networks upon which many ethnic, religious or otherwise formed groups have come to depend for their collective livelihood. The ensuing international financial flows both inside and outside the regulated markets provide a convenient operational space, the manpower and the necessary cover for trafficking of commodities and people.

The openly criminal economy: The criminal economy can be described as an unknown number of globally operating violence-based rather flexible networks. They are constantly extending their reach parasitically into the regular economy and are extorting protection-money in the informal economy among others. Drugs are perhaps the major driving-force of global networking in the criminal sphere. However, analytically one must confront the bitter irony that the extraordinary revenues generated in this illegal market entirely depend on the extremely costly prosecution of drug consumption. In fact from a purely economic point of view it can be argued that the drug market is the most subsidised market in the wealthy industrial nations[3]. Experts estimate that the global gross 'criminal' product (GCP) annually amounts to 1500 billion US dollars, about 40 % of which are attributed to drugs. The diffuse global financial markets provide the operational medium for the activities of the criminal economy whose actors ultimately aim at laundering their unlawful profits and invest them in the regular economy, real estate[4] being one of the favoured investment targets.

In short the present global economy can be schematised as a dynamic process currently under the spell of the neo-liberal doctrine of globalisation which is accompanied by social fragmentation and polarization. It equally provides a fertile ground for the dynamic expansion of a parallel pattern of shadow globalisation which comprises the combined informal and criminal spheres of the global economy. Internal armed conflicts articulate themselves in this environment and display the economic features already discussed, namely their indispensable integration into the global shadow economy. But the connectedness to the global shadow economy is not restricted to countries suffering a recognized armed conflict on their territory. In many countries the shadow economy features prominently and sustains strong organised crime embedded in global networks as well. Shadow globalisation is a pervasive feature which truly lives up to its name, it is in the last instance regulated by violence or the unfaltering threat of it.

4. Violence and economic regulation

As a further step in the analysis, based on evidence from a large number of countries, I propose to expand the analysis of societal violence beyond internal wars. As an hypothesis I submit the observation that the distinction between strictly defined internal wars and diffuse, but massive societal violence is not any longer warranted. The function and the "volumes" of violence often are comparable between countries considered to be at war and countries with large spatial frictions. One might describe the transformation of the organisation and the forms of armed violence from war-like confrontations towards seemingly diffuse manifestations of violence as a consequence of social fragmentation and polarization which opens spaces for violence-based imposition by criminal actors. The ensuing homicide rates often exceed the balance sheet of violence in internal wars. The post-conflict murder rates in El Salvador and Sao Paulo would be cases in point. Conceptualising armed violence broader is a precondition for effective policies aiming at reducing the appalling number of casualties related to one or the other form of "violent economic regulation" whether they occur in the context of an internal war or in the context of a failing state. I suggest that our state-centric perspective, permanently reinforced by the redundant literature on the paradigm of "democratic peace", hinders us to account for the on-going transformation of the forms of violence and, even more importantly, the territorial nature of conflicts.

War as hitherto defined is possibly being replaced by more targeted and decentralised acts of violence. In order to initiate this debate I would like to draw attention to the fact that the recent transformation of political regimes towards democracy appears to be associated with dramatic increases of homicide. The context is similar in all cases. The paradigm of neo-liberal globalism severely delimits the economic strategies of development and redistribution governments can pursue. The new democratic regimes regularly do not manage to reduce social fragmentation and polarisation. Brazil[5], South Africa[6], Nigeria[7], Russia[8] as well as post-conflict countries[9] are cases in point. The doubling of homicide rates, not officially documented in all cases, point in this direction. These situations easily exceed the casualty rates in many enduring "wars". Colombia[10] appears to represent two cases in one: For many years an internal war lingers on, though Colombia remains a democratic country according to internationally accepted standards. But homicides not related to the internal war are clearly the dominant form of violence in Colombia. These appalling homicide rates represent mostly gun-related casualties. The pervasive diffusion of small arms and not proliferation is instrumental for the emergence of such massive violence. The largest share, though certainly not the all of this violence, represents "regulatory violence". It is employed to enforce economic and financial transactions at different levels, including extortion, kidnapping, robbery and illegal trade. In this respect this seemingly diffuse violence resembles many features of what has been identified as typical for sustained "economies of war" in many current conflicts. But with respect to its territoriality and perseverance this armed violence is distinct and thus not identified as war proper.

