Nation-building is a broad term used to describe international efforts to conduct exogenous institutional change in weak and failed states primarily through the use of military force. The prevailing view is that nation-building is best accomplished by imposing democratic institutions (the so-called government-in-a-box) that will, in turn, stimulate economic development and growth. Global security is enhanced as under-governed spaces are decreased through the buildup of state capacity. We argue that, except in a few isolated cases, this nation-building strategy has failed to achieve the intended economic growth and political stability. Top-down change is rarely successful because it fails to engage at the cultural ‘embeddedness’ level described by Oliver Williamson, and triggers indigenous resistance to the invader typical of psychological in-group/out-group processes. In military operations, U.S. Special Forces was constituted to conduct irregular warfare in a bottom-up strategy, referred to as ‘by, with, or through’, that builds capabilities within the indigenous population to achieve national policy objectives. Within this construct, Special Forces operators act as ‘force multipliers’ to achieve ‘influence without presence’. In Helmand Province, Afghanistan in February 2010, one eight-man Special Operations Detachment was able to achieve pacification in the city of Marjah in a three week period during the surge operations, coined Operation Moshtarak, by applying Special Forces techniques. While the field of institutional economics has a growing awareness of the importance of informal institutional factors like culture and mindsets (North, 1995), they have yet to develop a strategy for intervening in national economies in a bottom-up fashion. As a result, the ‘know what’ exceeds the ‘know how’ in creating economic growth (P. Boettke, 1996), and the practice of nation-building tends to be top-down only. This paper explores how Special Forces techniques can overcome the ‘know-how’ deficit and be used to trigger the development of economic institutions during nation-building. This ‘know-how’, rooted within a Special Forces mindset defined by the imperatives to ‘Understand the Operational Environment’ and ‘Establish Rapport’ combined with a loose-tight management model similar to that found in British Indirect rule, can be specifically applied to peaceful nation-building activities by civilian organizations. The implementation of a successful bottom-up strategy requires exogenous forces to: (1) understand and adopt the indigenous mindset; (2) work by, with, and through, but not against, the mindset; (4) as an advisor, model the behavior desired in the indigenous population; (5) achieve legitimacy by indirectly applying capabilities and resources toward indigenous objectives; and (7) employ influence within trust-based relationships to nudge indigenous behavior towards desired institutional change – e.g. rule of law
