www.ebook3000.com The Architecture of Illegal Markets www.ebook3000.com The Architecture of Illegal Markets Towards an Economic Sociology of Illegality in the Economy Edited by Jens Beckert and Matías Dewey Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Oxford University Press 2017 The moral rights of the authors have been asserted First Edition published in 2017 Impression: All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2016962767 ISBN 978–0–19–879497–4 Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY Links to third party websites are provided by Oxford in good faith and for information only Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work www.ebook3000.com Acknowledgments Illegality is a pervasive issue in market transactions but not an important topic in economic sociology, a situation that this book sets out to help change The fourteen chapters assembled in the volume provide insights on the social organization of illegal market activities from a broad range of different settings, from financial markets to the market for illegally poached rhino horn The volume grew out of a research group on illegal markets that was established at the Max Planck Institute for the Study of Societies in 2010 In early 2015 we held a two-day workshop in Cologne Many of the chapters in this volume were first presented at this workshop We would like to thank first and foremost Ian Edwards who was in charge of the copy-editing of the manuscript We also wish to extend our gratitude to those who not appear in this volume but decisively enriched our discussions: Keith Hart, Peter Reuter, Michael Levi, and Paolo Campana Finally, we would like to thank the staff of the Max Planck Institute for the Study of Societies and Michael Böttcher for their organizational help www.ebook3000.com Contents List of Figures List of Tables List of Contributors Introduction: The Social Organization of Illegal Markets Jens Beckert and Matías Dewey ix xi xiii Part I Conceptualizing Illegal Markets Illegal Markets: Boundaries and Interfaces between Legality and Illegality Renate Mayntz 37 Part II Secrecy and Illegal Markets Secrecy and Frontiers in Illegal Organ Transplantation Philippe Steiner 51 What Is Grey about the “Grey Market” in Antiquities? Simon Mackenzie and Donna Yates 70 Governance in Online Stolen Data Markets Meltem Odabaş, Thomas J Holt, and Ronald L Breiger 87 Futurity, Offshore, and the International Political Economy of Crime Ronen Palan 108 Part III The State in Informal Market Places State-Sponsored Protection Rackets: Regulating the Market for Counterfeit Clothing in Argentina Matías Dewey 123 Shoddy, Fake, or Harmful: Smuggled Goods and Entangled Illegalities in a Vietnamese Border Market Kirsten W Endres 141 Contents Part IV Shifting Definitions of Illegality Making the Medical Marijuana Market Cyrus Dioun 159 10 Contested Illegality: Processing the Trade Prohibition of Rhino Horn Annette Hübschle 177 11 “We Are the Genuine People”: Legality and Legitimacy in the Sierra Leonean Diamond Market Nina Engwicht 198 12 A Crooked Mirror: The Evolution of Illegal Alcohol Markets in Russia since the Late Socialist Period Vadim Radaev 218 Part V Illegal Practices in Legal Markets 13 The Supply of Doping Products and the Relevance of Market-Based Perspectives: Implications of Recent Research in Italy Letizia Paoli and Victoria A Greenfield 245 14 Illegal Prices: The Social Contestation of High Living Costs in Guadeloupe and Mauritania Boris Samuel 268 15 The Price Is Not Right: Financialization and Financial Crime Robert Tillman 286 Index 305 viii www.ebook3000.com List of Figures 1.1 Dimensions of the legal/illegal and the legitimate/illegitimate 8.1 Vietnamese goods transporters at the Lào Cai–Hekou border gate 13 147 12.1 Per capita consumption of legal and illegal alcohol in Russia, 1980–2000 224 12.2 Organization of “grey” business schemes with a chain of affiliated firms 226 12.3 Percentage of recorded alcohol and samogon drinkers during the thirty days preceding the survey in 1994–2013 228 12.4 Inadequate quality and/or health dangers of vodka and other spirits, wine (excluding champagne), and beer from 1995 to 2012 231 12.5 Amount of alcoholic beverages, vodka, and ethanol seized by state protection agencies during inspections in Russia, 1999–2013 232 13.1 Chronology of doping prohibitions 251 13.2 Illustrative distribution chains for doping products and methods 256 The Price Is Not Right financial services sector These trends, I argued, have enhanced the criminogenic tendencies present in the financial services, as well as other industries Next I presented three case studies that illustrate the criminological consequences of these larger economic shifts The three case studies involve efforts by financial industry insiders to profit by manipulating entire markets by altering the infrastructure of those markets, tinkering with the mechanisms by which prices and rates are set The analysis of these forms of financial crime has implications for both mainstream economic theories of markets and for economic sociology, which I will only briefly mention here Contemporary economic theories of financial markets rest on the assumption that these systems function efficiently because participants respond rationally to “signals” being emitted by the market, signals that provide information on which investment decisions can be made (Fama 1970) These signals—which include things such as interest rates, foreign exchange rates, and electrical energy prices—are assumed to have an objective