Economic Resistance of the Business Sector as a Deterrent to War: A Two-Loop Model

Abstract

Economic Guarantees of Security (EGS), Internal Resistance Series, Working Paper No. 4 Work in Progress —August, 2026 Affiliation: International Institute of Political Philosophy (Kyiv, Ukraine) Author: Prof. Aleksandr Rozenfeld Contact: [email protected] Abstract This paper is part of the research series Internal Economic Resistance within the broader research program Economic Guarantees of Security (EGS). It develops the concept of business economic resistance as an endogenous constraint on military aggression and examines its role within a two-loop model of deterrence. Unlike conventional approaches that regard business primarily as a passive object of wartime mobilization, this study conceptualizes business as a decentralized network of autonomous economic agents possessing independent objectives, assets, contractual obligations, and decision-making authority. The paper argues that the principal source of business resistance lies not merely in expected financial losses but in the anticipated erosion of entrepreneurial freedom, property rights, contractual stability, market access, and institutional predictability. These institutional threats generate rational behavioral responses, including reduced investment, capital flight, production adjustment, contract restructuring, market reallocation, informal economic activity, and business exit. Although these responses rarely take the form of organized political protest, their diffusion through production, financial, contractual, and logistical networks gradually reduces the fiscal, technological, and organizational capacity of the state. The paper introduces the concept of an economic mobilization limit, defined as the point beyond which additional state pressure no longer increases, but instead diminishes, the effective resources available for military mobilization. Particular attention is devoted to the anticipatory nature of business behavior. Economic resistance frequently begins before the outbreak of war, as firms respond to expected sanctions, mobilization measures, regulatory restrictions, and institutional uncertainty. Consequently, well-designed systems of Economic Guarantees of Security can influence expectations at the decision-making stage, activating endogenous economic constraints before military aggression occurs. The proposed framework extends traditional deterrence theory by integrating external economic measures with internally generated behavioral responses of business. It demonstrates how decentralized economic decisions can complement international sanctions and other preventive mechanisms, thereby strengthening both the prevention of aggression and the conditions for its termination. One of the key conclusions of this work is that military aggression can be not only prevented but even stopped not only by external pressure measures but also by the economic behavior of businesses. The work presents and expands on a two-loop deterrence model that links international pressure measures with the internal disobedience of economic agents.