As part of the NWO-funded ‘Employment for Stability’ project (2014 – 2016) at the Conflict Prevention Program, Dr. Neil Ferguson provides an economist’s perspective on the employment-stability nexus, starting with John Kenneth Galbraith’s insights that “in economics hope and faith coexist with great scientific pretension and also a deep desire for respectability”.
Many economists draw their inference from statistical procedures. The problem is that, whilst these methodologies can reasonably tell you the relationship between two variables, they do not explain why. Thanks to Freakonomics, correlations between things like swimming pool drownings and Nicolas Cage films are common Internet fodder, yet while raising a chuckle from anyone who reached the “correlation / causality” stage of statistics, they also make a serious point. The key to good economics is as much in interpretation as it is in scientifically correct statistics. And for interpretation, one needs some hope and plenty of faith.
The faith comes from well-founded theories – so long as one believes in the models that underpin the subject, one can reasonably believe statistics that support them. Sometimes however, hope through leaps of imagination is needed. Faith may be imperfect but is less so the more one believes in orthodox economics. Hope, however, has the power to open fascinating new worlds or to wreak great havoc. Take as an example, the background to our “Employment for Stability” project. On the surface, there is not much to dislike. More jobs = less violence = more jobs = less violence… Yet to get from jobs to stability requires some faith and immense hope.
Beginning with what we know (or at least assume we know): poverty is one of the most robust correlates of conflict. Employment for stability simply cranks this relationship into reverse. The notion runs – in reduced form – that the higher the income, the more that must be given up to rebel and the higher the opportunity cost of revolution. Exogenously increasing income, say by stimulating employment, makes revolution too expensive. This logic, however, relies on the argument that grievance is universal but opportunities are not. In absolutes, this cannot explain why countries like Northern Ireland have experienced violent conflict while poorer nations have not. Four hundred years of ethno-nationalist division and fifty years of a monist parliament for a pluralist people certainly provided the grievance but the spark of absolute poverty was missing.
Relativity, then, becomes important – the cassus belli may actually be the presence of groups that feel poor compared to others, leading to violence via two different routes: an inflated sense of grievance and an inflated perception of the spoils of war. The relative deprivation hypothesis is deeply contested. If correct, it becomes increasingly apparent why the ‘wheels may come off an employment for stability bandwagon’ that shifts the poverty-violence continuum into reverse. Suddenly, it matters where jobs are created and who gets them. Uneven growth, for example, could actually spur conflict in previously peaceful places, particularly when perceptions are out of kilter with reality. Of course if the hypothesis does not hold, the ‘wheels may never have been on’ in the first place.
If reductions in (relative) poverty – at least in isolation – are not enough to deter conflict, focus should fall on grievances. But then new concerns arise: it is unclear why increasing incomes should improve people’s perceptions of governments or alter their belief in political systems. Some have sought to tackle this question and argue that jobs reduce grievances by encouraging ‘good government’. Here, two theories are prevalent – both hinging on the assumption that increased employment leads to a bigger tax base, which happily improves governments. In the first, more taxes increase social services. In the second, a worker-led tax base increases interaction between legislators and civilians. In both cases, better governments weaken grievances. In theory this makes sense but it remains a stretch to believe that sketchy governments are suddenly turned into good ones. Even if governments have the incentives and desire to behave this way, it assumes that the capacity to do so is extant. This is something that developing countries, even those relatively unaffected by conflict, struggle with. It is next to impossible to believe that such theories hold in post-conflict economies where bureaucracies and institutions have been destroyed.
Of course, these are not the only theories of change but the message is still clear: there is too much hope in the employment-stability nexus. This does not mean that we should abandon optimism altogether – a virtuous cycle is too good an opportunity not to develop. Yet, knowledge is forming slowly. As it stands, what we know is that we need to know more. This may seem like a foregone conclusion but more knowledge leads to better programmes. More importantly, there is growing understanding of how to generate the missing knowledge. More interventions and impact evaluations – although an easy suggestion – is a good starting place. Not only would that help research like our project, it also provides direct understanding of what works and where it works. Although this may feel dissatisfying with so much to gain, it is a big leap forward from where we were only a few years ago. Until we answer these questions, employment for stability will remain a leap of hope to a conclusion that, although virtuous and desirable, is in reality, little more than a white whale – forever just out of reach and with the potential to cause much harm when only wrongheaded hope leads the chase.