The economics of radical religious terrorism

The economics of radical religious terrorism

The Charlie Hebdo attack has led many to claim that - or at least question why - Islam is associated with terrorism. I would reverse the order of causality the question implies. We must first try to answer why there are so many terrorist organizations linked to radical Islam.

According to a book I read over the weekend, it turns out that is not a correct statement either. In his 2009 book “Radical, Religious and Violent: The New Economics of Terrorism,” economist Eli Berman starts by dispelling some myths: Contrary to popular belief, radical Islamist terrorists are not motivated by the promise of rewards in the afterlife or even by religious ideals. They are best understood as “rational altruists seeking to help their own communities.”

When looked through this lens, you immediately notice that terrorist organizations have millions of potential recruits – young altruists who feel that their communities are repressed or endangered. Then, you begin to wonder not why there are so many terrorist organizations associated with radical Islam, but why there are so few. In fact, less than a dozen such organizations are active today. But all of them are extremely lethal, and - as cold as it may sound - "successful."

To understand why that is the case, it may be useful to look at unsuccessful religious terrorists. The Jewish Underground, a group of Orthodox Jewish settlers who targeted civilian Arabs and Muslim holy sites in the 1980s, was quickly uncovered by Israeli intelligence. Berman explains that “its members leaked information, leading to infiltration by the authorities.”

We can also gain some insight from religion in the U.S.: In an influential 1994 paper titled “Why Strict Churches are Strong,” economist Laurence Iannaccone argues that “strictness makes organizations stronger and more attractive because it reduces free riding. It screens out members who lack commitment and stimulates participation among those who remain.” As a result, these organizations are able to offer many benefits, making defection very costly.

Berman applies this idea of churches as “economic clubs” to terrorism by showing that radical religious terrorist groups have found a way to control defection. Similar to strict churches in the U.S., Hezbollah, Hamas and the Taliban have “built loyalty and cohesion by means of mutual aid, weeding out free riders” as well as punishing defectors severely. In a way, “their deadly effectiveness lies in their resilience and cohesion when incentives to defect are strong.”

People on the ground have understood this well. In his 2006 manual “Counterinsurgency,” General David Petraeus notes that “soldiers and marines are expected to be nation builders, as well as warriors. … Be prepared to help reestablish institutions and local security forces and assist in rebuilding infrastructure and basic services.” Of course, terrorists know where their strength comes from: It's no wonder that aid programs are so often targeted.

The provision of basic social services would make Adam Smith’s invisible hand slap terrorists. Berman notes that in his “Wealth of Nations,” the Scottish economist suggested religious pluralism and tolerance, as well as strongly nondiscriminatory government, to counter violence based on religion. I hope France and the rest of the West can continue on that route.