Incentivizing Peace

One of the common economic arguments for the cessation of war is the so called “peace dividend.” Unfortunately, these dividends do not accrue to those who specialize in military commodities. As such there is a strong incentive for them to lobby for, and promote, military solutions to social conflicts. As Galbraith phrases it, “Boom Times for War Inc.” Clearly, there is not enough reason for corporations to avoid war, when it can be, in a myopic way, so profitable. Can peace be made more profitable? Can a tax structure be used to incentivize peace?

Corporations are treated as persons for legal purposes. What if corporations were treated as “citizens” or “non-citizens” (based on their declaration), such that they are given different tax treatment based on the war status of a nation. Now consider the following scenario: citizen corporations are given a lower tax (income and/or revenue) rate than non-citizen corporations during official peace time, however, as citizens they are considered having a duty to support the nation during a time of war. This is done by their being required to provide their goods and services to the government for zero profit during war time. This can be presented on patriotic/ethical grounds – corporations that attempt to profit during war time are hindering the war effort by forcing the government to use scarce resources during a time of crisis. This does not hinder these corporations from making a profit from sales to non-governmental entities during war time, if the corporation has the resources to do so. The combination of lower peace time tax rates, and zero profits during war time, would encourage businesses to take on a “citizen” status and then invest in keeping the world peaceful. Note that the defense industry can still make profits during peace time, which, if they truly are there to support the defense of our nation, is similar to a doctor getting paid for keeping their patients healthy.

Whether or not this plan is ever implemented, it seems that in a time of corporate power and nationalism the path to peace must wind its way through both. It is not enough to say how peace can benefit humanity, it will be necessary to make peace beneficial for the institutions that organize humanity.