The most recent studies and researches on Mafia’s infiltration in Italian legal economy highlights such as the economic crisis is further fueling the growth of Mafia’s clan, feeding their expansion, providing datas and elements to reopen the debate on organized crime, now to be considered as “structural” factor of the economy.
Mafia’s violence must be considered as an important economic factor and has become constitutive element of the markets. For a considerable part of the Italian “entrepreneurs”, who is able to exercise violence is not an outcast but competes on crucial markets. Who is “skilled” to exercise violence, even only as a deterrent, owns a capital.
The impressive figures achieved by Mafia in legal markets highlight the increasing weight of clans in the economy and in Italian society. A real boom that affects almost all sectors of national economy, by the agro-food retailing chain to tourism services, by business services to health care, by services for public administration to real estate sector, by financial services to road haulage, by management to waste industry, etc. A financial turnover estimated of 137 billion euros per year, which gives a profit of 104 billion, of which over 65 in cash. An amount equal to 7% of Italian GDP. Mafia must be considered the very first Italian enterprise.
The economy of Mafia is a Short Circuit in which companies transfer resources from legal business to the clans, by racket, drugs and usury, the criminal organizations then reinvest their capital in the legal economy. The huge income coming from international drug trafficking and drug dealing is reintroduced into banking system through offshore financial companies located beyond the national and European Union’s boundaries, and is partly reused to ensure credit to the companies wich cannot have gaining access to bank credit. Often the credit relation between mafia and legal companies ends up with the engulfment and the replacing of the firms.
Mafia’s money tempt in time of crisis, capitals are moving increasingly from South to North Italy and return in industrial relations and business partnerships, in exchange of know-how and in facilities to enter into the legal markets of northern Italy.
The monopoly of the legitimate use of the force of the State is not exercised on markets
The reality represented today by Mafia’ s economic organization catch unprepared the classic economic thought, according to which the capitalist development was possible only when the markets were safe. View from Italy, teeters even the theory about the conception of the formation of the State, understood as the “kingdom of the force”, the set up of political institutions in which is focused the maximum force available in a society, the result of the idea of the nation developed to govern the social and productive relations by the feudal absolutist proprietary State. The Nation-State then became, with the “industrial revolution” and the manufacturing ideology, the “community of the needs”, the capitalist adjustment of the markets. The form of the pre-state society, where took place the “material” relations of existence, was thus replaced by an institutional organization in which the security is a fundamental element to ensure the existence of a market economy.
If for the classic economic thought (Adam Smith) the criminal destroys wealth, does not create and circulate wealth, also the Max Weber‘s definition, according to which the State is an institutional political enterprise in which the administrative apparatus exercises the monopoly of the use of violence, implicitly showed the monopolist character of the control of the state in management the use of the force.
What must be understood, in relation to the “development” of the Mafia, on the other hand, concerns the nature of the modern State which, although it has accentuated the security control, it is not alarmed by the presence of mafia organizations which control whole segmentations of economy and markets. It is, still now, a matter a little studied and that in general does not affects the economists, because it is not considered “economics”.
Crime is a structural element of the economy
“Crime mob” is not an external factor to economics, political and social history. The criminal economy of Mafia cannot be separated from the reasoning on the economics in general. What is forbidden by the laws of the State it is not prohibited by the market that, from this point of view, must be seen not adjustable by the laws of the State, nor by the “moral” laws .
Crime is one of the factors to move (and circulate) wealth. It is not an external element of the market. Whereas before it was believed that criminal economy was exclusively based on illegal goods (that somehow distribute wealth), today we must take note that there is no incompatibility between legal and illegal markets. The incompatibility is only moral and legal, does not concern the market. Legal and illegal activities and trades live together peacefully and are paid with the same currency. There is not a legal euro or illegal euro.
Passing quickly for Marx…
“The exchangeability of the commodity exists as a thing beside it, as money, as something different from the commodity, something no longer directly identical with it. As soon as money has become an external thing alongside the commodity, the exchangeability of the commodity for money becomes bound up with external conditions which may or may not be present; it is abandoned to the mercy of external conditions. The commodity is demanded in exchange because of its natural properties, because of the needs for which it is the desired object. Money, by contrast, is demanded only because of its exchange value, as exchange value. Hence, whether or not the commodity is transposable into money, whether or not it can be exchanged for money, whether its exchange value can be posited for it — this depends on circumstances which initially have nothing to do with it as exchange value and are independent of that.” (Carl Marx, Grundrisse, The Chapter of Money)
The exchangeability of the goods depends by external conditions, because of the transcendent character of money, regardless of the production, which becomes a randomness, and not a means for the promotion of production. The State has the function to establish unity and stability to the capitalist project, as owner of the monopoly of violence. After the crisis of ’29, the money has assumed the role of mediating the anarchy of production, while with the subsequent end of state control on the economy, for guiding the reasons of the development, the Nation-State has stopped its function of technical organ of command for the survival of capital, its function of manager of the freedom and guarantor of Bourgeois-freedom.