M. Duffield[11] has introduced the concept of "network war" into the debate. This paradigm points in a direction which might help to better understand the distinct territoriality of violence in cases such as South Africa and Brazil, where violence regulates large spheres of the economy without escalating into forms which would classify as war. Integrating "network warfare" into the schematic representation of the current globalisation process as schematised in this text possibly brings us closer to an understanding of the transformation of violence as (among other functions) a tool of competing strategies of violent economic regulation of the global shadow economy. The mutation proceeds from internal war towards seemingly chaotic forms of "regulatory violence". The increasing emergence of transnational identities[12] as a result of the current shadow globalisation which nurtures large-scale migration also points towards a deterritorialisation of potential conflicts.

Conceptualising globalisation as three antagonistic and at the same time symbiotic or at least interdependent dynamic spheres allows us to understand the different meaning of territoriality for the networks which constitute the three spheres. As already explained the three spheres can be identified as the regular economy, the informal and the criminal sphere. In the context of the currently dominant paradigm of neo-liberal globalism all three spheres can be described as webs of interconnected networks with global reach. Hence the application of violence or the threat thereof as a means to impose the economic interest upon the respective network does not create a territorial front. The need to apply "regulatory violence" may occur in geographically disparate locations. A network of drug traders may require the application of "regulatory violence" at any link of the chain from the plantation to the consumer in any of the consumer markets around the globe. Traditional warfare about territorial control does not pay off for global networks operating in the shadow economy. They defend their operational space which may be quite flexible, if required under the circumstances, with targeted violence and even terror. The operational space is distinct from territorial control. It may amount to full territorial control, but the latter is not a necessary condition. Generating a certain level of insecurity may already provide for an optimal operational space, because every criminal network depends on the availability of a sphere and tangible locations which facilitate the symbiotic exchange with the regular economy.

A parallel logic applies to the global players among the transnational corporations. They also require safe operational spaces without obstacles. Often the operational security is provided by private security firms in otherwise violent environments. In some cases transnational corporations even contract the armed forces for the special protection of their assets, pipelines in particular. In Russia Gazprom is said to employ an "army" of more than 20 000 security personnel.

As a concomitant trend of fragmentation under global neo-liberalism the privatisation of security enhances the separation of social spheres. It is a response to the pervasive, in some cases deliberate weakening of the state which can not any longer provide security as a free public good. The private security industry is globally one of the fastest growing economic sectors. If security is turned into a commodity, an intra-societal protection race ensues continuously enlarging its territorial range. It speeds up processes of social fragmentation by creating peripheries where people lack the resources to purchase their security and fall prey to criminal rackets for their "protection".

Such territorial configurations emerge not only in the context of "withering states". In continuously spreading spaces the state deserts its role as provider of public security. As social fragmentation surges in the footsteps of neo-liberal globalism growing numbers of territories are controlled by local strongmen who vie for the monopoly of violence in "their" territory. However, often different networks operate on the same territory making such constellations highly competitive and instable.

It is important not to focus exclusively on "failed states" or the Third World. By implication of the transnational nature of shadow economies not only weak or failed states comprise large informal and criminal economic spheres, developed industrial economies have assimilated large informal as well as criminal networks. In Germany the presence of these largely invisible networks is reflected in posters decorating the entrance of post offices and many chain stores which inform the "invisible actors" in ten carefully selected languages that 'the employees cannot shorten the time during which the safe remains locked'.
Certain services are a domain of illegal qualified labour, health care in private homes for example. In Spain prostitution generates an estimated 12 billion _ per year, at least two thirds of the workforce in this sector are illegal immigrants from Central and Eastern Europe. Economists argue that during the recent boom in the United States inflationary pressures were significantly delayed because of the availability of illegal labour in large, almost unlimited supply. These examples should suffice to justify a systematic study of the global dynamics of the shadow economy which mirror the current configuration of neo-liberal globalism in the regular economy.

In many countries undergoing systemic transformation and a good number of developing countries, the economy is dominated by informal sectors and criminal actors. This goes hand in hand with the implosion of state structures. Those who form part of the state apparatus become modern highwaymen of sorts to the civil society. Their greed stifles any entrepreneurial initiative aimed at self-help. If a society has reached the point where the façade of state authority is appropriated by groups committed to economic criminality, the protagonists of that authority produce a climate of generalized insecurity. The regulatory systems of the civil society fade away and are replaced by chaotic structures based on rough self-defence. Rival militant identities take shape, the ensuing ideologies unfailingly promote the exclusion other people, often immediate neighbours.

