In the Shadow of the State

Abstract

Since Charles Tilly made the comparison between state making and organized crime, it has often been assumed that illicit markets necessarily contain parallel, coercive governance structures: mafias. I argue that some illicit markets have mafias while others do not, and identify as the source of this variation the costliness of the use of force and the imperatives of territorial control. When the use of force is too costly and there is no need to control territory to conduct business, illicit entrepreneurs will not invest in the development of mafias or use violence to protect their property. I evaluate theories of both organized crime and new institutional economics to explain the relationship between the authority structures of the state and the authority structures of illicit markets. Because mafias and their use of violence can undermine state sovereignty and public order, understanding the origins of violent mafias can inform policy choices.