Yves here. The observations about the Mafia have implications beyond Italy, particularly since the US seems hell bent on creating failed states.
By Daron Acemoğlu, Professor of Applied Economics, MIT, Giuseppe De Feo, Associate Professor, University of Leicester, and Giacomo De Luca, Senior Lecturer, University of York; Senior Economist, LICOS, University of Leuven. Originally published at VoxEU
The Mafia is often cited as one of the main reasons why Sicily has lagged behind the rest of Italy in economic and social development. This column describes how in an environment with weak state presence, the socialist threat of Peasant Fasci organisations at the end of the 19th century induced landholders, estate managers, and local politicians in Sicily to turn to the Mafia to resist and combat peasant demands. Within a few decades, the presence of the Mafia appears to have significantly reduced literacy, increased infant mortality, limited the provision of a variety of local public goods, and may also have significantly reduced local political competition.
The criminal syndicate known as the Mafia has played a defining role in the Sicilian economy and politics since its inception in the mid-19th century (Dimico et al. 2012), and has often been proffered as one of the prime reasons why Sicily has lagged behind the rest of Italy in economic and social development.
Though many aspects of the Sicilian Mafia are unique to the economic and social conditions of the island and its particular history, there are also several commonalities between the Sicilian Mafia and other organised crime syndicates in Italy (such as the Camorra in Naples and ‘Ndrangheta in Calabria), as well as the various drug gangs in Mexico, Colombia, and Central America (see Bianchi et al. 2017 and Barone and Narciso 2012 on the effects of crime syndicates on firms and governments). Most importantly for our purposes, all of these organisations appear to have partly filled the void created by a weak state, and may have contributed to the continued weakness of state institutions and to economic underdevelopment. Our recent paper (Acemoglu et al. 2017) seeks to contribute to the literature on the causes and consequences of the Sicilian Mafia and other criminal organisations (Alesina et al. 2016, Acemoglu et al. 2013, Buonanno et al. 2015, Daniele and Geys 2015, De Feo and De Luca 2017, Del Monte and Pennacchio 2012, Dimico et al. 2017, Pinotti 2015).
The Spread of the Mafia in Sicily
We document that the spread of the Mafia in Sicily at the end of the 19th century was in part shaped by the rise of Peasant Fasci organisations, the first popular socialist movement in Italy. The Fasci articulated many of the grievances of the peasants and day labourers of Sicily. Chief among their demands were higher wages, land redistribution, better working conditions, longer-term contracts for land leases, the return to sharecropping arrangements, and the reduction in indirect taxes, which fell heavily on peasants (Romano 1959, Renda 1977, Casarrubea 1978). In an environment with weak state presence, this socialist threat induced landholders, estate managers, and local politicians to turn to the Mafia to resist and combat peasant demands. The historical record shows many instances in which the Mafia fought against the Peasant Fasci and collaborated with the military in suppressing protests and killing protesters.
Figure 1 depicts the distribution of Peasant Fasci in 1893 and the intensity of the Mafia in 1900 across Sicilian municipalities and shows a positive association between these two variables. This visual correlation cannot of course be taken as evidence of a causal effect for the usual reasons that omitted factors might be accounting for both the presence of Peasant Fasci and the Mafia in a municipality.
Our strategy to overcome this problem is to exploit one of the key drivers of the Peasant Fasci movement around this time, which was the very severe drought of 1893 that ravaged much of the Sicilian countryside, creating massive hardship for day laborers and small-scale tenants. We document in detail how the severity of the drought in a municipality acted as a powerful trigger for the Fasci. This relationship between rainfall (or drought) and the Peasant Fasci is robust to a range of geographic controls as well as many of the potential other determinants of the location of the Sicilian Mafia — such as the presence of sulphur mines and citrus cultivations, highly profitable activities in 19th century Sicily, and therefore prone to the protection (and the consequent rent-seeking) activities of the Mafia (Buonanno et al. 2015, Dimico et al. 2017, Del Monte and Pennacchio 2012). More importantly, we also show that it is rainfall during the growing season of 1893, and not rainfall during other months or rainfall in other years, that predicts the rise of Peasant Fasci organisations, and that rainfall in 1893 is uncorrelated with several social economic variables before 1893.