Ni Dieu, ni maître, ni l’homme. (The Shumpeter’s Mafia-Entrepreneur)
To understand the phenomenon of Mafia economy, integrating it in the interpretation of the whole Italian economy, as an alternative to the sociological and/or criminology categories, in recent decades have been often used the categories of business and entrepreneurship in their Shumpeter’s version.
By this point of view, the characteristics of shumpeterian mafia-entrepreneur would be: (a) the innovative aspect, the breaking with the past contained in the entry of mafia in legal economic competition; (b) the element of rationality of capitalist calculation present in the conduct of Mafia-Entrepreneur in his operation of selective recovery of the traditional culture and values; (c) the irrational appearance, aggressive, of the same mafia activity, which expresses itself in the “animal” spirit of the accumulation of wealth.
Actually Mafia-Entrepreneur does not puts in place the “creative destruction”, another important characteristic of the shumpeterian entrepreneur, as introduces “new production combinations” that enables him to obtain competitive advantages over other entrepreneurs.
As far as this aspect has already been explained, decades ago, by the studies conducted by Pino Arlacchi, in which the real difference between Shumpeter’s entrepreneur and Mafia’s entrepreneur should be sought in the different effects of their presence in the economic development, in the Italian political debate of the past thirty years has often prevailed the “institutional” temptation to consider mafia entrepreneurial activity as an original state of capital accumulation and obtainment of means of production in a backward context. The strategy of the State should only integrate in a legal context Mafia’s Entrepreneurs.
What kind of wealth? Where is the innovation?
In Joseph Shumpeter’s theory, economic development is seen as the result of the innovative actions of the entrepreneur which, pursuing his goals, gives an individual contribute to the achievement of the social goals of development.
Mafia-entrepreneur instead does not have any purpose of “Common Good”. Shumpeter’s “innovation” is the breaking of a productive stability, and then the beginning of a process of economic development that occurs in the context of the production, as a result of events that change the old systems of production.
These changes can be determined by the introduction of a new type of good (or a new quality of the same); by the introduction of a new method of production; by the opening of a new market; by the conquest of a new source of supply of raw materials, or semi-finished products; by the industrial reorganization, or in other words, by the emergence of positions of monopoly, oligopoly, or by the breakage of one of these same conditions. For Shumpeter the revealing innovations are those that involve, in general, the construction of new plants, or the radical transformation of old plants. The goal of the entrepreneur is always profit. The productive reorganisation always involves deep social transformations. Mafia-Entrepreneurs instead choose always parasitics and less competitive market-segmentations, where the barriers are low or non-existent. The relationships with employees and suppliers are patriarchal and based mainly on favoritism.
The economic organization of Mafia’s system of companies tends to the general balance, and is generally characterized by poor technological innovation. Just wondering why there are no Mafia Entrepreneurs committed in production of machines? Why Mafia-Entrepreneurs do not invest in production and invest more in distribution or in financial goods? Because the real production of goods have a very low profit margin. Mafia’s Entrepreneurs prefer markets where profit margins are much higher than in other legal markets.
If analyze the result of actions taken by the Italian State to contrast Mafia in recent years, it can be inferred that the criminal economy, the Mafia clans, when enter into a legal market, never abandon the illegal market. This is what makes the mafia phenomenon different from the others. If it has never been hit by the Forces of the Order, when a “violent” company arrives on a market, if complies with the rules of the market, should not be considered anymore a violent company. At least by a theoretical point of view, not by a legal point of view. By a theoretical point of view it competes without other advantages. In the case of Mafia-Entrepreneurs it is not, because the best business continue on illegal market, ensuring a benefit that legal companies do not have. Because money that you can accumulate with traffick drugs and with the extortion it is incomparable to any other investment.
Observing the results achieved in the repression of mafia, it would seem that the effect has been pushing mafias to enter into other markets, instead of effectively reduce its economic potential.
Monks rich and poor convent. Mafia’s clans rich and poor districts.
If there is a demand, market response. If the demand, or need, is legal or illegal, market is indifferent. Which then would say that it is not true that crime destroys the wealth, in absolute terms.If has so much strength and so much consensus should be precisely because crime is one of the factors in the circulation of wealth. Then why mafias are located also on legal markets with their companies?In reality Mafia-Entrepreneurs replace and/or substitute existing companies, do not contribute to the enlargement of the market, rather they tend to immobilize it. In addition, when the profits are uncertain, funds are reinvested in circuits far away from districts where Mafia-Entrepreneurs operate. In general, Mafia operate in protected market-segmentatios, in particular where is possible to access on the flows of public money. The higher costs are paid by the community.
A part of the resources are used for opulent consumes, constitutive element of the social status of mafia-men. What is reinvested in the territory is not sufficient to promote its development. This explains the backwardness of the realities in which mafia’s clans operate, in spite of the enormous wealth produced.
Crime has also confiscated all illegal markets which first went autonomously operating outside the law, but were not controlled by organized crime: counterfeit consumer goods, soft drugs, prostitution, illegal immigration, etc. On illegal markets Mafia’s crime monopolizes and takes a big portion of the income that illegal trafficking first created without Mafia’s control, parasiting even the illegal activities.
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