quality, which, like measures of rainfall or the movement of glaciers, are unaffected by human behavior The case studies presented in this chapter have shown that many of these “signals” are in fact social constructs, the practical accomplishments of individuals in specific social settings that are governed by their own norms of behavior As in the movie The Wizard of Oz, in which the omnipotent Oz is revealed to be an old man behind a curtain pushing buttons and pulling levers, the majestic view (often promoted by mainstream economists) of financial markets as efficient perpetual motion machines is belied by the reality that they consist of real human beings making phone calls, sending emails, and texting one another, usually in pursuit of legitimate ends But this reality also creates innumerable opportunities for these finance workers, usually at the behest of their superiors, to manipulate the marketplace This view of financial markets is consistent with the growing literature in the sociology of financial markets (Knorr-Cetina and Preda 2005) From this perspective, things like the daily price index for electricity, Libor rates, and foreign exchange fix-rates can be understood as “market devices.” In Muniesa et al.’s (2007) formulation, these are defined as “the material and discursive assemblages that intervene in the construction of markets.” These devices can include material objects such as cash registers and stock tickers, as well as financial instruments such as derivatives, all of which serve to organize markets by providing the means of conceptualizing markets and creating standardized calculations (Preda 2006) Measures of market activities—prices, ratings, indices—could be included in this conceptual framework Fligstein and Roehrkasse recently suggested that the literature on “market devices,” while important for economic sociology, has tended to see their constructive aspect, to assume that “they are relatively immune to manipulation and 301 Robert Tillman abuse.” They argue that we should “expand analysis of market devices—to ask how their complexity gives market actors the ability to be fair or fraudulent” (Fligstein and Roehrkasse 2016) This chapter, hopefully, represents a very small step in this direction References Blain, Glenn 2009 “Governor Paterson Says Bonuses Paid to Wall Street Financial Executives Were Good for State.” New York Daily News, September Blair, Bridgette 2013 “Get to Know Public Citizen.” Public Citizen News 33(5) Calavita, Kitty, and Henry N Pontell 1991 “ ‘Other’s People’s Money’ Revisited: Collective Embezzlement in the Savings and Loan and Insurance Industries.” Social Problems 38(1): pp 94–112 City of London Corporation 2015 Total Tax Contribution of UK Financial Services Eighth Edition London: City of London Clift, Ben, and Cornelia Woll 2011 “Economic Patriotism: Reinventing Control over Open Markets.” Journal of European Public Policy 19: pp 307–23 Colchester, Max, and Jeane Eaglesham 2012 “Barclays Settles Rates Probe.” Wall Street Journal, June 27 Crowe, Portia 2015 “Wall Street Interns Are Earning More Money than Ever This Summer.” Business Insider, July Dyck, Alexander, Adair Morse, and Luis Zingales 2013 “How Pervasive Is Corporate Fraud?” Social Science Research Network Fama, Eugene 1970 “Efficient Capital Markets.” Journal of Finance 25(2): pp 383–417 Federal Energy Regulatory Commission 2013a “FERC, JP Morgan Unit Agree to $410 Million in Penalties, Disgorgement to Ratepayers.” News release, July 30 Federal Energy Regulatory Commission 2013b “FERC Orders $453 Million in Penalties for Western Power Market Manipulation.” News release, July 16 Federal Energy Regulatory Commission 2013c “FERC Approves Market Manipulation Settlement with Deutsche Bank.” News release, January 22 Financial Crisis Inquiry Commission 2011 The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States Washington, DC: US Government Printing Office Fligstein, Neil, and Alexander Roehrkasse 2016 “The Causes of Fraud in the Financial Crisis of 2007 to 2009.” American Sociological Review, published online before print, June 23, doi: 10.1177/0003122416645594 Foroohar, Rana 2016 Makers and Takers New York: Crown Publishers Godechot, Olivier 2015 Financialization Is Marketization! Paris: Max Planck Sciences Po Center on Coping with Instability in Market Societies Johnson, Simon 2009 “The Quiet Coup.” Atlantic Monthly 303(4): pp 46–50 302 www.ebook3000.com The Price Is Not Right Kelton, Erika 2012 “Barclays’ Traders Show How Much Fun Wall Street Has Manipulating Markets.” Forbes, November 11 Knorr Cetina, Karin, and Alex Preda 2005 The Sociology of Financial Markets Oxford: Oxford University Press Krippner, Greta 2005 “The Financialization of the American Economy.” Socio-Economic Review 3(2): pp 173–208 Krugman, Paul 2009 “Making Banking Boring.” New York Times, April 10 Maruthappu, Mahiben, Johnathan Watkins, Aisyah Maruthappu Mahiben et al 2016 “Economic Downturns, Universal Health Coverage, and Cancer Mortality in HighIncome and Middle-Income Countries, 1990–2010: A Longitudinal Analysis.” Lancet, published online before print, May 25, doi: 10.1016/S0140-6736(16)00577-8 McKenzie, Duncan 2009 “Economic Contribution of UK Financial Services 2009.” ISFL Research Muniesa, Fabian, Yuval Millo, and Michel Callon 2007 “An Introduction to Market Devices.” Sociological Review 55(2): pp 1–12 New York State Comptroller’s Office 2012 “Street Business Declined in 2011, Industry Profits Down by Half from Prior Year.” News release, February 29 New York State Comptroller’s