A recent article in slate by Columbia economics professor Ray Fisman, drawing on a forthcoming paper in American Economic Review ["Diamonds Are Forever, Wars Are Not. Is Conflict Bad for Private Firms?"] by fellow economists Massimo Guidolin and Eliana La Ferrara, takes the answer to their question [i.e., no, not necessarily, and sometimes it is quite good for them] as a given and — in describing the relationship between the end of Angola’s civil war (1975-2002) and the fate of its diamond industry [no. 2 export after petroleum] — pushes the question one step further: “Why was war good for Angola’s big miners?” * The article’s concluding graphs are:

In the oil rush that has seized much of the African continent in recent years, we may be witnessing another instance of disconnect between economic prosperity and certain business profits. Western oil companies, whether inhibited by ethics or constrained by law, have shied away from working with unsavory and corrupt African dictators. But such qualms haven’t stopped the China National Petroleum Company from drilling in countries like Chad, as the New York Times reported earlier this week. As long as Chad’s government remains a global pariah, the Chinese will face little competition.

The situation means that CNPC, like Angola’s wartime diamond miners, has no incentive to work for peace. Quite the opposite. There is a tragic mismatch between the social imperative to end war and the business imperatives of incumbent firms to maintain their entry barriers. La Ferrara and Guidolin don’t have data about whether Angolan miners helped to prolong the conflict. But it appears it would have been in their shareholders’ interests to do so. The fear is that companies with a taste for operating in war zones, or collaborating with corrupt governments, may be willing to do what it takes to keep things as they are. Because that’s what’s good for profits.

This unproven but provocative and, alas, ‘logical’ hypothesis drawn by Fisman reverberates:

Halliburton/KBR? Bechtel? Blackwater?

Perhaps not so much (in their control) anymore (now that civil war has taken on a life and death of its own) but early on, back in the days that Rumsfeld was saying “so what?” to a little [ahem] museum-artifact snatching and other widespread chaosification (with, you’ll recall, the singular exception of the well-soldiered oil ministry and all its records): How much was it in their interests to see “a little chaos” reign? to discourage a degree of peace (and, perhaps deluding themselves à la the Dickster, a degree of flower-strewn American welcome) which might have invited in the competition to divvy up the spoils of war?

The fact that it’s even plausible is yet more reason to shudder.

But it’s all too congruent with what we know to date of the mutual back-scratching, pocket-stuffing exclusivity of the Bush-Cheney-MegaCEOthink view of the way their world should work.

Bias disclosure: Forgive me for thinking, since living in the third-world in the late 70′s long enough to hear and read too much that never makes the American press, that multinational corporations (and chiefly their megaCEOs) are the bane of our existence, not inherently — they could have consciences — but they routinely practice the antithesis of conscientious capitalism. Ungoverned plunder is their now widely recognized byword, and a deep-pocket tunnel into the Oval Office/Pentagon/Langley is their get-home-free (hell, win-the-lottery) card. And yet you’d still never get that idea from reading our MSM except once in a blue-moon scandal, always treated as if an isolated aberration.

* Caveats (but which wouldn’t seem to offset the hypothesis regarding civil-war-era effects of vested interests): The linked wikipedia article on Angolan economy notes a 30% increase in diamond production in 2006, a figure that would have surfaced after the forthcoming paper was ‘finalized’ in September, 2006 [typical lagtime for publication in academic journals], so it’s unclear how much the post-civil-war aspects of the dynamics described in the paper are lessening now. It also occurs to me that the Angolan emergence from civil war may have coincided with global consumer awareness that has led to [well, some degree of] diamond boycotting, but I’m assuming the economists account for that. I haven’t read their paper, but their abstract states:

…We focus on diamond mining firms and conduct an event study on the sudden end of the conflict, marked by the death of the rebel movement leader in 2002. We find that the stock market perceived this event as “bad news” rather than “good news” for companies holding concessions in Angola, as their abnormal returns declined by 4 percentage points. The event had no effect on a control portfolio of otherwise similar diamond mining companies.

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