Here is the irony: few people are aware of the real history of the Sicilian mafia, and that its origins rest on economics of resources. So this week I thought it pertinent to share the history and rise of the Sicilian mafia, which forms an interesting query in economic history as well as an apt demonstration of the economics of a particular resource.
The story takes us back to a time when a particular disease, scurvy, was a terror among seafaring folks. It was a time of intense rivalry between European powers over the discovery and control of new lands and all of this effort rested upon merchant ships and naval might. Scurvy was a formidable challenge. Much effort went into deciphering the causes of that disease, until a Scottish doctor finally made a breakthrough. He found that this disease was mainly caused Vitamin C deficiency. The best sources of Vitamin C, at least at that time, were lemons and citruses.
There was a problem: Britain’s, and most of northern Europe’s, soil and atmosphere were not conducive for growing these plants. There was one particular place in Europe of that time whose soil and air were conducive to growing them: Sicily. Within a short span of time, lemons and citruses of Sicily skyrocketed in demand, leading to a high price. Naturally, Sicily and Sicilian land assumed gold’s worth. A valuable resource came into being.
Sicily of those days was a comparatively lawless place with no central government and a poor governance structure - Italy came into being in 1861. Where there is a void in governance, it is natural that somebody steps in to fill the vacuum. This void in Sicily was filled by a group of men who were called the Mafioso, a group that was considered noble by Sicilian residents since it provided protection against other extractive, lawless groups. By the time the lemons and citruses of Sicily became a sought after resource, the Mafioso were well established. As a golden opportunity fell into the lap of Sicily, these men were well placed to gain maximum benefit of this opportunity.
It was the Sicilian resource curse that really gave strength and prominence to the mafia
And so began the legend of the Sicilian mafia, later immortalised by Francis Ford Coppola in the iconic Godfather series of movies. From a party of men mainly concerned with protecting Sicilians from other lawless groups, they became a tightly-knit, murderous, feared group of anonymous men who would remove any obstacle in their way to keep Sicily’s gold (lemon and citruses) within their grasp, be it the murdering judges, officials or landlords who refused to pay their “due share” to the group.
A lot of these Mafioso later migrated to USA alongside people (mostly belonging to agricultural labour) when droughts struck Sicily. The labour carried the citrus and lemon varieties with them to USA, where they found a favourable environment for planting in Florida. As Italian emigrants gradually settled, so did the Mafioso. The difference was that they found other resources (especially finance in cities like New York) which could form the basis of their power and activities. This was the particular group that was depicted in Godfather movies.
In short, Sicily of that time fell afoul of the ‘resource curse’, a term coined to describe how a valuable resource can become a curse for a particular region or a country. It was the Sicilian resource curse that really gave strength and prominence to the mafia. This concept of resource curse has been used extensively in the literature to describe situations in nations around the world where the presence of a valuable resource became a huge problem. In African nations like Angola, the presence of diamonds became a curse as rival groups (backed by international financiers) fought for control of this valuable resource. Iraq’s example is right in front of us, as its hydrocarbon reserves became an invitation for a wave of US led invasions that completely ruined the socio-economic fabric of the country.
More importantly, what the Sicilian and other such examples show is the importance of governance and a well-functioning government. Without these attributes, the presence of a resource only invites trouble. Put another way, a country or a region can have all the resources in the world but in the absence of means to take advantage of that particular resource, it becomes a bone of contention and conflict. That is why the term ‘resource curse’ was invented.
It is important to delve into another related aspect of this debate, which has to do with how an outside (‘exogenous’ in econ lingo) could have economic repercussion upon another place, and how to take advantage of it. This aspect is important in the context of trade, especially theories like the Heckscher-Ohlin (HO) model of trade. In our Sicilian example, an exogenous shock (scientific discovery that Vitamin Cs deficiency causes scurvy) made Sicily a much sought after place, turning a once sleepy backwater into a pot of gold. But in the absence of a plan and a well-functioning government, the pot of gold fell into the hands of Mafioso. Had there been a proper plan, the discovery would have led Sicily to specialize in products that contain Vitamin C, and spawned a whole industry with it.
In Pakistan, a very relevant example comes in the form of labour migration to the Gulf States. There were a few exogenous shocks (invention of automobiles, engines that run on hydrocarbons, technology to extract and clean oil, etc.) that turned the fortunes of the backward Arabian Peninsula, where black gold (oil) lay beneath its surface. As the fortunes of Arab nations took a pleasant turn, it opened the doors for another country (Pakistan) whose labour flocked to these countries to find their sustenance.
The work of that labour has not only sustained their families back home, but also Pakistan, since without remittances, the country would have defaulted long ago on its foreign payment obligations. Ideally there should have been a policy in place to polish this resource (human capital), given its importance for Pakistan. Yet, look at any human development indicator, and Pakistan’s human capital lies near the bottom. In essence, what should have been a valuable resource is now pretty much a curse since Pakistan’s large population is fast becoming an intolerable burden upon it. In Pakistan’s case, there was no Mafioso that kept human capital from developing, but neither was there any public policy to accomplish the task!
When we use the term Sicilian mafia, it would be worthwhile to remember a bit about its history. Perhaps the next time we squeeze a lemon or gulp down a citrus, we should be careful in paying our regards to Sicilian mafia.
The writer is an economist