[.ca] The Economics of Organised Crime (ISBN 0521629551)

Excellent and Fascinating:
I first encountered this book in a class called -- wait for it ---the Economics of Organized crime. I was fascinated. The book explains the workings of the Sicilian and New York Mafia as well as Asian Tongs and the drug trade. The chapter by Gambetta is especially interesting. The book does get a bit technical in places with formulas and such, but one can skip over that for the more general view of how organized crime and government are similar in their operations. This work gave me a lot of insight into the role that crime plays in our social and economic structures. This is also a nice introduction to Transaction Cost Economics, which is rather new in the field of Econ. I would only add that some background in Macroeconomics is useful for a fuller understanding of the book.

Essential for understanding the organised crime phenomenon:
Organised crime in its many forms is one of the most important features of the late20th/early21st century world. Its extent, power, and impact increase year by year. In several parts of the world the distinction between organised criminals and the state means almost nothing. There is also an intimate connection between organised criminality on the one hand and both state intelligence services and terrorist organisations on the other. What is seldom realised is how new this is. The criminal gang is probably as old as civilisation but before the twentieth century that was as far as criminal organisation went. Now it has moved up several levels and crime is now organised as a business, on a transnational scale. It has, to adapt Peter Drucker, been "institutionalised". This book explains why this has happened. It is because of a change in the incentives facing criminals. To simplify the argument, historically the transactions costs of ensuring and enforcing cooperation among criminals have been too high to make it worthwhile. Criminals have also faced the problem that the short term incentive to betray their fellows has trumped the longer term incentive to cooperate with other criminals. This has been changed by a number of factors - communications and transport technology being significant - but as the book shows by far the most significant is government policy. Specifically, the policy of prohibiting the sale and manufacture of a number of "products" for which there is high demand such as arms, pornography, prostitution, gambling, and, above all, drugs. This changes the incentives and makes the pay off for cooperating so great that organised crime is the inevitable outcome. The essays make other points as well, notably the close similarities between organised criminal groups and governments/ruling classes (as St Augustine said, "All governments are in origin bands of robbers"). Some of the essays are quite technical and would be most useful to someone with an economics background but there is enough to make this book very informative for the layman as well. Truly an eye-opener. Now why do I think no one in Congress has read this book?