Sometimes a “consumer” of protection can also be a “producer” -- that is, it can happen that prosperous businesspeople or professionals are also members of the criminal organization. But as a general rule, it seems as though this is a formal arrangement to regulate access to protection. Gambetta's chart (161-162) shows that for the most part, people who play a prominent role in mafia organizations do not play a prominent role in professional life – they do low-level jobs, run small businesses, or farm. There is a disincentive for successful private businesspeople to become Mafia members, as they would be compelled to distribute favors.
What is the form of “contract” between providers of protection and their clients? The evidence (as in many other cases!) is sketchy, but there seem to be signs that 1) contracts are negotiable to a certain extent; 2) they can be long-term or mafia groups can be hired for specific instances, with mafiosi preferring long-term contracts, and 3) there is a competition between mafia organizations and law enforcement over the provision of protection (164).
Are mafia organizations in competition with one another? It looks like the potential is always there, but competiion is dangerous: it can easily lead to violence.
Are they in competition with their clients? This would appear to depend on how powerful the client is. A powerful client has the ability to shape the relationship of the business with the mafia organization.
Some of the protection is of what might be called a “general” nature. This has to do with relations between criminal groups and the local population. So mafiosi will attempt to regulate street crime and some other behavior (166-167) – this is probably related to the need to cultivate if not the acceptance of the population in the area where they operate, at least their toleration. This function is limited, however, as it is unpaid (at least in the direct sense).
When protection is in the form of services to a business, it takes the form of “solving problems” (168). Gambetta describes the service as “dispute settlement” (169). It could also be thought of, to borrow a phrase from the vocabulary of labor relations, as “binding arbitration.” In this case the reputation (and threat) associated with the mafia organization is sufficient that parties in dispute will accept the side taken by the “protector.” This process may involve violence, but as we discussed in relation to Mafia “trademarks” last week, part of the goal of maintaining a menacing reputation is to make the practice of violence unnecessary.
The classic form of “protection” may be protection against crime, especially theft (171-174). Here the relationship is considerably more complex than simply intimidating petty criminals. Consider the following possibilities:
1.In order to make a plausible argument that theft can be prevented by protection, it may be necessary to demonstrate that theft will happen without it. This means that mafia groups have to either engage in theft or have arrangements with people who do.
2.Theft may be a source of income, since the return of stolen goods may involve a reward.
3.The burden of providing protection may be very high, especially since the punishments for committing crimes that violate the system established by organized crime are often severe (Gambetta has the gruesome descriptions, I won't repeat them).
Another form of “protection” can lead directly to conflict between mafia organizations: “protection against rival taxing authorities” (175). Sometimes, however, “protectors” and extortionists find common cause (176).
Forms of payment for protection: money is used, certainly, but also – exchange of favors, directing business a certain way, portions of profit, or partnership in a concern. In these types of cases, there is a continuity between cultural practices and criminal ones: the use or threat of violence may not necessarily be involved.
However: in many cases the effective distribution of favors requires the maintenance of contacts at more than simply an informal level. Contact in the business and professional worlds is eased by the maintenance of contacts with the political world (183-187). Gambetta postulates the existence of a “market for votes” (184) in which politicians are the buyers and organized crime groups the sellers, but the structure of this “market” may be very difficult to determine. It appears to relate mostly to the distribution of favors.
Generally about protection: it may (often?) involve false promises, extortion, and violence. But at the same time “such services are often useful to and actively sought out by customers” (187). Still, private “protection” is an unregulated business, and when it goes bad, the consequences can be severe.
One of these is the use of violence to achieve the mafiosis' own ends, at the expense of the client (188-189). The clients may also abuse the power of protection against their competitors (190).
Another of these may be that the regulation of crime is not limited only to its prevention (190-191). Involvement with crime allows mafiosi to extract profit both from perpetrators (as a cut of the profit) and from victims (as the price of protection) simultaneously. This temptation may be difficult to resist, for obvious reasons.
Another consequence (and possibly the worst of all of them) may be that mafia groups may use clients as a way of undermining their mafia competitors. Clients most often do not know whether their “protectors” are weak or strong, or whether they are gaining or losing strength. Customers are placed at risk by the fighting itself, and may be placed at risk by the outcome of the fighting (192). Keeping ahead of the game would require a customer to have knowledge about relationships between mafia groups that they cannot reasonably be expected to have.
What is it all about, fundamentally? Gambetta says it is about “arrangements that thwart economic competition” (195). The term for this in economics would be a cartel. Others might call it a racket. The goal is, by way of agreements between suppliers and clients, and between potential competitors, to protect economic operators from competition – for a price, which is less than the profit to be gained by such an arrangement. Gambetta defines these as “collusive agreements” (197).
Collusion is possible in lots of businesses. Mafias tend not to be the guarantors of collusion in businesses which have either 1) high barriers to entry, or 2) sufficient power to enforce collusion on their own (steel, oil, high technology...). Instead they thrive in fields where there is inelastic demand and low barriers to entry (food, clothing, transport, garbage collection...) (197).
Additional conditions: instability in markets. This may either mean that “protected” businesses need to secure entry into new markets (in times of expanding prosperity) or need cash to remain in business (in times of shortage). Either condition invites organized crime to enter as a “partner,” in which case they “invariably overstay their welcome” (198).
Consequences of cartels: “less efficient production, higher prices, and smaller firms” (Reuter, quoted 202). Absence of initiative. Large-scale construction contracts (214-220) probably offer the best example, where markets are kept “orderly,” but to the detriment of the consumer (in most of these cases, the government).
But, the big question: why was mafia control largely broken at the fruit and vegetable market, but not at all at the fish market? Gambetta's answers (211-214): 1) to a limited extent, policy (expanded market and more licences), 2) breadth and dispersion of supply more difficult to control, 3) credit out of the hands of “middlemen.” In any case, it is not certain that the control is broken.
Challenge of the week: Figure out Gambetta's taxi puzzle (220-225)!
