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Unformatted text preview: American Political Science Review Page 1 of 15 November 2011 doi:10.1017/S0003055411000335 Governance and Prison Gangs DAVID SKARBEK Duke University H ow 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 emergedfromanunexpectedsourcebehindbars.TheMexicanMafiaprisongangcanextortdrugdealers on the street because they wield substantial control over inmates in the county jail system and because drug dealers anticipate future incarceration. The gangs 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. Evidence collected from federal indictments and other legal documents related to the Mexican Mafia prison gang and numerous street gangs supports this claim. H ow can people who lack access to effective gov- ernmental institutions establish property rights and facilitate exchange? For markets to op- erate effectively they require governance institutions to define and enforce property rights, adjudicate dis- putes, and mitigate the harms of negative externalities. Nearly half of the worlds governmentscomprising nearly two billion peoplefail to do this well, so it is important to understand how governance institutions arise and function in the absence of strong government (Leeson and Williamson 2009). This article examines the system of governance that has emerged among rival criminal groups in California, and it argues that the Mexican Mafia prison gang facilitates trade by His- panic drug dealers in Los Angeles. This unique context affords the opportunity to advance our understanding of how people define and enforce property rights and how trade takes place when individuals cannot rely on an effective governmental legal system. Centralized governments and competing, overlap- ping governance organizations can both provide gov- ernance institutions that resolve disputes, secure prop- erty rights, and limit negative externalities (Hooghe and Marks 2003). Laboratory experiments show that self-governance is possible (Ostrom, Walker, and Gardner 1992), and history provides many examples of the private provision of governance (Grief 2006; Ostrom 1990; Stringham 2007). Centralized and de- centralized governance organizations both require re- sources, which they can acquire in three ways: relying on peoples inherent cultural preference to contribute, increasing the quality or quantity of the good to en- tice contributions, or using threats and violence against people who do not contribute....
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