Mass flight and emigration—the latter generally by the most productive and best educated individuals—are the rule in such confrontational situations. It further blights the chances of overcoming the all-enveloping informalisation and criminalisation of economic activity. The diasporas which quickly take shape in the wake of crises initially live mainly in illegal conditions, but they nonetheless ensure survival in the crisis regions by sending remittances. Examples of this pattern are: the Lebanon (all groups), Kosovo (Albanians), Sri Lanka (Tamils), Chechnya (Chechens). At the same time, however, the diasporas provide a human infrastructure for lucrative illegal transactions of every kind. The diasporas regularly fill the war-chest in cases of armed conflict "back home". This has been the case, for example, in Northern Ireland (Catholics) and in Nagorno-Karabakh (Armenians).

All over the world, crises and civil wars have led to the formation of transnational human-resource networks, some of which have already achieved global scope. In each case, only a tiny elite secures a legal status in the diaspora. The total number of people involved is difficult to estimate. The United Nations High Commissioner for Refugees estimates the total number of displaced persons and refugees in the world to amount to araound 50 million. But the number of people living illegally in foreign countries, hoping to secure survival or a better life, is much greater than this. These people constitute an important blackmailable resource for managing the grey or criminal spheres of the globalisation process—spheres that have long since ceased to be confined to traffic in drugs and human beings. Even in states governed by the rule of law, these people often live in the shadows, beyond the scope of the rule of law. In most cases, their precarious existence is dominated by hierarchies underpinned by violence. They remain excluded from the provision of security as a free public good otherwise prevailing in the host society. Economically, they form an integral part of the respective national economy, but they are excluded from any political participation and social protection.

Whether in ghettos of discriminated and marginalized minorities in the metropolises of the industrial nations or in the huge poverty-stricken zones that surround every large city in the Third World or in cities with abandoned industries in the former Soviet Union, the inhabitants of these places perceive the state authority essentially as if they were living in a collapsed state. In these 'exclaves of economic and social apartheid', parallel social structures of domination take shape. The monopoly on force is held by territorially organized gangs, which—like nation-states—settle border disputes by armed force. Protection money replaces taxes. People living in such precarious circumstances are a resource for, amongst other things, arms and drugs trafficking and other risky activities in demand in the black economy. Anyone who is poor has no choice and is likely to accept criminal risks.

5. Intergenerational apartheid

As all of this were not bad enough the current globalisation produces a social fragmentation which I describe as "intergenerational apartheid". Historically, the present time will probably be recalled as an age of mass youth unemployment. The economic (dis-) order that is currently unfolding in line with the neo-liberal paradigm has nothing to offer to the majority of the world's young people when they reach working age. There is no role for them, either in the present-day 'regular' economy or in traditional rural structures. These latter are in the process of disintegrating all over the world under the pressure of modernisation. Neither the modern industrial nor the service sectors can absorb the up-coming generations into the regular labour force. It is part of the neo-liberal logic of global competition that rationalized, capital-intensive production methods and marketing strategies should ultimately triumph pervasively throughout the world, not withstanding their problematic social impact.

Worldwide a large part of the rising numbers reaching working age is being involuntarily driven into the no man's land of informal economies and is thereby becoming an inexhaustible resource for criminal entrepreneurs in search of manpower. A clear example of this dilemma is provided by the present situation in Algeria. The Algerian society, like many societies in the Third World, is burdened with a youth bulge, as the phenomenon has been denominated in the sociological literature. About half the population is less than 15 years old. It is estimated that at present about 60 per cent of those looking to enter the job market for the first time remain unemployed as far as the regular economy is concerned. There is little prospect of any improvement. The young people in question (males only) are known as hitistes ('those who prop up or lean on the wall'). They are always on the look-out for a chance to do a good deal on the trabendo circuit—casual smuggling, mostly with France—or to bolster their existence and thus also their identity, by some other means, mostly within the grey area of the informal economy or if they are lucky by rendering some criminal service. In their life time neo-liberal globalism for all its growth prospects is unlikely to provide a workplace for them in the regular economy. Increasingly young people in various countries develop a realistic understanding of their fate. The praise of violence as a means of personal advancement is a pervasive theme in local Hiphop songs around the world.

