The Italian Organized Crime: when culture fosters economic stagnation.

Episode 1: an introduction to Italian organized crime

Outside of the Italian borders, Mafia probably constitutes one of the strongest stereotypes about Italians, mostly “thanks” to the worldwide famous film “The Godfather”, in turn inspired by the homonym novel by Mario Puzo. Younger generations may also know “Gomorra”, firstly a book by Roberto Saviano, then both a film and a tv series. There is no doubt the Italian organized crime generates curiosity and interest well beyond the national context; for this reason, and maybe – just a little – to dismantle the aforementioned hateful stereotype by means of spreading knowledge, I decided to bring its unique peculiarities as the second instance of this articles’ series on culture and economic outcomes. As to economic outcomes, different sources disagree on how much of Italian GDP can be attributed to organized crime, with estimates for 2005-2008 varying from 0,1% to 10%. As indicated in the last report on organized crime redacted by Confesercenti, the Italian association of small and medium-size enterprises, Mafia is the first economic entity of the country, with a revenue base of 140 billions of euros, a profit beyond 100 billions (net of investments!) and a disposable liquidity of about 65 billions. This, of course, leaving aside deeper considerations on the important interaction between organized crime and legitimate State institutions, the consequences of which any economist can easily envisage, and which we will only briefly touch upon. In such a vast topic, my interest is to illustrate with some hopefully interesting examples (in two separate articles) how the phenomenon of Italian organized crime cannot be conceptualized without taking into account its deep, cultural roots. To do so, let me first outline a few basic facts on the Italian organized crime:

  • We generally refer to different “mafias”: each is strongly connected to a different regional territory. Most importantly, we find: Mafia or Cosa Nostra in Sicily; ‘Ndrangheta in Calabria; Camorra in Campania (that is, the region of Naples. Yes, the one in “Gomorra”); Sacra Corona Unita in Apulia. The last two tend to have a more purely commercial nature, yet they still present those characteristic which allow us to ascribe them to the mafia-like set of cultural values.

  • Each of them is divided into families or clans, which are, either individually or in smaller conglomerates, competing one against the other.

  • With some differences stemming from diverse histories, the family component is generally very important for all mafias (most notably for Cosa Nostra and ‘Ndrangheta).

Cultural roots

That of family is not the only cultural value embedded and distorted by the mafia culture. Especially in Calabria and Sicily, it is accompanied by concepts like honor, friendship, respect, trust. To stress their importance, consider only that Cosa Nostra does not control prostitution as it is considered a dishonorable activity. These are, indeed, pervading values in Southern Italy’s society: until quite recent times, for instance, the so-called delitti d’onore (honor killings) were not infrequent, and often took the form of punishments for some action against the honor and reputation of a family. Academics from all fields of social sciences have explored this cultural climate and theorized it. Notably, Edward C. Banfield, in the late ’50s, spent 9 months in Chiaromonte, a small village in the region of Basilicata. He then referred to the local culture, in his book by the self-explaining title “The Moral basis of a Backward Society”, as one of “amoral families” – that is, the irrelevance of all moral principles outside of the small circle of one’s close family. Much later, Platteau (2000) defines the latter as a culture of limited morality (identified in strongly hierarchical societies), as opposed to general morality, whereby good conduct and honesty can be enlarged to strangers, as in more modern societies. An interesting connection of limited morality (or, rather, of its characteristics, since we cannot travel in time) to bad quality of local institutions is suggested by Putnam et al. (1994): from a purely public finance perspective, he theorizes that political participation is key for public goods’ provision and monitoring. Yet, if the interest toward participation and the “common good” is absent, not only there will be underprovision of public goods, also corruption will experience a spike. More recently, one of the most prominent voices worldwide in political economics, Guido Tabellini, has related cultural variables (most notably, mistrust), to the outcome of institutional quality and economic development, finding, as expected, a negative relationship[1]. He also explicitly mentions that limited morality creates the basis for the onset of organized criminal phenomena, which become a channel for negative effects on economic development at the regional level. Hence, putting all pieces together, scholars suggest that mafias would originate from a culture of limited morality, thereby leading to a lower quality of institutions, which in turn would increase consensus for mafias even more and foster limited morality in an endless vicious circle. Namely, mafias would fill the void – created by limited morality as well – of ineffective institutions, thereby substituting themselves to official institutions.