Motivated by this relationship, we use measures of rainfall or severity of drought as a source of variation in the location of the Peasant Fasci and then, using this variation, we attempt to estimate the impact of this peasant organisation on the Mafia (measured in 1900), which thus isolates the effects of the reaction of landholders and agricultural estate managers towards peasant organizations on the spread of the Mafia. We find robust and large effects from Peasant Fasci on the spread of the Mafia. Quantitatively, our estimates indicate that the presence of the Peasant Fasci in a municipality increases the Mafia index in that municipality by 1.5. To put this in perspective, note that an increase in the Mafia index from 1 to 2 corresponds to a change from little presence of the Mafia in a municipality to significant presence. This quantitative magnitude implies that as much as 37% of the strength of the Mafia in 1900 throughout Sicily may have been due to its deployment against the Peasant Fasci, thus suggesting that the episode we are focusing on may have played a pivotal role in the Mafia’s dominant position on the island.
Figure 1 Distribution of Peasant Fasci in 1893 and Mafia intensity in 1900
Notes: Top map reports in grey municipalities with a Peasant Fasci organisation in 1893; bottom map reports the intensity of Mafia presence in 1900.
The Impact of the Mafia on Local Economic Development
We use the source of variation in the location of the Mafia in 1900 to estimate its medium-term and long-term effects. The causal chain is that once the Mafia spread in order to combat peasant demands and organisations, it took root in the municipality and may have subsequently impacted medium- and long-run economic outcomes by weakening state capacity or directly impacting the allocation of resources (via corruption or coercion). Crucially, and related to the falsification exercises discussed above, we verified that rainfall or even severe droughts (in other years, and thus not working through peasant organisations) have no effect on local economic, social, and political outcomes. This bolsters our confidence that the causal chain outlined here is meaningful.
We find significant and quantitatively large negative impacts of the Mafia on literacy and various public goods in the 1910s and 1920s. For example, according to our estimates increasing the Mafia in 1900 variable from 1 to 2 (corresponding to an increase from little presence of the Mafia to significant presence) is associated with an approximately 10 percentage point decline in literacy in 1921 (about 20% of its mean) and a 5 percentage point increase in infant mortality (about 30% of its mean). These results, and their quantitative magnitudes, are quite robust.
How did the Mafia generate these negative effects? Even though we are not able to provide a comprehensive answer to this question, we provide suggestive evidence that part of the answer might lie in local politics. Historical and case study evidence indicates that the Mafia is often heavily involved in local politics. It discourages certain parties and candidates from campaigning and is also engaged in voter intimidation and fraud. This suggests that the footprint of the Mafia in local politics may be found in the concentration of votes across candidates in the municipality. Consistent with this expectation, our analysis shows that municipalities with relatively more intense Mafia presence feature systematically greater concentration of votes across candidates and consequently lower political competition in 1909 parliamentary elections. Quantitatively, the effects are even larger than for economic outcomes. For example, an increase from little presence of the Mafia to significant presence (from 1 to 2) is associated with a 30 percentage point decrease in political competition in 1909 (about 38% of its mean).
We also find negative effects of the Mafia on longer-term measures of economic development (in the 1960s, 1970s and 1980s) though these are generally weaker and often only marginally significant. This suggests that the impact of the Mafia has attenuated over time, which is not surprising in view of the decline of the Mafia during Mussolini’s fascist dictatorship and its subsequent reconfiguration. Nevertheless, our results suggest that the Mafia’s impact on concentration of votes across candidates has persisted strongly into the latter part of the 20th century.
