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Self-governance, property rights, and illicit commerce

In: Research Handbook on Austrian Law and Economics

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  • David Skarbek

Abstract

The legal centrism hypothesis argues that the state is necessary to define and enforce property rights, and in the absence of state-based institutions, self-governing groups will be incapable of engaging in economic exchange and extended commercial enterprise. This chapter provides evidence against legal centrism by examining the operation of the Nuestra Familia prison gang. The gang protects inmates’ property rights and facilitates trade in contraband in California prisons, and operates an illicit business enterprise in the free world from behind prison walls. An important reason for the success of its organization is a system of information transmission mechanisms between gang members in different facilities. These mechanisms allow self-governance among people with high discount rates and criminal histories.

Suggested Citation

  • David Skarbek, 2017. "Self-governance, property rights, and illicit commerce," Chapters, in: Todd J. Zywicki & Peter J. Boettke (ed.), Research Handbook on Austrian Law and Economics, chapter 8, pages 178-191, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:13939_8
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    References listed on IDEAS

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    1. Emily C. Schaeffer, 2008. "Remittances and Reputations in Hawala Money- Transfer Systems: Self-Enforcing Exchange on an International Scale," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 24(Fall 2008), pages 95-117.
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    3. Adolphson, Mikael & Ramseyer, J. Mark, 2009. "The competitive enforcement of property rights in medieval Japan: The role of temples and monasteries," Journal of Economic Behavior & Organization, Elsevier, vol. 71(3), pages 660-668, September.
    4. Peter T. Leeson, 2009. "The Laws of Lawlessness," The Journal of Legal Studies, University of Chicago Press, vol. 38(2), pages 471-503, June.
    5. Edward Stringham (ed.), 2005. "Anarchy, State and Public Choice," Books, Edward Elgar Publishing, number 3741.
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