Economic Factors of Conflict and Violence

Objectives

To assess the use of proxies in literature related to the study of Economic Factors of Conflict and Violence

To investigate shadow economic activities using proxy indicators

To globally compare case studies of criminal activity for similarities and linkages

To test proxies (in the absence of hard data) and stylise configurations of violence related to economic transactions as opposed to anomic violence.

This work package conceives of globalisation as a complex web of intertwined parallel dynamics, which determine both the regular economy and the rapidly expanding shadow economy. It aims at identifying the growing numbers of social groups developing transnational identities in the twilight of shadow globalisation. Social and economic spheres beyond state control and outside the rule of law appear to be expanding and transforming into dynamic transnational networks. New forms of social control emerge alongside shrinking states whose monopoly of legitimate violence is weakening. (Trutz von Trotha Hrsg. Soziologie der Gewalt, Sonderheft 37/1997 Kölner Zeitschrift für Soziologie und Sozialpsychologie, 410 pp. for a pioneering analysis). For systemic reasons the economic spheres of shadow globalisation are not fully accounted for in official statistics. As a result methodological descriptions of emerging patterns on the basis of diverse, widely scattered information form the main building blocks of this research.

Description of work

Violence, which may under certain circumstances escalate into armed conflict, is a manifestation of a failure of civilizing institutions. It threatens the social cohesion of the modern state and indicates the erosion, if not absence, of the state’s monopoly of legitimate violence or as may also be the case, the abuse of violence by the state itself. Empirical research designed to inform the policy discourse on societal violence can only be selective [1]. The research will concentrate on shadow economic transactions and develop stylised representations of it.

A growing share of economic activities takes place in informal or criminal spheres. They are equally part of the dynamics of globalisation resulting in complex multilevel interdependencies. The isolation of economic causation of violence in stylised models requires careful disentangling of these often hidden interdependencies as well as a separation between instrumental and anomic violence. According to the latest annual report of the ILO the livelihood of four billion people is restricted to the informal economy. The statistical accounting of these spheres rests on shaky grounds and is subjects to controversial debates (F.Schneider vs. Federal Statistical Office and our correspondence with both). Many substantial economic activities as well as international transactions do not enter public accounts because they are considered illegal and hence take place in hiding, either for reasons of tax evasion or because they are regulated by means of violence or the threat thereof.

The weakening of the state’s monopoly of legitimate violence takes different forms but is pervasive. A broad range of private agencies comprising legal as well as criminal actors replaces the state. This trend is reinforced by the pervasive privatisation of public spaces and social (income) polarisation. In cases of state failure «markets of violence» (Elwert in Trotha), the most radical form of privatisation of security, emerge as a medium of regulation.

Civil wars and societal violence are taken to represent a continuum. This is supported by data reported in the recent «World report on health and violence»(WHO). Violent death rates reported for countries not at war like Nigeria, South Africa or Brazil among others supersede the rate of victims in many current wars. The means used to kill and the social groups (age, gender, social status) involved are similar in currently raging civil wars and fragmented societies.(For case studies see: Kurtenbach S., Lock P. eds. Kriege als Überlebenswelten: Schattenglobalisierung, Kriegsökonomien und Inseln der Zivilität, Bonn 2004).

In order to conceptualise the global economy more comprehensively a three-sector model comprising legal, informal and criminal spheres will be used as a heuristic tool. It sheds light on the social dynamics across the fuzzy boundaries and on symbiotic exchanges between the three interdependent spheres and how this relates to various manifestations of societal violence. Looked at from the perspective of the state the regular economy on the one side and the informal and the criminal economies on the other are juxtaposed, economy versus shadow economy or globalisation versus shadow globalisation.

→ The regular economy based on a legal framework constitutes the only segment of globalisation whose data properly enter standard economic research. In relation to the reproduction of the state this customary boundary of modern economics is particularly relevant. It delineates the sphere of regular markets where the law protects the actors and where taxes can be levied. Taxes are the indispensable basis of statehood, but currently the regulatory capacity of states is structurally diminished by a downward spiral in tax revenues caused among others by shadow economic activities severely eroding the regular economy and by a global competition for inward investments.

