The concept of “illegal markets” is one which captures the same phenomena as the concept of “transnational (organized) crime”. However, “crime” directs the attention towards the harm of the activity, the motivations and curricula of individual offenders and groups and legal measures in the content of criminal justice and rehabilitation. A market perspective, on the other hand, focuses on the conditions and contexts of repeated exchanges that follow a supply and demand logic and expects rational actors who minimize their risk of prosecution and seek to maximize their gains. As such, this concept focuses more on global incentive structures and how the international realm feed into those through differences in regulation and legal, social and economic disparities between countries. Instead of criminalizing specific groups, including ethnic groups, the illegal markets perspective shows the intricate interdependencies between predominantly supply countries and predominantly demand countries. It also shows how, if demand is inelastic and the incentive structures thus stay the same, illegal activity often adapts rapidly and fluidly to policing activities. The perspective also renders personnel as well as structural links between the legal and illegal spheres visible [1].
Cybercrime, like fraud and scams, are not considered as illegal markets, since markets require a demand as well as a supply side. Rather, the internet provides new infrastructure that facilitates crime [2]. Money laundering and corruption similarly facilitate crime instead of constituting a market in itself.
Examples of Illegal Markets
The most commonly known illegal market is the market for illegal drugs. This market has been widely and internationally criminalized by the United States of America and has therefore received a lot of international attention as well as law enforcement resources. Historically, the first global prohibition regime was the slave trade, which despite prevailing labour rights infringements and human trafficking incidents, has become a very strong, successful regime. Another sector that has been widely discussed, albeit not institutionalized because of very diverging views on how to define the offence exactly and on whom to define as victim and offender, is prostitution [3]. These cases are widely known in part, because they have long seen more or less effective attempts at transnational prohibition, or strong advocacy for it, either by individual states or NGOs as moral entrepreneurs. Other illegal activity, however, is receiving less advocacy efforts and is far from being regulated in a cohesive manner in a prohibition regime.
In our research at the Institute for International Relations and within the training research project we address these markets which are only starting to be put on the national and international agendas or which are genuinely new crimes as “emerging illegal markets”.
Emerging Illegal Markets
Emerging illegal markets are here understood to mean markets which are either genuinely new types of illegal and illicit trade and services, as well as markets about which knowledge and interest for which is only just emerging. Illegal markets, therefore, “emerge” in one of two ways. Firstly, they can be genuinely new markets, created by new opportunity structures. An example is the illegal trade of sand, caused by the construction boom which lead to a higher demand for cement and therefore caused incentives to “steal” sand from beaches [4]. Also, the spread of the internet has created new illegal activities, such as identity theft, scams, but also online child pornography, as well as ways for coordinating such action and for selling illegal goods online. Animal species, which might be becoming rarer and therefore increasingly in need of protection are another example. However, illegal markets can also be “emerging” if at this point they still widely remain “under the radar” and are largely invisible to policy makers and/or the public. For example, the illegal trade of “blood” diamonds, which are diamonds sold by non-state armed groups, is widely known, while the market of coltan, which is suspected of also financing protracted conflict and in places mined under harmful conditions, used for technological devices such as mobile phones, is less well-known to most. The same applies to the contribution of other valuable minerals or oil to fueling conflict.
Emerging markets are not necessarily black markets. Black markets are markets that have been prohibited but that in practice persist. Some of the emerging markets, in contrast, are not globally prohibited even though they include activities that are deemed by many to be undesirable or immoral. However, the activity may be very controversial; strong interests may stand against regulation, or regulation efforts may be so new that they have not been decided upon or effectively implemented. In contrast to black market exchanges, such activities cannot be prosecuted. Since finding consent for a prohibition regime can be a process that takes considerable time, such a market may simply not be prohibited yet but advocacy for effective regulation may already be emerging [5]. Similarly, a look at the diffusion of international crime regulation shows that the spread of international law is also a matter of time, with more parties signing and ratifying treaties with time.
Transnational Crime and Regulation
In a legal sense, crime is what is forbidden by law. Anything, then, that constitutes a breach of the law is a crime, and inversely, any activity that does not violate any laws, is legal. When looking at transnational crime, however, this perspective is of limited use because in crossing borders it is unclear whose laws are the relevant ones. Do we see crime as soon as something is forbidden in one country? Does it have to be forbidden in all countries? Do we speak of global crime only when the Security Council of the United Nations Organization prohibits an activity? Or is a peremptory norm, one that stands above all other international legal agreements and does not even have to be codified in a legal document, required?
In this context, a more helpful interpretation of crime is one that sees it as activities that are socially perceived to be in some way harmful and therefore undesirable. Commonly, the socio-political reaction to such behavior is the state’s taking regulative action. The state thus forbids certain activities by law, but it also decides on how to enforce those rules, how to react in case of breaches of those laws and who to consult and rely upon in deciding on how to regulate. However, the process of deciding on what exactly is harmful enough to be forbidden and who is to blame for the harm – the consumer, the producer, the smuggler? – is a complicated one and not all harmful activity is regulated in the same way or even regulated at all.