Office 2016 “Wall Street Bonuses Decline in 2015.” News release Philippon, Thomas, and Ariell Rashef 2012 “Wages and Human Capital in the U.S Finance Industry.” Quarterly Journal of Economics 127(4): pp 1551–609 Phillips, Kevin 2002 Wealth and Democracy: A Political History of the American Rich New York: Broadway Books Preda, Alex 2006 “Socio-Technical Agency in Financial Markets.” Social Studies of Science 36(5): pp 753–82 Reurink, Arjan 2016 From Elite Lawbreaking to Financial Crime: The Evolution of the Concept of White-Collar Crime MPIfG discussion paper 16/10 Cologne: Max Planck Institute for the Study of Societies Rushe, Dominic, and Jill Treanor 2012 “City Fears that Wall Street Has the Square Mile in Its Sights.” Guardian, August 11 Stewart, James 2012 “In a New Era of Insider Trading, It’s Risk vs Reward Squared.” New York Times, December Taibbi, Matt 2009 “The Great American Bubble Machine.” Rolling Stone, July Taibbi, Matt 2013 “Everything Is Rigged: The Biggest Price-Fixing Scandal Ever.” Rolling Stone, April 25 Tillman, Robert, and Michael Indergaard 2005 Pump and Dump: The Rancid Rules of the New Economy New Brunswick, NJ: Rutgers University Press Tillman, Robert, Henry Pontell, and William Black Forthcoming Financial Crime and Crises in an Era of False Profits New York: Oxford University Press US Department of Justice 2012 “Statement of Facts, U.S Dept of Justice and Barclays Bank PLC.” US Department of Justice 2015 “Assistant Attorney General Leslie R Caldwell Delivers Remarks at a Press Conference on Foreign Exchange Spot Market Manipulation.” 303 Robert Tillman News release, May 20 Ward, Sharon 2012 Too Big to Trust? Banks, Schools and the Ongoing Problem of Interest Rate Swaps Harrisburg, PA: Pennsylvania Budget and Policy Center Wilson, James Q 1975 Thinking about Crime New York: Basic Books Zucman, Gabriel 2015 The Hidden Wealth of Nations: The Scourge of Tax Havens Chicago: University of Chicago Press Legal Citations City of Philadelphia v Bank of America Corporation et al Case no 1:13-Cv-06020 (SDNY 2013) (“Complaint”) Commodities Futures Trading Commission 2014 In the Matter of J.P Morgan Chase, USA before the Commodities Futures Trading Commission Docket no 15-04 (“Order Instituting Proceedings”) Federal Energy Regulatory Commission 2012a Barclays Bank PLC, Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith Docket no IN08-8-000 (“Enforcement Staff Report and Recommendation”) Federal Energy Regulatory Commission 2012b Barclays Bank PLC, Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith Docket no IN08-8-000 (“Order to Show Cause and Notice of Proposed Penalty”) Federal Energy Regulatory Commission 2013 144 FERC 61,068 (“In Re Make-Whole Payments and Related Bidding Strategies”) Docket No IN11-8-000, Federal Energy Regulatory Commission v Barclays Bank; Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith Case 2:13-Cv-02093-TLN (EDCA 2013) (“Petition for an Order Affirming the Federal Regulatory Commission’s July 16, 2013 Order Assessing Civil Penalties against Barclays Bank, Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith”) New York State Department of Financial Services 2015 In the Matter of Barclays Bank, PLC (“Consent Order”) 304 www.ebook3000.com Index Abacha, Sani 118 Abraham, Itty 142 Ackrell Capital 173n10 activists ambivalent market interfaces 163–4 medical marijuana 166, 167, 170–3 adverse selection, online stolen data markets 95, 97, 100, 102 advertising see marketing Agamben, Giorgio 144 AIDS crisis 160–1, 162, 164–73 AIG 291 Airbnb 11, 24 Air France 276 Akerlof, George A 95 alcohol, illegal see Russia: illegal alcohol markets Alderman, Kimberly 80 Ambagtsheer, Frederic 67 ambivalent phenomena 44–6 Angolan diamond market 202 animal rights movement 187 anonymity 68 antiquities, grey market in 77 online stolen data markets 90, 93–7, 101 tax havens 109 antiquities, grey market in 70–84 architecture of illegal markets 18 broader understanding of grey markets 83–4 changing status of objects 78–9, 82 functioning of the illicit trade in antiquities 73–7 illegality vs legality 16 market features that facilitate “greying” 77–8 mixed streams of supply 78, 80–2 moral psychological processes of engagement 79, 83 use of grey market concept in literature on illicit antiquities 78–9 Applbaum, Kalman 143n3 Apple Inc 115 arbitrage electrical energy market 294–5 tax havens 115 Vietnamese border market 145 archaeological looting 72, 74–5, 79, 81–4 architecture of illegal markets 17–22 Argentina counterfeit clothing 124–5, 130–7 capitalism 23 legitimacy 42 marketplace 129–31 micro perspective 134–6 police 130–3, 135, 137 political authorities 130, 133–4, 137 research methodology 127–8 sweatshops 129 tolerance 44 transparency, lack of 19 violence, threat of 56 state-sponsored protection rackets 126 stolen cars 56 Arias, Enrique Desmond 14 Armstrong, Lance 252, 253 artifacts see antiquities, grey market in Arts Council England 81 Aspinall, Edward 142–3, 144 audits, and Guadeloupian living costs 175, 268–9, 270–3, 274 Austria, doping products 258 authenticator procedures, online stolen data markets 96, 97, 102 Aziz, Abdel 278, 280 Bahamas, as tax haven 116 Baláž, Vladimir 145 ballot initiatives, medical marijuana 161, 167, 170–1 banabana 206–7, 212 Bank of New York 117 bankruptcy, international laws 63 banning users, online stolen data markets 97, 99 Báo Lào Cai 145 Barclays Bank electrical energy market 295–6 foreign exchange fix 299, 300 Libor 297–8 Index Baring Brothers 118 Barnes, Nicholas 14 Bayart, Jean-Franỗois 277, 282 Bear Sterns 