Murray Rothbard on Organized Crime

Murray Rothbard was a great economist[1], and a disaster when it came to politics.

A while ago, I came across this article, about The Godfather I & II and other Mafia movies. A few quotes:

The key to The Godfathers and to success in the Mafia genre is the realization and dramatic portrayal of the fact that the Mafia, although leading a life outside the law, is, at its best, simply entrepreneurs and businessmen supplying the consumers with goods and services of which they have been unaccountably deprived by a Puritan WASP culture. […]

Hence the systemic violence of Mafia life. Violence, in The Godfather films, is never engaged in for the Hell of it, or for random kicks; the point is that since the government police and courts will not enforce contracts they deem to be illegal, debts incurred in the Mafia world have to be enforced by violence […]. But the violence simply enforces the Mafia equivalent of the law: the codes of honor and loyalty without which the whole enterprise would simply be random and pointless violence. […]

Organized crime is essentially anarcho-capitalist, a productive industry struggling to govern itself; apart from attempts to monopolize and injure competitors, it is productive and non-aggressive. Unorganized, or street, crime, in contrast, is random, punkish, viciously aggressive against the innocent, and has no redeeming social feature. [Italics mine.]

What is the logic (or praxeology) of this? Let me take it step by step:

  1. States are organizations. A particular state may be well organized or badly organized, but an “unorganized state” would be a contradiction in terms.

  2. According to Rothbard and his followers, states are criminal by their very nature. This is why they dismiss the idea of a rights-respecting and rights-protecting state (limited government or a “night watchman” state) as illusory. No matter how hard we try to establish such a state or government, it will always end up with our rights being violated.

  3. Thus, a state is an example of organized crime.

So, if Rothbard (and his followers) is in favor of organized crime, what justification does he (or they) have for opposing the state?

Well, the answer to this seems to be that the state or government is doing a bad job of enforcing law and order. Privately organized crime is simply more effective that governmental organized crime.

And isn’t there a kernel of truth in this? When the state or government does not do its job of enforcing rights – and, instead, violates our rights – other organizations will step in to fill the vacuum.

Organized crime thrives on “victimless crimes”. When drinking is outlawed (as during the Prohibition era) – or taking drugs or gambling – this is when the Mafia takes over and supplies the goods. And when there are heavy taxes on tobacco and alcohol, then organized smuggling takes over. With a truly rights-respecting and rights-protecting government or state, this would not happen. But this, of course, is precisely what the anarcho-capitalists dismiss as illusory.

Rothbard has this graphic illustration of how much better the Mafia is than the government:

One errant, former member of the Corleone famiglia abases himself before The Godfather (Marlon Brando). A certain punk had raped and brutalized his daughter. He went to the police and the courts, and the punk was, at last, let go (presumably by crafty ACLU-type lawyers and a soft judicial system). This distraught father now comes to Don Corleone for justice.

Brando gently upbraids the father: “Why didn’t you come to me? Why did you go to The State?” The inference is clear: the State isn’t engaged in equity and justice; to obtain justice, you must come to the famiglia. Finally, Brando relents: “What would you have me do?” The father whispers in the Godfather’s ear. “No, no, that is too much. We will take care of him properly.” So not only do we see anarcho-capitalist justice carried out, but it is clear that the Mafia code has a nicely fashioned theory of proportionate justice. In a world where the idea that the punishment should fit the crime has been abandoned and still struggled over by libertarian theorists it is heart-warming to see that the Mafia has worked it out in practice.

Now, states are sometimes at war with one another, and sometimes at peace; and this is true of different Mafia groups, as well. About this, Rothbard writes:

In many cases, especially where “syndicates” are allowed to form and are not broken-up by government terror, the various organized syndicates will mediate and arbitrate disputes, and thereby reduce violence to a minimum. Just as governments in the Lockean paradigm are supposed to be enforcers of commonly-agreed-on rules and property rights, so “organized crime,” when working properly, does the same. Except that in its state of illegality it operates in an atmosphere charged with difficulty and danger.

But governments, too, “mediate and arbitrate disputes”. This is what diplomatic services are for – trying to prevent disputes from developing into wars. And wars commonly end with a peace treaty.[2]

It is, of course, true that governments today (and in the past) do a very bad job of protecting our rights and a very good job at violating them. But this is also true of private robber bands. – And I assume that if Rothbard is opposed to unorganized street crime but in favor of organized crime, then he must be opposed to private muggers, who mug on their own with no organization behind them, but in favor of organized robber bands, just because they are organized – or should be, if he follows his own praxeology.

It is also true that the struggle for a proper, limited government (a “night watchman state” or a “constitutional republic” or whatever name for it you prefer) is an uphill struggle. Just think of how many politicians will lose their power, as well as their salaries and other advantages, if this would become true. They will fight back with all their might. But this is also true of Mafias and of all the other “private protection agencies” that the anarcho-capitalists envision. If politicians can be corrupted by power-lust, so can Mafia bosses.

But if this struggle is impossible and illusory, our only choice would be to throw in the towel.

Update July 30 2014: This post has also been published on the new website For The New Intellectual.


[1] I haven’t read his magnum opus Man. Economy and State; but the introduction to his America’s Great Depression contains what may be the best explanation of the Austrian Business Cycle Theory and why it is the only possible explanation of the “boom-bust” phenomenon. And his shorter monographs What Has Government Done to Our Money? and The Case for a 100 Percent Gold Dollar are excellent presentations of the case for a 100% gold standard. I also recommend The Mystery of Banking, The Myth of Free Banking in Scotland and The Essential von Mises.

[2] I once heard a story about Harry Binswanger discussing the idea of “dispute resolution organizations” (DROs) with Ayn Rand, and her reply was: “You mean, like the United Nations?”

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