Our work shows large negative effects of the Mafia just a few decades after its spread throughout Sicily in the last decade of the 19th century. The Mafia appears to significantly reduce literacy, increase infant mortality and limit the provision of a variety of local public goods. We also find a sizable effect of the Mafia on local politics – in places where the Mafia took root, the distribution of votes in parliamentary elections is highly concentrated. This suggests that the Mafia, in part by preventing parties and politicians not allied with itself from campaigning or even appearing in the municipality, may have significantly reduced local political competition. We conjecture that this might be one of the major channels via which the Mafia affects local economic development. Future work in this area investigating the exact mechanisms via which different criminal organisations influence the organisation of local government, local corruption, and local politics would be particularly informative. For instance, our strategy does not reveal whether the Mafia may have reduced local economic development because of local corruption, other effects of local criminal activity or because of its impact on local political competition.
See original post for references
“the US seems hell bent on creating failed states.”
…already got ’em…
Perhaps you mean MORE failed states…
A failed state is a political body that has disintegrated to a point where basic conditions and responsibilities of a sovereign government no longer function properly (see also fragile state and state collapse). Likewise, when a nation weakens and its standard of living declines, it introduces the possibility of total governmental collapse. The Fund for Peace characterizes a failed state as having the following characteristics:
Loss of control of its territory, or of the monopoly on the legitimate use of physical force therein
Erosion of legitimate authority to make collective decisions
Inability to provide public services
Inability to interact with other states as a full member of the international community
Common characteristics of a failing state include a central government so weak or ineffective that it has an inability to raise taxes or other support, and has little practical control over much of its territory and hence there is a non-provision of public services. When this happens, widespread corruption and criminality, the intervention of non-state actors, the appearance of refugees and the involuntary movement of populations, and sharp economic decline can occur.
Looking in the mirror is oftentimes a tough go…
Organized crime didn’t really exist in the US until Prohibition. Since politicians and police enjoyed their alcohol, it didn’t take much for organized crime to quickly appear and work hand-and-glove with the government institutions that were ostensibly supposed to be fighting them. When Prohibition ended, organized crime now had capital, organization, and political networks, so quickly moved into other pursuits such as drugs, prostitution, and gambling which had previously existed in a local form but could now be structured as organized cartels.
We are still paying the price today of the crime and corruption that came out of Prohibition as well as the century of institutionalized racism and Jim Crow laws that followed slavery. The modern day refusal by the federal government to legalize marijuana is just going to be a repeat of Prohibition most likely, except that the states themselves are actively trying to legalize it.
The financial sector decided it didn’t want to operate illegally, so it is simply “supporting” legislators who will make previously illegal stuff legal, thereby eliminating legal jeopardy for anything bu the most blatant fraud and theft. Al Capone wishes he could have accomplished that.
exactly…Prohibition ‘the gift’ that keeps giving.
Arguably by some definitions, the US is more of a failed state than Italy.
1. The two party system significantly has undermined party competition. The GOP uses vote suppression to undermine poor minority voters. The Democratic Establishment uses similar tactics to undermine left wing challengers.
2. The Italians have the mafia and politicians like Berlusconi. The US has Trump who is clearly using the power of the US Presidency for his own business interests and to benefit the rich. Which brings us to the fact that the billionaires run the US. Likewise there is a massive transfer of economic rent upward to the top 10 percent, the shareholder class.
3. Many states and municipalities in the US are fascing bankruptcy or fiscal challenges. Basic services are often not functional. Some high profile examples include the lead poisoning of Flint and the hookworms in the Deep South.
4. Italy has a universal healthcare system and a better welfare system. It is not perfect, but I think that many Americans would envy it.
5. Italy does have very big challenges with unemployment and underemployment. So does the US. However those with jobs in Italy have far better labour protection laws and benefits like vacations.
6. Italy has a lower obesity rate than the US. Where commercial interest is at stake, the US government is unable or simply too corrupt to stand up to corporations and their lobbyists. Same with the Italian mafia it seems.
So tell me, which is a more failed state? Neither is perfect, but what is worse?
Very glad that you’ve posted on this. If you can find it, I’d recommend “Salvatore Giuliano , a 1962 Italian film directed by Francesco Rosi. Shot as a neo-realist documentary.”
Thank you for the tip – while not directly focused on the mafia, Paulo Sorrentino’s ” Il Divo ” has them active in the shadows on a stage that IMO, does a brilliant job in the form of drama of giving some insight into the reign of Guilio Andreotti & relatively recent Italian politics.
