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The concept of organized crime has had a winding history, with many, partially contradictory, meanings attached to it since the expression began to be used in the United States more than a hundred years ago (see, e.g., Varese 2010). Basically, the understanding of organized crime has shifted back and forth between two rivaling notions: (1) a set of stable organizations illegal per se or whose members systematically engage in crime and (2) a set of serious criminal activities, and particularly the provision of illegal goods and services, mostly carried out for monetary gain. (Other criminological concepts, such as white-collar, political, and professional crime, entail similar definitional problems).
Originating from the now discredited official representation of organized crime in the United States in the 1950s and 1960s, the former notion is still embraced by the media and by policymakers seeking to justify draconian measures. Although it is rejected by many scholars, such understanding is corroborated by the existence of a few large-scale and long-lasting criminal organizations worldwide, which Paoli (2002) termed “mafia-type criminal organizations.” These are primarily the Sicilian Cosa Nostra and Calabrian ’Ndrangheta, the Italian-American La Cosa Nostra, the Chinese Triads, the Japanese Yakuza, and the vory v zakone (thieves-in-law) in the Soviet Union (USSR) and its successor states.
The second view, which is now dominant in the scientific understanding of organized crime, is most clearly exemplified by the criminal activities listed as typical of organized crime in the Organized Crime (Threat Assessment) Reports produced at regular intervals by Europol and national law enforcement and governmental agencies, such the UK Serious and Organized Crime Agency and German Federal Police Office. In this second paradigm, depending on the authors and agencies, the identification of organized crime with the provision of illegal goods and services can be complete (e.g., Van Duyne 1997) or merely partial (e.g., Edwards and Levi 2008). Prohibited psychoactive drugs (e.g., heroin, cocaine, and cannabis) are the bestknown examples of illegal goods, but, in addition to them, this category also includes goods produced and traded in violation of specific regulations: human beings, if trafficked for the purposes of sexual exploitation or forced labor; cigarettes, alcohol, and gasoline, if exchanged without paying excise and other taxes; and diamonds, wood, and other natural resources, if extracted illegally or sold outside the legitimate channels. The category of illegal services is also broad, as it ranges from gambling (in those jurisdictions in which it is still prohibited) to paid sex (in jurisdictions where prostitution itself or its exploitation is prohibited) and to the entry into a rich country, in the case of human smuggling.
Organized crime official reports and scholarly studies (e.g., Edwards and Levi 2008) also often include different forms of “illegal transfers” (e.g., robberies, extortions, embezzlement, and cases of fraud). Unlike the provision of illegal goods and services, these transfers do not create value but merely transfer it from one person to another. Not least for this very reason, however, the harm they generate is more evident than the harms accruing from the provision of illegal goods and services.
This research paper is structured as follows: the first section gives a summary of the debate about organized crime in the USA and Europe, providing evidence of the above-mentioned alternative understandings of organized crime but also of the growing integration of the two views. The following two sections (“Mafia-Type Organizations” and “Illegal Markets/Activities and Their Actors”) are, respectively, devoted to mafia-type organizations and illegal markets and their actors, as they best symbolize the two opposing views of organized crime.
Organized Crime: A Contested Concept
The meanings of organized crime have changed considerably and repeatedly over time. Reflecting the two different notions of organized crime discussed in the overview, some authors as well as national and international policy and law enforcement agencies have emphasized the “Who,” that is, the offenders and their variable partnerships, whereas others have given more relevance to the “What,” that is, the criminal activities conducted (see Smith, 1991).
The organization-based approach, which was dubbed the “alien conspiracy” theory by its critics due to its emphasis on foreign criminals, was first enunciated by the Kefauver Senate Investigating Committee in the 1950s. Despite the scarcity of empirical proof, the committee set out the terms of an Italian mafia-centered view of organized crime that remained the US official standpoint for almost three decades. This identified organized crime with a nationwide, centralized criminal organization that dominated the most profitable US illegal markets, allegedly derived from an analogous parallel Sicilian organization and largely consisted of migrants of Italian (and specifically Sicilian) origin (U.S. Senate 1951, p. 131). The merger of the two concepts of organized crime and mafia was fully accomplished in 1963 when Joe Valachi testified before the Senate Permanent Subcommittee on Investigations. By recalling his experiences as a low-ranking member of an Italian-American mafia association called (La) Cosa Nostra, Valachi gave a new name to the menacing criminal organization singled out by the Kefauver Committee and provided many details about its internal composition and illegal activities (U.S. Senate 1963). Thanks to extensive television coverage, Valachi’s views were popularized among the American public.
