Mafia capitalism takes the same route as the Titanic on its maiden voyage…

Capitalism with a dash of  socialism to add a restraining touch of morality  is, arguably, the least-worst economic option for running a country’s economy. Certainly better than Communism under inevitably self-perpetuating elites.

But shareholder-based capitalism is flawed and possibly doomed, because its aim is the short-term maximisation of profits for the shareholder rather than the long-term growth and health of businesses in which the shareholders invest. The aim is short-term profit-taking, not efficiency. In that sense, it has the same flaws as countries run by dictators or businesses run by criminal organisations… or, indeed, countries run by criminal organisations.

Which brings me to Italy.

I have just arrived in Milan for a couple of days.

I have blogged about the Mafia before…

According to a report issued two days ago, the Mafia is now “Italy’s biggest business”. But this is hardly news – ’twas ever thus in my lifetime.

Post-War Italy was, in effect, run by the secret Masonic lodge P2 (Propaganda Due) for around thirty years: an unholy alliance of politicians, big business, the military, the intelligence services and the Mafia. It was a conspiracy theorist’s most paranoid dream come true.

The real ‘new’ news story about the Mafia’s financial power seems to be that the current world financial crisis has particularly hit Italy and has partially unified the traditional Mafia groups.

In the current economic crisis, traditional banks are reluctant to lend, so many Italian businesses nationwide have been forced to borrow at crippling rates of interest from organised crime, including the three big Mafia groups – the Cosa Nostra, the Camorra and the ‘Ndrangheta.

As a result, the Mafia now have an alleged annual turnover of around £116 billion with reserves of 65 billion Euros, making them “Italy’s biggest bank”.

This is according to a report issued a couple of days ago by Confesercenti, a prominent employers’ association which represents 270,000 small-to-medium businesses. They simply called their report Criminality’s Grip on Business  and it says the Mafia account for around 7% of Italy’s Gross Domestic Profit – and we are talking very ‘gross’ here.

Marco Venturi, the president of Confesercenti, was quoted as saying: “According to our estimates, loan sharking caused the closure in 2010 of 1,800 businesses and destroyed thousands of jobs. Right now, Mafia Inc is the only business enterprise willing to make substantial investments.”

That sounds to me like a man with an eye for publicity.

But, basically, if you are running a small business facing ruin and potential closure in the current economic crisis where banks are only interested in short-term strategies, you have few options to try to save yourself except to borrow from the Mafia… which ironically may itself result in ruin and the potential closure of your business.

Small business owners with tight margins and limited cash flow also, as always, face extortion and straight robbery by the Mafia, at a reported rate of one crime every minute.

This week’s Confesercenti report says the influence of various mafias is now being felt not only in traditional strongholds such as Naples and Palermo, but increasingly in the wealthy north of Italy, in regions such as Lombardy – in other words, the country’s business capital of Milan – and the report says the mafias have expanded there with the “complicity” of some politicians, as well as lawyers and accountants.

Again – perhaps especially in Italy – that comes as no surprise.

Another report this week – by Libera, an anti-Mafia association – says the average adult Italian spends nearly 1,300 Euros every year on slot machines, bingo and other forms of gambling. This 76 billion Euro market is Italy’s third biggest industry and the Libera report claims the Mafia have also now moved into what the report calls ‘new’ areas of business such as public health, transport and logistics.

Milan is known for its fashion industry and now seems to have picked up the latest street fashion – criminal organisations running not just Big Business but the country’s infrastructure.

Well, that is the story.

In fact, I think, as I said earlier, this is hardly news – ’twas ever thus in my lifetime.

In Italy, traditions run deep.

1 Comment

Filed under Crime, Economics, Italy, Politics

One response to “Mafia capitalism takes the same route as the Titanic on its maiden voyage…

  1. I will take your word on the Italian crime portion of your post but have total disagreement with your first two paragraphs. First, equating socialism with adding a touch of morality is beyond me. Morality? By confiscating the property of one individual and transferring it to another is morality?

    Second, to state that shareholder based capitalism is only interested in short term gain disregards the reality that those who are managing the interests of the shareholders will be gone if they are unable to continue to create wealth. Their positions are not lifetime appointments based on party affiliation or some type of “position for life” civil service gig. Mr. Market will weed them out and a more efficient manager or in the larger sense a more efficient company will come along and take their place.

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