The trademark Mafia

1
The trademark Mafia

• Diego Gambetta
• European Summer Days
• Economics, Extra-legal Protection and Organised
  crime
• Steyr, 9-14 July 2005

2
Puzzle

• On 18th November 1993 the Italian police secretly
  recorded a telephone conversation between two
  Sicilian Mafiosi
• The first says The Mafia was ruined by Totò
  Riina the boss of bosses in the last few years.
  He was too heavy handed.
• The other, Salvatore Robertino Enea, who was
  arrested a few months later, replies Listen,
  the word Mafia no one can touch it, no one! They
  can destroy mafiosi but not the Mafia,
  understand? (Repubblica 11,2, 1994).
• This belief is shared by Harold Kayo Konisberg,
  a Jewish gangster who worked as a contract killer
  for the Mafia in New York. In an interview he
  said This thing wont die. (This Thing the
  Mafia) (The New Yorker, August 6, 2001, p49).
• Trivial? Superstition? Delusion of grandeur?

3
CRIMES AND SIGNS CRACKING THE CODES OF THE
UNDERWORLDDiego Gambetta, Princeton UP,
forthcoming, 2006

• 1. IDENTIFICATION SIGNALS
• 2. CONVENTIONAL SIGNALS
• 3. NICKNAMES
• 4. WHY LOW LIFE IMITATES ART
• 5. PROTECTING SIGNALS
• 6. THE TRADEMARK MAFIA
• 7. WHY PRISONERS FIGHT
• 8. SIGNALLING BY SELF-HARMING
• 9. THE VALUE OF INCOMPETENCE
• 10. THE EXCHANGE OF COMPROMISING INFORMATION
• CONCLUSIONS

4
PLAN OF THE LECTURE

• REPUTATIONS AMONG CRIMINALS
• REPUTATION OF PROTECTION FIRMS
• THE TRADEMARK MAFIA
• MIMICS OF THE TRADEMARK
• FIGHTING MIMICS
• BACK TO THE PUZZLE

5
Reputations among criminals

• Building and maintaining a reputation for the
  quality and trustworthiness of ones business is
  an essential part of most economic activities.
  Criminal firms make no exception
• The value of a good reputation increases
• As the cost of proving/testing the quality of
  goods increases
• If there are no certifying and enforcing
  institutions
• The secrecy and the instability that characterise
  the underworld increase the demand for
  reliability but they make it harder
• to reassure others or feel reassured by others
• to advertise it and to divulge it

6
Reputations among criminals continued

• The uncertainty besetting the underworld hinders
  the extension of reputation to supra-individual
  entities such as names and trademarks
• Criminal reputations remain attached to specific
  individuals, at best extending to families,
  contrary to the legal economy in which
  reputations can have a life independent of the
  originators
• The time horizon of criminals at best coincides
  with their life expectancy as it is hard to pass
  it on
• These limitations lower the value of a good
  reputation in illegal businesses relative to the
  value a reputation has in legal businesses

7
Reputation of protection firms

• Successful protection firms struggle out of these
  limitations. They have to. For them reputation is
  their key asset
• Protection saves on signalling/testing costs. But
  it also saves on production cost building a
  reputation is the main production cost.
• Car manufacturers with a good reputation still
  have to produce cars. A reputation for providing
  good quality protection and the production of
  protection are one and the same thing. People buy
  protection from and comply with protectors
  decisions if they fear them and believe others
  fear them
• A protector could not run his business if he had
  to establish his credentials at every
  transaction, and a loss of reputation can be fatal

8
Reputation of protection firms continued

• Protection agencies benefit from developing as
  organisations. One reason is that entry costs are
  high because the cost of creating a reputation
  are high
• An organisation makes sure that one does not need
  to start again every time an individual dies or
  goes to jail.
• A reputation embedded in the rules and practices
  of the organisation rather than in any particular
  individual can be passed on to new member and to
  subsequent generations. It becomes a transferable
  asset
• In successful Mafia-like groups, pace The
  Godfather, membership and power transfers go
  beyond kin by contrast, protection firms made of
  individuals, or small bands or kin, such as the
  Neapolitan Camorra remains turbulent and subject
  to higher uncertainty