294 Becker, Howard 2, 10, 128 Beckert, Jens illegal markets 110, 143, 147–8 market concept 246n4 rational action 88, 103 social order of markets 270, 274, 283 Belarus, Customs Union with Russia and Kazakhstan 233 Belgium, as tax haven 116 Bermuda, as tax haven 116 Bernard Hayot Group 273n4 Bichler, Gisela 79 big money 292–4 BNP 118 Bolivia emigrants in Argentine sweatshops 129 state-sponsored protection rackets 135 Bourgois, Philippe 2, 10 Bowman Proulx, B 80 Brazil land-grabbing processes 23 organ transplantation 65 state-sponsored protection rackets 126 bribery 41 antiquities, grey market in 76 of customs officials 21 doping products 257 Sierra Leonean diamond market 203n2, 205n4 Vietnamese border market 144, 146–53 violence, threat of 56 British Bankers Association 297 British Virgin Islands, as tax haven 117 Brodie, Neil 80 Buchanan, James M 110 Bush, George W 294 Calavita, Kitty 287 Caldwell, Janet 299n4 Cambodia antiquities trafficking 75 archaeological wonders 74 CITES 187 Canada, organ transplantation 60 cannabis demand side 21 medical see marijuana, medical capitalism 22–7 co-habiting economies 109 property as theft 54n3 capture process, illegal organ transplantation 62 Carnegie, Andrew 112–13 Carruthers, Jane 182 Cayman Islands, as tax haven 116 Chicago School 2, 10 child pornography 16 China antiquities, grey market in 76 goodwill 113 land-grabbing processes 23 organ transplantation 59, 63 smuggled goods in Vietnamese border market 141–52 state-sponsored protection rackets 125 CITES 185–6 rhino horn market 180, 186–8, 189–90, 195 Citigroup 298, 299 Clausewitz, Carl von 56 clientelism 15 Clift, Ben 291 CMA-CGM 276 Cohen, Glenn 64 Colombia organ transplantation 59 state-sponsored protection rackets 126 Commons, John R futurity 109, 112 intangible property 112–13 old institutional economics 109 communication, online stolen data markets 96, 100, 102 Compassionate Investigational New Drug (IND) program 166–7 competition 59, 68 architecture of illegal markets 21 peaceful nature 55 as struggle 55 competitive advantage 25 concealment, work of 57–8, 68 organ transplantation, illegal 66–7 see also secrecy Conconi, Francesco 250–2, 253, 258, 260 confidentiality 57 consumer goods pricing Guadeloupe 8, 268–76, 282–3 Mauritania 8, 268–9, 277–83 Convention on International Trade in Endangered Species of Wild Fauna and Flora see CITES cooperation with state agents, selective 21 corporate crime 256 see also financial crime corruption 41–2, 215 antiquities trafficking 75 architecture of illegal markets 21 CITES 187 doping products 246, 255, 257 enforcement of informal rules 10 informal markets 202 306 www.ebook3000.com Index legality vs illegality 17 Libor 297 Mauritania 277, 279 neo-patrimonialism 281 organ transplantation, illegal 54, 61, 65, 67 Sierra Leonean diamond market 205n4, 207, 213–14, 215 state-sponsored protection rackets, Argentina 126 tax havens 27, 118 Vietnamese border market 143, 144, 153 violence, threat of 56 counterfeit goods alcohol, Russia 219, 220–1 data sources 223 evolution of illegal markets 224–5, 228–30, 231, 233–5, 238 legality and legitimacy 235, 236–7 capitalism 23 demand side 21 doping products 257 illegality vs legitimacy 14 marketing 22 medicines 4, 19 sweatshops 129 transparency, lack of 19 Vietnamese border market 150 violence, threat of 56 see also Argentina: counterfeit clothing Crédit Agricole Indosuez 118 credit card data, stolen 91, 98–9 personal networks 20 quality issues 19 Credit Suisse 118 criminology 15 white-collar crime 24 cross-border trafficking of antiquities 72, 75–6 cultural property 74 customer services, online stolen data markets 97–8, 100 customs officials/systems alcohol, Russia 225 antiquities, grey market in 75, 76 bribery 21 Vietnamese border market 146, 147, 152 Cyprus, money laundering 117 data, stolen see governance in online stolen data markets Davis, Diane 14 demand side of illegal markets 21 derivatives, financial 116 de Soto, Hernando 10 Deutsche Bank 25, 294, 296, 298 Dewey, Matías 39 diamond market illegality vs legitimacy 14 see also Sierra Leonean diamond market documentation antiquities, grey market in 76, 77, 81, 82 doping products 250 rhino horn market 193 Sierra Leonean diamond market 203, 205–6, 210, 214 Vietnamese border market 146 Donati, Alessandro 247, 248, 260 Donnan, Hastings 145 doping products 6, 245–62 chronology of prohibitions 250–1 distribution chains and market relationships 254–7 marketing 22 national sports bodies, role of 258 quasi-illegal market 258–62 research design and data collection 247–8 typology of suppliers 248–54 drug market lack of transparency 19 tax havens 116 Duran-Martinez, Angelica 126 Durkheim, Emile 7, 54 Dutch Antilles, as tax haven 116 Dutch East India Company 181 Dwyer, Robyn 21 Dynergy 294 economic dynamics 23–4 economy of the future see futurity of the past 109–11 of the present 109 Egypt antiquities, grey market in 81 organ transplantation 61–2, 64 electrical energy markets 294–6 embezzlement 114, 118 enforcement influencing of 21 of informal rules 9–10 legality vs illegality 16–17 rhino horn market 190 selective 8–9, 17 state-sponsored protection rackets 124–7, 130, 132, 135, 136 England enclosure process 22–3 Industrial Revolution 23 Engwicht, Nina 45 Enron 287, 292, 294 entrepreneurs see market pioneers entry barriers 21 307 Index escrow services, online stolen data markets 97, 98, 99 European Union (EU) CITES 188n15 cross-border shopping for alcohol 220 doping products 259 goodwill 113 tax havens 115 evolutionary economics 109–10 exception, zones of 143–4, 