The analytics of continuing conflict

The efforts of men are utilized in two different ways: they are directed to the production or transformation of economic goods, or else to the appropriation of goods produced by others.

Vilfredo Pareto

Abstract

Individuals, groups, or nations — if rational and self-interested — will be balancing on the margin between two alternative ways of generating income: (1) “peaceful” production and exchange, versus (2) ‘appropriative” efforts designed to seize resources previously controlled by others (or to defend against such invasions). Both production and appropriation, on the assumption here, are entirely normal lines of activity engaged in to the extent that doing so seems profitable.

The general-equilibrium steady-state model involves a resource partition function, a social production function, a combat power function, and an income distribution equation. Solutions were obtained under thesymmetrical Cournot protocol and two alternativeasymmetrical assumptions: the familiar Stackelberg condition and a more novel hierarchical protocol called Threat-and-Promise. The analysis demonstrates that, in contrast with the harmonistic bias of orthodox economic theory, a general-equilibrium model can also encompass the hostile and destructive interactions that characterize real-world social relations.