In Italy, Mafia’s violence is a Capital
The most recent studies and researches on Mafia’s infiltration in Italian legal economy highlights how the economic crisis is further fueling the growth of Mafia’s clan, feeding their expansion, providing data and elements to reopen the debate on organized crime, now to be considered as a “structural” factor of the national economy.
Mafia violence must be considered an important economic factor and has become a constituent element of the markets. For a considerable part of Italian “entrepreneurs”, those who are able to exercise violence are not marginalized but compete in crucial markets. Those who are “skilled” in the exercise of violence, even if only as a deterrent, own a capital.
The impressive figures reached by the mafia in legal markets highlight the growing weight of clans in the Italian economy and society. A real boom that affects almost all sectors of the national economy, from the agri-food distribution chain to tourism services, from services for business to health care, from services for the public administration to the real estate sector, from financial services to transport and logistic, from management of urban waste to industrial waste, etc. A financial turnover estimated at 137 billion euros a year, which generates a profit of 104 billion, of which over 65 in cash. An amount equal to 7% of Italian GDP. Mafia must be considered the first Italian company.
Mafia’s economy is a short circuit in which companies transfer resources from legal affairs to clans and, with drugs, “racket” and usury, criminal organizations then reinvest their capital in the legal economy. The huge income deriving from international drug trafficking and drug dealing is reintroduced into the banking system through offshore financial companies located beyond national and European Union borders and is partially reused to guarantee credit to companies that cannot access to credit banking. Often the credit relationship between the mafia and legal societies ends up swallowing up and replacing businesses.
Mafia-money entice in times of crisis, capital is increasingly moving from Southern to Northern Italy and returns in industrial relations and commercial partnerships, in exchange of know-how and in structures for entering in 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 the mafia’s economic organization finds unprepared the classical economic thought. In fact, according to the theory, capitalist development would only be possible when markets are secure. Seen from Italy, also falters the theory of the conception of the formation of the State, understood as the “realm of force”, the creation of political institutions in which the maximum force available in a society is concentrated. The idea of the nation had developed to govern social and productive relations by the owners of the absolute feudal state. Thus, with the “industrial revolution” and the manufacturing ideology, the nation-state becomes the “community of needs”, the capitalist adaptation of the markets. The form of the pre-state society, where the “material” relationships of existence took place, has therefore been replaced by an institutional organization in which security is a fundamental element to guarantee the existence of a market economy.
If for classical economic thought (Adam Smith) the criminal destroys wealth, in the sense that he does not create it and does not circulate it, even 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, has implicitly shown the monopolistic character of state control in the management of the use of 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, despite having accentuated the security control, is not alarmed by the presence of mafia organizations that control entire segmentations of the economy and markets. It is, even now, a little-studied issue and that, in general, does not influence economists, because it is not considered “economy”.
Mafia is a structural element of the economy
“Mafia crime” is not an external factor to economic, political and social history. The criminal economy of the mafia cannot be separated from the reasoning on the economy in general. What is prohibited by the laws of the State is not prohibited by the market which, from this point of view, should not be seen as adjustable by the laws of the State, nor by “moral” laws.
Crime is one of the factors to move (and circulate) wealth. It is not an external element of the market. Although previously it was believed that the criminal economy was based solely on illegal goods (which somehow distribute wealth), today we must recognize that there is no incompatibility between legal and illegal markets. The incompatibility is only moral and legal, it does not concern the market. Activities and exchanges, legal and illegal, coexist peacefully and are paid for with the same currency. There is no 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 goods depends on external conditions, due to the transcendent character of money, regardless of production, which becomes randomness, and not a means of promoting production. The State has the function of establishing the unity and stability of the capitalist project, as the owner of the monopoly of violence. After the 1929 crisis, money assumed the role of mediating the anarchy of production, while with the subsequent end of state control over the economy, to guide the reasons for development, the nation-state interrupted its technical function of command organ for the survival of capital, its function as manager of freedom and guarantor of bourgeois freedom.
Ni Dieu, ni maître, ni l’homme. (The Shumpeter’s Mafia-Entrepreneur)
To understand the phenomenon of the mafia economy, integrating it into the interpretation of the entire Italian economy, as an alternative to the sociological and/or criminological categories, in the last decades the categories of enterprise and entrepreneurship have often been used in their version of Schumpeter.
From this point of view, the characteristics of the Schumpeterian Mafia entrepreneur would be: (a) the innovative aspect, the break with the past, contained in the entrance of the mafia into legal economic competition; (b) the rationality element of the capitalist calculation present in the conduct of the mafia entrepreneur in his operation of selective recovery of culture and traditional values; (c) the irrational, aggressive aspect of the mafia activity itself, which is expressed in the “animal” spirit of the accumulation of wealth.
