My last post about the Economics of Kidnap and Ransom, discussed the process of kidnap for ransom negotiations. In this post I want to outline how it comes to a kidnapping in the first place. There are many puzzles as to where, when and why a kidnapping happens. These questions can adequately be explained by the protection theory, a theory explaining the costs and benefits of an organization that has a “monopoly on violence”. First, I will explain what the protection theory is. Secondly, I will elaborate on why this theory can explain where, when and why kidnappings happen. In conclusion this theory explains why mafia like organizations, extracting information and taxes from businesses and individuals, are the prime perpetrators of kidnappings.
An efficient economy, in which goods and services can be traded freely, need an organization that enforces trade agreements, a so-called protector. This protector is mostly a state. The protector ensures that a trade between two parties is according to the agreement or law. In order to enforce these agreements, the organization needs a “monopoly on violence”. This guarantees that the protector will be able to administer trade without resistance, because they are the only ones who can effectively use violence (i.e. the executive branch). This benefits society as a whole because now trade can be monitored and deviations punished, resulting in safe economic flourishing. But it also comes at a cost. The “monopoly on violence” is expensive. It costs money to fund an executive branch of government. Thus, taxes are payed by society in order to fund protectors. People happily pay them because they benefit from the protectors. It is thus a positive sum game in which value is created if society pays protectors to monitor society.
So far so good. But what happens in failed states in which the protectors are not able to enforce the law? In this case the “monopoly on violence” is up for grabs. Here extra-legal organizations come into play, substituting the government. This is the very definition of a Mafia. The Mafia is nothing but an extra-legal protector. It collects “taxes”, co-called protection money, in order to facilitate orderly trade by enforcing a “monopoly on violence”. But Mafias don’t substitute governments perfectly. For the most cases they don’t have sophisticated judiciary and correctional facilities. The bureaucracy isn’t very established in Mafia law, leaving the mafia in the dark about how much people earn and what people do. But these things are important to know if one’s only funding are taxes. Next we will explain why kidnaping is fantastic way for mafias to find out what people are up to without bureaucracy and without unnecessary costs.
The majority of kidnappings are done by the mafia because (1) it makes sense for them (high benefits), and (2) they have the infrastructure to do so (low costs).
(1) So why does it make sense for the mafia to kidnap people? Let’s imagine you are a mafia boss and you have a few big manufacturing companies under your monopoly of violence rule. You suspect that one of them might earn more than what he tells you he earns. How do you find out what his actual profit is? You could go up to his place and destroy part of his factory and demand higher tax payments. But that’s not smart: You will destroy part of the business that earns you money via taxes. Thus, smashing windows, intimidating workers, and killing employees is a horrible idea if you want the maximum amount of taxes from a business. A way smarter way to do this is by kidnapping a family member of the manufacturing owner. By doing this the business can continue to make profit, and at the same time your fraudulent manufacturing owner will now reveal what he’s able to pay for his beloved daughter (i.e.). You win on both fronts: (a) the tax paying business stays intact, (b) by knowing how much he is willing to pay for his daughter you know how much money he has/ how much extra money he could have paid in taxes and protection money. This hypothetical example can be extended to Somali pirates, pipeline worker kidnappings in Eurasia, or cartel kidnappings in South America. Kidnapping is an efficient way of taxation for extra-legal protectors. It establishes how much a firm in a mafia’s territory makes, while not disturbing the profit generation by the company itself.
(2) The second point to why most kidnappings are done by mafia-like-organisations is because they are the only ones capable of such a task. Kidnapping isn’t easy. You need an infrastructure in place to feed and hide the operation. The kidnappers must establish ways of communication, negotiation, and transport. All these factors are less of a problem if you have the “monopoly on violence” in a territory, thus act as a state. A group of 5 criminals will have a hard time organizing a kidnap and ransom negotiation, while a state-like-actor can control nearly every aspect mentioned above.
We can summarize that kidnappings happen by “protectors” in order to extract information and taxes, without harming their local business. This is true for the majority of kidnappings. This theory is outlined in Anja Shortland’s fantastic book Kidnap. I will leave you with one other theory explained in that book: One of the oldest kidnap for ransom, in this theoretic framework, are marriages in the middle ages. To ensure that collaborating states, with limited information, adhere to the agreed upon trade agreements, family members were married off to partnering (or rival) countries. This is a long-term kidnapping ensuring that the rulers of other countries uphold their end of the bargain. If not the new addition to the family will live under worse circumstance, be tortured, or die.
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