Destructive Entrepreneurship: The Cost of the Mafia for the Legal Economy

Clotilde Champeyrache

Journal of Economic Issues, 2018, vol. 52, issue 1, 157-172

Abstract: This article focuses on the infiltration of legitimate businesses by the mafia and on the existence of “legal mafia-owned enterprises” (i.e., legal, declared enterprises owned — directly or indirectly — by mafiosi). Crime economics often limits itself to the destructive aspects stemming from merely illegal activities. Mafia investments in the legal economy and mafia entrepreneurship are also an underestimated source of latent conflict that is costly to the economy and society. This article shows that mafia-owned legal enterprises establish a lasting, unproductive, and even destructive entrepreneurship. The mafia strives to create an artificial scarcity that affects only its non-members, and thus the mafia manages to dominate markets and other entrepreneurs. The mafia then turns from its initial appropriative functions into a rule-producing function in order to shape markets. More specifically, the mafia asserts itself as a competing sovereign thanks to its power to withhold resources obtained through property over productive entities.

Date: 2018
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DOI: 10.1080/00213624.2018.1430947

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