→ In the informal economy the social contract between state and citizen, expressed by the payment of taxes and the protection implied in an effective monopoly of the legitimate use of force, is weakened. Security ceases to be a public good. In the ensuing regulatory vacuum alternative modi opernadi to provide security take root. Security turns into an expensive commodity for the already poor. The informal economy forms ungovernable mega-agglomerations throughout the world. This cosmos of volatile life provides the basis for the formation of continuously expanding informal transnational networks of collective survival. They are based on common identities of different nature, sometimes only constructed in the process. A large part of the network transactions are of shadow-economic nature and are thus prone to be usurped and dominated by violent actors and criminal entrepreneurs making the separation of informal and criminal spheres a fuzzy undertaking. Such networks accumulate substantial human capital allowing them to carry out sophisticated transnational operations, sometimes of global reach. They become a virtually inexhaustible source of migration, national and international, legal and more often illegal.

→ The openly criminal economy can be described as an unknown number of globally operating rather flexible violence-based networks. They are constantly extending their reach parasitically into the regular economy as well as into the cosmos of informality. Originally drugs were the major driving-force of global networking in the criminal sphere [2]. Ironically the extraordinary revenues generated in this illegal market entirely depend on the intensity of prosecution. Best guesses estimate that the annual global gross criminal product (GCP) currently amounts to 1500 billion US dollars, about 40 % of which are attributed to drugs, though human trafficking appears to be growing fast.

Social exclusion is the greenhouse of violence related to coercive economic regulation which is the overarching feature of shadow globalisation. Worldwide the younger generations are particularly affected by social exclusion. In many parts of the world there are but few jobs on offer in the regular economy for the mass of young people reaching the age to enter the labour market. Unemployment rates (in the regular economy) of well above 50 % among young people between 15 to 25 years of age are commonplace in many countries. The age bias of this social exclusion is best described as a form of intergenerational apartheid. Because violent crime is statistically the preserve of males between 15 and 35 years, this situation is of particular relevance for the analysis of causal linkages between the economy and violence.

The current crisis of economic regulation in the industrialised world is reflected in high structural unemployment. It provides a fertile ground for the dynamic expansion of shadow globalisation and proliferates violence and the unfaltering threat of it as a means to regulate economic transactions. In some countries the shadow economy features even dominates and sustains strong organised crime embedded in global networks.

However, in order to inform policy making how to (re)integrate the shadow economy and its transnational networks into the regular sphere, they have to be identified first and analytically dissected thereafter to fully understand their dynamic functioning. It is towards this end the proposed research will be directed.

Approach to be adopted:

During the initial phases of the research project the empirical work will focus on finding intelligent proxy indicators for activities representing the process of shadow globalisation [3]. The latter is linked to manifestations of «regulatory violence» defined as violence or the operative threat thereof applied to impose asymmetrical exchange or the unlawful appropriation of commodities or services. Since all players involved have an eminent interest of acting in secret, research must attempt to identify traces of shadow economic transactions that can be extrapolated to represent the activity. This is largely unexplored territory; therefore a large number of potential proxies for network activities in the shadow economy will have to be tested to sort out valid indicators [4]. This work is already being carried out in close cooperation with Prof. A. Iken (Hamburg Fachhochschule) [5]. The selected proxies are expected to eventually provide data permitting to realistically simulate this sphere. They reflect the dynamics of exclusion and informal, mostly illegal integration. Similar social mechanisms are expected to operate at different socio-economic levels. Thus, an indicator like international bus services, not related to tourism, are likely to be harbingers of shadow economic activities involving black labour markets. It is not possible at this point to precisely predict which sets of data are likely to be effective in highlighting the volumes shadow-economic circulation and its spatial distribution. The very nature of the subject, namely bringing to light activities the actors are determined to hide suggests that in the course of the on-going research new potential indicators are likely to be discovered. The attention paid to illegal transactions in the context of the «war against terrorism» is likely to contribute to unfolding continuously improved images of shadow globalisation.

