Privatizing an Uncontested Public Good - The Rise of Transnational Corporate Military Service Provision

University essay from Lunds universitet/Ekonomisk-historiska institutionen

Abstract: The provision of military and armed security services typically is the monopoly domain of the state. With the end of the Cold War legitimate private firms, however, expanded as worldwide providers of military and security services. The proliferation of private military companies echoes back to pre-modern eras when it was customary for state rulers to allocate force and security through the market. This study therefore aims to explore and explain the rapid rise of transnational corporate military service provision in our time, and to ground this change process historically by exploring the economic history of private military service provision. Historically this study primarily addresses private military service provision during Medieval and Early Modern periods. During these eras state and local rulers relied on contractual institutions to employ military companies and other private military actors. To explain the rise of private military service provision in our time this study explores global institutional changes, national institutional arrangements and military privatization paths, and the proliferation of transnational private military companies. This study demonstrates that the capacity of the modern state to control, sanction and exercise legitimate violence has not diminished, but it has rather been transformed by the resurgence of contractual arrangements under new post-Cold War institutions. Today modern states control private military companies through formal rules and informal norms, competition constraints, and through informal ties between public sector and military officials and entrusted private military firm executives. Modern states that are able to provide security as a public good primarily hire military service firms to augment regular forces and public security provision. The substitution of public security and military force resurfaced in weak states as a short-term response to armed conflicts, political instabilities, and humanitarian crises. Overall this change underlines a partial return to contractual institutions in public security and military provision. While military privatization has served to augment the regular military structure and has contributed to reduce many peacetime military costs the resurgence of contractual institutions has amplified transaction costs due to the ensuing demand for efficient contract management practises and the intrinsic need for new efficient military contract management structures.

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