This mafia-centered view of organized crime has long dominated the (USA and international) public perception of the problem: since the 1960s, hundreds of books have been written on the topic, and dozens of movies have been made. Some of these – above all, Mario Puzo’s The Godfather (1969) and its film adaptation by Francis Ford Coppola – have been so successful that they have profoundly shaped the general understanding of organized crime and the mafia in the United States and elsewhere. For many people, the Italian-American mafia, which is de facto identified with organized crime, is and behaves as is recounted in these romanticized novels and films.
Such an interpretation received scientific systematization from Cressey (1969): in his view, La Cosa Nostra relied upon Sicilian traditional cultural codes but was also a hierarchical and “rationally designed” organization, very close to Max Weber’s ideal type of legal-rational bureaucracy and therefore capable of operating in contemporary America.
The identification of the mafia with organized crime – and thus the idea of an alien conspiracy polluting the economic and social life of the country – has been rejected by the majority of American social scientists since the 1960s. These have alternatively accused the mafia-centered view of organized crime of being ideological, serving personal political interests, and lacking in accuracy and empirical evidence (e.g., Smith 1975). Some scholars, however, have overreacted, up to the early 1980s categorically denying the existence of the Italian-American mafia as a structured and longstanding criminal organization.
Scientific attention has instead been redirected from “Who” back to “What” and upon the most visible and noncontroversial aspect of organized crime: the supply of illegal products and services. In order to eradicate ethnic stereotypes of crime and direct attention to the marketplace, several authors have put forward the expression “illicit” or “illegal enterprise” as a substitute for the ethnically loaded term “organized crime.” As Smith (1975, p. 335), one of the earliest proponents of the new approach, expressed it, “illicit enterprise is the extension of legitimate market activities into areas normally proscribed – i.e., beyond existing limits of law – for the pursuit of profit and in response to a latent illicit demand.”
More often, however, organized crime itself has been equated with the provision of illegal goods and services. Hence, according to Block and Chambliss (1981, p. 13), “organized crime [should] be defined as (or perhaps better limited to) those illegal activities involving the management and coordination of racketeering and vice.” Organized crime has thus become a synonym for illegal enterprise. That is, the involvement in illicit market activities has become nowadays the basic requirement of virtually all definitions of organized crime in the US scientific and official discourse, and this view is shared by both supporters of the mafia-centered understanding of organized crime and its critics.
A negative side effect of this partial consensus has been that the term “organized crime” is intermittently used to refer to both sets of criminal organizations and sets of activities. In the definition quoted above, Block and Chambliss clearly present organized crime as a set of activities. The identification of organized crime with a set of organizations is instead fostered by supporters of the US official standpoint and a few independent scholars, including critics of the official understanding. According to Reuter (1983, p. 175), for example, “organized crime consists of organizations that have durability, hierarchy and involvement in a multiplicity of criminal activities .. .. The Mafia provides the most enduring and significant form of organized crime.” Unsurprisingly, the frequent confusion between offender and offense often leads to circular reasoning. In 1986, for example, the (second) President’s Commission on Organized Crime (1986, p. 11) concluded that drug trafficking was “the single most serious organized crime problem in the United States and the largest source of income for organized crime.”
With the exception of Italy and Spain, the “illegal enterprise” approach has since the 1970s acquired a dominant position in the scientific debate in Europe and has since the late 1980s been dominant in the policy debate as well, with a resulting focus on criminal activities for gain. As early as the mid-1970s, Kerner and Mack (1975) talked about a “crime industry,” and in an earlier report written in German, Kerner subscribed even more explicitly to the view of organized crime as an enterprise (1973). The emphasis on illegal market activities has remained unchallenged ever since. Hence, for example, van Duyne (1997, p. 203) asks “What is organized crime without organizing some kind of criminal trade; without selling and buying of forbidden goods and services in an organizational context? The answer is simply nothing.” More recently, several scholars (e.g., Edwards and Levi 2008) have suggested getting rid altogether of the expression organized crime and focusing instead on the organization of crime for gain.