Some history to explain Mafia’s growth

Let us then resort to history, for the case of Sicily, to shed more light on the confusion regarding the direction of causation arrows and, in case we were to assume the above reasoning to be correct, to strengthen its soundness.

In 1876, two young men, one of which was to become a prominent member of the Italian Senate, conducted a field research in Sicily, and described the reality of a land fallen victim of a series of myopic political choices. Namely, their theory rests on the combination of two historical contingencies. The first is the failure of the Bourbonic Kingdom of the Two Sicilies of responding adequately to the first wave of protests of the XIX century. It resulted in the approval, by an extremely ephemeral parliament, of the 1812 Constitution, which formally abolished feudalism. In this regard, it is worth mentioning that Sicily was regarded as the “granary of Europe” ever since the Roman Empire, and that the Borbons did not invest in a departure from a predominantly agrarian economy. The second is the advent of Garibaldi in 1860 and the foundation of the Kingdom of Italy, with the consequent imposition of an entirely new set of institutions to the whole peninsula – primarily the Statuto Albertino, a constitution which had been conceded after the 1848 revolts.

Before 1812, the societal structure was purely hierarchical, with a small number of land-owners de facto governing over a vast mass of peasants. According to Franchetti and Sonnino, isolation and lack of investment in technologies, together with a limited morality environment, made the use of force against other wealthy families the only way to increase one’s wealth. Within this frame, the abolishment of feudalism would only entitle a larger portion of the population to the use of force although, in actuality, the remainder of the previously-existing legal framework did not change, leaving peasants enormously dependent on land-owners’ families[2]. This had two effects: the missed creation of a middle class as in the rest of Italy and Europe, and the further concentration of powers in the hand of a few families, who were de facto and partly de jure holding the judiciary and the executive power after the end of Garibaldi’s dictatorship – for instance, they have been able to appoint mayors until 1874. The third power, the legislative one, was still in the hands of the Italian government. Yet every source of law, starting from the Statuto Albertino, rested on the assumption of the existence of a vast middle class, and was therefore greatly ineffective. While in the rest of Europe the middle class fought for the recognition of rights and ensured monitoring of the newly established institutions, Sicilian families protected their interests by means of expressing their importance in the society and manifesting their patrimony and social status: the more you had, the more you became able to assert yourself. How? Mainly with demonstrations of force and violence. Moreover, as those few rival families virtually constituted a monopoly over wealth, what little remained created even more competition among non-land-owners, culminating in even more violence and in the creation of rival conglomerates at different social strata. In this sense, in the absence of a public opinion and of reliable institutions, the most powerful of these conglomerates substituted the State for the provision of safety and order (through the institution of a surrogate police force). A natural consequence of this is the demonization of legitimate institutions, especially when their aim was to fight mafias and their criminal activities: the public good already had its protectors, who enjoyed a large consensus, be it spontaneous or by force. To stress this point, already back in 1876, Franchetti and Sonnino describe the State as an army in the territory of an enemy nation, and report:

“[…] In this way the most manifest crimes are committed, whose authors will never be known to authorities. Everyone knows who they are, where they are, what they did and what they will do, yet no one reports, no one witnesses; not even the victim who, if strong and brave enough, waits to take revenge, otherwise resigns in silence”

From the substitution of the State to the concept of Omertà

A final, fundamental note in this regard is the concept of omertà. The latter, which doesn’t find translation in any language other than Italian and derives from the latin word humiltas (humbleness), is the consolidated and codified praxis of being silent in presence of a crime with the aim of avoiding the identification of the criminal. Despite the fact that, as illustrated above, rivalry among clans comes by construction, omertà remains a higher law across different factions and for the whole local population: keeping a status quo in which criminal activities are legitimate is an absolute priority.

