Michelle Lynn Studer

Tanter Poli-Sci 472

Final Research Paper

 

The Mafia Puzzle

 

Rational Choice theorists believe that each actor acts rationally when making decisions in order to maximize expected utility. However, there are many instances where actors choose policies with outcomes that are less than optimal. In some of these instances Prospect theory is able to explain the puzzles that Rational choice theory leaves behind. In fact, Prospect theory predicts that contrary to popular belief, actors will often act in a way that fails to maximize utility. It contends further that actors will respond in specific, identifiable ways to various situations.1 The Waves of Deterrence, resolve, control and calcuability, and misperceptions are also often helpful in determining why an actor behaves differently than rational choice theory predicts. This paper will explore the question: Why does the American Italian Mafia continually threaten U.S. national security, and ask why normal U.S. methods of containment are relatively unsuccessful?

 

The American Italian Mafia first began to play a role in the US in the early 1900's. It was not one group imported from the Sicilian Mafia, but rather a few individuals from Calabria, Camorra, and Sicily, that came over and began the family run enterprises that are what we call the Mafia today. Although the American Mafia holds many similarities with the Sicilian Mafia, as the various families have grown, they have adapted to many American ideals as well. Originally in Italy, the Mafia was formed by the estate managers in order to conserve and protect the middle class of families between the overlords and the serfs. The Mafia exchanged money and services for their own protection. Brotherhood became the most important issue with respect highly regarded. Rules for membership were that you had proven yourself as a "man of stomach," or in other words that you wouldn't rat out friends or family to the police, and you had to be from a good family - no female in prostitution. The reason the Sicilian Mafia was so effective was due to the juxtaposition of church and state. The government was weak, and religion dominated. This idea of ineffectual government was kept, as Italian criminal families immigrated to the United States.2

 

The code of the Mafia still includes these early values. Loyalty goes first to the family, second to the church, and last to the state. Most of the Western world believe in the idea that power comes from wealth. However, the Mafia believes that wealth comes from power, and furthermore power comes from respect. Respect in turn can only be acquired if you are feared to the point where no one will ever dishonor you or your family in any way. If they do they must be punished at any cost. The idea is that a man and his male relatives will die or take anyone's life for the family's honor.3

 

This new American Mafia wanted more than small amounts of power and family respect; they were greedy. They wanted vast amounts of power and money, and illegal enterprises were as welcome as legal ones. Various Mafia families became gangsters holding powerful positions in the US.4 In the 1920's the majority of illegal Mafia operations revolved around bootlegging, and gambling. In the 1930's the operations switched to predominately gambling with money laundering, and political corruption of high ranked officials. Today, the Mafia is involved in large numbers of legal and illegal operations including gambling, loan sharking, national food chains, trash hauling, money laundering, selling cocaine and heroin, and fencing illegal property. There are many reasons why the United States Department of Justice has pegged the Mafia as the most influential group involved in organized crime, and thus given it the reputation of the biggest national threat. The first is that the department is convinced that major gambling operations are under the control of organized crime, and that the Mafia has a monopoly in many areas. Other reasons include economic concern about the competitiveness of other legal businesses that are not supported by illegal funds. 5

 

On the international level, there is also more attention being given to organized crime, when describing their concerns, they explained the Mafia - a "family, where structured hierarchies, internal rules, discipline, codes of behavior and diversity in illegal activities are common practice. Included in such organizations are the largest and most developed types of criminal groups, involved in a multiplicity of illegal activities." Their concern is that with the ease of communication, and the globalization of business, it will become easier and easier to move immigrants, drugs and weapons through borders. Nato is concerned that " The sheer volume--trillions of dollars annually--of illicit proceeds from these global criminal organizations could present a threat to national economies from price and stock manipulation to banking fraud. These groups also may use their massive wealth to gain controlling interests in strategic economic sectors and buy high-level political influence."6

 

The Mafia was not publicly acknowledged by the US government until 1951, and the FBI remained skeptical of any such organization until Joseph Valachi claimed membership in La Cosa Nostra in 1963. However by 1969, both the public and the majority of governmental organizations agreed that there was a Mafia (La Costa Nostra), and that it was made up of 24 families nationwide, with a minimum of 2000 members known to law enforcement officials.2 In 1970, the RICO (Racketeer-Influenced and Corrupt Organizations) act became law describing Racketeering activity as "any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical…" in direct response to the Mafia. It was an expansion of the guilt by association theory. This act made it easier to get witnesses to testify due to extreme rewards, and eased restrictions on clandestine surveillance. It is the first law to prosecute criminal groups rather than individuals, and it introduced the idea of "a pattern of racketeering" (two or more racketeering prosecutions in a ten year period)as well as the "criminal enterprise."(any group of associated individuals where any one of them employs racketeering).7

 

Expected-utility theory has been the most popular method of analysis for decision making in conditions of risk. The idea is that each choice has a specific set of results, and that the probability of each result is known to the actor. The theory posits that each actor will attempt to maximize expected utility when faced with risky options.1 However, recently, attention has been given to the failure of rational choice theory to account for behavior discrepancies. Rational Choice theory often fails to explain the choices that actors actually make in real situations. Take the following situations; The Mafia has many businesses both legal and illegal, and many of their long standing legal ventures have become more successful than their illegal ones.8 Given this scenario is true, why wouldn't the Mafia expunge the illegal operations to concentrate on the legal ones, that are still lucrative, but less dangerous. Also the Mafia is unable to be deterred without incarceration (which is also not always effective) or death. It would seem that given the situation, that the government had established an act that could convict anyone with a tie to any Italian criminal family for some crime. Thus, it would follow that criminal families like the Gambino's and their boss John Gotti would be deterred from operating these illegal enterprises falling under the RICO Act of 1970. However this was and is not the case obviously. These crime families, though less influential today than in the past, still operate. John Gotti has been convicted under the RICO Act, but the organization continues under the authority of his son John A. Gotti who was tried, but not convicted this year under the RICO Act. Why even with this unfair, and unconstitutional law is the United States government unable to effectively eliminate the Mafia entirely?9

