The Italian mafia rose to prominence in part because of a thriving lemons industry, according to research by Alessia Isopi and colleagues. Their study, to be presented at the Royal Economic Society''s 2014 annual conference, shows that lemon growing was a lucrative business in nineteenth century Sicily and the growers paid the mafia for protection.
The researchers use a parliamentary inquiry into the economic, social and moral conditions of Sicilian peasants in 1886, to show that variation in the prevalence of the mafia across villages on the island depended on the development of the lemon industry.
At that time, Sicily had a dominant position in the international market for lemons as a result of barriers to entry due to the particular climatic conditions for lemon trees to grow. Given the extent of the production and the international demand of lemons, the sector was of strategic importance for the Sicilian economy.
The dominant position together with growing international demand after the nineteenth century (when it was proved that lemons had beneficial effect in curing scurvy) provided high profits that were systematically extorted by the mafia in exchange of protection. This profitability, combined with a general vacuum of institutions provided an ideal breeding ground for a mafia industry to provide private protection for lemon producers.
The mafia can be considered one of the largest and most successful businesses in Italy. Given the economic and social relevance of the phenomenon, this study investigates why this form of organised crime developed and what factors explain the cross-regional variation of the mafia in the Sicilian region.
Both institutional and historical explanations have been proposed by the existing literature. Fiorentini (1999), Grossman (1995) and Skaperdas (2001) focus on weak institutions, predation and enforcement of property rights. With respect to the Sicilian Mafia, Villari (1875), Sonnino and Franchetti (1877) and Colajani (1885) suggest the legacy of feudalism, the development of latifundism and a loss of social capital and public trust as possible driving forces.
Even though these theories provide plausible explanations for the origin of Sicilian mafia, they fail to explain why we observe considerable variation across areas in the region that were experiencing very similar conditions: what is specific to these few localities where the mafia appeared at first?
Unlike existing works that emphasise institutional and historical factors, this study highlights the importance of the presence of fixed costs, as a source of market imperfections and of very high profits in certain towns. The authors claim that high profits coming from imperfect market structures are a natural condition for the development of the Sicilian mafia.
Using a parliamentary inquiry on the economic, social and moral conditions of Sicilian peasants in 1886, they show that such variation of mafia across villages in Sicily depends on the development of the lemon industry. At that time, Sicily had a dominant position in the international lemons market as a result of barriers to entry due to the particular climatic conditions for lemon trees to grow.
Given the extent of the production and the international demand of lemons, the sector was of strategic importance for the Sicilian economy. The dominant position together with a boost in the international demand after the nineteenth century (when Lind proved the beneficial effect of lemons in curing scurvy) provided high profits that were systematically extorted by the mafia in exchange of protection. This profitability, combined with a general vacuum of institutions provided an ideal breeding-ground for a mafia industry that used to privately protect lemon producers.
The researchers collected data, at town level, for the entire island from the Damiani Inquiry (1886). This investigation, which is part of a larger inquiry approved in March 1877 and proposed by Stefano Jacini, aimed at assessing the conditions of the agricultural sector and the conditions of peasantry in every region of Italy.
The Damiani Inquiry represents one of the earliest and most important primary sources on the economic and social conditions of Sicily in the 1880s and provides valuable information about the kind of crops produced, tax burden, wages, relations between peasants and landlord, lewdness and religiousness of people, corruption of the clergy, rule of law and crime.
Using this source, the researchers coded variables for the presence of the mafia, kind of crops produced, scale of the plantation, rule of law and other important variables and find that the presence of mafia is strongly associated with production of lemons. The market structure hypothesis advanced in their paper therefore not only complements existing theories of the mafia''s emergence, but is also consistent with the timing of the origins of mafia.
We also perform a more detailed regression analysis, and the relation between mafia and production of lemons is largely confirmed.
''Origins of the Sicilian Mafia: The Market for Lemons'' by Arcangelo Dimico, Alessia Isopi and Ola Olsson