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And the activities of the Camorra et al are not criminal? The definition is not a monopoly on coercive force, but a claimed monopoly on the legitimate use of coercive force. Is the use of force by the Camorra et al legitimate? And what "local public goods" are they generating? Their main activity is extortion, which is surely not a public good of any kind.

Peter:
I repeat:"government is a legal institution that has a monopoly on coercive force. Organized crime can be seen as an attempt at illegal entry into the activities of established government". So yes, the activities of organized crime are criminal. The "local public good" being provided is "protection" services which really means protection from themselves and others of their kind engaged in their activities.

"What I found intriguing is that the results suggest pervasive organized crime served as a barrier to opportunistic crime in the wake of an economic downturn – something one would think is what the public security apparatus of government should be doing."

Yes, but the public security apparatus faces regulatory barriers in the performance of their duties that don't apply to the mob (i.e., fair trials, limitations on the ability to kneecap people, etc.), so it's not entirely surprising that they're less effective.

"Is the use of force by the Camorra et al legitimate? And what "local public goods" are they generating? Their main activity is extortion, which is surely not a public good of any kind."

Probably not. But I can't say that that is never true. If the local police are sufficiently inept or corrupt (surely not implausible in parts of Italy or other parts of the world), the mob (or their local equivalent) might actually provide value for their protection money (certainly relative to the local police). No doubt that's part of the reason for the enduring prevalence of those sorts of criminal organizations. And no doubt there are parts of the world where criminals have more legitimacy in the eyes of the locals than the local police force.

Couldn't organized crime also act as a central planner for crime in a region? They could keep crime directed towards the more capital intensive crimes by providing the training or capital and establishing which crimes should be committed. Though with the overall level of crime in these areas not changing significantly I guess this idea isn't very useful (unless maybe organized crime also brings levels of crime to some sort of saturation point, bringing nearly all would be criminals into crime already).

The idea that organized crime would provide protection from increased extortion makes sense. If someone is paying you protection money you should be providing the service they are paying for (even in that includes protection from your own thugs). Otherwise they might lose some credibility and receive less payments.

"Though with the overall level of crime in these areas not changing significantly I guess this idea isn't very useful (unless maybe organized crime also brings levels of crime to some sort of saturation point, bringing nearly all would be criminals into crime already)."

Presumably, an organized crime "monopolist" wants to provide the "optiomal" (at least from their perspective) level of crime, enough to fleece their targets, but not enough to cause them to move or shut down their businesses, resist, or lobby for better policing. So you'd expect the crime level to more or less constant, regardless of changes in the supply of potential criminals (i.e., cause by a recession), since the monopolist will keep the others from entering the market (perhaps by making them an offer they can't refuse).

David Simon and Michael Burns chronicle a similar pattern in the US drug trade in their book "The Corner". Back in the 1950's and 60's, when it was difficult to get supplies of heroin, the drug trade was controlled by a handful of professional suppliers who, like good oligopolists, made sure that the drug trade was "controlled". Dealers were professionals, they were selective about who they would sell drugs to (i.e., not kids and, as a point of pride, not anyone they thought might be cops), and they were selective in the use of violence (minimizing the risk that society would decide to wage a "war on drugs"). They had a market, it was protected, they were collecting their oligopoly rents and had the muscle and incentive to keep it that way. From the perspective of a drug monopolist, this is profit maximizing behaviour (taking into account time spend in jail or the risk of death).

With the explosion in the availability of first heroin and later crack, that carefully managed drug trade broke down. Suddenly, anyone who could rub two nickels together could hop on an interstate, pick-up a package of drugs and, bang, they're a drug dealer. As competition increased, prices plumetted, dealers started selling to anyone who wanted to buy(including cops, who started making their living busting low-level street dealers too stupid to recognize an undercover cop) causing use to spread beyond the traditional core of hard-core junkies, and violence skyrocketed (as the US entered the era of teenagers spraying down street corners with tec-9 in an effort to win market share). Meanwhile, the income (and life expectancies) of drug dealers plummetted.

So that might be an example of "organized" crime (arising from the existence of limited number of suppliers of heroin or other hard drugs) providing a socially optimal (or, at least, socially preferable relative to the present, level of crime).

"If someone is paying you protection money you should be providing the service they are paying for (even in that includes protection from your own thugs). Otherwise they might lose some credibility and receive less payments."

Also, if they're doing it right, the extortionist is capturing his client's economic profit (leaving the client indifferent between carrying on business and shutting down). In effect, that makes the extortionist the defacto owner of his client's business (since he's entitled to all the profit). Unless he wants the client to shut down, any other money that comes out of the business come's out of the extortionists "fee" In that case, if you're an extortionist, and someone robs from your "client", they're in effect stealing from you. I suspect more than a few mobsters see things that way too.

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