152 export regulations, antiquities market 72, 76, 81 externalities illegality vs legitimacy 13–14 inter-group 89–90 online stolen data markets 93–4 technological developments 24 extortion 127n3 extradition 100 Faraggiana, Daniele 253 Federal Energy Regulatory Commission (FERC) 295–7 Feldman, Harvey W 169 Ferrari, Michele 252, 260 financial crime 2, 41–2, 286–8, 289, 293–302 capitalism 25–6 electrical energy markets 294–6 foreign exchange fix 299–300 illegality vs legality 16 Libor 297–9 tax havens 116 financial engineering 291–2 tax havens 115–16 financialization 286–302 see also financial crime financial services industry 289–94, 300–1 see also financial crime Finland, doping products 258 Fligstein, Neil 17, 58n4, 301–2 Flores Pérez, Carlos Antonio 126 foreign exchange (FX) fix 299–300 Foroohar, Rana 288–9, 291 fragmented nature of illegal markets 19 France Civil Code 56 and Guadeloupe, price differences between 273–4 organ transplantation, illegal 18, 53 repression against Central African merchants 278n11 fraud corporate 286–7 doping products 251, 253, 257, 260 French convention school 282 Guadeloupian retail sector 275 Mauritania 278, 279 online stolen data markets 94, 98, 99 free movement 68 frontiers 58–60, 68 legal 58 material 58–9, 60, 66–7 organ transplantation, illegal 60, 66–7 social 58, 66–7 see also interface between legal/illegal future, hope for the counterfeit goods 21 illegality vs legitimacy 13, 14–15 future economy 20 futurity 109–14 tax havens 118–19 Gainsborough, Martin 142 Gambetta, Diego 20, 109n2 gambling, illegal 246, 257 Germany doping products 258, 259 legality vs illegitimacy 201 surrogate motherhood Ghadde, Ehel 280 Ginsburg, Carlo 66n10 global financial crisis 25, 286–7 alcohol, Russia 226, 229 financialization 289, 290 health effects 287 Libor 298 globalization 63–6 Godechot, Olivier 291 Goffman, Erving 163 Goldman Sachs 289, 290, 294 Goldstein, Daniel M 135 goodwill 112–13 organized crime 118–19 Gorbachev, Mikhail 221, 223, 233 Gore, Al 52 governance in online stolen data markets 87–103 economic organization of two-sided markets 89–90 trust-creating mechanisms 95–9 understanding illicit online data markets 90–3 Green, Penny 80 grey markets 45, 46 in antiquities see antiquities, grey market in meaning of term 70–1 understanding of 83–4 Groenewald, Dawie 192–3, 194 Guadeloupe, high living costs in 8, 268–76, 282–3 Guernsey, as tax haven 116 Guyana, consumer goods pricing 275 hackers 91, 102–3 see also governance in online stolen data markets 308 www.ebook3000.com Index Hamilton, Tyler 252 Hardy, Sam 72 Hart, Keith 10–11, 40, 143n4, 282 hawala system 124 hedge funds 115, 293 Helmke, Gretchen 15, 125 Hill, James 112 Hirschman, Albert 57 Holt, Thomas J 99 homemade alcohol, Russia 219, 220–1 data sources 223 evolution of illegal markets 224–5, 227–8, 233–5, 238 legality and legitimacy 235, 236, 237 Hong Kong, as tax haven 116 HOTT project 59, 60, 63, 64–5, 66 Howman, David 246 human body parts, commodification of 51, 52–3 see also organ transplantation, illegal human trafficking 56 Hume, John 189 hunting, rhino 180, 181–2, 183–4, 189–94 Huygues Despointes Group 273n4 hybrid phenomena 44n4 identity theft 91 illegality and capitalism 22–7 changing definitions of contested, in rhino horn market 177–80 economic dynamics 23–4 vs informality 10–11 vs legality 15–17, 37–9, 46 Sierra Leonean diamond market 203–4 see also interface between legal/illegal vs legitimacy 11–15, 42, 162–3 rhino horn market 180 Russian alcohol markets 222 Sierra Leonean diamond market 200, 208–15 weak states 201–2 types 41–3 see also illegal markets; illegal products illegal markets architecture 17–22 definition nature of 41–3, 67–8 typology 4–7, 41 weak states 200–2 illegal products 4, 16 capitalism 22 illegitimacy vs legality 201–2 vs legitimacy 46 organ transplantation 54 import regulations, in antiquities market 76 Indergaard, Michael 287 India organ transplantation 52, 61, 62–3, 64 surrogate motherhood inflation, Mauritania 277–8 informal economy 2–3, 80–1 capitalism 22 vs illegal markets 219 rule violations Sierra Leonean diamond market 208n8 Vietnamese border market 143 weak statehood 201–2 informality vs illegality 10–11 vs legitimacy 40 see also informal economy informal rules, enforcement of 9–10 information asymmetries, online stolen data markets 94 intangible property 112–13 intellectual property rights see counterfeit goods; trademark infringements Intercontinental Exchange (ICE) 295 interface between legal/illegal 43–6 ambivalent 162–4, 172 antiquities market 79 grey markets 71, 79, 81, 84 living costs, high 276, 282–3 medical marijuana 161, 167, 170, 172 rhino horn market 191–4 Sierra Leonean diamond market 205–8 state-sponsored protection rackets 124–5 see also frontiers International Association of Athletics Federations (IAAF) 258 international marketplace, antiquities market 72–3, 76 International Monetary Fund 117 International Olympic Committee (IOC) 251, 252 International Union for the Conservation of Nature 185 internet as world’s largest ungoverned space 24 see also online markets investment banks 290 Iran organ transplantation 6, 59, 63, 65 Standard Chartered 291 Iraq, organ transplantation 59, 63 Ireland, as tax haven 116 Israel, organ transplantation 65, 66 Istanbul Protocol 53, 56–7 Italy doping products 6, 245–62 distribution chains and market relationships 254–7 309 Index Italy (cont.) national sports bodies, role of 258 quasi-illegal market 258–60 research design and data collection 247–8 typology of suppliers 248–54 NAS (Nuclei Anti-Sofisticazione/Carabinieri