In many countries, more than half of all young people belong to this excluded group. In such circumstances, devoid of any prospect of advancement, the use of instruments of force such as an automatic rifle becomes an extremely attractive proposition. With a weapon in his hand, for the first time in his life, a young man suddenly feels respected by others—even if the sentiment in question is actually sheer angst in the face of terror on the part of the persons under threat. Force exerted through an automatic rifle becomes the means of resisting social exclusion. Force promises access to the world of industrial mass consumption—to which there is constant media exposure, even in the farthest corners of the world.

Following the end of the so-called liberation movements and the almost total disappearance of the concomitant utopian ideas of social equality, now almost exclusively young males figure as violent protagonists in armed conflicts and armed violence. This is probably due in part to the fact that economic modernisation brings with it a radical devaluation of those roles in the production process that were previously assigned exclusively to men. As a reaction to this, and in the absence of cultural-emancipatory and economic alternatives, male identity is construed in terms of acts of violence that offer give a feeling of superiority and autonomy. The lost position in the production process is replaced by participation in the social production of violence. This logic is also reflected in the crime figures and the prison population in developed countries where young males belonging to discriminated minorities have the highest rates of violent crime and form the majority of inmates. As a result of ascribed roles offences involving firearms are overwhelmingly the preserve of young men.

Political wheeler-dealers with criminal economic interests who operate in civil-war scenarios make cynical use of the impulsive urge of young men to take up arms to defend themselves against social exclusion, deprivation and the ensuing denial of an accepted role. Hence the phenomenon of the child soldier in the Third World has more in common with youth gangs in highly industrialized states than the mostly separate discussion of these two social pathologies would suggest.

The never-ending civil wars and the pervasive "regulatory" violence elsewhere are fuelled, amongst other things, by the total exclusion of the rising generations in the context of state collapse or social fragmentation. From the perspective of young men seeking the role of a "soldier" or a "child soldier" presents itself as an attractive option; it commands respect and income . Moreover, the chances to survive as a soldier are probably greater than in the violent chaos of societies paralysed by the war or in destitute refugee camps. Working as a 'soldier' is therefore not just highly attractive to young men; in the jargon of modern economics, it is a 'rational choice'.

6. Final remark

I started out with highlighting general configurations observed in the context of war economies. These configurations were identified as an integral part of the on-going globalisation process which I stylise as a process involving three antagonistic and at the same time symbiotic spheres. Thus, the economic features identified in the context of war economies also prevail in many countries not classified as fighting an armed conflict. Every illegal transaction geared to garner convertible currency (i.e. dollars) is bound to penetrate into global markets outside the war zone either directly or via a chain of "shadow" traders. In this way every industrialised country unwittingly participates in the economic dynamics of armed conflicts in distant regions. In the course of this analysis it becomes obvious that illegal war-related transactions are but a small part of shadow globalisation. Illegal markets operate outside the rule of law and are basically regulated by violence.

Pervasive fragmentation and social polarisation developing in the footsteps of neo-liberal globalism represented by the so-called Washington consensus manifests itself in a broad variety of forms of "regulatory violence". This violence is crowding out the market as a regulatory mechanism because the "failed" and weak states can not any longer protect markets regulated by the law. Thus, armed conflict is only the tip of the iceberg of "regulatory violence". Studying globalisation as a system of interacting networks in all three spheres leads to the hypothesis that "regulatory violence" used to protect the functioning of shadow-economic networks both internally and against competing networks requires acts of violence in distant geographical locations belonging to the operational space of the respective networks. It follows, as a trend at least, that we might expect a deterritorialisation of "regulatory violence", in other words social violence in form of internal warfare with traditional geographical fronts is likely to be replaced by seemingly chaotic, but growing levels of "regulatory violence" which should be measurable in growing homicide and crime rates[13].

Presently the dynamics of shadow globalisation are self-perpetuating because the reproduction of the state depends on taxes which can only be extracted from the regular economy. In order to identify countries were the informal and criminal spheres actually dominate the economic activities, it is expedient to look at the trends in tax collection. Because without tax there is no accountable state, instead there we are likely to find only political entrepreneurs who have appropriated the state in order to pursue their businesses in the shadow economy.