Whether the population is “omertuous” because of absent and ineffective institutions or whether the climate of limited morality leading to omertà prevented legit institutions to put down roots in the territory is hard to disentangle: it is an extremely interesting equivalent of the dilemma of the egg and the chicken. What we can be sure of, however, is the crucial role played by the culture of limited morality, as intended by the aforementioned literature, in this picture.

More recent development: massive infiltration and geographical expansion

Omertà and consensus, in particular, continued expanding undisturbed and underestimated for about a century – ever heard the famous phrase “Mafia doesn’t exist”? Then, in the ’60s and the ’80s of the XX century, the so-called Wars of Mafia and then the “Maxi Trial” woke up the whole Italian nation; the second, in particular, with the so-called “mattanza” (slaughter) which for the first time included a considerable number of State exponents: judges, investigators and politicians. Whereas the first event didn’t bring any significant results in terms of specific legislation, the second awakened the public opinion and the State on the necessity to create dedicated tools (laws and ad hoc instiutions) in order to contrast the mafia phenomenon. It is interesting to notice that, as reported by Della Porta and Vannucci in their cogent summary, when it comes to the infiltration of public institutions, different mafias have different approaches. They quote the judge Falcone (spoiler: he will be killed in one of the most tragic pages of Italian chronicles of the last century, the “Season of Massacres” in the early ’90s[3]), who stated in his masterpiece “Cose di Cosa Nostra”  how the Sicilian Mafia preferred to have politician friends or little direct representation in politics rather than controlling it in a structured way: Salvatore Riina, commissioner of many of the massacres of both the Second War of Mafia and the Season of Massacres, confirmed that the aim was to have the Mafia’s interests protected, and the right laws passed; the same concepts applies to ‘Ndrangheta. The Camorra and the Sacra Corona Unita, on the other hand, mostly seek to have “long-lasting protection contracts with politicians, to consolidate positive expectations and trust”[4], mainly through exchanges of votes. In both cases though, as reported by various people who repented, a candidate showing some form of relationship with an exponent of a mafia, or a member of the mafia expressing his political preferences will be sufficient to ensure election.

An important element to report is the progressive geographical expansion of these events. The Wars of Mafia, in fact, regarded both Cosa Nostra and the ‘Ndrangheta, due to conflicting interests on smuggling and kidnappings. The Season of Massacres witnessed a number of different political killings in various Italian cities, including Rome, Florence and Milan. Contemporaneously, the judge Antonio Di Pietro started a massive investigation on corruption in Milan [5], which led to discoveries related, among other things, to illegal financing of parties. Currently, a number of mafias have rooted their commercial activities in numerous parts of the world, from the USA (see the Italo-American Mafia, now de facto divided from the Sicilian one), to the more recent examples of Latin America for the production of drugs and of Northern Europe for its commerce.

There are infinite stories, points of view and details that could be added to this synthetic introduction. Yet, it appears quite clearly that a phenomenon originating as a best response to economic and political circumstances in underdeveloped regions, and rooting its existence to the consensus of citizens, has grown to become a trans-national threaten to public order, through the creation of alternatives to the maintenance of the rule of law. Through the lenses of an economist, this could be seen as a game with more than two players facing organized crime; the only feasible strategy is a cooperative one… The creation of which is still a work in progress.

Next time, I will bring you through one of the main pillars of consensus’ creation: religion. Stay tuned!

[1] Nerdy note for econometrics’ enthusiasts: Tabellini implements an instrumental variable to claim causality, yet there is room for doubts as to the fulfillment of the exclusion restriction. Yet, his analysis is still one of my favorite pieces of academic writing.

[2]Going back to academia, Weber (1970) points out that emancipation from feudal arrangements is crucial for the diffusion of a culture of general morality.

[3] The award-winning film “The Mafia kills only in summer” provides a good summary of those years and the events.

[4] Again Della Porta and Vannucci in Zamora, K. C. (2013). Dangerous Liaisons. Brookings Institution Press. (follow the initial link)

[5] Naturally, there’s an award-winning tv series on the “Clean Hands” investigation as well, called “1992”.

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