The loose understanding of organized crime in terms of profit-making criminal activities has allowed organized crime to become a successful policy term even in European countries that had no mafia problems. Concern for organized crime first spreads in the late 1980s in Germany and the Netherlands and then, to various degrees, in other European states. Given its vagueness and elasticity, the term “organized crime” could be used to express the fear that the Italian mafia could invade the rest of Europe – a fear that reached its peak in the early 1990s after the murders of Judges Falcone and Borsellino by the Sicilian Cosa Nostra – but also refer to profitmaking criminal activities and entrepreneurs close to home or to the real and imagined threats coming from the East after the 1989 fall of the Iron Curtain and the 1991 implosion of the Soviet Union.
With few partial exceptions (e.g., the Netherlands and Spain), the European official (or semiofficial) definitions of organized crime draw from the illegal enterprise paradigm. The definition adopted by German State Ministers of the Interior and Justice in 1986, which has been very influential and has been adopted also by other governments (e.g., Belgium), for example, states:
—–Organized crime constitutes the planned commission of criminal offenses to acquire profit or power. Such criminal offenses have to be, each or in their entirety, of a major significance and be carried out by more than two participants who cooperate within a division of labor for a long or undetermined time-span using a) commercial or commercial-like structures, or b) violence or other means of intimidation, or c) influence on politics, media, public administration, justice, and legitimate economy. (BKA 2012)
Analogous, market-oriented definitions of organized crime have been adopted in the United Kingdom. The most recent is bafflingly simple: “Organised crime is defined as those involved, normally working with others, in continuing serious criminal activities for substantial profit, whether based in the UK or elsewhere” (SOCA 2012).
Following up on the studies of Reuter (1983) and others, policy-making and law enforcement agencies worldwide have increasingly had to realize that stable, large-scale criminal organizations far from monopolize profit-making criminal activities (e.g., Europol 2003). Rather than discarding the pair “criminal organizations” and “profit-making criminal activities,” they have increasingly watered down the definition of criminal organizations so as to include also networks, gangs, cells, and any group composed by at least three people working together for some time (e.g., UNGA 2000; SOCA 2012). For some agencies (e.g., SOCA 2012) and scholars (e.g., Felson 2009, pp. 159–160), organized crime seems to mean little more than co-offending by more than two perpetrators.
The supposed territorial scope of organized crime has also changed. Originally, organized crime was equated with racketeering, another vague notion at the core of which there is, however, extortion, an activity necessarily territorially based and usually carried out only on a local basis. Since the 1990s, instead, many researchers (e.g., Williams and Florez 1994) and an even larger number of government agencies and international organizations, ranging from the USA to the United Nations (UNGA 2000; White House 2011), have emphasized the transnational nature of organized crime.
As this brief overview already shows, the policy and scientific legitimacy and relevance of the organized crime concept have also varied considerably over time. Except for the United States and Italy, most other nations did not regard organized crime as a serious domestic problem until the late 1980s. Whereas media accounts of organized crime and mafias have always fascinated the general public, most scholars shunned the topic until the early 1990s. Only since that period has organized crime become an accepted policy and scientific concept virtually throughout the world.
Since the 1990s, the majority of governments at least in the developed world and many international organizations, including the UN, have adopted bills, decrees, action plans, and international treaties specifically targeting organized crime, usually granting extensive new prosecutorial powers to law enforcement agencies – as the United States had already done in the 1960s and 1970s. The fight against organized crime has also been used to justify far-reaching criminal justice reforms in several countries, particularly in Europe (see Fijnaut 2013a).
Despite some persisting resistance, organized crime has also become a legitimate scientific research topic, attracting considerable attention from criminologists and other social scientists during the 1990s and the early twenty-first century, particularly in Europe.
