Toward an Economic Sociology of Illegal MarketsWorkshop, February 23–24, 2012 | MPIfG, Cologne
Topic and Goal of the ConferenceResearch on markets is one of the main fields of economic sociology. The study of markets, however, concentrated on legal markets. Illegal markets have not been studied in market sociology. This is not only an important lacuna in academic research. Illegal markets are a phenomenon of great economic, political, and social significance. Though estimates on the size of illegal markets are notoriously difficult to make existing estimates indicate that revenues on illegal markets may well surpass one trillion dollar annually. Politically, the existence of illegal markets provides important challenges to the state and to law en-forcement. Socially, illegal markets are important phenomena because of their challenges to the moral order of societies.
Illegal markets deviate significantly from legal markets in their organization and func-tioning. They lack legally enforceable rules of regulation, for conflict resolution and for ensuring property rights that are taken for granted on legal markets in advanced economies. The absence of protective legal rules has many consequences. Markets suffer of non-transparent structures so that suppliers, partners, rivals, and costumers cannot identify each other easily. The quality of the products is not assured through the state or private regulatory institutions. Conflicts arise easily but their resolution is difficult. Transactions take place primarily in personal networks for reasons of lack of institutional trust. These restrictions to economic exchange cast doubts even on the very market character of some of the illegal transactions.
Illegal markets are not homogeneous. Fully independent illegal markets exist where the product as such is forbidden (e.g. illegal drugs). Illegal markets lean on legality if only the commercialisation of otherwise legal products or services is forbidden (e.g. adoption, organs) or they are mixed with legal markets if the illegality consists of the violation of regulatory norms (e.g. weapons, waste disposal). All illegal markets are connected to the legal economy in one way or the other. Legally produced goods like cigarettes are sold illegally, illegally produced goods such as counterfeits are channelled into supply chains of legal products. In other cases, products and services oscillate between the two spheres with several mutual entry points or are traded in black markets. Thus, legal and illegal markets are closely interwoven. Given the significance of illegal markets and the existing research lacuna in economic sociology, the Max Planck Institute for the Study of Societies is currently launching a research group on illegal markets.
The workshop shall bring together scholars already working in the field and help identifying theoretically important research questions and possible empirical research sites, as well as showing connections between economic sociology and research strands in criminology and other disciplines dealing already with illegality in economic exchange. The workshop shall also help establishing contacts and facilitating exchange. The MPI draws on a comprehensive preparatory analysis of literature and first theoretical outlines. Among the questions to be discussed can be the following:
- How do illegal markets emerge? Which preconditions and resistances do exist?
- How do market actors react to the absence of legal protection? Are there substitutes?
- Are illegal markets regulated and if yes by whom and how?
- Are there regularities in the variety of value chains for illegally traded products?
- How are illegal businesses organized?
- What is the relation between legal and illegal markets? Are they dependent on each other or do illegal markets parasitically adhere to legal markets?
- How do states determine their investment in fighting illegal markets?
- Which economic and social consequences do illegal markets have?