Organized Crime

Questions about the structure of organized crime usually involve a consideration of two distinct yet related issues. The first concerns the form and level of organization that characterize criminal associations. The second involves a consideration of the structure of the various markets within which these associations operate.

With respect to the first question, debate has centered around the level of rationality of organized crime groups. In simple terms, the concept of rationality refers to the degree of "organizational sophistication." To the extent that organized crime groups are highly rational, they possess a well-defined division of labor, formal authority relations, and a structural permanence which implies that the organization exists independently of the people that comprise it at any particular point in time. Those descriptions of La Cosa Nostra, for instance, as a relatively formalized bureaucracy with positions for "bosses," "underbosses," and "soldiers" suggest a highly formalized model.

In contrast, it has been argued that organized crime groups more closely resemble informal rather than formal organizations. In this model, organized crime groups are said to consist principally of localized sets of loosely structured relationships that derive from kin and other forms of intimate association. The organizational context is seen to be based less on bureaucratic formality and more on shared cultural understandings and cooperation. Analyses by James O. Finckenauer and Elin K. Waring of the structure of the "Russian Mafia" in America, for instance, reveal that criminal associations typically resemble informal networks and as such are not centralized or dominated by any small group of individuals. Moreover, those individuals who do exert particular influence in these networks do so because of personal influence rather than because of positions that they occupy. There is also little evidence to support the view that these organizational structures outlive the involvement of their central participants.

Some critics of the more formalized model, such as historian Mark Haller, maintain that it is incorrect—at least in the case of Italian American crime organizations—to equate an association of organized criminals with a business enterprise. Rather, the members of such associations are relatively independent entrepreneurs who run their own illegal businesses from which they derive income. The organization does not provide "jobs" but serves the needs of its members in a variety of ways, not the least of which is the establishment of relationships and partnerships that facilitate the exploitation of illicit opportunities. Of course, not all groups operate this way and it is important to distinguish those that function like businessmen's associations from those that are themselves business enterprises. The Cosa Nostra differs from a Colombian drug cartel in that the former is a type of social group that serves the interests of its members while the latter is a business group that is concerned with the sale and distribution of illicit goods. To group them together would be to confuse organizations like the Rotary Club with businesses like department stores.

It is also possible that differing views about the level of rationality of organized crime are not so much in conflict as they are differentially applicable. It may be that at certain (higher) levels of some crime organizations, authority is relatively formalized and, to some degree, structure exists quite independently of the activities in which the group is involved at any particular time. At the same time, relationships involving those at lower levels of the organization—or involving those in the organization and those beyond it—function in much more informal ways. Thus, rationality may not only vary between crime organizations but within them as well.

With respect to the structure of the markets in which organized crime is engaged, a key structural issue concerns what is sometimes assumed to be the inevitability of market monopolization. From one point of view, the trend toward monopoly is the central and defining feature of organized crime. Through the provision of "protection" to those involved in illicit businesses (such as bookmakers), through the establishment of trade associations involving legitimate sectors of the economy (such as the laundry business), or through other extortionate practices, organized crime groups are able to monopolize the delivery of particular goods and services.

In contrast, others have argued that the tendency of illicit markets associated with organized crime is to resist monopolization. Based on an analysis of gambling and loan-sharking operations in the New York City area, for instance, Peter Reuter (1983) concluded that the fear of police intervention and a lack of court-enforceable contracts tend to make markets fragmented and localized. Moreover, entry into such markets was relatively easy and prices for illegal services were set by the competitive power of the marketplace rather than by any sort of central pricing authority. While violence might be expected to facilitate monopolies, it has been found that it is used less frequently (and is less useful) than is sometimes believed. Not only does the use of violence invite police scrutiny, it also suggests a rather unstable mechanism for market control. By implication, any such monopoly is always vulnerable to groups as willing or more willing to use violence.