Contrary to what the critics of the alien conspiracy stated, there is nowadays indisputable evidence that a few large-scale, long-standing criminal organizations exist even in Western countries, which Paoli (2002) calls mafia-type organizations. These range from the Sicilian Cosa Nostra and the Calabrian ’Ndrangheta in Italy to the Yakuza in Japan and from the Italian American La Cosa Nostra in the United States to the Triads in China, Hong Kong, and elsewhere and to the thieves-in-law in the USSR/Russia.
Long regarded by the media and public as the prototype of organized crime, these centuriesold organizations are usually loose consortia of smaller groups. The Calabrian ‘Ndrangheta and Sicilian Cosa Nostra, for example, are each composed of about 150 groups (Paoli 2013). Twentyfour mafia “families” used to compose the American La Cosa Nostra, even though many such groups are no longer active today (Albanese 2013). According to the Japanese police, there are 22 Yakuza organizations in Japan, a number that has remained stable since the 1990s (Hill 2013). Several different triads are known to be active in Asia, America, and Australia (Chin and Liu 2013).
Although the individual units enjoy considerable autonomy, it still makes sense to regard mafia-type criminal organizations as unitary. They constitute, in fact, segmentary societies – an organizational model well known to anthropologists studying “simple societies.” In segmentary societies, such as mafia-type organizations, societal boundaries are drawn by the common cultural heritage and structural organization. In several cases, a process of centralization has been built upon these segmented structures. Among the families associated with the American and Sicilian Cosa Nostra and, more recently, among those belonging to the Calabrian ‘Ndrangheta, this process of centralization has led to the institutionalization of superordinate bodies of coordination (Paoli 2003). In Japan, three syndicates – the Yamaguchi-gumi, Sumiyoshi-rengo, and Inagawa-kai – have succeeded in incorporating many smaller groups and now account for 80 % of the total number of initiated members (Hill 2013). The trend, however, is not univocal. There are no signs of a centralization process going on in the heterogeneous universe of Chinese organized crime. Furthermore, even when superordinate bodies of coordination exist, their competencies are rather limited. Usually their main purpose is to minimize the visibility of the criminal organizations through the regulation of the internal use of violence. In the case of Sicilian and American Cosa Nostra cases, moreover, the centralization of power has reverted and the “commissions” are no longer active (Paoli 2013).
Mafia-type organizations are based on lifelong status and fraternization contracts, which establish ritual kinship ties among the members. It is not by chance that the basic units of the Sicilian and American Cosa Nostra are called families. Although Italian and Italian-American mafia groups clearly distinguish themselves from the blood families of their associates so much so that no women are allowed, the term evokes and, at the same time, prescribes the cohesion and solidarity of blood ties (Paoli 2003). In Japan, the relationship between a yakuza chief (oyabun) and lower-ranking members (kobun), which is the pillar of the whole association, is portrayed as the relationship between a father and his sons (Hill 2013). Relying on fictive kinship ties, mafia-type organizations enjoy a flexibility that has no parallel among contemporary businesses whose employment contracts usually promise economic benefits in exchange of specific, limited tasks. The contracts imposed by mafia-type organizations on their members are so comprehensive that the latter are expected not only to deny family and friendship bonds but even to sacrifice their own life if the group requests it. In exchange, individual members benefit from the collective action and the reputation of the organization in the pursuit of both licit and illicit businesses. The membership in a mafiatype organization group is, hence, typified by a crisscrossing of instrumentality and solidarity, of personal selfishness and unconditional involvement.
The ritual kinship ties established at the moment of the initiation ceremonies have historically been used by both the organizations as such and their members to achieve a plurality of goals and to accomplish a variety of functions. Only by sacrificing empirical evidence, it is possible to single out an encompassing function or goal that can characterize mafia-type organizations throughout their lives. In particular, although their members are heavily involved in illegal businesses today, neither the development nor the internal structure of mafia-type organizations is the product of illegal markets dynamics. Indeed, many of these organizations arose before the consolidation of modern illegal markets: the predecessors of Triads and Yakuza groups in the course of the eighteenth century and Southern Italian mafia groups in the late nineteenth century (Chin and Liu 2013; Hill 2013; Paoli 2013).
