“The Insurance Company is my shepherd; I shall not want.” (alternate translation)
War and Insurance, by Josiah Royce, was an effort by one of America’s greatest philosophers to “outline, with necessary brevity and incompleteness, a plan whereby a possible future organization for mutual insurance amongst the nations may be devised and may tend towards the gradual establishment of more pacific relations among the nations than they now possess.”
First, Royce offers a paean to the modern concept of insurance:
Insurance, viewed either as a mode of business or as a social institution, is one of the most momentous instances of the union of very highly theoretical enterprises with very concrete social applications. Furthermore, as experience shows, the insurance principle has come to be more and more used and useful in modern affairs. Not only does it serve the ends of individuals, or of special groups of individuals. It tends more and more both to pervade and to transform our modern social order. It brings into new syntheses not merely pure and applied science, but private and public interests, individual prudence, and a large regard for the general welfare, thrift, and charity. It discourages recklessness and gambling. It contributes to the sense of stability. It quiets fears and encourages faithfulness.
Next, the philosopher compares nations to individual human beings:
Nations, viewed as corporate entities, are as subject to risks as are individual human beings. Some of these risks are principally moral in their nature; but many of them can be more or less exactly estimated in economic terms. Thus, floods, famines, pestilences, earthquakes, and volcanoes may interfere, in various fashions, with the economic as well as with the rest of the social life of the peoples thus afflicted. Apart from actual famines, the considerable failure of their crops may impair, for a season, the normal supplies of individual nations. Internal crises, social and political, may interrupt their healthy development in ways involving not only moral disasters, but heavy expenses. Such evils come upon various nations irregularly, but also with widely different, weight and seriousness. Only a vast and long-continued collection and an exceedingly difficult statistical analysis of the facts regarding such calamities could determine the regularities which a sufficiently large number of instances of national disaster would be, if properly studied, certain to show. Such regularities, however, if once discovered, would furnish an "actuarial basis" upon which an insurance of individual nations against such risks could conceivably be undertaken.
How, then, should we obtain national insurance? Royce observes that “in order that an insurance could be actually undertaken, there would have to be in existence a vast and well-secured fund, contributed by a great number of individual nations, and held, under established rules, ready to supply the means of paying to an insured nation — perhaps the whole of its loss in case of any previously defined sort of disaster ; or perhaps such a portion of that loss as an equitably devised insurance contract, duly adjusted to the contribution previously made by the nation in question, declared to be payable from the common fund in case a certain definite disaster befell one of the nations which had subscribed to the insurance agreement.
Quantification is the key, of course; what can’t be counted doesn’t count. Fortunately, actuaries exist for the sole purpose of calculating risk, just as adjusters exist for the sole purpose of denying claims:
Since all irregularly distributed phenomena of a given type, if sufficiently numerous, — so long as they are indeed finite in number, — show some kind of statistical regularity, this "actuarial basis" for various forms of international insurance could be furnished by the patient study of the economically definable risks and losses of a sufficiently large group of nations, followed through a long enough period of time.
What could possibly go wrong? Royce imagines a skeptic’s critique:
A fund contributed by individual nations for their insurance against disasters would constitute a possible object of predatory attacks. In other words, the safety of the insurance fund would have to be provided for. This would be as difficult as to provide for the carrying out of any other international agreement in which large interests were involved. Concerning the administration of the fund differences of opinion would arise. Since the fund would be international, these differences would have to be submitted to arbitration or else to war. To the already existing obstacles which the Hague tribunal has to meet new obstacles would be added. Differences of opinion concerning the use of the insurance funds would frequently involve what is usually called national honor. They would, therefore, be hopeless differences. And this initial defect would appear to belong to any international insurance scheme.
And Royce immediately answers his own imagined objections:
A certain fund, contributed by various nations, should be put into the hands of a board of international trustees. (The constitution and the mode of selection of the members of this board is yet to be decided.) The board, according to the scheme proposed, would have a minimum of judicial powers. These judicial powers would never refer to questions which could be called questions of national honor. The judicial problems of the "board would be limited to questions referring to the actual interpretation of certain contracts. These contracts would be either of the nature of insurance policies, or else of other forms of trust agreements. When these contracts had put certain funds into the hands of the board, the funds being held in trust for certain insured nations, or for other nations that intrusted funds to the board, the board would have the sole right, in controversial cases, simply to decide what the terms of the contract, or of certain connected duties of trust, established as the right of the nation or nations of whose funds the board was trustee. The decision of the board regarding these matters — a decision which would always be made by a public procedure and in accordance with established rules — would be a final decision, so that no nation should have any authority, under its agreement, to appeal from the decision in question.
Should any doubts, or doubters, remain, Royce gives this reassurance:
The international board of trustees which my plan contemplates would have no police to guard it, no international army or navy to protect it, no direct interest in international controversies, and no reason for diplomatic relations with any existing powers. It would receive its funds in trust as voluntary contributions of the nations. It would administer its trust in accordance with policies of insurance and deeds of trust. It could neither declare war nor make peace. Nominally it might hold its sessions, after the manner of the Hague tribunal, in some neutral state, and be regarded as possessing a peculiarly close although essentially ideal and, so to speak, sentimental connection with that state. But its obligations would be to its own conscience, guided by the deeds of trust which it had undertaken to administer.
Royce’s solution to international conflict was presented originally as an address “delivered at Berkeley, California before the Philosophical Union of the University of California at its twenty-fifth anniversary.” It is worth noting the date on which Royce delivered the address: August 27, 1914. The “Great War” (now known as World War I) had begun on July 28, 1914; by the time Royce proposed his plan, European nations were engulfed in a pointless conflict that would last four years--outlasting Royce, who died in 1916--and set the stage for the bloodiest century in human history.
The problem wasn’t that Royce’s “solution” was wrong, unrealistic, or impractical; the problem was that no one could hear him over the din and clamor of battle.
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I had never heard of Josiah Royce’s quixotic proposal until finding it mentioned by Eugene McCarraher in The Enchantments of Mammon. Royce’s War and Insurance can be accessed via the Internet Archive (www.archive.org).
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