“In fighting against the less developed societies the more developed ones have always found that their greatest advantage lay in the lack of unity in the enemy’s ranks.” – Ludwig von Mises, Socialism, p. 273
The slow motion implosion of a fragile Iraqi state has created light political consensus where it hadn’t previously existed. President Obama has spoken of the dangers posed by a “barbaric” Islamic State (ISIS) that has seemingly filled the power vacuum in Iraq, while Republican Sens. John McCain and Lindsey Graham wrote recently in the New York Times that “The threat ISIS poses only grows over time. It cannot be contained. It must be confronted…”
Writing in the New Yorker, George Packer referred to ISIS as “expansionist as well as eliminationist,” and that its “many hundreds of fighters holding European or American passports will eventually return home with training, skills, and the arrogance of battlefield victory.” On the right in the Wall Street Journal, though Peggy Noonan eventually came out against the actual Iraq war, a recent column by her channeled an increasingly bipartisan, “this time is different” consensus about ISIS. Even Noonan thinks something must be done to blunt the alleged global threat that is Islamic State.
Notable about this foreign policy comity is that it very much existed (if the congressional vote in favor of the Iraq invasion was any kind of indicator) back in 2002 and 2003 with regard to Saddam Hussein. How quickly we all forget, though it’s entirely possible this time IS different. The actions of ISIS members speak to hideous brutality that cannot be ignored. Since it can’t, this opinion piece doesn’t presume to know if the “Neo-Neocons” (to steal an adjective from the Wall Street Journal’s Bret Stephens) are right or wrong from a foreign policy perspective.
Indeed, this is not meant to be, nor does it amount to foreign policy commentary. Not one bit. It should be said up front that nothing written should be seen as an assertion of knowledge or an understanding of any specifics about Islamic State, how powerful and organized it might be, and whether or not it represents something fearful that Hussein – at least in retrospect – perhaps did not.
This column does, however, presume to look at the economics of the situation. Specifically, it will try to address the alleged Islamic State threat through the eyes of the great Austrian School economic thinker, Ludwig von Mises. It’s a guess that Islamic State wouldn’t have much fazed Mises.
That’s the case because ISIS found its footing in the very kind of “less developed” society that Mises referenced as non-threatening in his classic book, Socialism. Without trying to minimize the horrors of 9/11, the sickening doings of ISIS, or the ability of terrorist or extremist groups to visit further horrors on the greatest symbol (the U.S.) of the developed world, it’s fair to presume that Mises would wonder what all the Islamic State fuss is about. It’s not as though the latter was formed inside a sophisticated country, or countries.
In reality, the entity that has left and right up in arms in search of a muscular response was born in a part of the world that is one of the least productive economically, that can’t claim to create even one consumer good (the oil wealth there is largely a creation of western ingenuity) that is desired by global consumers, that can’t claim even one university that would appeal to the best and brightest. Despite this, numerous wise eyes are on ISIS?
Even more puzzling is the reporting about this nascent group. A recent Wall Street Journal front-page headline referenced “The Islamic State’s Economy of Extortion.” The article explained that ISIS is a largely self-financed entity by virtue of it “exacting tribute from a population of at least 8 million,” along with other funds raised through “criminal and terrorist activities.” Ok, so a group that is financed by plunder is a threat to the most powerful, capitalistic nation on earth?
Mises likely would have mocked today’s consensus precisely because the basis of ISIS’s existence is one of theft, coercion, or both. As he similarly wrote in Socialism, “Our whole civilization rests on the fact that men have succeeded in beating off the attack of the re-distributors.” We thrive because we’re largely free, yet a terrorist entity that is financed by thievery supposedly “cannot be contained.” What’s interesting about this is how many on the American right buy into the latter narrative. Though incentives and reduced barriers to economic activity properly animate their policy views as applied to the health of the U.S. economy, apparently redistributionist economics can create vibrancy and effectiveness in the Middle East?
Even more interesting is how allegedly skillful are those inside ISIS. To read the previously referenced Journal article without a skeptical eye is to believe that ISIS is run by a team of McKinsey consultants, as opposed to the radical militants who are actually in charge. As Nour Malis and Maria Ari-Habib wrote, the “radicals from the group administer an orderly extortion system of business and farm tributes, public-transport fees and protection payments from Christians and other religious minorities who choose to live under the militants rather than flee.” Would such a scenario birth resource-abundant growth in the U.S., or any other part of the world? It surely wouldn’t, and economic logic suggests it’s not doing so for ISIS.
Some will say oil revenues can or could fund ISIS, and if that’s true, President Obama’s Treasury should seek a stronger, more stable dollar to push down the price of oil. The stronger dollar that would lightly suffocate Middle Eastern oil producers would at the same time exist as a magnet for global investment in the U.S. What could weaken ISIS funding would cause the U.S. economy to soar. As Mises wrote,
“More highly developed societies attain greater natural wealth than the less highly developed; therefore they have more prospect of preserving their members from misery and poverty. They are also better equipped to defend their members from the enemy.” (emphasis mine)
Taking this further, despite the U.S. still being the world’s most advanced country in a freedom and economic sense, to watch what goes on inside Washington, D.C. is to be horrified by the ineptitude that defines our political class. Lest we forget, Harry Reid leads the Senate, John Boehner leads the House of Representatives, while Nancy Pelosi leads the opposition in the House. In the United States of America.
Since we Americans can claim such “competent,” “enlightened” leaders in our nation’s capital, do readers want to speculate on the quality of leadership inside ISIS? It doesn’t take several Foreign Affairs columnists to deduce that there probably isn’t a collection of Thomas Jeffersons and George Washingtons at the top of an entity that has Washington transfixed. Figure our political class can’t agree on much of anything (this latest alleged terrorist threat once again a rare example of consensus), the fighting is constant, yet somehow we’re supposed to believe that a criminal organization’s activities are defined by competent consensus and quietude at the top such that failure to respond now dooms us to eventual massacre in the cities and states we live in? Maybe so. Again, this column doesn’t purport to know about or be about foreign policy.
Still, basic economic logic suggests that skepticism about the power of ISIS is warranted. It is because eventually groups like it splinter of their own contradictions. As Mises put it in Socialism, “Only temporarily do the nations in a lower state of organization manage to co-operate for great military enterprises. Internal disunity has always dispersed their armies very quickly.”
Ludwig von Mises is sadly not here today to participate in the Iraq/ISIS debate, but his writings from long ago suggest that he would cast a skeptical eye on all the handwringing about the latest alleged terrorist threat. Maybe this time IS truly different, but if so, it would have to be that basic economics has become very dumb.