The Political Economy of Counterinsurgency

Derek C. McAfee

Major Professor: Christopher Coyne, PhD, Department of Economics

Committee Members: Richard E. Wagner, Peter J. Boettke

Online Location, Online
April 15, 2022, 08:00 AM to 10:00 AM


This dissertation examines the political economy of U.S. Counterinsurgency (COIN) doctrine, seeking both to endogenize its recurrent adoption despite recurrent failure, and to explore the fundamental reasons for these failures. It uses economic reasoning and insights from Virginia Political Economy, principally emergent dynamics and the limits of knowledge, to explain the emergence of COIN doctrine, its failures in practice, and yet its persistence despite repeated operational failure.

Chapter 1 introduces the central tenants of COIN doctrine and situates the dissertation into a broader literature involving the role of military doctrine, explanations for doctrinal changes, and the challenges in evaluating the efficacy of military operations and outcomes. It also establishes an empirical and theoretic connection between military theory and its application which stands in contrast to a common theme in military scholarship that assumes a weak, or nonexistent, link between doctrine and operations.

            Chapter 2 establishes the central puzzle – the peculiar combination of doctrinal consistency despite repeated failure. Most COIN operations have failed and in the limited historical examples of government ‘wins’, the methods used do not comport with the dictates of COIN theory. The answer purposed to this puzzle – of persistence despite failure - lies in the combination of bureaucratic incentives operating in the context of complex systems. War alters the institutional constraints on action, and these actions manifest differently depending on the complexity of the war environment. Where conventional wars tend to reflect the actions of well-defined hierarchical organizations, insurgencies tend to reflect a spontaneous order, and this difference is at the heart of COIN’s dysfunctional continuity.

Chapter 3 explores the reasons for COIN failure, using Richard Wagner’s framework of entangled political economy. Insurgency is conceptualized as an entangled spontaneous order, which brings to the forefront the entanglement of both market and political dynamics and presents fundamental knowledge problems. Entanglement implies that remedies prescribing either increased government activity or increased scope for market activity are often misguided, and that COIN operations intended to separate the political from the economic will likely cause further entanglement – and consequently, greater knowledge problems. COIN activity guided by these signals, therefore, tends to target the ‘wrong’ things, leading to poor results and failure.

Chapter 4 provides empirical support for these central claims, using a comparative study of recent operations to degrade insurgent finances. The comparative case study involves two near concurrent air campaigns, Operation Tidal Wave II against ISIS and Operation Iron Tempest against the Taliban. Both involved a heavy reliance on a single relatively inelastic commodity, and both were targeted using the same operational logic, but the campaigns led to markedly different outcomes. The chapter will examine the reasons for these different outcomes, using the framework and economic insights developed in the previous chapters. Chapter 5 concludes with main findings and implications of the dissertation.