Self-interest seeking leads stronger individuals to plunder weaker ones. But could it also lead them to do so in ways that minimize plunder’s social inefficiency? This paper argues that when
Self-interest seeking leads stronger individuals to plunder weaker ones. But could it also lead them to do so in ways that minimize plunder’s social inefficiency? This paper argues that when contracts between enemies are enforceable and transaction costs are low, plunderers and their victims benefit from trade that facilitates the former’s ability to plunder the latter. Coasean “plunder contracts” transform plunder’s social costs—resources invested in violent appropriation and resources lost in violent conflict over ownership—into private benefits for plunderers and their victims. A significant portion of the wealth that plunder would otherwise destroy is preserved instead. We call this result “efficient plunder.”
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