Among the many functions historically carried out by mafia-type organizations, political functions, even more than economic activities, have always had a key relevance, and it is to Diego Gambetta’s credit that he brought attention to this dimension that had long been neglected in the scientific discourse on the mafia and organized crime. According to Gambetta (1993, p. 1), in fact, the Sicilian mafia is “a specific economic enterprise, an industry that produces, promotes and sells private protection” (The provision of protection is one of the most important functions historically played by mafia groups, a quintessential one, we could say, since it derives from their exercise of violence in the villages and neighborhoods where mafia groups are based. Gambetta’s analysis is rather to be criticized for his one-sided emphasis on protection and his denial of the polyvalence of mafia groups. It is furthermore regrettable that out of polemical reasons, Gambetta overshadows the analogies between the mafia, as he defines it, and the state. Such a similarity was instead outlined by Charles Tilly (1985, p. 169): “if protection rackets represent organized crime at its smoothest, then war making and state making – quintessential protection rackets with the advantage of legitimacy – qualify as our largest examples of organized crime.”
Although not employed on every occasion, ultimately violence constitutes the backbone of mafia-type organizations’ power. These use violence foremost to secure the obedience of their own members and to punish those that have betrayed or not respected their authority. They also employ it as a means to threaten, render inoffensive, or even physically eliminate whoever endangers the power positions and the business activities of the organization or its individual units. Through the threat or the effective use of violence, mafia-type organizations have also been trying – enjoying for a long time a fairly high degree of success – to impose their rules on society at large in their territory of influence. As such, criminal organizations of mafia type can be seen as proto-states that have the ambition to impose their own legal order within a given territorial area through the threat and the use of physical force. Each family associated with either Cosa Nostra or the ‘Ndrangheta, for example, claims sovereignty over a well-defined territory which usually corresponds to a village or to the district of a city.
Mafia-type organizations’ political ambitions mirror the weakness of state authorities in the contexts in which they developed. The oldest among them consolidated in contexts in which the local state authorities were not able to guarantee even a minimum of security and the residents had to protect their property, women, and own lives by themselves. The American La Cosa Nostra rose in the early twentieth century when the US government still had limited authority in the Italian ethnic community and some of its representatives preferred to come to terms with, rather than prosecute, La Cosa Nostra bosses and other criminal entrepreneurs fostered by Prohibition. Founded in Stalinist prisons in the 1930s, vory v zakone and other Russian crime groups gained unprecedented political power and control over economic resources after the implosion of the Soviet Union in 1991 (Volkov 2013).
While criminal groups posing as proto-states rose in several parts of pre-modern Europe (e.g., Fijnaut 2013b), most of them were swept away by the consolidation of modern state structures. The current mafia-type organizations have survived in contexts in which government structures have remained weak or their representatives have been willing to enter into pacts with them. At least up to the mid-twentieth century, for example, Italian government officials came to terms with the representatives of mafia power and de facto delegated to the latter the maintenance of public order over wide areas of western Sicily and southern Calabria, where the authority of the central government was scarce and even the officials’ personal safety was in danger. In Japan as well, Yakuza bosses have held close ties with members of the political establishment and specifically the Liberal Democratic Party, Japan’s dominant political party since WWII (Hill 2013).
Exploiting the weakness of the state and, at the same time, their own privileged contacts with corrupt politicians and civil servants, mafia-type criminal organizations have traditionally fostered their popular legitimacy by providing income and other nonmaterial advantages to their associates and a variety of services for the general population, such as civil-service jobs, a pension benefit, or impunity for their supporters or votes for befriended politicians. Additionally, in Italy, Japan, Russia, and Chinese communities all over the world, they have occasionally controlled the workforce and carried out “dirty work” for colluding companies and landowners, for example, by protecting them from ordinary criminals or by breaking strikes or other forms of protests. Furthermore, mafia-type organizations have supplied goods and services for which there is, despite their official prohibition, a public demand. It is through the latter function that mafia-type organizations become involved in the criminal activities being considered exemplary of the alternative understanding of organized crime – thus, creating a partial overlapping between the two views. Contrary to what is often maintained, however, mafia-type organizations are far from controlling illegal markets worldwide, and indeed, according to a plurality of independent researchers, their “market share” has in recent years further declined (Chin and Liu 2013; Hill 2013; Paoli 2013).
