Peace EconomyInstitute

Appendix A, interactive

Which way does the money pull?

A weapons maker earns more as conflict rises. A charge on that harm is meant to change the arithmetic. This model, taken from the formal appendix to the Peace Dividend Mandate, lets you set the level of conflict and the terms of the charge, and see where a contractor’s own interest points: toward more conflict, or toward less.

or skip it and move the dial yourself.
1 · The dial

Set the level of conflict

Each party weighs the same question: what does one more step toward conflict earn, and what does it cost? Whichever is larger decides which way it pushes.

Relative stability
Mandate tier 2 : 1  ·  H = 0.50

How to read the cards: the red bar is what one more step toward conflict would earn; the green bar is what that step would cost under the rule. Whichever bar is longer decides which way the arrow points, and so where that party would put its influence.

2 · The benefit

Where the money goes

Spent on weapons$100
Required investment in peace

Worldwide, at full implementation, the paper estimates the yearly sum at $1.4 trillion under the 2 : 1 baseline and $3.5 trillion under the 5 : 1 ratio of active major conflict.

Under the Mandate, at this ratio
Spent on peacebuilding worldwide today$10–15 billion

Because the ratio climbs with conflict, the worse a war becomes, the more money is obliged to flow toward ending it.

3 · The terms

Change who pays, and how much

Three settings matter most. Try a scenario, or move the sliders yourself.

How much of the charge the contractor recovers in contract prices. Pass-through, φ.

The paper sets 5 : 1, the conservative end of the documented five-to-seven range.

The textbook remedy, like a carbon tax: a fixed charge per unit of harm, rate τ. No such charge exists today; set it to 0 to see the world as it is.

4 · The whole range

From peace to war, all at once

Which way each party pushes

Toward peace Toward conflict Government not turned

The contractor's profit at every level

Under a flat tax Under the Mandate Most profitable point

Under a flat tax the curve bends upward, so the most profitable point sits at an extreme, usually the far right (Proposition A.1). Under the Mandate the curve bends downward, giving a single best point inside the range (Proposition A.2). The dial's position is marked in gold.

5 · Why it matters

A cause of war that a rule can change

Wars have many causes, and most of them lie beyond the reach of any policy: grievance, ideology, fear, the ambitions of particular men. One cause is plainer. Under the present arrangement, the industry that arms the world earns more as conflict deepens and pays nothing toward what conflict costs, so its considerable influence leans toward more of it. Of all the causes of war, that one can be changed by a rule.

The Peace Dividend Mandate is such a rule. It asks nothing of human nature and waits on no change of heart; in the paper's own words, it requires only that the war economy be made to pay for what it costs. Once it does, the most powerful commercial interest in the business of conflict acquires a financial reason to want peace; where the cost is passed on in contract prices, the government that buys from it acquires that reason instead, and the cost of war appears in the public budget for voters to see. Either way, the money goes to the people working to build peace.

Change of this kind begins with people who understand it. If the argument persuades you, read the summary, pass this page to someone who would want to see it, and ask the people who represent you whether they have considered it.

6 · For economists

The model in full

Show the mathematicsHide the mathematics

A representative contractor chooses, and lobbies over, an externality level H ∈ [0, 1]. Every quantity below is computed exactly from these forms; nothing is simulated or fitted at run time. Units are multiples of baseline weapons spend (s₀ = 1, H̄ = 1).

Operating margin (amplified when β > 0)
Conflict-indexed ratio, fitted to the tiers
Mandate burden
Static comparator
Firm payoff and lobbying direction (Prop. A.3)
Government payoff (Cor. A.5)
At the dial

Propositions A.1 and A.2 are stated in the paper with the firm bearing the whole burden (φ = 0). Here they are evaluated on the firm's retained payoff m − (1−φ)B, which reduces to the paper's case at φ = 0.

ResultAt current parametersStatus

Marginal return against marginal burden

Lobbying inverts wherever the burden borne lies above the margin (shaded). The flat charge crosses once and is overtaken from above at H*; where the Mandate's schedule is steep enough, its burden crosses from below and stays above, the point a calibrated schedule places at the defensive baseline.

Ratio schedule

ρ(H) Paper's tiers (§3.3)

The tier schedule is a step approximation to a continuous Pigouvian schedule ρ(H) = λ(H) (§A.5).