Market Mechanisms for Democratic Control?

Abstract

This paper analyses private military and security companies (PMSC) as opposed to the traditional military regarding their respective democratic control. After reducing the question to an economic model by broadening the model allowing it to include political and social expectations as well as costs of matching those, this paper addresses two explanations on the rationale behind the compared agents. First, classical state-agents were found to operate minimizing total costs, including social costs, especially the cost of expected damages and those of avoiding damages, hence producing a social optimum for control. Here, the concept of damage includes all social desiderata and their opposites. PMSC on the other hand also minimize their costs, however, they try to operate on a higher level of avoidance costs because the costs of damages usually do not concern them before the damage occurs; if this happens, their cost curve increments making it extremely expensive to handle their mandate. According to the model, both, state-controlled military as well as PMSC can operate at an optimal level of democratic control. PMSC however, if contracted under strict rules of liability and contractual penalties, can provide a better outcome than social and democratic control would.