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Taking an economic sociology perspective, this introduction offers a systematic overview of the social organization of arenas of exchange prohibited by state law. We first distinguish different types of illegal markets, examine their internal functioning, and address state and political reactions to them, paying particular attention to the selective enforcement of the law and the role of informal rules. Second, we introduce the distinction between illegality and legitimacy, which is crucial for an understanding of the prevalence and form of illegal markets, and address two sources of social acceptance of illegality: externalities and expectations of the future. Third, considering the completely transformed role of the state, we allude to the architecture of illegal markets, indicate actors’ specific coordination problems, and illustrate how actors cope with them using cases contained in this volume. Finally, we elucidate the role of tax havens and the role of illegality in capitalist dynamics.

The study of legality and illegality in markets usually relies on the assumption of “consolidated” statehood. This is surprising given that the strong state is by far an exception rather than the norm in the international system. It raises the question of how illegality is socially defined and enacted in contexts in which statehood is limited; that is, when the legitimacy, capability, and willingness of political authorities to develop and enforce a coherent body of laws is restricted. Analyzing social interactions in Sierra Leone’s illegal diamond market, this chapter argues that in order to understand illegality in situations of limited statehood it is crucial to take into account how illegal economies and their relation to the legal sphere are shaped by social norms of legitimacy.

The study examines the evolution of heterogeneous illegal markets, including markets for homemade alcohol, counterfeit alcohol, and illegally manufactured alcohol in Russia. A variety of statistical sources and survey data is used to demonstrate that the compositions of these markets have come through four different stages since late socialism, depending on the constellation of political, legislative, and economic factors. At each stage, some of these markets prevail, whereas others remain undeveloped. Overall, illegal alcohol markets tend to grow in periods of exogenous political or economic shocks and shrink in periods of economic growth. Changes in the structure of illegal markets are backed by a continuous requalification of products, organizations, and transactions contesting the boundaries between legality and illegality. Some illegal activities retain their legitimacy due to the ignorance or tolerance of enforcement agencies and final consumers.

This chapter shows that as prosperity increased in the region, new secondary markets for stolen goods emerged prosperity in order to satisfy demand for consumption goods. Overall demand and appetite for illegal goods in the region had increased dramatically since the 1990s, especially in low-income households. This chapter examines types of victimization, and their rates, to prove that it was these crimes that partly fueled these illicit marketplaces. After reviewing several of these illegal markets, such as those for cellular phone, digital goods and firearms, this chapter exemplifies this trend with an understudied yet very important crime-driven market, namely the car-theft industry.

The study of illegal markets needs to distinguish illegality from legality, and to relate both to legitimacy. There is no conceptual ambiguity about the distinction between legal and illegal if legality is formally defined. In practice, (formal) legality and (social) legitimacy can diverge: illegal markets are empirically related to organized crime, mafia, and even terrorist organizations, and they interact both with legal markets and the forces of state order. Where legal and illegal action systems are not separated by clear social boundaries, they are connected by what has come to be called “interfaces”: actors moving between a legal and an illegal world, and grey zones of actions that are neither clearly legal or illegal, nor clearly legitimate or illegitimate. Interfaces facilitate interaction between legal and illegal action systems, but they are also sources of tension and can lead to institutional change.

This chapter concerns itself with the nature of the supply of doping products and the relevance of market-based concepts, with specific reference to conditions in Italy. Notwithstanding concerns about doping and the role of the criminal underworld in sport, relatively little is known about the supply of doping products. Against this backdrop, we analyze the supply of doping products by revisiting and building on the central findings of an empirical study of supply and demand in Italy and argue, first, that supply and demand come together to form a “market”; second, that this market is “quasi-illegal”; and third, that this conceptualization can help inform policymaking in Italy and elsewhere and might have bearing on future research in criminology and other disciplines.

