Militaries in Business: Ethiopian Defense Engineering in my mind

In his well-known portrait of “war makers and state makers as coercive and self seeking entrepreneurs,” Charles Tilly analyzed patterns of state formation and resource acquisition in early modern Europe.1Yet the relationship between state making and entrepreneurship is also important for understanding a contemporary phenomenon in the developing world: military involvement in business enterprises.

From Asia to Africa to the Americas, military officers have assumed primary roles as entrepreneurs, owning and running a range of enterprises from petroleum companies to banks to hospitals. In general, the phenomenon emerged over the course of the twentieth century, during periods of state-building in developing countries.

In some cases the economic resources are held in the name of the institution of the armed forces, while in others officers collect profits for personal enrichment. With few exceptions, however, once military entrepreneurship takes hold it grows, providing its protagonists with an important and often autonomous resource base.

Military entrepreneurship is significant for the potentially detrimental impact it can have on the armed forces and on their relations with civil and political society. While enclave building may well improve the resource base that officers and the forces have to draw on, it introduces a motivation for profit and competition that challenges the professional integrity and institutional cohesion of the military.

Moreover, enclave building enhances the political power of the military institution and its officers, making them less dependent on—and therefore less accountable to—civil and political society.

Military entrepreneurs are doubly powerful: not only do they have a near monopoly on the state’s power of coercion, but they are also stakeholders in lucrative nonmarket enterprises run with minimal oversight from government officials or society at large.

Thus, where a legacy of military entrepreneurship exists, civilians seeking to establish responsible political control over the institution will face the daunting task of eroding a discreet, but nonetheless established, prerogative to economic power and autonomy.

Mani, K. (2007), Militaries in Business: State-Making and Entrepreneurship in the Developing World, Armed Forces & Society2007 33: 591