In a first step the research will stylise typical activities on the basis of journalistic reports and other descriptive sources [6]. Since the regular economy and the shadow economy are linked and share symbiotic spheres, most shadow-economic activities and their actors become visible at some point. Upon identifying these spheres in a second step proxy indicators must be sought from among otherwise available data and, if found, projected to represent the shadow-economic activity. The empirical work concentrates on sifting existing data from diverse sources to identify information, which allows demarcating the complex networks of the shadow economy that often operate with impunity across borders. The research process can be compared with putting a puzzle together on the basis of largely unknown contours. Adding on to data already examined in current research several potential precursors of shadow economic activities are to be explored in order to establish their utility.

An example of such a potential precursor of transnational networking includes changes of passenger volumes and of flight destinations in countries like Angola, Cyprus, Nigeria, Paraguay, Thailand and Turkey [7]. Such data will be analysed for the period of the last ten years. It is expected that some changes related to suspected shadow economic activities can be identified. This work is expected to provide a proxy for illegal financial transfers and an indication where the symbiotic spheres serving as exchange medium with the regular economy are geographically located.

A second strategy designed to identify shadow operations consists in extracting sociological, demographic and socio-geographical data from localities and regions where the shadow economy dominates and violence is prolific. If then a similar configuration of data is found elsewhere, it can be taken as a preliminary indicator justifying intensive observation [8] and data collection in order to test the socio-structural configuration for shadow economic activities or to explain a distinct outcome. Thus, a number of case studies of identity groups linking up with criminal activities carried out by the team of Prof. Iken in the region of Hamburg will provide structural data (sociological, demographic and socio-geographic) to construe hypothetical configurations with a high probability of coercive regulatory violence [9]. Highly suspect variables would be 50 % unemployment among young males, important share of street vending even of valuable imported commodities, absence of taxation among others. By searching for similar configurations in other countries and regions the tentative configurations will be tested.

If social fragmentation and income polarisation are indeed part of the global footprint of the currently dominating economic regulation, it follows that a realistic research design can not rely on national averages and distribution measures i.e. Gini-index. Instead it is necessary to break this data down into parameters representing large social layers which often correspond to distinct socio-geographic areas, not least because particularly conflict-prone horizontal stratification [10] is lost in aggregated national data.: At the same time income inequalities may lead to social segregation (gated communities, privatisation of public space etc.) and to an apparent separation between the regular and the shadow economy. However, functionally the two worlds are mutually dependent and share a wide sphere of symbiotic exchanges.

It will be of utmost importance to account for illegal migration and its economic foundation by all possible means of empirical representation [11]. Traces of illegal migration surface in different institutional reports at both ends of the process. For the purposes of this project all these data have to be integrated into an economic simulation of the process on the basis of descriptive reports and other testimonies. Well documented diaspora communities and their role in the region of origin will serve as precursors to a wider data collection on the dynamics [12] of migratory processes in relation to the expansion of shadow economic activities, because the existing information suggests that the expatriate communities harbour transnational networks forming part of the dynamic web of shadow globalisation. For the time being configurations to be studied will include Albanian (incl. Kososvo) - Western Europe, Central America - United States, Philippines - Southwest Asia/United States. Further selection will depend on the access of data and the typological complementary utility.

The high crime rates in the poverty-stricken favelas, bidonvilles, slums, ethnic enclaves etc. which encircle the mega-cities in most regions of the world, including wealthy OECD-states as well, pose the methodological problem of isolating coercive «regulatory» violence. These areas are the bridgeheads of transnational networks. Migration leads to the articulation of national, religious or ethnic identities whose political economy rests on complex transnational circuits including symbiotic exchange spheres with the legal economy. Official crime statistics will be scrutinised whether they reveal patterns of coercive violence.

The proposed research is not designed to penetrate shadow economic spheres with investigative tools. The methodology is based on creatively combining diverse elements of existing information in order to shed light on otherwise hidden spheres. A known example of intelligently using data as a proxy for otherwise undocumented activities is the correlation between electricity consumption in a certain area and documented income, which is taken as a possible indicator of shadow economic activities.

The empirical work will draw on technical expertise which will be recruited later on as part of the EART team. This applies in particular to statistical testing and regional expertise.