This is a great little book and I highly recommend it just for the chapter 3, ‘The Renaissance, 1300-1600–The Case of the Condottieri and the Military Labor Market’. What makes this book so cool is that it describes the history of the Condottieri from the point of view of economics. Stuff like principal agent problem and asymmetric information are the areas that this book goes into, and I found it to be fascinating.
The book also talked about today’s PMCs and how they are being used, or misused. The authors even gave some kudos to Executive Outcomes for being an effective PMC versus the UN during the Sierra Leone war.
But back to the Condottieri or Italian contractors/mercenaries. (Condottieri were the mercenary captains and also contractors in general) This is very interesting material, because the authors discussed the incentives of these mercenaries back then that helped to alleviate the principal agent problem. They used things like bonuses, or the individuals were allowed to ransom and loot as part of the contract. (back then, this was a standard feature of warfare of all armies)
Probably the one thing that piqued my interest the most is the use of bonding agreements within the contracts. I have talked about bonds in the past or how these could be effective tools for getting companies to do what you need them to do, and this book talked a little bit about how bonds were used in the past.
Specifically, the authors mentioned a lecturer named Daniel Waley whom examined twenty Italian mercenary contracts that had been preserved from the late 13th century. There were 11 contracts from Bologna, 5 from Siena, 1 from Florence, 2 from Piedmont, and one from the March of Ancona. All of them were issued between 1253 and 1301, with fifteen of them after 1290.
All of the contracts had these elements in common:
1. Number of men to be hired.
2. Type of force. (cavalry, infantry, etc.)
3. Number of horses to be supplied.
4. Values of the horses. (minimum and maximum)
5. The mendum or compensation for horses injured or killed.
6. Provisions for arms and equipment.
7. Length of contract. (usually 3 or 6 months)
8. Contract renewal option.
9. Payment for travel to place of engagement.
10. The rate of pay and pay period. (usually once every two months)
11. The pay differentials among various grades of hired men. (commanders, cavalry, infantry, crossbowmen)
12. The division of prisoners, ransom, and booty.
13. The secure release if the hired men were themselves taken prisoner.
14. Bonus pay. (retention of booty, double pay for battle days)
15. Jurisdiction, default and penalty clauses.
16. Dispute Resolution within the hired band.
17. Loyalty clause.
18. A performance bond. (6 of the 11 Bolognese contracts had bonds guaranteeing good behavior)
As you can see, the contracts were pretty involved back then. The book mentioned that contracts used to run about 4,000 words, but later contracts shortened up a bit and ran about 1,000 to 3,000 words. The authors pointed out that the hiring states began to develop regulations that helped to make contracts more formulaic, and thus easier to write. It is easier to point to laws and regulations of that state, as opposed to make provisions that cover ‘everything’ within in a contract.
What is interesting is that this is exactly what has happened with today’s companies. There were really not enough regulations on the use of companies in the beginning days of Iraq or Afghanistan, and so contracts really had not control features.(we also had problems because of this) Now, the contracts are a lot better, just because of the amount of scrutiny that has been applied to the companies and the government. I have seen a dramatic increase in regulations, and we will probably continue to see this evolution take place.
The performance bond is interesting to me. I mentioned this in my post about Reflex Responses that they had a performance bond in their contract with the UAE, and that is smart. Early American privateers had to be bonded in order to receive a Letter of Marque as well. Of course the bond survives in other industries, and it is just one tool of many to provide incentive in the principal agent problem–or to get folks to do what you want them to do.
The other thing that this book talked about is modum stipendii and modum societatis. Or basically contracting with an individual versus contracting with the leaders of mercenary companies. Contracting with individuals was problematic, because each had their own set of intentions. But hiring a group with a leader that motivates them and keeps them together, is far more dependable and easier to manage.
Of course with today’s companies, this is how it works. The US government rarely contracts with individuals, and it is far more easier and efficient to contract with DynCorp and have them provide the bodies. But this also got me thinking about how companies recruit.
I have thought about this concept in the past, as far as hiring groups of individuals for companies. If a company could hire a squad or platoon of contractors, where all of them fought together in their old unit or company, and they had a leader for bargaining purposes, then a company could gain advantage of having a team that has unit experience, integrity and cohesion. This is an issue that I have seen out there, and it would be interesting to see companies try this out. Because to me, a unit with experience, integrity and cohesion is extremely valuable to a company for the offense and defense.
The book also defined a time period where Italian cities switched from hiring individuals to hiring units. They started using the term Lance or lancea in contracts which was a unit of 3 men. Perhaps this might be a feature of modern contracts? It would be far easier to find Lances who all knew each other and fought together in let’s say the Marines. The survival of such teams would be higher, and their effectiveness on the battlefield would be better because that unit experience/cohesion/integrity element was already there. (that’s if you have a good leader leading these lances)
The other deal that was interesting to me is the pay for the common mercenary back then. They did not make a lot of money, and it was the mercenary captains that became wealthy. These grunts would make the same amount as day-laborers for stuff like construction. The book said they averaged 9 florins a day, from between 1321 and 1368. It sounds like rates continued to fall as time passed, and the basic grunt definitely took it in the shorts. They also had tons of pay issues, like late pay, not getting paid or receiving forged money! lol And we talk about pay problems these days?
But like with any military or PMC, past or present, if you screw with the soldier’s pay, they tend to get pissed off. Or they just leave. Countries like Iraq or Somalia have experienced what happens when you don’t pay soldiers or police, and security is highly dependent upon making sure guys are getting paid on time and the amount that was agreed upon.
These old mercenaries also sold their equipment to make enough money to get by between contracts, and life for a soldier was tough back then. As a result of this low salary, contractors tended to gravitate to contracts with the most stability and longevity. If you have a family to feed and bills to pay, then this becomes understandable in today’s realm. (I have seen contractors leave contracting to be soldiers again, and I have seen soldiers leave the military to be contractors. Which might indicate equilibrium of a sorts?)
The other thing I wanted to touch on about the book is they do go into offense industry a little bit. Contractors were paid bonuses for all sorts of things, like for storming a castle, acts of bravery, or for bounties. Anything to give an incentive. They also offered pensions to contractors that were loyal, something Sir John Hawkwood depended on greatly towards the end of his career. (the lesson here is save your pennies!)
Well, that is all I will get into with the book. Check it out in the Jundi Gear Store, and I have provided some links below for your convenience. –Matt
The third chapter of the book on Google Books here.
Book Description
Publication Date: May 1, 2008
Castles, Battles, and Bombs reconsiders key episodes of military history from the point of view of economics—with dramatically insightful results. For example, when looked at as a question of sheer cost, the building of castles in the High Middle Ages seems almost inevitable: though stunningly expensive, a strong castle was far cheaper to maintain than a standing army. The authors also reexamine the strategic bombing of Germany in World War II and provide new insights into France’s decision to develop nuclear weapons. Drawing on these examples and more, Brauer and Van Tuyll suggest lessons for today’s military, from counterterrorist strategy and military manpower planning to the use of private military companies in Afghanistan and Iraq.
“In bringing economics into assessments of military history, [the authors] also bring illumination. . . . [The authors] turn their interdisciplinary lens on the mercenary arrangements of Renaissance Italy; the wars of Marlborough, Frederick the Great, and Napoleon; Grant’s campaigns in the Civil War; and the strategic bombings of World War II.
“This study is serious, creative, important. As an economist I am happy to see economics so professionally applied to illuminate major decisions in the history of warfare.”—Thomas C. Schelling, Winner of the 2005 Nobel Prize in Economics