Martial races as clubs? The institutional logic of the martial race system of British India

Military institutions can be seen as a solution to a type of principal-agent problem, in which a government principal contracts with a military agent to produce violence on their behalf. Absent extensive monitoring, low effort should be expected from the military agent. This should especially be the case for a mercenary force which cannot rely on patriotism or ideology. Yet the mercenary army of the British-ruled India consistently produced high and dedicated performance. In this paper, I argue that the otherwise curious institution of recruiting predominantly from the so-called ‘martial races’ helps to explain this puzzle. Drawing on Iannaccone’s club goods model, I argue that the martial race recruitment system represented an effective solution to the principal-agent problem by allowing the British to benefit from a repeat business arrangement with a small number of ethno-religious groups whose costly in-group prohibitions and poor outside options helped both to screen out potential shirkers and deter poor performance on the battlefield.