Introduction

In February 2022, Russia launched its unprovoked invasion of Ukraine. Since then, Ukrainians have withstood the Russian invasion, as well as commenced an ambitious reconstruction plan with tremendous support, especially from liberal democracies. Ukraine’s defense against a much larger foe, and its fight for democracy and autonomy against a warmongering former superpower, made Ukraine the world’s beacon for freedom and justice.

Our goals in this special issue are to better understand how Ukraine has withstood Russia’s aggression and, perhaps more importantly, to offer insight into how Ukraine can win the war and the ongoing reconstruction. The articles were selected with the idea that multidisciplinary perspectives are useful to understand the nature and consequences of the War in Ukraine. The authors each share the view that public choice, consistently applied, offers insight into war and reconstruction in Ukraine, as well as some insight into the sources of Russia’s warmongering.

War is devastating, complicated, and multifaceted. To introduce the special issue, we begin by clarifying what is meant by the War in Ukraine (when it began and why we refer to it as such), as well as the costs of the war, the Ukrainian movement for democracy, and the reconstruction of Ukraine.

The political economy of polycentrism

One significant theme in public choice is how the decentralization of decision-making improves the quality and efficiency of public goods provision. Vincent and Elinor Ostrom recognized that central governments would likely be unable to discern the optimal quantity of provision of public goods. Ultimately, the Ostroms’ research agenda did much to articulate an efficiency rationale for federalism.

The Ostroms also clarified that polycentrism is more than decentralization: polycentric systems are defined by the autonomy of local and subnational governments to govern themselves (Ostrom, 1997). A central lesson of their approach is that polycentrism is often an appropriate institutional arrangement to promote self-governance, to improve the quality of public good provision, and to promote the co-production of goods and services (Aligica et al, 2019).

The first two articles in this volume explore the consequences of polycentricity in wartime Ukraine. Keudel and Huss (2023) consider what they call “polycentrism in practice,” thus contributing explicitly to the Ostroms’ research agenda on the way polycentric systems operate in the real world. As they explain, one of the central lessons of public choice is that polycentric systems often work well. They then recognize, inspired in part by the literature on quasimarket failure, that subnational and local governments may fail. How have subnational and local governments fared in the war in Ukraine? What are their consequences?

Keudel and Huss provide an especially compelling case that reforms that established greater autonomy for local and subnational governments in Ukraine have had major positive consequences, which they organize into use of local knowledge, mobilization of resources, and encouraging institutional experimentation and innovation. Their main conclusion, based on an impressive wartime survey of over 200 Ukrainian local authorities, in-depth interviews, and focus groups with local authorities and their representatives, is not only that local governance has remained resilient during Russia’s full-scale invasion but also that local governments and community organizations remain a critical source of institutional innovation amid extremely trying circumstances. The depth of empirical research harkens to the rich empirical studies of polycentrism of Elinor Ostrom, though Keudel and Huss differ in that they consider the operation of polycentric systems of governance during a full-scale war (see, for example, Ostrom, 2005).

The Ostroms’ polycentricity is perhaps not as well known for its use in understanding collective security. Alshamy, Coyne, Goodman, and Wood (2024) demonstrate that it is not just useful but essential to understand collective defense. They start with what is puzzling to many observers, which is how Ukraine has been able to resist Russia effectively, considering the size of Russia’s conventional military forces. They develop an elegant theory that clarifies four benefits of polycentric defense against invasion: (1) facilitating the use of local and context-specific knowledge; (2) permitting competition, experimentation, and flexibility; (3) reducing single-point-failure vulnerabilities; and (4) encouraging a wide variety of individuals to join the armed forces and contribute to the war effort.

Alshamy and colleagues extend previous research by Wood (2019) that considered the innovative ways that Ukrainians defending the eastern front from Russia starting in 2014 were able to crowdfund defense. This perspective is significant because conventional economic theory suggests that governments, not citizens, provide collective security. To be sure, a difference in the current context of Russia’s unprovoked invasion is that Ukraine’s response has been more centralized since February 2022. This is perhaps most obvious with conscription laws meant to keep Ukrainian men aged 18–60 in the country. That said, the authors demonstrate that there are significant features of Ukraine’s defense that are polycentric and that they contribute to successful defense against Russia. Together with the research by Keudel and Huss, these articles provide strong evidence that polycentricity, Ukraine-style, contributes to improvements in the ability to provide both “normal” goods and services in war and the good of collective security. The lesson is that meaningful polycentric institutions, rather than monocentric ones, can not only improve the provision of public goods but also offer insight into defense against an existential threat.

Private interests, not public ones

A central theme in public choice is that individual politicians are not necessarily bad. Rather, since political institutions vest some people with more power than others, they create incentives for any politician to do what is in their interest, as opposed to what is best for society. This realistic view is why Buchanan (1984) called public choice “politics without romance”: the nature of political power corrupts incentives.

The second set of articles focus on the incentive problems arising from political power, with a focus on the role of institutions in explaining Russian decision-making. Rather than deny Russian agency and accountability, as occurred in some narratives in which “the West” or the North Atlantic Treaty Organization (NATO) somehow made it so that Putin had no other choice, these articles explain how domestic institutions contributed to a situation in which Russia decided to wage a war that is costly not only to Ukrainians but also to Russia and its citizens. In this regard, their analysis is reminiscent of the approach of Douglass North and Yoram Barzel, as well as others in the new institutional economics tradition, who emphasize that institutions define the benefits and costs of alternative actions (North, 1990; Barzel, 2002). Such analysis also speaks to the age-old question of why nations choose predation over opportunities for peaceful coexistence and exchange (Candela and Geloso, 2020). Beyond this, the articles in this special issue recognize that Putin has agency and moral responsibility for his actions and choices.