Illegal Markets/Activities And Their Actors
Despite the exaggerations of some moral and political entrepreneurs, the growing worldwide concern about organized crime partially reflects real changes that directly impinge on illegal (market) activities and their actors – which is the second paradigmatic understanding of organized crime.
Among these changes, the most significant has been the rise of the illegal drug industry. Since the 1970s, this has become the largest and most profitable illegal market activity in virtually all Western countries, attracting the greatest number of traditional underworld figures and fostering a reorientation of professional crime toward the drug business. According to a conservative estimate, the world drug markets generated US $322 billion in retail sales in 2003, corresponding to 0.9 % of global GDP (UNODC 2005, pp. 123–143). These are substantial figures, probably much larger than the revenues of any other illegal entrepreneurial activity, although there are no reliable estimates for any of them.
The demand for illegal drugs in rich countries has been a key promoting factor of the expansion of the world drug industry, which now connects opium poppy and coca cultivation areas in Afghanistan, Burma, or Colombia to retail users several thousands of kilometers away. However, Western countries are far from being merely consumers or importers of illegal drugs. Some of them, and most notably the Netherlands, Belgium, and the United States, have also become major producers of cannabis and synthetic drugs, while others play a key role as transit countries (e.g., Spain).
Despite the reorientation of many professional criminals toward drug trafficking and dealing, several – traditional and nontraditional – profitmaking criminal activities have continued to proliferate. As a matter of fact, some of these activities – ranging from car theft to robberies and the exploitation of prostitution – experienced an unexpected revival in the years immediately following the fall of the Iron Curtain, when Eastern European criminals primarily resorted to violence and ruthlessness to earn a “fast buck” in Western Europe.
A third group of entrepreneurial crime activities has also flourished since the 1980s, although they hardly are the prerogative of traditional underworld members. These activities range from fraud and other financial crimes to bidrigging in public works tenders and the illegal wholesale trade in toxic waste, weapons, diamonds, and gold. They undoubtedly form a part of organized crime, if one accepts the loose official definitions of organized crime. Albeit difficult to estimate precisely, the harm these activities cause to society might be considerably higher than the harms of the illegal activities, such as drug and human smuggling, traditionally regarded as typical of organized crime.
Whereas the more white-collar forms of organized crime usually attract public attention only in the immediate aftermath of a big scandal, a second wave of expansion of Western illegal markets began in the mid-1980s, raising much concern in government institutions and the general public. This expansion was largely triggered by the enactment of increasingly restrictive immigration policies in most Western countries during the 1980s and 1990s, which created a large demand for human smuggling services. The number of potential customers as well as victims of veritable human trafficking also suddenly multiplied, as the liberation of Eastern Europe in 1989 and the collapse of the Soviet Union in 1991 abolished restrictions on the mobility of almost 400 million Eastern European and former Soviet citizens. Crises in other parts of the world, ranging from several African countries to Iraq, Afghanistan, and East Timor, also engorged the flow of prospective migrants, at the same time as growth and improvement of transportation facilitated their movements, by drastically reducing logistical constraints.
To meet this demand, human smuggling “companies” popped up at all the crucial borders of “Fortresses Europe and USA.” Although many smugglers merely sell services desperately wanted by their customers, their prices are often extortionate and the smuggling conditions dangerous and even inhuman, as proven by the accidents all over Europe and on the US-Mexican border that cost the lives of undocumented migrants. (These incidents are caused, however, not only by the smugglers’ ruthlessness but also by the rigor of Western governments’ border interventions.) Moreover, this flourishing black market has opened up space for all kinds of exploitation that sometimes end up as real trafficking in human beings.
It is almost a platitude to note that public demand constitutes the main determinant for the provision of illegal goods and services. The evidence for such a statement is most compelling in the case of illegal drugs, which are willingly consumed by about 230 million people worldwide (approximately 5 % of the world population aged 15–64; UNODC 2012).
Political conditions – again primarily the strength and legitimacy of government authorities – also impact illegal markets. For example, they play a key role in determining the location of production of agriculturally based drugs (especially, heroin and cocaine). All else being equal, the cultivation of the plants from which these drugs are extracted tends to concentrate in countries with no effective enforcement of drug prohibitions and with local government or quasi-government tolerance or support for drug production and trade. Afghanistan and Burma, the world’s two leading opium producers, most clearly illustrate this principle.
