Omertà, vendetta and good economic performance of the criminal organizations

Abstract

The codes of omertà (law of silence) and vendetta (revenge) function as economic institutions of criminal organizations. The omertà manages the information costs in the businesses of these organizations and the vendetta reinforces the fulfillment of agreements in them. Both reinforce each other and make possible the good performance of these businesses despite developing in a very hostile environment. This helps explain the persistence of these businesses and the strength of the criminal organizations that manage them. In crimes such as drug trafficking this translates in that the supply side is very resistant and, if the demand is solvent, the business is inevitable and very profitable. The conventional criminal policy, focused on attacking the offer, is insufficient; or the demand is reduced or the link between the two is articulated in another way.