Additionally, especially with the process of globalization, national legislation is no longer a solution for curbing many undesired activities. Instead, individuals and businesses can use countries, which do not regulate or do not enforce the regulation, to move their activities there. In addition to their own laws, states thus also have to convince other states to adopt specific regulation and to enforce them effectively to prevent “safe havens”. Because of these differences in how crime is dealt with, political scientists and international relations researchers ask questions such as which different regulations exist, whom the state relies on for enforcing them, and which topics receive enough attention to be regulated in the first place.
With an international perspective questions arise as to who convinces or forces other states to regulate in a certain way, which actors and organizations are relevant at the international level and which structures facilitate and incentivize crime. Crime is a result of and strongly reacts to national and international regulation. If actions are forbidden and the prohibition is enforced in a region, trade routes adjust to minimize risks and maximize gains. Due to this flexibility, where countries are unwilling or unable to hierarchically implement or enforce prohibition, there countries can become safe havens for criminal activity.
Similarly, where a practice is culturally accepted, such as the consumption of alcohol or other substances, prohibition is often extremely costly and thus ultimately infeasible, demonstrated for example in the prohibition era in the USA from 1920 to 1933. Many of these advantages of legalization are debated in the discussion of the legalization of all or specific drugs, and they include greater transparency and therefore reduced risks concerning the quality of the products and legal redress if market participants violate the agreements. However, many more regulatory options between legalization and prohibition are possible, including awareness raising, high taxation, consultations, and social services – aimed at reducing demand. Other initiatives draw on businesses to collect and share data on suspicious behavior or personal information to aid law enforcement. In other cases, businesses even take an active role to fight illegal practices, for example through certificates. Also non-governmental organizations play a role as awareness raisers, as safe-guards of certification and in providing victim support. The regulation of transnational crime thus consists of much more than police activities and top down law making and law enforcement activities. Instead, bottom-up regulation by affected parties (lobbying groups, companies, civil society actors, victim groups) fill the spaces between legalization and prohibition. Actors beyond the state therefore often play a central role as forces that shape legal and illegal transactions. A host of “soft” and “hard” regulatory mechanisms thus exists in the spaces between prohibition and legalization, addressing and profiting from non-state actors.
Transnational Crime and Organized Crime
Forbidden goods and services, such as drugs, conflict diamonds, human trafficking and prostitution receive a lot of attention in the media. However, reports often focus on specific illegal goods and services and on illegal organized groups or individual victims’ accounts. Often, connections between these groups are assumed, painting a picture of highly organized ventures, which infiltrate or overpower the state and jeopardize state legitimacy.
However, many contradictions exist in these reports and scientific research has often shown that criminal activities are organized, carried out and perceived locally in ways that contradict the assumptions about organized crime. Especially transnational crime, due to its additional logistical requirements in moving goods and people across borders, usually requires the cooperation of several individuals, requiring some sort of loose or hierarchical organization. However, while Mafia-style structures do exist in some markets and areas and while some organizations do seek to coopt governments, the majority of transnational crime is likely to be committed by less hierarchical organizations and economically minded individuals that are connected by loose networks, which are less vulnerable to policing efforts [6]. A market-centered perspective thus seems more appropriate for understanding transnational crime.
The Training Research Project
This page therefore presents less well-known transnational illegal activities from a market and governance perspective that asks which top down and bottom up governance exists to address transnational crime. The results stem from a training research project connecting the institutes research and students research on illegal markets. Such enquiries help understand illegal markets, for which data is often difficult to obtain and verify, and can ultimately help design governance mechanisms that are best suited to suppress and direct production and consumption in the desired ways. Additionally, while some illegal activities receive considerable attention, a lot less is known about other markets that equally pose health risks – such as counterfeit medicine -, that contribute to conflict by helping finance it – like coltan and other valuable minerals – , or have equally unwanted consequences for the people working in the trade – such as labour under sweatshop conditions.
Therefore, this page focuses on these emerging transnational illegal markets, about which little is known so far.
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[1] Greenhill, Kelly M. / Peter, Andreas (2010): Sex, Drugs, and body counts: The politics of numbers in global crime and conflict. Ithaca, New York: Cornell University Press.
[2] Hall, Tim (2010): Where the money is: the geographies of organised crime. Geography, 95(1), p. 4-13.
[3] Hall, Tim (2012): Geographies of the illicit: Globalization and organized crime. Progress in Human Geography 37(3), p. 366-385. Available at: Link
[4] Masalu, Desiderius C. (2002): Coastal erosion and its social and environmental aspects in Tanzania: a case study in illegal sand mining. Coastal Management, 30(4),p. 347-359.
[5] Jakobi, Anja P. (2013): Common goods and evils? The formation of global crime governance. Oxford: Oxford University Press.
[6] Lampe, Klaus von (2012): Transnational organized crime challenges for future research. Crime Law and Social Change, 58(2), p. 179-194.