9
Reputation of protection firms continued

• Individuals and sub-groups benefit from and
  contribute to the reputation of the organisation,
  the reputation is a common asset
• Sicilian judge Fabio Salamone captured the
  quintessence of the Mafia
• every associate can use the strength of
  intimidation as an incorporeal good (...) an
  asset common to all associates and therefore
  belonging pro indiviso to every single one of
  them. (...) It is (...) a capital which
  represents the result of a process of collective
  accumulation and which can provide a rent to
  the individual member even if he did not take
  part in the process Only because he is known as
  such can a mafioso fulfil his aims
• To become made member means to be authorised
  to exploit the shared reputation asset by those
  who own it, being recognised as a member by
  other members

10
Reputation of protection firms continued

• Mafia-like groups have thus a paramount interest
• in regulating the number and the quality of
  members who can benefit from the collective
  reputation
• in making sure that all families and members
  respect certain rules in handling their business,
  so that their reputation and indirectly the
  reputation of the industry remains solidly
  attached to the whole and as detached as possible
  from individual vagaries.

11
Signalling reputation

• Signs make a reputation travel a face, a name,
  a logo, a tune, a pattern, the ethnic origin of
  the suppliers. Signs embodying a reputation
  become trademarks.
• Trademarks are a form of signalling quality by
  signalling identity (Bacharach and Gambetta 2001)
• In most economic studies reputation once acquired
  is assumed to travel without problems, by
  contrast, accurate re-identification can be
  problematic, because of mistakes and because of
  mimics
• The management of trademarks that is the
  management of signalling reputation once there is
  one is an essential economic activity.
  Trademarks must be distinctive, memorable and
  attractive, and hard to mimic or otherwise
  protected

12
The trademark mafia

• Through which signs is the reputation of being a
  mafia member communicated?
• The name Mafia alone carries a powerful
  message. It has reached a mythical status
  independent of the individuals incarnating it
  at any one time. Only nation states, organised
  churches, corporations, or ancient academic
  institutions can achieve as lofty status
• Those who can make others believe that they are
  members of the entity connoted by that name have
  a tremendous reputation advantage

13
Origins of name

• The name mafia first appeared in 1865
• Its most likely origins are from a play, called I
  Mafiusi della Vicaria, which was performed over
  2000 times
• The word was coined by outsiders but it worked
  it solves a coordination problem among many units
  that operate in secrecy (parallel with al-Qaeda)
• In 1876, Leopoldo Franchetti wrote
• the term Mafia found a class of violent
  criminals ready and waiting for a name to define
  them, and, given the special character and
  importance they have in Sicilian society, they
  had the right to a different name from that
  defining vulgar criminals in other countries

14
Mimics

• Since reputation is nearly everything in the
  protection business, mimicking successfully its
  trademark is all one needs to reap the benefit.
• But can anyone who just claims we are the Mafia
  be believed? And can anyone who claims to be
  protected by the Mafia be believed?
• With outsiders it is not so difficult because
• Easier to mimic group membership than specific
  individuals
• Secrecy makes it harder to double check claims
• Pascal Wager

15
Fighting mimics

• The standard way to protect the name from mimics
  is to punish them whenever they are caught
• Another way is to deflect the identification on
  additional traits, e.g. ethnic features reduces
  the pool of potential mimics (style of apparel is
  not relevant as it is a non-costly signal)
• Intimidating demeanour and speech
• Use of other reputation-carrying names names of
  boss, of kin dynasties, of families founders,
  and nicknames

16
Fighting mimics continued

• As the areas of Mafia influence and the size of
  membership increase mimicry becomes easier also
  with insiders as many Mafiosi may not even have
  heard of each other
• To counter this risk the Mafiosi have a rule one
  cannot introduce oneself as a member to another
  member, he needs a third party known to both to
  officiate the introduction
• There is web of filters that permits the correct
  identification of mafia members formed by a rich
  array of signs that make the mafia world hard to
  penetrate by mimics

17
Back to the puzzle

• Suppose all Mafiosi were all wiped out, would the
  term survive as a meaningful carrier of an
  intimidating reputation?
• A trademark that remains without an owner is a
  prized asset up for grab. If Mafia evoques
  intimidation, being able to claim we are the
  true Mafia continues to carry an effective
  economic value. If everyone believes that there
  is something threatening out there called the
  Mafia the incentive for new entrants to claim to
  be the rightful bearer of that name are
  tremendous.
• But why would that reputation be maintained?
• It is hard to be sure whether a secret
  organisation has disappeared if there is
  criminal activity it will be attributed to the
  Mafia, if there is no activity people conjecture
  that it is re-grouping in secret (parallel with
  al Qaeda)
• At fist there would be bad quality mimics mixed
  with good quality ones