Castles, Battles, and Bombs

Castles, Battles, and Bombs

University of Chicago Press

2008

"Economics is a science of decision making."

Jurgen Brauer and Hubert Van Tuyll, professors of economics and history at Augusta State University, have written a history of war that uses economic principles (6 of them) to highlight decisions made relating to warfare or military spending through history.  It's an interesting book but a relatively dense read.  The principles are (1) Opportunity Costs, (2) Expected Marginal Costs and Benefits, (3) Substitution, (4) Diminishing Marginal Returns, (5) Asymmetric Information and Hidden Characteristics, and (6) Hidden Actions and Incentive Alignments.   More than anything the book analyzes how decisions regarding war and military spending were made and what economic factors combined with human behavior influenced those decisions.

This is a study in rationality.  The authors cite the work of Herbert Simon, who won an Nobel Prize in Economics, related to "Bounded Rationality."  This was the exploration of the consequences of man's limited rational capability.  Simon's work in "Administrative Behavior" described the work of the company as an adaptive system of physical, personal and social components that are held together by a network of intercommunication and by the willingness of the its members to cooperate and strive toward a common good.   The authors attempted to explain the situation, the economics involved, and the personal behavior of those involved, and how it all impacted the decisions that made relating to war.   Very interesting.

Economics according to the book is a study of behavioral principles by which a rational human being goes about his or her decision making.  People choose one thing that if not pursued would carry the greatest sacrifice, the highest opportunity costs.  In the Middle Ages, even though castles were enormously expensive (the equivalent, in some cases, of the income of the kindgom for a year), sovereigns would spend the required resources because the cost of a standing army was even more expensive.  This was remarkable in that resources were very limited (small tax base, no credit system, etc. -- how long would we have waged war in 2003 - 2010 without being able to borrow money to do it?).  One of my favorite quotes of the book is "A king in 1008 was far more aware of the need to make choices than a president in 2008."

In terms of cost benefit and marginal returns, there was an evolution of contracted or mercenaries armies (used in Renaissance Italy) to standing armies over time.  Cost was one issue but another was the unintended consequences of mercenary armies taking control of client states (I am reminded of William Walker in Nicaragua who was originally contracted as mercenary by one of the factions of civil war there -- he arrived with 80 men and took control of the country -- not good).  In looking at total war during the period 1618 - 1815, "the calculation of expected costs and benefits of each additional engagement in battle them might be said to have had a rational goal: to lower the total cost of war." 

Access to and the use of information was highlighted in the Civil War as the authors compared the battle decisions of Robert E. Lee as he faced a series of Union generals.  An assessment was made of diminishing marginal returns in radically increased bombing of Germany in the last years of World War II (increased bombing, according to the authors, actually had a negative impact for the Allies in that German morale increased under the horrific attack).  A study of substitution was made in the case of the French in standing down their armed forces in favor of developing nuclear deterrent during the Cold War (it should also be mentioned that France suffered incredible losses in Vietnam and Algeria). 

The last chapter focuses on the economics of terrorism in which the authors describe terrorist organizations as rational economic actors subject to opportunity costs and other factors affecting their decisions.  Key to an anti-terror strategy is to either decrease the revenue flow to terror organizations or increase the costs of their terrorists operations.  The authors cite the rational behavior of terrorists: "The overriding message is that the effort to tax terror (increase its costs) out of business calls forth resistance and breeds innovation, substitution, and efforts to increase productivity."

Final section of book assesses the economics of military manpower.  The authors contend that the productivity of military manpower carries implications for the demand of military manpower.  Different battle scenarios affect productivity.  As roles change, productivity of one type of warrior (highly trained, specialized skills in a high tech weapons approach) may not provide the same benefit in a different role (serving as body guards for diplomats).  Alternative mechanisms -- hiring the mercenary forces rather than mantaining them as part of a standing army may be the most economical chocies.

The Ghost of William Walker

The following article was published in the newsletter of the US Embassy in Nicaragua in May 2003. The news of US invasion of Iraq was in the headlines in Latin America and appeared biased against our efforts. Clearly, the Latin Americans saw the world through different eyes -- they remembered a past almost unknown to North Americans.

The Ghost of William Walker

“What matters at last is this: all over Central America, William Walker is remembered as the pattern and the paradigm for American intentions. There is not a school child who does not know his name … he has been the core with which national myths have been created: the heroic and successful struggle of the people of Central America against the arrogance and power of North Americans.” Robert Houston, “The Nation Thief”

Regional integration is not new to Central America. In the Spring of 1856, the region was probably more united than at any other time in its history. An allied army comprised of soldiers from Nicaragua, Costa Rica, Guatemala, Honduras and El Salvador backed by British and US business interests fought a bloody war against William Walker and his followers. Disease, superior numbers and national spirit brought victory to the allies and influenced Central America’s relationship with the United States for generations to come.

During the recent war in Iraqi, I caught glimpses of Walker’s ghost in some of the Hispanic media stories. It seemed to me at times the US was portrayed as the arrogant bully; the subliminal message was … this had been done before, in a different place and a different time. That message was unfair but perception creates its own reality and how the world perceives our actions depends as much on the past as on the present. Faulkner wrote in “Requiem for a Nun” that, “The past is not dead. It’s not even past.” Understanding what William Walker did in Central America is important to understanding how Central Americans view the United States and our actions in the region. A historical perspective can help us understand the present and better deal with the future.