Command for Health Protection) 247–8, 250, 252–4, 260 sweatshops 23 Jacobs, Harvey 52 Janus figures, in the antiquities market 77, 84 Japan, goodwill in 113 Jersey, as tax haven 116 Johnson, Simon 290 Jooste, Johan 193 JP Morgan assets 290 electrical energy market 296 Libor 298 US Steel 112–13 JP Morgan Chase ( JPMC) 299, 300 JP Morgan Ventures Energy Corporation ( JPMVEC) 296 Justman, Wayne 166, 169 Katz, Jack 128 Kazakhstan, Customs Union with Russia and Belarus 233 Kenya, as rhino range state 177n1 kidney transplants see organ transplantation, illegal Kimberley Process Certification Scheme (KPCS) 203 Koidu Holdings/Octea 213 Kosovo, organ transplantation 65, 67 Kouchner, Bernard 53 Krippner, Greta 288 Krüger, Johan 189 Krugman, Paul 289 land-grabbing processes 23 Lansky, Meyer 116 Laos, CITES 187 La Salada see Argentina: counterfeit clothing laundering artifacts 79, 82 money see money laundering rhino horn 192, 193 law enforcement see enforcement Lebanon, diamond market 206n6, 212 Le Déault, Jean-Yves 53 legality changing definitions of vs illegality 15–17, 37–9, 46 Sierra Leonean diamond market 203–4 see also interface between legal/illegal vs illegitimacy 201–2 vs legitimacy 39–41, 44, 142 piecemeal 210–11 legitimacy 37–8 alcohol, Russia 222, 235–7, 238 antiquities, grey market in 76 vs illegality 11–15, 42, 162–3 rhino horn market 180 Sierra Leonean diamond market 200, 208–15 weak states 201–2 vs illegitimacy 46 interfaces between legal and illegal action systems 45 vs legality 39–41, 44, 142 organ transplantation 54 Sierra Leonean diamond market 207–15 sources 13–15 technological developments 24 Lemthongthai, Chumlong 192n17 Levitsky, Steven 15, 125 Liberia, mining sector 211n13 Libor 25, 297–9 living costs, high 268–70, 281–3 Guadeloupe 268–76, 282–3 Mauritania 268–9, 277–83 looted artifacts 72, 74–5, 79, 81–4 Luhmann, Niklas 39 Lupsha, Peter A 126 Luxemburg, as tax haven 116, 117 Lyannaj Kont’ Pwofitasyon (LKP) 270, 272, 274–6 Macedonia, organ transplantation 59 Mackenzie, Simon 80 mafia organizations 41 doping products 257 as economic enterprises 109n2 vs illegal markets 42, 43, 45 personal reputation 20 protection rackets 42, 123, 125, 127n3 violence, threat of 21 see also organized crime Magrì, L 260 Maingot, Anthony P 116 malicious software 91 Mandel, Jerry 169 Mann, John 291 March, James G 40 marijuana, medical 6, 159–73 AIDS crisis 160–1, 162, 164–73 buyers’ clubs 20, 167–70, 172 quality issues 19–20 theoretical development 161–4 winning state support 170–1 Marijuana AIDS Research Service 166 market discipline 26 310 www.ebook3000.com Index marketing alcohol, Russia 226 architecture of illegal markets 21–2 online stolen data markets 94, 95, 101 “unmentionables” 162 market pioneers ambivalent market interfaces 163–4 medical marijuana 167–70, 172–3 Martinique 272, 275 Marx, Karl 22, 54 Mason, James 166 Matza, David 18, 72 Mauritania, high living costs in 8, 268–9, 277–83 Mauritius, as tax haven 116 McCarthy, Callum 117 mediator procedures, online stolen data markets 96, 97, 102 medical marijuana see marijuana, medical medical tourism see organ transplantation, illegal medicines, counterfeit 4, 19 Medicus Clinic case 65, 67 Melnikov, Victor 117 Merrill Lynch 294 Mexico drug production/distribution, and associated violence 56 emigrants in the US 151 state-sponsored protection rackets 125–6 Milk, Harvey 167 minimum prices, alcohol 226–7, 233 money laundering frontiers 58 Sierra Leonean diamond market 202, 207 tax havens 26–7, 108–9, 114, 115, 117–19 Moore, David 21 moral hazard, online stolen data markets 95–8, 100, 102 Muniesa, Fabian 301 Myanmar, and CITES 187 Namibia private ownership of wildlife 183n8 as rhino range state 177n1 National Party (South Africa) 182 Nauru, as tax haven 117 neo-patrimonialism 281 Netcare Clinic case 65, 67 Netherlands doping products 249 organ transplantation 59, 63 as tax haven 116, 117 Nigeria, embezzlement in 118 non-governmental organizations conservation 187 organ transplantation, illegal 53, 66 Northampton Museum (UK) 81 Obama, Barack 291n2 occupational crime 256 Ocean Tomo 113 offshore economy see tax havens oil prices, Guadeloupe 270–3 old institutional economics 109–10 Olsen, Johan P 40 Olson, Mancur 90 Ong, Aihwa 143–4, 152 online markets doping products 255 internet as world’s largest ungoverned space 24 marketing 21–2 stolen data see governance in online stolen data markets opacity see transparency, lack of Open Yai markets 42, 209, 212 organizational crime 256 organized crime 2–3 antiquities, grey market in 72 doping products 254, 257, 258 economy of the present 109 futurity 111–12, 113–14, 118–19 vs illegal markets 42, 43, 45 law enforcement, influencing of 21 Sierra Leonean diamond market 202 sovereign economic power, replication of 111 tax havens 108–9, 114, 116–19 terminology 261 see also mafia organizations organ transplantation, illegal 6, 51–68 capitalism 23–4 frontiers 59, 60, 64, 66–7 globalization 63–6 legal dimension 52–4 quality issues 19 secrecy 18, 66–7 violence 56–7, 61–3 Orr, Zvika 65n9 Ould Ahmed Salem, Zekeria 280 Oxfam 118 Pakistan, organ transplantation 59, 63, 64 Palan, Ronen 117 Palermo Protocol 53, 56 Panama, as tax haven 116 “Panama Papers” 26 Paoli, Letizia 9, 247, 248 paperwork see documentation parallel markets 71 pasanaku 124 past, economy of the 109–11 311 Index quality of goods alcohol, Russia 230, 231, 236, 237 architecture of illegal markets 19–20 in Mauritania solidarity stores 279 medical marijuana 19–20 online purchases 22 online stolen data markets 90, 92, 95, 97–9 standards 