This is a highly readable book that provides strong and rigorous arguments to prove a thesis that is intuitive to many but still denied by some—that the United States foreign policy of using military intervention, occupation, and reconstruction to establish liberal democracies across the world is more likely to fail than to succeed.

Christopher J. Coyne's contribution to the literature is to use economic analysis and to apply game theory, public choice theory, and Austrian economic theory to the analysis of his thesis. Although he points out that reconstruction was a popular topic among sucy prominent twentieth-century economists such as Walter Heller, John Maynard Keynes, Ludwig von Mises, and Bertil Ohlin, Coyne reminds us that few economists have recently turned specifically to the issue of reconstruction. While exceptions include Stan Fischer, James K. Boyce, Tony Addison, myself, and a few others, his statement is essentially correct: Economists have left the issue to political scientists, historians, and other public policy experts.

After War examines a number of efforts at reconstruction—ranging from the first U.S. attempt to shape political, economic, and social events in Cuba to the more recent “state-building” undertakings in Afghanistan and Iraq. Coyne uses the term “reconstruction” in a broad sense to encompass the process in its entirety, “from the initial occupation to the exit of occupying forces, as well as the wide array of activities that occupiers overtake.” Thus, reconstruction entails the rebuilding of both “formal and informal institutions,” “the restoration of physical infrastructure and facilities,” “minimal social services,” and “structural reform in the political, economic, social, and security sectors” (pp. 9–10).

Coyne's benchmark for reconstruction success is whether, several years after the departure of the occupiers, a situation remains that is conducive to the establishment of a liberal democracy in which there is both respect for the rule of law and protection of human and property rights. In this sense, a democratic process that leads to elections need not necessarily satisfy the objective of establishing a liberal democracy. Throughout the analysis, he never questions whether this goal is good or bad. His primary focus is simply whether or not the United States can realize this goal.

Using the well-known Polity IV index, and leaving aside the experiences of Bosnia, Kosovo, Afghanistan, and Iraq—episodes too recent to be analyzed with this type of methodology—the author finds strong historical evidence to conclude that U.S. efforts to export liberal democracies at gunpoint are more likely to fail than to succeed, in large part because of the inability of the United States to construct enduring liberal democratic institutions from scratch.

Coyne presents case studies on three categories of reconstruction experiences: successful reconstruction (West Germany and Japan), unsuccessful reconstruction (Somalia and Haiti), and ongoing reconstruction (Afghanistan and Iraq). Variables such as the level of troops per capita, aid per capita, the timing of elections, and so on did not seem to explain these categories. The existing culture and the institutional framework in the different countries analyzed, however, were important factors in determining success and failure.

The 1960 Coase theorem, formulated by Nobel laureate Ronald Coase, predicts that conflict should not continue indefinitely since there are gains to be achieved by engaging in cooperative behavior through bargaining. However, as Coyne points out, this theorem only holds in the presence of well-defined property rights and the absence of transaction costs associated with bargaining and exchange (pp. 42–43, 49).

The lack of these conditions in many of the countries listed in Table 1.1 explain the existence of continued conflict and the need for mediators, a role that occupying forces have played (in addition to the United Nations, which, though not mentioned, has been a significant presence in both Kosovo and Somalia). Coyne is right in arguing that despite economists' frequent assumptions that individuals are “rational,” in fact they do not always act rationally. Individuals often engage in conflict, or prolong conflict, because they believe that, by doing so they have a better chance of coming out on top. This is another major reason why the Coase theorem does not hold.

Coyne also discusses the “art of association,” which Alexis de Tocqueville identified in Democracy of America as one of the fundamental tenets of liberal democracy in the United States. In his view, the associations and networks of U.S. civil society were not the result of government design, legislation, or intervention but, rather, the result of the ingenuity of self-reliant, entrepreneurial actors. Such actors would not sacrifice their own-self interest for that of the larger community, but understood well that their private interests were directly related to the interests of the community and acted accordingly (pp. 51–54). Coyne argues that the lack of such dispositions and capacities in countries such as Somalia, Afghanistan, and Iraq could explain in part the difficulty of creating liberal democracies in those countries.

