A case study from David Skarbek of Duke University that analyzes how the Mexican Mafia developed its own form of governance within the Los Angeles county prison system recently appeared in the American Political Science Review. The following is a portion of the study’s abstract:
How can people who lack access to effective government institutions establish property rights and facilitate exchange? The illegal narcotics trade in Los Angeles has flourished despite its inability to rely on state-based formal institutions of governance. An alternative system of governance has emerged from an unexpected source — behind bars. The Mexican Mafia prison gang can extort drug dealers on the street because they wield substantial control over inmates in the county jail system and because drug dealers anticipate future incarceration. The gang’s ability to extract resources creates incentives for them to provide governance institutions that mitigate market failures among Hispanic drug-dealing street gangs, including enforcing deals, protecting property rights, and adjudicating disputes.
The formation of “spontaneous order” often comes as a surprise to those who see the state as the end-all to civilization. Spontaneous order was defined by Friedrich Hayek as
A spontaneous order is a system which has developed not through the central direction or patronage of one or a few individuals but through the unintended consequences of the decisions of myriad individuals each pursuing their own interests through voluntary exchange, cooperation, and trial and error.
Through the past 50 years, the Mexican Mafia has developed its own system of property rights, protection, and order within the Los Angeles prison system. This phenomenon began in 1956 as incarcerated Hispanics joined together for the sake of protection. Since the government, which initially locked up the inmates, failed to enforce adequate property rights, an internal system of government emerged as a response. From this establishment of basic protections arose a governing arrangement to both extract wealth over a given geographical area and provide law and order. The Mexican Mafia has essentially created a state within the confines of the United States and the state of California.
Like many states, some have risen to positions of more influence despite the egalitarian model of members having “only one official rank … one vote, and no one can give another member an order.” No state would be complete without taxes and the Mexican Mafia doesn’t disappoint. By utilizing a form of extortion by taxing profits from drug dealers with the threat of violence upon incarceration, the Mexican Mafia plays the role of enforcer even behind bars. This tax typically runs in the range of 10–30 percent of revenues. In exchange for tax revenues comes protection from fellow inmates if one is unlucky enough to be locked up. In order for the Mexican Mafia to maximize tax revenue from drug sales, this practice strives to mitigate actual violence.
A system of dispute arbitration has also developed to ensure peace. Skarbek points to an example in February of 1994 where representatives of the Mexican Mafia and the representatives of two street gangs known as 18th Street Gang and MS-13 met to resolve animosity stemming from one gang member killing another. After arbitration, peace was reached and a gang war averted for the sake of maintaining cash flow from drug dealing. This process was repeated to settle future conflicts. Drive-by shootings are even regulated by the Mexican Mafia as unauthorized shootings are punishable by death on incarceration.
Though it is based on the threat of coercion, the system of governance by which the Mexican Mafia engages in is quite entrepreneurial. In Man, Economy, and State, Murray Rothbard describes the actions of an entrepreneur in this way:
In his quest for profits he saw that certain factors were underpriced vis-à-vis their potential value products. By recognizing the discrepancy and doing something about it, he shifted factors of production (obviously nonspecific factors) from other productive processes to this one.
The Mexican Mafia engages in such a process by vetting each target’s potential for incarceration. Those who have a good chance of being arrested and subsequently locked up are pressured into paying taxes. The same goes to those whose friends or family have a high probability of being jailed. Say what you will about this type of extortion, but the entrepreneurial spirit pops up in even the most unlikely of places.
So what should Austro-libertarians, who recognize the importance of property rights but are wary of coercion, take away from this phenomenon of emergent order? After all, the Mexican Mafia has established a semimonopoly of violence and coercion over a geographical area, meaning it has become its own state even within the jurisdiction of the United States and California government.
First, the demand for basic protection and property rights amidst the failure of public authorities provided the incentive and profit motive for inmates to form the Mexican Mafia and its practice of taxation. Had adequate protection been offered, such an underground system of law and order might not have emerged.
This takes us to the next point: the Mexican Mafia’s taxation and protective model was indeed the result of spontaneous order. As Hayek outlined, the original members of the Mexican Mafia established this system to better their own interests.
Where Hayek’s insight doesn’t apply is the use of coercion by the Mexican Mafia. While emerging order as the result of purposeful action is something to be celebrated when it results in peaceful, voluntary cooperation, the violent tactics employed by the Mexican Mafia are a sight to abhor. As the nonaggression axiom — the foundation for Austro-libertarianism — shows, unjustified aggression toward one’s property is morally reprehensible.
And this leads to the final point. The Mexican Mafia’s system of governance can be attributed to the state’s prohibition of narcotics. If the state regarded property rights as sacrosanct, there would be no laws against drugs and therefore far fewer people in prison. Without the threat of incarceration and subsequent assault, the Mexican Mafia would lose much of its ability to tax.
Like the system of private law and property that developed during the settlement of the American West, the Mexican Mafia’s creation of governance is demonstrative of man’s ability to develop protective services among the failures of existing governments. In the case of the “not-so-wild” American West, property protection and order were developed to ease the living conditions of settlers in the absence of any governmental structure. In the Mexican Mafia’s case, protection and arbitration were not only responses to a lapse of government enforcement but also mechanisms for violent exploitation. The two instances, though similar as emerging orders, yielded two different outcomes: one that decreased the amount of violence through volunteerism and one that utilized state-like force to maintain control.
Though it’s a shame the Mexican Mafia’s system of law and order devolved into coercion, Skarbek’s case study is an important tool to analyze an instance of spontaneous order, as mankind, possessing infinite desire, continues to transform and adapt to changing circumstances.
Now if only our elected leaders appeared as the tattoo-laden thugs whose behavior they inspire, perhaps the public would be more reluctant to endorse their wielding of coercive power and authority. After all, skin-deep appearances are the only thing separating our friend pictured above from those who legislate in the confines of Congress, state capital buildings, or city hall.
