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1 - Introduction: Conflict and appropriation as economic activities

Published online by Cambridge University Press:  30 December 2009

Michelle R. Garfinkel
Affiliation:
University of California, Irvine
Stergios Skaperdas
Affiliation:
University of California, Irvine
Michelle R. Garfinkel
Affiliation:
University of California, Irvine
Stergios Skaperdas
Affiliation:
University of California, Irvine
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Summary

An American businessman, recently arrived in Moscow to open an office, was met at his hotel by five men with gold watches, pistols and a print-out of his firm's net worth. They demanded 7% of future earnings. He took the first flight to New York, where muggers are less sophisticated.

(The Economist, 1994)

Although crime, conflict, and appropriation are common activities in all societies, the regularly reported incidents like the one just described from Moscow and other post-Soviet localities surprise even Westerners (who have been hardened by tales of muggings in New York and celluloid violence). The source of the surprise, at least from the perspective of most economists, is simply the failure of apparently rational individuals to engage in mutually advantageous trade spontaneously. In the absence of external or internal restraints, however, an individual with easy access to a pistol might find it more convenient to take what he wants from others outright by threatening to use force than to obtain what he wants through peaceful trade. As a general principle, resources can be used not only for production but also for appropriative purposes such as for theft and warfare. Individuals and groups can either produce and thus create wealth or seize the wealth created by others.

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Publisher: Cambridge University Press
Print publication year: 1996

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