The draconian measures occasionally imposed by authoritarian governments and quasi-state authorities also vividly demonstrate the impact that government decisions can have, at least in the short term, on illegal markets. With a radical and concerted opium suppression campaign, the Chinese Communist led regime eliminated in the early 1950s opium consumption and production in China, which was then by far the largest market in the world. Such a campaign, however, entailed degrees of coercion that no democratic government can rightfully employ (Paoli et al. 2009). Totalitarian regimes have also been able to prevent the integration of their countries into international illegal markets. Most Western illegal drugs, for example, were unavailable in Russia until the implosion of the Soviet Union in 1991. The bulkier the product is, the higher the chances of control. As already mentioned, the Iron Curtain effectively deprived 400 million people of their right of free movement and “protected” them from falling prey to human trafficking and smuggling.
The chances of controlling illegal markets are, however, much more limited for democratic governments committed to the rule of law and a market economy. As long as these are not willing to resort to authoritarian border and law enforcement methods or to disrupt legitimate trade by, say, inspecting every container crossing their national borders, it will be almost impossible for them to stop illegal market flows. Indeed, these can be regarded as the price we need to pay for democracy and a market economy. Much like the informal economy, of which they are part, illegal markets constitute a “normal,” unavoidable component of all modern societies. Contemporary governments have even less leverage than their predecessors over illegal – and legal – market flows as a result of economic globalization. The diminution of state-enforced restrictions on exchanges across borders – the core trait of globalization – has accelerated the interconnections between previously separate domestic, legal and illegal, markets and increased the mobility of goods, capital, and human beings. For illegal entrepreneurs, it has become easier than ever to move drugs and other illegal commodities from producing to consuming countries, to repatriate profits, to establish business partnerships with foreign counterparts, and even to operate in foreign countries themselves.
If the prospects of controlling global illegal market flows are quite bleak, the in-depth analysis of the world heroin market by Paoli et al. (2009) suggest that government authorities, even in democratic societies, are not powerless vis-a`-vis organized crime activities. One of their main conclusions is that the strictness of governments’ enforcement of prohibitions – in other words, the degree of effective illegality to which opiates (i.e., opium and its derivatives, including heroin) are subject – is the most important single factor to shape how the opiate/heroin market is organized in a particular country and the behavior of its producers and traffickers. It impacts, in particular, the size, organization, and operating methods of enterprises that produce or traffic illicit opiates.
These findings tie in well with a growing body of literature on organized crime in Western countries that show that the great majority of illegal exchanges in Western countries are carried out by numerous, relatively small, and often ephemeral enterprises. In other words, “disorganized crime” (Reuter 1983), rather than organized crime understood in terms of large-scale stable criminal organizations, predominates on the illegal markets of Western countries, reflecting the constraints deriving from the enforcement of prohibitions. These constraints have to do with the fact that illegal market entrepreneurs are obliged to operate both without and against the state.
First, since the goods and services they provide are prohibited, illegal market actors cannot resort to state institutions to enforce contracts and have violations of contracts prosecuted. Nor does the illegal arena host an alternative sovereign power to which a party may appeal for redress of injury. As a result, property rights are poorly protected, employment contracts cannot be formalized, and the development of large, formally organized, long-lasting companies is strongly discouraged (Reuter 1983).
Second, all illegal market actors are forced to operate under the constant threat of arrest and confiscation of their assets by law enforcement institutions. Participants in criminal trades will thus try to organize their activities in such a way as to assure that the risk of police detection is minimized. Incorporating illegal transactions into kinship and friendship networks and reducing the number of customers and employees are two of the most frequent strategies illegal entrepreneurs employ to reduce their vulnerability to law enforcement moves (Reuter 1983; see also Bouchard and Morselli 2013).
Due to the threat of police intervention, either in terms of seizing assets or imprisoning participants, the planning time horizons of illegal entrepreneurs are likely to be much shorter than those in legal markets. Since an illegal enterprise can hardly be sold as the entrepreneur ages, he is likely to divert an increasing share of his profits to legal assets which can be passed on to his heirs.
