gwern comments on Open Thread, June 16-30, 2013 - Less Wrong
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Yes, you've reinvented the classic economic/game-theoretic justification for total war - pour encourager les autres. This reasoning was more or less the explicit goal of the Mongols when they did things like build pyramids of skulls, and I've read economic analyses of New World pirates in which the Jolly Roger served a similar intimidation function. The tactic works best when coordination is hard, because if the intended victims can coordinate, such extremism may prompt the formation of an effective alliance against oneself even by parties who would've preferred to remain neutral.
This in fact seems to have happened to Joshua several times, though he managed to fight his way out of it both by way of some powerful alliances of his own, and by taking the defensive in these exchanges. One of his major advantages seems to have been that though he could not outlast his enemies year-to-year (having no city of his own), he could always outlast them within a given year, since the locals had to return home to plant and harvest crops and he didn't. It was probably touch and go for a bit.