William Walker was born in Nashville, Tennessee in 1824. By 19 he had graduated summa cum laude from the University of Pennsylvania to become one of the youngest physicians in US. He continued his studies at the Sorbonne then returned to America and began studying law. At 22 he was admitted to the bar and, after serving as a law clerk for a short period, he became the editor of The Crescent, a New Orleans newspaper. Later he traveled to California and became the editor of a newspaper in San Francisco. This was the era of Manifest Destiny, the relatively easy war with Mexico and the annexation of its territory in the West, the California gold rush and the need to spread the glory and civilizing power of American democracy and values. San Francisco became the jumping off point for expeditions to Mexico and Central America. Walker traded in the pen for a gun and at 5 foot 3 inches tall and 130 pounds became a filibuster (derived from the Dutch for freebooter or adventurer).


Walker’s first attempt at glory was in Baja California where, with 45 men, he declared the “Republic of Lower California.” After some initial success, he was defeated by the Mexicans and forced to flee back to the United States. Walker then focused on Nicaragua. He arrived on June 28, 1855, to fulfill a contract with Liberal leader Francisco Castellon calling for the delivery of 300 colonists available for military duty in exchange for land and cash (mercenaries) to aid in Nicaragua’s ongoing civil war. The Liberals were known as the Democrats and had Leon as their home base. The Conservatives were centered in Granada and were known as the Legitimists. Their name was based on their assertion that their claim to govern was legitimately derived from the 1854 constitution. Walker’s army consisted of 57 men and was christened the American Phalanx by Castellon. The first action of the Phalanx was a frontal assault on heavily fortified Conservative positions at Rivas. Walker’s troops gained the main plaza but were then surrounded and had to fight their way out sustaining 38 percent casualties. The Americans re-grouped after this defeat, received additional recruits from the US and planned an attack on Granada. Walker commandeered a boat from the Accessory Transit Company and landed his force near Granada in the early hours of October 13, 1855. The city fell with little resistance.

With Granada under his control (and the most prominent Conservative families as his hostages), Walker convinced the Conservatives to surrender. He then disbanded the Conservative and Liberal armies and declared an “all volunteer” force. In the meantime, new recruits arrived via the Transit Company. A loan of $20,000 was made to Walker by the Company and additional filibusters were brought in at a discounted $20 per passenger from the United States. Walker rigged an election and had himself declared President of Nicaragua. More than 11,000 “immigrants” including women and children from the US came to Nicaragua during two years that he was in power. While Walker’s total force was estimated by one of his officers to have been 2,500 men although he never mounted a single force in excess of 750 men for any one battle. There was a continuous flow of filibusters to replace the large number of casualties from battle and disease as the war intensified. Before the war ended, more than 1,000 North Americans died making the War in Nicaragua more costly than the Spanish American War fought four decades later. As the war turned against Walker and his forces, he took more drastic actions. At one point he burned Granada to the ground and posted a sign that stated, “Here was Granada.”

Central America unified and fought Walker. Volunteers came from all parts of Latin America for a war of liberation against the Americans in Nicaragua. Heroic efforts were made by the Allies. Juan Santamaria became Costa Rica’s national hero in the Second Battle of Rivas as he died torching a house held by the filibusters. An all-Nicaraguan force at San Jacinto defeated the filibusters and Andres Castro became a hero for killing a filibuster with a rock when his carbine misfired. As the battle casualties and losses from cholera mounted, Walker’s force became weaker. After a review of the Transit Company records, Walker claimed the company owed Nicaragua (that is, Walker) $400,000 in unpaid royalties. He revoked the company’s charter and Cornelius Vanderbilt. entered the fight against him. On May 1, 1857, Walker fled from Nicaragua. It is estimated that up to 10,000 Central Americans were killed or wounded during the war.

There is something in Walker’s story that is with us still. He personified cultural arrogance and the belief of his time that America’s duty was to take “civilization” to the world. In his book, “The War in Nicaragua”, Walker stated his views on achieving economic and social development --- his comments sound as if his mission were to build and develop Nicaragua.

“ … to destroy an old political organization is a comparatively easy task, and little besides force is required for its accomplishment; but to build up and re-constitute society --- to gather the materials from the four quarters, and construct them into a harmonious whole, fitted for the uses of a new civilization --- requires more than force, more than genius for the work, and agents with which to complete it. Time and patience, as well as skill and labor, are needed for success; and they who undertake it, must be willing to devote a lifetime to the work.”

Walker did little to strengthen Nicaragua (although he did set up a short-lived land registry and tried to develop a functioning land market) and he did much damage (the razing of Granada, summary executions, etc.). His was an age of almost religious fervor in the belief that America’s way of life was best for the world. Manifest Destiny was the battle cry and we had the duty to take our values to the world.

As Americans, we tend to fix things, to right wrongs and to build new social orders. The experience of William Walker and other events in our past point to a need to temper these traits with a greater attempt to understand why others are like they are and what can be done to influence change rather than force it.