It could be that the “negative effects” generate the mafia, not the other way around.
There’s less crime in mafia-controlled areas. See Letizia Paoli’s careful study:
“preventing parties and politicians not allied with itself from campaigning or even appearing in the municipality”
Would it be meaningful to look at this from another angle? That the Mafia promoted parties that were allied with itself? You could regard the Mafia as an enforcement arm promoting government dedicated to the convenience of the governors, with the results we see.
This fits with my hobby-horse of an idea that the FIRE sector of the American economy resulted when the giant corporations in the Planning Economy (viz. J.K.Galbraith, The New Industrial State) dropped all their activities that interfered with planning.
Someone should get on the horn and give Inspector Montalbano a ring and tell him he is needed! Interesting article this but I have the feeling that there are large gaps in this account. Those maps show the mafia strongest in the west but that is where much of Sicily’s agricultural lands are located so you could then infer that the mafia in a rural phenomenon.
There is a good synopsis of the history of the mafia at https://en.wikipedia.org/wiki/Sicilian_Mafia#History that gives a lot of fascinating info, especially in the formation of the mafia after Italy became a nation. Worth reading. This article lists the effects of the mafia but unfortunately does not go into the why of it all which is a shame as well as a weakness to this work.
If you substituted “California” for Sicily and “Democratic Party” for Mafia in that first paragraph it would still be accurate.
I recommend Alfred McCoy’s book “The Politics of Heroin in Southeast Asia” to all who are interested in the modern history of the Mafia.
He details the agreements made by US Intelligence ( Mostly ONI at that time) with Lucky Luciano.
In return for preventing German sabotage on the NY docks and intelligence and clandestine support for the invasion of Sicily Lucky Luciano was freed and was allowed to appoint all the mayors in Sicily.
A very good deal for the Mob,especially since Benito Mussolini had made a serious effort to destroy the Mafia for a number of years with a good deal of success.
Yup, the USA has some responsibility here.
Re Yves Observation in the intro: “The observations about the Mafia have implications beyond Italy, particularly since the US seems hell bent on creating failed states.”
The authors point to a historical policy in Sicily that has more recently been employed in some form in Central and South American countries and in the MENA. Not to diminish the deeply disturbing growth of organized transnational criminal cartels, but there are other national and global constituencies besides criminal cartels who benefit from engineering repression of those who seek the rule of law, civil conflict, social chaos and fragmentation, dismantlement of existing governments, defunding governments, resultant governance vacuums, frameworks for corruption and criminality to flourish, and disinvestment and extraction of resources. Those innocents who are severely damaged, often mortally, by such actions are evident every evening on BBC, PBS Newshour, etc. But the list of policy beneficiaries who walk in the shadows receives little media attention.
Thank you for elevating this issue in the public conversation.
Sounds a lot like the history of republican Rome.
In the USA, the Prohibition era interwined the Mob with law enforcement and government in ways like no other event. We’re still dealing with many of the effects on society.
I’ve also read that (Chicago Mayor and machine capo) Richard Daley (senior) was a member of a gang (the Hamburg Athletic Club) funded by the Democrats. Similarly, LA (and Honduran) gangs have also filled in the political gaps. The Honduran extortion gangs mirror Mancur Olson’s description of state formation (Power and Prosperity) wherein taxation is a protection racket writ large.
Olson himself was at least partly funded by the Kochs. Fred Koch lost a lawsuit to the Rockefeller oil companies which used his (patented) refining methods without paying royalties. Later, it became known that Rockefellers had bribed the judge in the case. Koch re-sued and won…and ever after hated government as a vipers nest of corruption.
I suspect one might establish the source of the Mafia in Naples was the invasion and occupation of that area by the Normans on their way to the Crusades, possibly accentuated by the Propaganda Fide.
The quality of leadership, from one mad king to the next, was very poor and the people saw what they had to do. In a way of thinking, the Mafia are a response to bad government and in that light they may be seen as a thoroughly progressive institution. Their weakness is in the command structure.