Finally, since they are operating against the state, illegal enterprises are prevented from marketing their products. They cannot create their own brand image and try to bind customers to it. Strong economies of scale, however, are associated with advertising, and the advantages linked to the nationwide marketing of one’s own products have long been recognized as a very important factor in the rise of modern large-scale corporations. Illegal enterprises, however, are by definition excluded from the possibility of exploiting these advantages because, by doing so, they would obviously attract law enforcement attention and damage their own businesses. For the same motives, illegal enterprises in Western countries resort sparingly to violence: as Pearson and Hobbs (2001, p. 42) put it, “violence and killings attract police attention and leave traces, as well as attracting retaliation. Violence is therefore strictly ‘bad for business.”
For all the above reasons, it is rather unlikely that large, hierarchically organized enterprises will emerge to mediate economic transactions in the illegal marketplace of countries with effective governments. The factors promoting the development of bureaucracies in the legal portion of the economy – namely, taking advantage of economies of scale of operations and specialization of roles – are outbalanced in the illegal arena by the very consequences of product illegality. Even mafia-type organizations are subjected to the constraints deriving from the illegal status of products, and when they deal in drugs or other illegal products, they do not operate as monolithic productive and commercial units. On the contrary, their members frequently set up short-term partnerships with other mafia members, or even nonmembers, to carry out illegal transactions.
Nor are the average illegal market actors of Western countries interested in, or capable of, exercising a quasi-political power similar to that of mafia-type organizations. As Europol (2003, p. 10) recognizes, “politically, few OC groups pose a direct threat to Member States.” Most organized crime groups active in the richest Western countries are simply too small and ephemeral to be able to exercise such political power.
The situation can look radically different in countries with lax or no enforcement of official prohibitions. Paoli et al.’s (2009) analysis of the world heroin market, for example, concludes that opiate enterprises can become large and stable and assume bureaucratic characteristics if they are closely linked via corrupt ties to, or coincide with, a powerful state or quasi-state authority. Under conditions of lax or non-enforcement, opiate enterprises may form oligopolies or even monopolies, if powerful and engaged state or quasi-state authorities back them up. The extent of violence and bribery also depends on the strength and involvement of state or quasi-state authorities. Violence may be high, if the supporting state or quasi-state authority is weak; it may be low, if the state or quasi-state authority is strongly institutionalized and directly involved in the drug trade.
This model also predicts that for countries that have become accustomed to lax or non-enforcement, a shift toward strict enforcement may imply a worsening of drug-related corruption, violence, and instability in the interim. What happened in Afghanistan during the first decade of the twenty-first century clearly demonstrates the potential for worsening conditions: powerful drug producing and trafficking organizations have used all available means to oppose state efforts to enforce prohibition more rigorously and fight for the “right” to continue their established businesses.
Illegality and enforcement seem to have similar effects on the size and operating methods of cocaine and cannabis trafficking enterprises as they have on opiate-related firms. For example, large and stable cocaine trafficking organizations having no qualms about openly challenging state sovereignty have consolidated in countries lacking consistent enforcement of prohibitions, such as Colombia and Mexico (e.g., Medel and Thoumi 2013; Thoumi 2013). Presidents Fox and Calderon’s determined fight against Mexican drug cartels has plunged the country into an unprecedented spiral of violence. Mutatis mutandis, the model of varying effective illegality seems to be applicable to the enterprises producing and dealing with synthetic drugs and other illegal goods and services.
The analysis shows that the manifestations of organized crime in any single national context depend – to a considerable, albeit not exclusive, extent – on the authority of the local government agencies. A full analysis, however, would also have to weigh the benefits and costs of governmental control interventions. The US war on drugs of the past two decades may have helped keep the US drug market relatively “disorganized” but has failed to reach its main goal of reducing drugs availability and has produced huge social and financial costs: it is enough to say that a considerable proportion of the over two million people behind bars and about five million more on probation or parole have been convicted for drug offenses.
Criminal repression is undoubtedly a necessary reaction to the most serious forms of organized crime, such as a mafia-type organization challenging government authority. Nonetheless, governments should always aim at reducing the total harms associated with organized crime and policies and not lose sight of the fact that they also carry responsibility for these harms.
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