In reality, the mafia entrepreneur does not at all implement “creative destruction”, another important characteristic of the Schumpeterian entrepreneur, when the latter introduces “new productive combinations” that allow him to obtain competitive advantages over other entrepreneurs.
Although this aspect has already been explained decades ago in the studies conducted by Pino Arlacchi, the real difference between the entrepreneur of Schumpeter and the entrepreneur of the Mafia must be sought in the different effects of their presence in economic development. In the Italian political debate of the last thirty years the “institutional” temptation to consider the mafia’s entrepreneurial activity as an original state of accumulation of capital and acquisition of means of production in a backward context has often prevailed. The strategy of the State, with this vision, should only be limited to integrating the entrepreneurs of the mafia in a legal context.
What kind of wealth? Where is the innovation?
In the theory of Joseph Schumpeter, economic development is seen as the result of the innovative actions of the entrepreneur who, pursuing his objectives, makes an individual contribution to the achievement of the social objectives of development.
The mafia entrepreneur, on the other hand, has no purpose of “common good”.
Schumpeter’s “innovation” is the rupture of productive stability, and thus the beginning of a process of economic development that occurs in the context of production, following events that change old production systems.
These changes can be determined by the introduction of a new type of good (or a new quality of it); with the introduction of a new production method; from the opening of a new market; from the conquest of a new source of supply of raw materials or semi-finished products; from industrial reorganization, or in other words, from the emergence of monopoly positions, oligopoly or from the breaking of one of these same conditions. For Schumpeter, the revealing innovations are those that generally involve the construction of new plants or the radical transformation of old plants. The entrepreneur’s purpose is always profit. Productive reorganization always involves profound social transformations. Instead, mafia entrepreneurs always choose parasitic and less competitive market segments, where the barriers are low or non-existent. Relations with employees and suppliers are patriarchal and based primarily on favoritism.
The economic organization of the system of mafia societies tends to general equilibrium and is generally characterized by a poor technological innovation.
One might ask why there are no mafia entrepreneurs involved in the production of machines? Why do mafia entrepreneurs not invest in production and invest more in distribution or financial assets? Because the real production of goods has a very low-profit margin. Mafia entrepreneurs prefer markets where profit margins are much higher than other legal markets.
Analyzing the results of the actions taken by the Italian State to oppose the mafia, in recent years it has been possible to deduce that the criminal economy, the mafia clans, when entering a legal market, never abandon the parallel illegal market. This is what makes the Mafia phenomenon different from the others. If he has never been influenced by the investigations of the judiciary, when a “violent” company arrives on a market, if it complies with the rules of the market, it should no longer be considered a mafia society. At least from a theoretical point of view, not from a legal point of view. From a theoretical point of view, it should compete on the market without other advantages. In the case of mafia entrepreneurs it is not, because the best activities, the most profitable, continue on the illegal market, guaranteeing an advantage that legal companies do not have. Because the money they can accumulate with drug trafficking and extortion is incomparable with any other investment.
Looking at the results of the repression of the mafia, it seems that the action of the police forces has pushed the mafias to enter with its activities in other markets, instead of effectively reducing their economic potential.
Monks rich and poor convent. Mafia’s clans rich and poor districts.
If there is a demand, the market responds. If the demand, or necessity, is legal or illegal, it is indifferent to the market. Which means that it is not true that crime destroys wealth in absolute terms. If it has so much strength and so much consensus it should be precisely because crime is one of the factors in the circulation of wealth. So why do the mafias also fit into the legal markets with their companies? In reality, mafia entrepreneurs replace and/or substitute existing companies, they do not contribute to market expansion, but tend to immobilize it. Moreover, when profits are uncertain, capital is reinvested in circuits far from the districts in which mafia entrepreneurs operate. In general, the mafia operates in protected market segments, particularly where public money flows can be accessed. The highest costs are paid by the community.
A part of the resources is used for opulent consumption, a constitutive element of the social status of the mafia. What is reinvested in the territory is not enough to promote its development. This explains the backwardness of the realities in which the mafia clans operate, despite the enormous wealth produced.
The Mafia also confiscated most of the illegal markets that had initially entered into activity independently, outside the law, but not that they were not controlled by organized crime: counterfeit consumer goods, soft drugs, prostitution, illegal immigration, devices counterfeit, computer scams, etc. In illegal markets, the mafia crime monopolizes and takes most of the revenue, thus also parasitizing the illegal activities that were not created by the mafia.
Quest’ opera è distribuita con licenza Creative Commons Attribuzione – Non commerciale – Non opere derivate 3.0 Italia.
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