Diamonds, Blood, and Taxes

This article addresses an important gap in research on the causes of civil war: the lack of a theory that explains why lootable resources like alluvial diamonds are linked to civil war in some cases and peace in others. To help fill this gap, we propose a revenue-centered theoretical framework that shifts the focus from rebels to rulers and states, situates rulers in the context of the institutional and economic constraints on their ability to earn revenue, and combines this focus on revenue with a focus on state spending. In countries rich in lootable resources, the ability of rulers to achieve political order depends on (1) the availability of nonlootable resources; (2) the mode of extraction of lootable resources, especially whether they are extracted by hard-to-tax artisans or, alternatively, by large, taxable industrial firms; and (3) patterns of state spending. This framework supplements widely used models of civil war that emphasize the state’s capacity to defeat an insurgency yet do not answer the important prior question of why state capacity varies so widely across resource-rich countries.