39 Vietnamese border market 150–1 quasi-illegal markets, doping products 258–62 Quinn, Sarah 163n5 rationalization of the work process 11 Rawlings, Greg 117 Reeves, Madeleine 145 Reno, William 282 repugnant goods 4–5 reputation antiquities, grey market in 77 architecture of illegal markets 20 financialization 293 online stolen data markets 92, 97–8 research perspectives, dialogue among 15 retail sector, Guadeloupe 273–6 Réunion, consumer goods pricing 274n5, 275 Reurink, Arjan 288 revenues from illegal markets reviews of sellers, online stolen data markets 92, 97, 98–9 rhino horn market 6, 177–95 architecture of illegal markets 18 CITES 185–8 conservation during apartheid regime 182–5 contested illegality 178–80 hunting and anti-poaching measures in colonial times 181–2 illegality vs legitimacy 12, 14 legal/illegal interface 191–4 local level 188–91 procurement methods and demand 180–1 Riccardi, Michele 118 rippers 92, 99, 100–1 Roehrkasse, Alexander 301–2 Roitman, Janet 278n11 Rosenbaum case 65, 67 Royal Bank of Scotland 298, 299 rule violations informal economy 11 Russia Civil Code 229 doping products 258 illegal alcohol markets 218–38 classification 219–20 conceptual background 220–2 data sources 222–3 demand side 21 evolution 223–35 money laundering 117 online stolen data markets 100 organ transplantation, illegal 59 Single Customs Union with Belarus and Kazakhstan 233 state-sponsored protection rackets 125 Radin, Margaret Jane 179n4 Randall, Robert 166, 171 Ras, Hugo 192n17 rating mechanisms, online stolen data markets 96–7, 100 rational action models 88, 102–3 Salada, La see Argentina: counterfeit clothing Sandberg, Sveinung 21 Saudi Arabia, organ transplantation 64 savings and loan crisis 286–7 Savona, Ernesto U 118 Schmidt, Eric 24 Paterson, David 291 patrimonialism 15 Payen, Didier 271 Peron, Dennis 165, 166, 167–8, 170–1 personal networks architecture of illegal markets 20 legitimate illegal markets 162–3 medical marijuana 167–8, 170 organ transplantation, illegal 59, 63 rhino horn market 191, 193 pioneers see market pioneers poaching, rhino 180, 181–2, 184, 191, 192–4 police antiquities, grey market in 75 protection rackets, Argentine counterfeit clothing 130–3, 135, 137 Vietnamese border market 151 political authorities see state political science 15 Pontell, Henry N 287 Portes, Alejandro 11 poverty antiquities, grey market in 75, 83 medical marijuana 169 organ transplantation, illegal 61, 62 Sierra Leonean diamond market 208–9, 214 power 3, 8, 14, 40, 43, 56, 76, 110, 111, 126, 127–9, 137, 144, 153, 182, 185, 209, 213n14, 269, 273, 275, 277, 278n11, 280, 281n17, 282, 289, 294, 296 present, economy of the 109 protection rackets 42 architecture of illegal markets 21 mafia organizations 42, 123, 125, 127n3 state-sponsored 124, 125–7 see also Argentina: counterfeit clothing Proudhon, Pierre-Joseph 54 public opinion, and organ transplantation 54 punctuated equilibrium model 172 312 www.ebook3000.com Index secrecy 7, 57–9, 68, 123, 137 architecture of illegal markets 18 child pornography 16 corruption 42 financial crime 42 organ transplantation, illegal 66–7 tax havens 109, 114, 115 see also concealment, work of Seychelles Economic Development Act (EDA, 1995) 117 as tax haven 116, 117 shadow state 80–1, 282 shareholder value model 292 sharing economy 11 capitalism 24 Sierra Leonean diamond market 8, 198–200, 202–15 Diamond Trading Bill 204 legality vs illegality 203–8 legitimacy, sources of 208–14 tolerance 44 signaling theory 98 Simmel, Georg 55, 57, 58 Singapore, as tax haven 116 Situational Action Theory 18 Slocum, Tyson 296 Smart, Alan 143, 143n4 Smith, Adam 293 smuggling alcohol, Russia 219 evolution of illegal markets 225, 231, 233, 238 antiretroviral drugs 168–9 doping products 256 Sierra Leonean diamond market 204, 205, 206n5, 210, 213 Vietnamese border market 141–53 Snyder, Richard 126 social movement activists see activists social orders, Sierra Leonean diamond market 213–14 Société Anonyme de Raffinerie des Antilles (SARA) 271, 272 South Africa Game Theft Act 105 (1991) 183–4 National Environmental Management Biodiversity Act (NEMBA, 2004) 189, 191, 193 organ transplantation 65, 67 rhino horn market 177, 181, 186–94 apartheid regime 182–5, 186, 187, 188, 190, 194 architecture of illegal markets 18 CITES 186–8, 189–90 colonialism 181–2, 183, 187–8, 191 game reserves 182–5, 190, 193 national parks 182–5, 193–4 selective enforcement Threatened or Protected Species (TOPS) regulations 188, 189–90, 191 Spain, doping products 249 Standard & Poor’s 500, goodwill value 113 Standard Chartered 291 standards 39 see also quality of goods state ambivalent market interfaces 163–4 antiquities, grey market in 78, 79 architecture of illegal markets 17 capitalism 23, 26 caring 210 coding system 110 contested illegality 178–9 economies of past and future 110–11 illegal markets 7–10, 162, 198 illegality vs legitimacy 12, 14, 15 legality vs illegality 17, 198 living costs, high 269 Guadeloupe 271–4 Mauritania 277–81 medical marijuana 166–8, 170–3 organ transplantation, illegal 53 organized crime 111 post-conflict 198–9, 204, 207, 210n11 Sierra Leonean diamond market 198–9, 204 protection rackets 124, 125–7 rhino horn market 189–92, 194 Russian illegal alcohol markets 221, 223, 226, 229–30, 233–4 selective cooperation with state agents 21 shadow 80–1, 282 Sierra Leonean diamond market 198–200, 203–15 Vietnamese border market 142–7, 151–3 weak 198–202, 207, 233 statute of limitations, doping products 248, 252, 253, 258 Steiner, Philippe 2n3, 179n4 stolen goods architecture of