That illegal markets thrive is something of a puzzle to sociology. Despite the lack of legal frames—crucial for conflict resolution, regulation of competition, and formal sources of credit—new illegal markets continue to emerge. Thus an analysis of informal social mechanisms is essential for a better understanding of illegal markets’ internal coordination. The main goal of this chapter is to dissect the role of one of these mechanisms—state-sponsored protection rackets—in the context of illegal markets. This type of protection racket means a selective non-enforcement of the law, an action carried out intentionally by politicians and police forces in order to capture economic resources. I provide evidence that such an informal mechanism is present on a massive scale at La Salada, a huge illegal and informal marketplace close to Buenos Aires city center. The chapter seeks to make a contribution on informal mechanisms fostering unlawful exchanges.

How did entrepreneurs and activists establish medical marijuana markets in the United States despite more than a half-century of social stigma and state prohibition? In this chapter, I draw upon interviews with medical marijuana market pioneers to show how an exogenous shock and endogenous actors laid the foundation for a multi-billion dollar industry. Interviews suggest that the death and devastation of the AIDS epidemic compelled value-rational entrepreneurs to openly defy the law and build informal market institutions, such as organizational forms and rules of exchange, to supply marijuana to AIDS patients. Market proponents legitimized and legalized these informal institutions by deploying strategic frames portraying marijuana as a compassionate palliative for the dying and by passing ballot initiatives allowing medical marijuana use, first in San Francisco (1991) and then in California (1996).

Illegal drugs are commodities that are bought and sold in markets. Many farmers are engaged in small amounts of drug growing in the producing countries, but there are comparatively small numbers of refiners, smugglers, and top-level importers. Compared to most legal markets, there are many sellers relative to the number of buyers in drug markets. One consequence of the network character of drug distribution is its resilience. Eliminating individual players or even entire organizations within a mature drug distribution network has little impact on the ability of the network as a whole to transport drugs from their source to the customers. This adaptability of mature drug distribution networks limits the ability of enforcement authorities to eradicate mass-market drugs.

This concluding chapter summarizes the book and evaluates its findings with respect to world society theory and IR. It also sheds light on future developments of the global crime agenda, including the likely broadening, intensification and further rationalization of global crime governance. The chapter starts with a summary of the main findings presented in the book. It then elaborates on the implications of concepts like institutional entrepreneurship and rationalization, and the relevance of analyzing fragmentation in global governance. The chapter also provides an outlook to broader questions relevant in the field of crime, like the role of numbers in global governance and the important relationship between machinery and substance. The chapter also presents additional perspectives on global crime governance, for example that of Foucault and governmentality.

This chapter shows that the illegalization of an economic exchange is not a straightforward political decision with fixed goalposts, but a protracted process that may encounter unexpected hurdles along the way to effective implementation and enforcement. While political considerations informed the decision to ban trade in rhino horn initially, diffusion of the prohibition has been uneven and lacks social and cultural legitimacy among key actors along the supply chain. Moreover, some market actors justify their participation in illegal rhino horn markets based on the perceived illegitimacy of the rhino horn prohibition. The concept of “contested illegality” captures an important legitimization device of market participants who do not accept the trade ban.

Examines how alcohol has been constructed as a “social problem” in Russia in the post-Soviet period. For many years the dominant construction of the problem was that of illegal alcohol, with alcohol’s negative effects on the demographic situation only gaining prominence in the latter half of the 2000s. The chapter explains why and why the large consumption peaks in 1994–5 and 2002–3 failed to provoke alarm among the ruling elite at the time, in spite of efforts by public health activists to problematise the issue, finding that the crises provoked by the transition from communism detracted attention from demographic issues.

This chapter focuses on illegal markets for drugs and for one class of possible contributions to the study of crime in Latin America. But this is possible only if the importance of drugs in Latin America is provided and given the study of markets is an area where economists can be expected to have substantive comparative expertise. This chapter provocatively provides a pessimistic view of the state of knowledge in the field, arguing that the broad trends in crime over the past forty years suggest that few things have worked. It focuses on what happens to supply and demand when an artificial law prevents market clearing, connecting drug prohibition and violent crime. According to the chapter, a large part of the problem arises because government prohibition policies affect the nature and amount of dispute resolution that takes place through legal means.