The author also attributes differences in reconstruction to a factor noted by John Stuart Mill, when he commented on “the great rapidity with which [some] countries recover from a state of devastation.” Mill attributed this ability to recover to the fact that people with “the same skill and knowledge which they had before … have nearly all the requisites for their former amount of production” (p. 56). Coyne argues that this explains the difference between reconstruction in Germany and Japan, as compared to that of Somalia and Haiti. Although Coyne does not mention it, this is also consistent with Thomas Jefferson's argument that democracy cannot succeed in countries that do not have an educated people, which is often the case in countries in reconstruction in the post–Cold War period.

Coyne brings in the work of several other Nobel Laureates in economics to explain the differences in reconstruction performances. Whereas F.A. Hayek emphasized cultural endowment—including the “beliefs, traditions, and habits of a society”—as the foundation for a liberal political order, Douglass North was a key contributor to the “path dependency” theory, which argues that the way in which institutions and beliefs developed in previous periods constrain the available options in the present. (pp. 55–56). Drawing on work by Milton Friedman, Finn Kydland, and Edward Prescott on the “credible commitment” of formal institutions and “time inconsistency in public policy (pp. 66–67), Coyne notes that government policies may themselves hamper reconstruction if individuals in the public service do not act in the “public interest,” favor special groups, firms, or certain individuals over others, or focus on the “short term” even though this would result in higher long-term costs. Bad policies may have “unintended consequences” that can make the situation worse, both in the present and in the future (pp. 86–109).

Coyne also applies Harold Demsetz's notion of the “nirvana fallacy” to reconstruction. In this context, the fallacy would be to assume that government intervention is flawless and that it is necessary to overcome market failure when, in fact, government actors may not be more efficient in allocating resources than imperfect markets (pp. 24—25, 110). Coyne points out that occupiers often perform less well than the corrupt or failed states they seek to replace, and in most instances they cause more harm than good (I have provided some evidence that this has been the case in Afghanistan and Iraq).

The author's review of the political literature, together with his comprehensive economic analysis on the topic of exporting liberal democracies through military intervention, is a welcome addition to the field. But where the book falls somewhat short of expectations is in its search for solutions (Chapter 8). Coyne rightly questions Niall Ferguson's proposal to implant liberal democracy through the brute force of “American colonial administrations” on the basis that long-term occupation would overcome the issue of “credible commitment” discussed earlier. Coyne believes that this option is no better than the means employed to date. He also considers “peacekeeping” as an alternative option (pp. 173–80). Presumably he is thinking of operations involving negotiation and mediation under Chapter VI of the UN Charter, that is, with the agreement of the two parties, rather than using force to carry out the reconstruction, as in operations authorized under Chapter VII. The record of the former in El Salvador and Mozambique, for example, was much more encouraging than that of the latter in Somalia, Kosovo, and Iraq.

For Coyne, the most effective way to spread liberal democracy around the world involves “no [military] intervention combined with a commitment to free trade.” Such a strategy would exercise what Joseph Nye calls “soft power” to attract and convince others “to shift the preferences in a desired manner” (pp. 29, 186–87).

I have great sympathies with this policy recommendation as a “preventive measure” in countries where improved economic conditions and job opportunities may avoid conflict or in countries that oppose U.S. policies like Cuba and Iran—assuming that the nuclear threat of the latter is deemed insignificant. I also think of this policy as a “supplement to aid” in UN-led peacekeeping or peacebuilding operations to support governments in their reconstruction efforts in Africa and elsewhere. I can hardly imagine, however, how the United States could have used “soft power” following 9/11 to offer the Taliban trade preferences and expect that Afghanistan would reform along liberal lines. It is similarly difficult to imagine this tactic's success in ending conflicts in Kosovo, Bosnia, Somalia, and Rwanda. In the case of Iraq, on the other hand, removing the UN comprehensive sanctions and opting for “soft power” rather than military intervention—as Coyne recommends—was indeed a missed opportunity to advance U.S. foreign policy in a more effective and less bloody and expensive way.