What remains is to give life to the general hypothesis that “institutions matter.” Hebert and Krasnozhon (2024) do so by examining the calculus of Russian aggression against Ukraine. Drawing on insights from theories of autocratic decision-making, they explain how political loyalty and repression gave rise to a tin-pot dictatorship, an apt characterization of Vladimir Putin’s political regime. As they explain, improvements in Russia’s economic performance during Putin’s first two terms increased the supply of political loyalty and slowed the pace of political repression. Deteriorating global financial conditions and associated declines in Russians’ living standards between Putin’s second and third terms in office contributed to an unambiguous decline in the supply of loyalty and increased repression. These conditions increased the incentives for Putin to pursue his preference for the conquest of Ukraine through a full-scale war rather than continuing with the low-intensity war Putin started in eastern Ukraine in the Donbas.

This perspective focuses on the domestic sources of foreign policy, a conventional consideration in international relations. Trantidis (2024) further clarifies the international politics of Russia’s war in Ukraine, criticizing the realist view that Russia’s security concerns, as understood by President Putin, contributed to the conflict. Trantidis sees realism as offering a deficient analytic because it disregards the political and economic structure of nations and the complicated ways in which foreign policy is shaped by preferences, strategies, and intra-elite relations. The specific institutional features that increased support for the full-scale war include continued state influence over much of the economy and society, as well as the dependency of the regime on key socioeconomic actors and groups for its survival. This political-economic landscape constrains the expression of genuine feedback and dissent from society and, in the process, explains how domestic institutional features shifted the cost–benefit calculus toward escalation in warfare. Trantidis then explains why the capitalist peace theory, which contends that dense economic relations provide a strong disincentive for countries to resort to war, is found wanting. Instead of talking about capitalism generically, Trantidis discerns varieties of capitalism, as they condition state–society relations differently. More generally, to explain Russia’s behavior, it is critical to focus on the preferences and strategies of the leadership and elite domestic actors within the aggressor state, as well as associated power asymmetries.

The political economy of reform and reconstruction

The third collection of articles focus more explicitly on institutional reform and its relationship to Ukrainians winning the war and winning reconstruction. Shapoval et al (2024) consider the process of reforming public procurement in Ukraine. In contrast with the usual public choice approach, which sees revolutions as establishing clear rules to constrain predation, they argue that all revolutions—including pro-reform revolutions like the Revolution of Dignity—are incomplete. What is necessary is for citizens to develop a process to monitor everyday opportunities for corruption. They show that ProZorro, an innovative e-procurement system, addressed a classic challenge of government predation. What is remarkable is that the institutions of open government persisted even with Ukraine’s martial laws. Moreover, the ProZorro initiative is currently being scaled up with an innovative system of open procurement that will govern the reconstruction process.

Another theme in the special issue is understanding the challenges to privatization. There is abundant evidence that privatization is a source of economic prosperity. Despite this, there is an equally robust literature which finds that people are often disillusioned with, or outright opposed to, privatizations (Denisova et al, 2012). Brik and Protsenko (2024) emphasize that Ukraine has had its struggles with privatization support, though what is especially significant is that there appears to be substantial regional variation in support for privatization. There is also an ongoing challenge with crime. These puzzles motivate the development of a theory, based on sociological perspectives on crime and the new institutional economics, which sees crime as undermining support for privatization. Their theory is based on the mutual vulnerability associated with crime and privatization. They present empirical evidence that higher levels of crime are associated with diminished support for privatization. They also leverage the idea that Soviet institutions contributed to crime to assess the causal impact of crime on privatization attitudes. They argue that Soviet industrialization, as a colonial policy, is a natural experiment that enables them to use urban development as an instrument for crime. Through such analysis, they offer reasonable evidence that crime undermines privatization. The significance for reconstruction is that increases in crime could undermine another goal of reconstruction, which is providing further support for privatization.

Extending the research agenda

A symposium on a country currently engaged in war presents challenges for authors, in this case, from Ukraine, many of whom have lived and worked in the country since Russia’s full-scale invasion. It is also a work in progress, as conclusions must be preliminary. In this regard, the articles invite further consideration. They have also only begun to scratch the surface in public choice ways that might be useful to understand the political economy of the current war and reconstruction.

What might the future hold for such analysis? A recurrent theme in public choice is that crises, both real and imagined, contribute to the expansion of government (Higgs, 1987). While some of the authors in the symposium are optimistic about the ability to limit predation and prevent the expansion of bureaucracy, the pressure to expand government continues. A critical research endeavor is to understand how such pressure is resisted, as well as to chart its evolution as the war—and reconstruction—continue.

The well-known pathologies of reconstruction include the incentive problems of foreign nations and donor-supported aid organizations (Coyne, 2008; Murtazashvili, 2018; Murtazashvili and Murtazashvili, 2019). The world has just seen the return of the Taliban in Afghanistan after 20 years of intensive state-building. Many of the difficulties reflected incentive problems arising from excessive bureaucracy (Lambert et al, 2021). There is no reason to presume that Ukraine is a similar context. What is relevant is understanding how those differences in context translate into different experiences and outcomes with state-building. This history is currently being written because reconstruction has only recently commenced in Ukraine.

One must also ask about crony capitalism and political capitalism (Aligica and Tarko, 2015; Holcombe, 2018). War and reconstruction will no doubt contribute to more pressure for capitalism to develop in ways that undermine rather than promote peace and prosperity. How this process unfolds and the extent to which Ukrainians can evade cronyism will remain ongoing concerns.

Funding

We gratefully acknowledge financial support from the Center for Governance and Markets at the University of Pittsburgh.

Conflict of interest

The authors declare that there is no conflict of interest.