Monday, 4 June 2012

[Mafi-o-nomy]The Mafia's economic role

Picture courtesy of
"Capitalism is a thug's economy, a heartless economy, a base and vile and largely boring economy. It is the antithesis of human fulfillment and development. It mocks equity and justice. It enshrines greed... Capitalism sucks. Does anyone seriously want to contest that?" - Michael Albert, Z Quote
Note: to be fair and to remind ourselves so that we don't forget - the centralised 'managers' of previous 'Eastern Bloc' (socialist/communist) states were also equally heartless and greedy [if not more] by converting precious natural resources into commodities exactly like their counterpart the capitalist West.

[...] the economic role played by the Mafia in pre-WWI Sicily.
I write about it here since the logic fits perfectly with the theory that Daron Acemoglu and co-authors recently wrote up in a Vox column. The model they put forward explains the three-way "dance" between the rich, the citizens and the military under democratic and non-democratic regimes.
Our basic analytic framework is simple. Two groups, the elite rich and the citizens, are in conflict under democratic and nondemocratic regimes. Under democracy, redistributive policies benefit the citizens at the expense of the rich. Under oligarchy the rich keep their wealth but have to create (and pay) a repressive military to maintain them in power. A repressive military is a double-edged sword, however; once created, it has the option of attempting to establish a military dictatorship, seizing power from democratic or oligarchic governments. This is the political moral hazard problem at the core of our framework.
In fin-de-siècle Sicily, the landed aristocracy (0.1% of the population) owned 99% of the land.

Retrieved on 6 June, 2012 from 
original article written on Jul 10th 2008, 22:13 by Richard Baldwin |