Content area
Full Text
THE ENTERPRISE "MODEL" OF ORGANIZED CRIME: ASSESSING THEORETICAL PROPOSITIONS
In recent years, the study of organized crime has been oriented around the enterprise "model." This model is really an approach to studying organized crime, founded on the notion that legal and illegal businesses are quite similar. This notion provides the method used by enterprise theorists: theories established for studying formal legal organizations are applied to the study of businesses that provide illegal goods and services. The most noteworthy research based on the enterprise approach is that of economist Peter Reuter. Reuter used principles of industrial organization and marketplace dynamics to predict that illegal enterprises will be relatively small and shortlived, and that illegal markets will be characterized by competition, not by collusion. Here I seek to assess the degree to which Reuters propositions were confirmed or disconfirmed by observations of the numbers gambling industry in New York City in the 1960x. Most of Reuters propositions were not supported by the data used in this study.
Jay Albanese (1985) suggested that theories of organized crime can be divided into three major paradigms: conspiracy, local ethnic groups, and enterprise. Conspiracy theory (also called the alienconspiracy/bureaucracy/ corporate model) is the traditional view of organized crime embraced by many public officials. From this perspective, organized crime is seen as a formal, rigidly structured, bureaucratic organization very much like a legitimate corporation. It is viewed as a monolithic conspiracy of national proportions that is perpetuated by minority ethnic groups, notably Italian-Americans. The conspiracy perspective has been largely discredited (Albini 1971; Block 1994; Ianni 1972; Potter 1994; Reuter 1983; Smith 1975), while the academic community has sought to introduce alternative paradigms founded on social and economic realities.
In recent years, the dominant perspective on organized crime has been the enterprise "model," whereby organized crime is viewed as economic activity that happens to be illegal. The primary assumption underlying the enterprise approach is that because organized crime is merely business activity which exists at the illegal end of the market "spectrum," theories developed for studying formal legal organizations may be applied to the problem of organized crime. Research oriented around the enterprise approach has led to a new orthodoxy of organized crime theory that has replaced the discredited conspiracy/bureaucracy framework.