Prolegomenon to a Political Economy of Intelligence and Security: Can Microeconomic Analysis Explain Success or Failure in Intelligence Cooperation?

Abstract

The governmental functions of security and intelligence require a number of distinct organisations and functions to interact in a symbiotic way. Because the external environment is uncertain and complex, these organisations must constantly negotiate with each other to establish which of them addresses which issue, and with what resources. Coasian principles suggest that if there are no transacting costs and property rights are clear, then such negotiations should lead to an overall maximisation of the benefits gained (in this case better security and intelligence provision), yet this is rarely realised. By coupling the transaction cost theory devised by Oliver Williamson in 1975 with a range of alternate theoretical perspectives that impact on these areas of governance, an institutional costs approach is developed. By increasing the resolution of the analysis whilst still retaining a comprehensive overview, the frictions that hinder negotiated cooperation become apparent. The two cases of counterterrorism and defence intelligence in both the United Kingdom and the United States are then used to test and refine the institutional costs paradigm that results. These demonstrate that orthodox views of good cooperation in the former and poor cooperation in the latter are overly simplistic, as neither is necessarily more disposed to behave cooperatively than the other; rather, the institutional costs environment that their respective organisational architectures create incentivises different cooperative behaviour in different circumstances. The analysis also shows that the impact of the various factors that make up the institutional costs paradigm is in fact far more nuanced in these areas than is evident in earlier transaction costs scholarship. Their relevance differs by type as well as degree. Institutional costs analysis therefore provides the beginnings of a political economy for cooperative working in the intelligence and security spheres of governance.