"Why doesn't government like organized crime?" "Because it hates competition!"
It is the truth.
Most governments use the fraud of the sanctity of Law to support the illusion of majority rule while a noncompetitive minority makes decisions sans any actual majority input other than an occasional ballot whose outcome may or may not be prearranged. Furthermore, government routinely tries to monopolize everything it can by coercion. Therefore, ANY government that does not allow and protect voluntary disassociation is a violence based protection racket no different than the "organized crime" that it sanctimoniously excoriates.
From John Robb's Global Guerrillas
A core dynamic behind the emergence of the nation-state was it's ability to run a successful protection business (aka racket). A system that has been growing since the treaties of Westphalia in the 1600s. The protection business is relatively simple:
- It is a monopoly. It has exclusive ownership over the use of violence. As a monopoly, it must crush all internal competitors.
- It defends its monopoly from outside interests -- as in warfare with nation-state and non-state competitors.
- It charges the customers (individuals and businesses) within its geographical areas of control for this service. This isn't optional. Customers presumably benefit from this protection.
Historically Successful Protection Rackets
So what made the nation-state formula for protection so superior to its competitors during its ascent over the last 400 years? It's simple. It delivered value to its customers. Let's dive into this with a paper by Charles Tilly (War Making and State Making as Organized Crime). He cites the economic historian Frederic Lane's simple formula for success:
- The protection monopoly must generate tributes in excess of the costs necessary to maintain it's monopoly.
- The protection monopoly must generate protection rents for its customers. The amount the customers benefit gain from the protection of their interests less the amount they pay for it.
- Both tributes and protection rents must be positive for long term success. Further, the nation-state that minimized protection tributes in favor of maximizing protection rents grew the fastest (historically, that was partly accomplished through economies of scale).
The Status of Modern Protection Rackets
The protection formula broke down in the latter half of the 20th Century as the nation-state became more complex. Key elements of this breakdown include:
- First, the advent of nuclear weapons made full scale war impossible (van Creveld).
- Second, the emergence of a global marketplace with global property rights meant that the commercial interests of the nation-state's remaining customers became more powerful than nation-state's interests. This restricted/limited warfare even more.
- The result has been a slow unraveling of the nation-state's ability to maintain it's monopoly over violence (and much more) within and outside its geographical borders. This has created a gap in protection at the local level into which small violent groups are now quickly converging. Finally, there is additional evidence that the economies of scale that drove the growth of earlier protection monopolies has broken down.
- Stay decentralized and cooperative (re: opposition to the state) to ensure protection efficiency. There are few economies of scale in this environment given the leverage offered by globalization and the presence of legacy nation-states as barriers to growth.
- Generate positive protection rents for their customers. Deliver value. Protection monopolies that expand into the core businesses of its customers will become vulnerable and inefficient. Expand the business interests of customers by eliminating competition when possible and ensuring market access. Charge competitive rates and not monopoly rents (sufficient tribute but not excessive).
- Diversify. To maximize potential tributes while still delivering accelerating protection rents to customers, a protection racket should expand its customer list. This means extending protection from drug smuggling to generic smuggling (across the entire range of potential goods) to generic commercial activity (standard corporate and small business interests). Create a vibrant local commercial environment across the entire spectrum of potential activity.
NOTE: I think this is a nice expansion of the theoretical groundwork laid down in Brave New War, with the goal of laying out the entirely new framework for how 21st Century warfare will work. Of course, since I don't work for anybody exclusively, it is available to everybody. Use as you see fit.