illegal markets 18 doping products 248, 252, 254–5, 257, 260 illegality vs legality 16 occupational crime 256 online stolen data see governance in online stolen data markets quality issues 19 rhino horn 180 Sierra Leonean diamond market 212 transparency, lack of 19 strategic framing 163 medical marijuana 172 subsistence, right to 208–9 subversive economy 145 Sudanese migrants 61–2 313 Index surrogate motherhood 4–5, capitalism 23–4 Swaziland, rhino horn market 186 sweatshops capitalism 23 counterfeit clothing 124–5, 134–6 Swedberg, Richard Sweden, organ transplantation 59, 63 Swiss Federal Banking Commission 118 Switzerland antiquities, grey market in 76 as tax haven 116 Sykes, Gresham M 18 Taibbi, Matt 289, 297 Taiwan, and CITES 187 Tarbell, Ida 112 tax on alcohol, in Russia 226–7, 233 financial services industry 290–1 Guadeloupe 271 Mauritania 280 as percentage of transaction 111 Sierra Leonean diamond market 212 tax avoidance alcohol, Russia 221 tax havens 115, 117, 118 tax evasion alcohol, Russia 220–1, 225, 227, 230, 233, 235–6, 238 informal economy 11 Sierra Leonean diamond market 205n4 tax havens 27, 114–16, 118 Vietnamese border market 146 tax havens 108–9, 111, 114–16 capitalism 26–7 criminal investment 108 futurity 118–19 organized crime 108–9, 114, 116–19 percentage of world’s wealth in 287 regulations 114–15 secrecy 18 taxi companies 11, 24 Taya, Maaouya Ould 277 Taylor, James 61 terrorist organizations vs illegal markets 42, 45 Sierra Leonean diamond market 202 Thomas theorem 54 Thompson, Edward Palmer 23n10 Tillman, Robert 287, 288 time restrictions, alcohol sales in Russia 236 Toet, Karel 193 tourism, and archaeological riches 74 trademark infringements 132, 135 Russia 229 alcohol 220, 225, 229–30, 235–7 see also counterfeit goods transaction costs organized crime 111 state 110, 111 transparency, lack of 123 antiquities, grey market in 77, 78, 80 architecture of illegal markets 18–19 financial markets 293 Guadeloupe 271–3, 274 tax havens 108, 115 transplant tourism see organ transplantation, illegal Transvaal Directorate of Nature Conservation 183 Trespeuch, Marie 2n3, 179n4 trophy hunting, rhino 180–1, 183, 186, 189–90, 192, 194 trust antiquities, grey market in 77 architecture of illegal markets 20 institutional 20 online stolen data markets 88, 90, 92–102 state-sponsored protection rackets 136 Turkey, organ transplantation 64, 67 two-sided markets 88 economic organization 89–90 online stolen data markets 90, 93–4, 102 Uber 11 UBS 294, 298, 299n4 UCI 258 underdevelopment, informality as major cause of 10 unemployment, and Sierra Leonean diamond market 209 UNESCO 83 Unger, Brigitte 117 Union des Forces de Progrés (UFP) 280–1 United Arab Emirates (UAE), antiquities market 76 United Kingdom antiquities, grey market in 78, 81 doping products 249 financial institutions infiltrated by organized crime groups 117 financial services industry 290–1 Libor 297 organ transplantation 60 see also England United Nations CITES see CITES Palermo Protocol 53, 56 United States of America antiquities market 75, 76, 78 CITES 185 314 www.ebook3000.com Index Controlled Substances Act (CSA, 1970) 160 doping products 245, 246, 252, 253 financial crime 287 electrical energy markets 294–6 foreign exchange fix 299–300 Libor 297–9 financialization 288–93 medical marijuana 159–61, 164–73 National Organ Transplantation Act (1984) 52 online stolen data markets 100 organ transplantation 51, 52, 53, 60, 64, 65 rhino horn market 192 state-sponsored protection rackets 125 US Steel Trust 112–13 values 72, 210 Van Bockstael, Steven 211n13 van Klinken, Gerry 142–3, 144 van Riebeeck, Jan 181 van Schalkwyk, Marthinus 189 van Schendel, Willem 142 Varese, Federico 127n3 Veblen, Thorstein B 109 Venezuela, organ transplantation 53 Venkatesh, Sudhir 2, 10 Vietnam border market 21, 141–53 CITES 187 rhino horn market 189, 193 violation of rules/regulations informal economy 11 violence doping products 257 Mauritania 278 organ transplantation, illegal 56–7, 61–3 threat of 55–6, 59, 68 architecture of illegal markets 20–1 legitimate illegal markets 162 online stolen data markets 100 state-sponsored protection rackets 124 Visconti, Arianna 80 Volkswagen 5, 25 Wal-Mart 291 warranties 19 Vietnamese border market 150–1 Weber, Max legitimacy 12, 39–40 profit making 55 rational enterprise 11 states web forums see governance in online stolen data markets WebMoney 91 Wehinger, Frank counterfeit goods 21 illegal markets 110, 143, 147–8 market concept 246n4 Werner, Clint 164–6, 168–9 West, Christopher 162 whistleblowers 67 white-collar crime 24, 256, 261 see also financial crime Wikström, P 18 Williams, Allan M 145 Willock, Anna 186 Wilson, Aubrey 162 Wilson, James Q 288 Wilson, Thomas M 145 Woll, Cornelia 291 World Anti-Doping Agency (WADA) 246, 251, 257 Yemen CITES 187 rhino horn market 181 Yiftachel, Oren 153n13 Zerilli, Filippo M 143, 143n4 Zhang, Juan 142 Zimbabwe, as rhino range state 177n1 Zucman, Gabriel 287 315 ... is, of one of the bases of the social structure of illegal markets) improves our understanding of illegal and informal practices Examples of this are the understanding of the financing of criminal... contradictory) rules and how they come to bear on the understanding of legality and illegality in economic practices Illegality and Informality in Markets The investigation of economic activity taking place... in the organization of markets under conditions of legality and illegality Finally, in the last section we discuss the connection between illegality and the capitalist economy Illegality in markets