The Implications of Criminal Incompetence for the Behavior of Illegal Drug Markets

• In Event: Criminal Incompetence: Why Criminal Organizations and Markets Work so Poorly

Abstract

A plausible model of who chooses to go into illegal markets and the selection mechanism for success would argue against prominent criminal entrepreneurs being of high intelligence. A tolerance for a variety of risks (legal, reputational and physical) is a requirement for entry into these trades. For promotion to the higher levels of the trade these have to be accompanied by the capacity to command contingent violence i.e. to acquire the reputation for being able to deliver on a contingent threat. In a modern Western society these capabilities are unlikely to lead to high educational attainment, as indeed is reflected in the backgrounds of the most prominent illegal entrepreneurs.

Nor can they substitute for their own limited capacities by hiring highly skilled professionals. First class criminal lawyers are available to defend them; the legal system makes that a profitable and respectable, even glamorous, specialty. But being the financial or legal advisor for a major narcotics dealer or human trafficking don is to acquire all the risks of the crime with only a few of the rewards. Thus models that assume strategic behavior on the part of illegal entrepreneurs may mislead.

Drug trafficking is probably an extreme amongst illegal markets in terms of risks of long prison sentences and violent victimization but it is by consensus considered the largest illegal market. This paper examines discrepancies between theoretical predictions reflecting conventional economic theory and observed drug market behaviors. It provides an early statement of an alternative theoretical approach based on Evolutionary Economics that might provide a strong analytic framework for understanding the behavior of illegal markets.

Author

• Peter Reuter, University of Maryland