The Review of Austrian Economics, 18:3/4, 325–342, 2005.
2005 Springer Science + Business Media, Inc. Manufactured in The Netherlands.
The Institutional Prerequisites for Post-Conﬂict
CHRISTOPHER J. COYNE firstname.lastname@example.org; www.ccoyne.com
Hampden-Sydney College, Department of Economics, Box 863, Hampden-Sydney, VA 23943; Research Fellow,
Mercatus Center, Arlington, VA 22201
Abstract. A successful post-conﬂict reconstruction is characterized by a self-sustaining liberal political, economic
and social order that does not rely on external support. It is argued that the extent of reconstructed orders is
constrained by their institutional prerequisites. These prerequisites—a shared ideology and ethic of individual and
private property rights, a commitment to markets and the rule of law—arefundamental. Without these preconditions
to serve as a foundation, reconstructed liberal orders will fail to be self-sustaining over time. It is argued that the
viability of a shared ideology and ethic, and hence success, is directly dependent on the extent of horizontal ties
in the post-conﬂict country. The main conclusion is that societies lacking adequate horizontal ties will require a
high level of continual intervention and reconstruction efforts will have a lower probability of success.
KeyWords: nation building, post-conﬂict reconstruction, social capital, social change, state building
JEL classiﬁcation: O20, P11, P16, Z13
Writing over a century and a half ago, John Stuart Mill explored the reason behind “the great
rapidity with which countries recover from a state of devastation. . . done by earthquakes,
ﬂoods, hurricanes, and the ravages of war.” Assuming that the disaster did not result in large-
scale depopulation, Mill concluded that individuals “with the same skill and knowledge
which they had before. . . have nearly all the requisites for their former amount of production”
(1848:82–3). Mill’s insight is extremely relevant today, especially in the context of post-
conﬂict countries and reconstruction efforts within those countries.
The topic of post-conﬂict reconstruction is currently one of the most relevant policy issues
in the world with major efforts underway in Afghanistan and Iraq. While the United States
has past experience in post-conﬂict reconstruction, there is much we do not know. Applying
Mill’s analysis to these U.S.-led reconstruction efforts, why were Japan and Germany
successfully reconstructed relatively quickly after war while Somalia and Haiti remain
stuck in a trap of underdevelopment, non-cooperative behavior, and unhealthy institutions?
Perhaps it is the case that a different set of knowledge and skills existed in prewar Japan
and Germany as compared to Haiti and Somalia. This paper focuses on understanding the
conditions or “requisites” necessary for success in the post-conﬂict situation.
Post-conﬂict reconstruction involves building or rebuilding both formal and informal in-
stitutions (Kumar 1997). Speciﬁcally, it involves the creation and restoration of physical in-
frastructure and facilities, minimal social services, and structural reform and transformation