The economics of espionage

An Indian army non-commissioned officer and his retired Indian Air Force non-commissioned officer father have been caught spying for Pakistan. Last year, a high-ranking Indian intelligence officer escaped the country. He was spying, presumably for the United States.

The politics of espionage is an oft-discussed, if not well-understood issue. What about its economics? If politics, patriotism and morality are excluded, are there purely economic factors that cause some people to be spies? Hundreds of thousands of Indian soldiers and air-men as paid as little as this spying duo, but the actual number of spies is (hopefully) very small in comparison. What then makes spies spies?

Opinions, links, comments and email welcome.

15 thoughts on “The economics of espionage”

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  4. I think that it is Psychology rather than Economics that plays a large part in the making of a mole. I doubt anyone has ever become a millionaire spying for Pakistan, if nothing else, the sudden unexplained wealth would bring the counterintel guys running. I’m sure the Pakis pay their spies (as I’m sure we Indians do too), but not any significant amounts. I don’t think there is enough money in espionage to satisfy someone who has purely mercenary motives.

    Oh, and thanks for linking my blog!

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  6. Nitin,

    But IT is morality and patriotism, which stops everyone in defence from turning spies.

    The economics you talk about (ie without any moral or ethics restriction) can not exist, as the very foundation of economics is honest barter

  7. Personal grudges? Feeling of being victimized by the system?

    Actually, the more I think about it, I come to the conclusion that the reason would vary from case to case. Each spy would have his own reason for the betrayal.

  8. I think the factors leading towards working or succumbing towards a direction of espionage for some other country will involve a lot of things, not just the mentality of the individual. Circumstances play an important part in those who are lured towards a quick buck .. or two.
    Even if Hundreds of thousands of Indian soldiers .. as you say .. are paid the same .. not all of them would have the access to information, or even the opportunity to spy.

  9. Hi all,

    Thanks for the views. Patriotism and morality, of course, are important and certainly not to be dismissed. The intent of this post is not to discuss those but to examine the economics of this issue. Ceteris paribus 🙂

    Anya has a point: demand and supply. The actual supply may be very small as not many people have access to secret information. But is demand limited too? How many countries/customers are there who are willing to pay for such info.

  10. Umm…

    Nitin sorry for being nagging, but I hope I can make myself clear.

    Economics can not be applied in this case in the same way as it can not be applied in case of “multiple personality disorders” or “existentialism”.

    While it is fashionable to apply economics (or psychology especially the
    freudian variety) on any issue under the sun, the fact is, that by no stretch of imagination current economics or psychology are GUT of social sciences. Until and Unless such a theory is formulated, we should do the analysis the conventional way, even if it is not cool.

    This is more of an issue concerning ethics than economics

  11. I’ve removed an off-topic and off-colour comment from this post. Primary Red had a good rebuttal. Unfortunately, that rebuttal too needed to be removed too.

  12. I guess in a normal person, the cost in terms of feelings of extreme guilt and the great risk will be so high that spying for a foreign country will not seem worth it no matter how well they pay. However, if a given individual already has a reason to help the foreign power, whether it is identification with their cause (eg. the Cambridge spies) or a perceived injustice or grudge or whatever, the spy can be “bought” for virtually peanuts. Since intelligence agencies probably do not have the kind of cash it will take to recruit a purely mercenary spy (like Aldrich Ames), they would be more likey to look for agents with a non-monetary motivation for spying. Another point is that it is virtually impossible for a mercenary spy to enjoy the fruit of his spying, because people with access to secrets are always watched for unexplained income. Aldrich Ames only survived as a spy as long as he did because of a monumental counter-intelligence failure.

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