These observations have an important implication for post-conflict scenarios. The lesson refers to the limitations of peace accords. The international community regularly puts pressure on warring parties to reach an agreement and end fighting. Without taking precautions that the embeddedness of the economy in the networks of shadow globalisation is replaced by an active integration into the regular economy, the war may end, but the regulatory violence is likely to continue or even to expand. The political reconstruction will either be dominated or boycotted or both by entrepreneurs whose main interest is to maintain and expand their participation in global criminal networks and who are afraid of the eventual rule of law in a democratic state.


[1] This is reflected in victimisation surveys in various Latin American countries which show that less than 10% of crimes are reported to the police. See: José María Rico, Laura Chinchilla, Seguridad Ciudadana en América Latina, México D.F. (Siglo ventiuno editores), 2002.

[2] This term has been introduced by Georg Elwert, Gewaltmärkte. Beobachtungen zur Zweckrationalität der Gewalt, in: Trutz von Trotha(Hrsg.), Soziologie der Gewalt, Sonderheft 37/1997 Kölner Zeitschrift für Soziologie und Sozialpsychologie. Unfortunately this very useful paradigm has not been adopted in the Anglo-Saxon discourse on violence.

[3] In the United States alone more than one million persons, mostly Afro-Americans and Hispanics, are kept in prison for drug offences costing the tax payer far more than the same number of university grants would require. Drug control both nationally and internationally absorbs many billions of dollars per year around the world. In the absence of objective medical indications the war against drugs amounts must be identified as an ideology. Without the fundamentalist cultural zeal to suppress the supply of drugs in financial terms this market would be very small and not particularly profitable. The suppression of supply is not likely to succeed, because it serves as reciprocal incentive. At the same time little is being done to educate the consumers (demand side). An implicit collusion between the political classes in the United States and large parts of Europe and the criminal entrepreneurs controlling the drug business best describes the current situation.

[4] The cyclical price hikes in the real estate sector in emerging economies which regularly end in asset value bubbles are linked to the inflow of dirty money. But laundered money flows into real estate in London, Miami, Switzerland or Mediterranean resorts as well. For a case study of the linkages between financial crises and money laundering see: Guilhem Fabre, Criminal prosperities, financial crisis and money laundering: the case of Mexico in comparative perspective, in: UNESCO / UNODCCP, Globalisation, Drugs and Criminalisation, Part 2, UNESCO (MOST) Paris 2002, pp.238-251.

[5] Angelina Peralva, Perspectives sur la violence brésilienne, in: Revue Tiers Monte, t.XVII, no. 167, julliet-septembre 2001, pp.537-554. Luke Dowdley, Crianças Combatentes em Violência Armada Organizada : um estudo de crianças e adolescentes envolvidos nas disputas territoriais das facçoes de drogas no Rio de Janeiro, ISER Vivario 2002 (http://www.desarme.org).

[6] Mark Shaw, Crime and Policing in Post-Apartheid South Africa, Transforming under Fire, London (Hurst & Co.) 2002; Jonny Steinberg ed., Crime Wave, The South African Underworld and its Foes, Witwaterstrand University Press 2001.

[7] Human Rights Watch, Nigeria The Bakassi Boys The Legitimization of Murder and Torture, May 2002, Vol. 14, Number 5.

[8] Data to be found in: International Study of Firearms, United Nations 1998; WHO, World report on violence and health, Geneva 2002..

[9] For El Salvador see: Human Rights Watch; for Liberia see: Human Rights Watch (www.hrw.org).

[10] See: Peter Waldmann, Der anomische Staat Über Recht, öffentliche Sicherheit und Alltag in Lateinamerika, Opladen (Leske + Budrich) 2002, Chapter 11.

[11] Mark Duffield, Global Governance and the New Wars, The Merging of Development and Security, London (ZED Books) 2001.

[12] The Kosovo Albanians are a case in point, by the time the war started at least half the economically active population lived and worked outside the province, mostly in Westen Europe. The emigration was the result of economic mismanagement and discrimination by the Tito-regime. The marginalisation under Milosevic intensified both the legal and illegal emigration. Without the lifeline provided by the diaspora a slef-assured Kosovo Albanian identity would not be viable.

[13] The best recent statistical compilation of murder rates which corroborates my hypothesis for countries where data is available is: WHO, World report on violence and health, Geneva 2002. <