 

Apparently the US is unable to properly model Mafia behavior and thus is unable to formulate effective action. Another behavior model is Prospect theory. Prospect theory, partly because it explains risky choice regarding monetary options rather than just plain risky choice is a more effective means for evaluating Mafia behavior. The first aspect of Prospect theory relates to reference point. This means that actors determine choices according to gains and losses rather then the net outcome. This affects the way an actor may frame his various choices. The second aspect deals with the importance of losses as opposed to gains. People are more willing to take risks when they are in a domain of loss, and less willing to take risks when they are in a domain of gain. The third aspect deals with current possessions. Laboratory experiments indicate that actors tend to value what they currently own more that they should, this is called the endowment effect. Lastly is the idea of loss aversion which holds that people prefer the status quo as opposed to a situation with different results but the same approximate net outcome.1

 

It is easy to see how the Mafia would not be willing to switch over to entirely legal ventures, if you consider the endowment effect, and loss aversion. These actors overvalue all of their current enterprises and are not willing to swap them for the same approximate value. Also, they may see themselves in a domain of loss according to illegal ventures such as gambling, loan sharking etc. If they already control these ventures, they will be more risk acceptant in order to continue to hold what they already own and control. Thus they are willing to brave harsher laws and penalties. 8 However, neither prospect theory or rational choice theory can predict Mafia behavior, action, and attitude as well as the second, third, and fourth waves of deterrence can.

 

The second wave of deterrence relates to resolve. It is clear in the case of the US Mafia that the United States has until recently lacked resolve. The US would not admit to the existence of an Italian American Mafia until 1969. It is difficult to prevent and discourage organized crime, if you are unwilling to admit to its existence. It wasn't until the many trials in 1985, In the mother of all RICO cases, where 3 alleged "bosses", Anthony Salerno (Genovese family), Anthony Corallo (Luchese), and Carmine Persico (Colombo) were convicted to 100 years that many US officials even admitted that the Mafia existed and was a formidable force capable of jeopardizing US national security. In addition, the RICO Act was not used in such a way at all until the early 80's though it was established in 1970.10

 

The third wave of deterrence involves control and calculability of risk. Due to the honor code and their own laws within the family, Mafia heads feel as if they are able to control, and calculate the risk. They trust family more than any other, and within a family everyone knows that dishonor or betrayal is equated with immediate death, thus if only family members are aware of the illegal activities there should be virtually no chance of others finding out. They know what all the possible penalties for their actions are, and in many cases they are able to bribe high ranking officials like judges and police officers. In one scenario, a family bought a refuse company in order to get rid of waste from illegal ventures.11 In this way they are also able to control all the evidence. Through their legal ventures, they are able to launder money from illegal ones, another method of control.

 

The fourth wave of deterrence involves biases and misperceptions. There are two types of biases, motivated and unmotivated. Motivated biases are things you perceive because you want to perceive them, unmotivated biases are things you see because you expect to see them. The Mafia suffers from both types. They continually think that the family members will honor and respect the family hierarchy above everything else, because due to the code of law they practice, they expect things to happen that way. In their neighborhoods, if they are respected, they are not touched or harmed in anyway - they expect this to be true of the outside world as well. They also suffer from motivated biases, they expect that their families will be protected, will last, and will be invincible because that is what they want for their families. They live by their own creed, and this is how they see the world working.

 

The United States government needs to understand the creed these Mafia figures live by first and foremost to be able to understand their biases and their perception of their situation according to risk. Due to the close knit nature of the families, the best policy option would be undercover integration of agents into the families. Although the RICO Act has proven to be somewhat effective lately, I do not feel the Act is fair in its prosecution. It targets individuals who may or may not be involved in illegal Racketeering. I believe that the Mafia will continue to exist in the future, and I believe the US agencies need to involve themselves in disbanding these family organizations without using unfair means. The best policy would be the breaking up of all illegal enterprises, while leaving the legal operations alone. In addition I agree with Pino Arlucchi, that the public needs to be educated about organized crime and public coruption.12

 

 

End Notes

 

 

1. Farnham, Barbara. Avoiding Losses/Taking Risks. New York: Plenum Publishing Corporation, 1994.(Introduction)

2. Ianni, Francis, Elizabeth Ruess-Ianni. A Family Business. New York: Russell Sage Foundation, 1972 Chapter1

3. Ianni, Francis, Elizabeth Ruess-Ianni. A Family Business. New York: Russell Sage Foundation, 1972 Chapter 2

4. Ianni, Francis, Elizabeth Ruess-Ianni. A Family Business. New York: Russell Sage Foundation, 1972 69

5. Reuter, Peter. Disorganized Crime The Economics of the Visible Hand. Cambridge: The MIT Press, 1983

6. UNResolution 1992/23: Organized crime gopher://gopher.un.org/00/esc/recs/1992/23

7. The United States RICO Act http://www.gotti.com/96RICO.html

8. Pearce, Frank, Michael Woodiwiss. Global Crime Connections Dynamics and Control. Toranto and Buffalo: University of Toranto Press, 1993

9. The RICO prosecutions http://www.gotti.com/ravsrico.html

10. RICO laws and prosecutions http://www.gotti.com/law.html

11. UN Public Briefing/ Press Release http://www.un.org/plwebcgi/idoc.pl?227+unix+_free_user_+www.un.org..80+un+un+br1997+br1997++Mafia