As applied to political crises, economic concepts suggest that
peaceful settlements may become increasingly hard to find.
A Russian occupation of Crimea raises the specter of the Cold
War, in which the nuclear stalemate between the United States and
the Soviet Union devolved into regional disputes around the world.
While military and political frictions made the biggest
headlines, the Cold War couldn't be well understood without using
economic theory -- specifically, game theory, which analyzes the
strategic logic of threats, credibility and conflict.
It's worth viewing the crisis in Ukraine through the prism of
game theory, too, as applied on several fronts.
Nuclear deterrence From the standpoint of game theory as
developed by Thomas C. Schelling, a 2005 Nobel laureate in economic
science, the conflict can be seen as a case study in nuclear
deterrence. That's because, after the Soviet Union split into many
pieces in the 1990s, a newly independent Ukraine gave up its portion
of the old Soviet nuclear arsenal. In part, it did so in exchange
for a memorandum supporting its territorial integrity, signed by
both Russia and the United States.
Eliminating its nuclear weapons may have seemed a good deal for
Ukraine at the time, and it can be argued that the world became a
safer place. Yet if Ukraine were a nuclear power today, it would
surely have a far greater ability to deter Russian military action.
Tipping points Long before Malcolm Gladwell popularized the
concept, Mr. Schelling created an elegant model of tipping points in
his groundbreaking work, "Micromotives and Macrobehavior." The
theory applies to war, as well as to marketing, neighborhood
segregation and other domestic issues. In this case, the idea of
negotiated settlements to political conflicts may be fraying, and
the trouble in Crimea may disturb it further, moving the world
toward a very dangerous tipping point.
First, some background: With notable exceptions in the former
Yugoslavia and in disputed territories in parts of Russia and places
like Georgia, the shift to new governments after the breakup of the
Soviet Union was mostly peaceful. Borders were redrawn in an orderly
way, and political deals were made by leaders assessing their
In a recent blog post, Jay Ulfelder, a political scientist, noted
that for the last 25 years the world has seen less violent conflict
than might have been expected, given local conditions. Lately,
though, peaceful settlements have been harder to find. This change
may just reflect random noise in the data, but a more disturbing
alternative is that conflict is now more likely.
Why? The point from game theory is this: The more peacefully
disputes are resolved, the more peaceful resolution is expected. …