Mark D. West

The Dark Side of Private Ordering: An Institutional and Empirical Analysis of Organized Crime

This Article provides theoretical and empirical support for the claim that organized crime competes with the state to provide property rights enforcement and protection services. Drawing on extensive data from Japan, this Article shows that, like firms in regulated environments everywhere, the structure and activities of organized criminal firms are significantly shaped by state-supplied institutions. Careful observation reveals that in Japan, the activities of organized criminal firms closely track inefficiencies in formal legal structures, including both inefficient substantive laws and a state-induced shortage of legal professionals and other rights-enforcement agents. Thus, organized crime in Japan--and, by extension, in other countries where significant gaps exist between formal property rights structures and state enforcement capacities--is the dark side of private ordering. Regression analyses show negative correlations between membership in Japanese organized criminal firms and (a) civil cases, (b) bankruptcies, (c) reported crimes, and (d) loans outstanding. We interpret these data to support considerable anecdotal evidence that members of organized criminal firms in Japan play an active entrepreneurial role in substituting for state-supplied enforcement mechanisms and other public services in such areas as dispute mediation, bankruptcy and debt collection, (unorganized) crime control, and finance. We offer additional empirical evidence indicating that arrests of gang members do not curb the growth of organized criminal firms. These findings may have a significant normative implication for transition economies: efforts to eradicate organized crime should focus on the alteration of institutional incentive structures and the stimulation of competing rights-enforcement agents rather than on traditional crime-control activities.

Legal Rules and Social Norms in Japan's Secret World of Sumo

Members of the Japan Sumo Association, the organization that governs professional sumo wrestling, have developed a complex web of formal legal rules and informal social norms outside of the usual confines of the law to structure and define their relationships. The core of this organizational structure is the rules and norms that govern the ownership and transfer of 105 shares of so‐called elder stock. The elder‐share‐based organizational structure maximizes group welfare in two ways. First, the constitutive rules and norms that make up the elder share regime tend to maximize the aggregate welfare of the group. Second, within the elder share regime, the Sumo Associations choice of whether to apply rules or to defect to norms is based on a calculation of comparative efficiency.

The Tragedy of Condominiums: Legal Responses to Collective Action Problems After the Kobe Earthquake

This Article explores condominium recovery following the 1995 Kobe (Great Hanshin) Earthquake as a case study of laws role in facilitating collective action. The quake damaged more than 2,500 condominium complexes, leaving unit owners with the collective action problem of how to dispose of the property from among their options under the Japanese Condominium Law: restore, reconstruct, or sell. The evidence from Kobe, buttressed by (or at least not inconsistent with) comparative evidence from California, shows that law was facilitative, and, at a minimum, satisfactory, in the disposition of property. This finding suggests that a law that includes (a) a high supermajority vote threshold and (b) a method for combining fragmented interests encourages timely recovery and aids owners in overcoming collective action problems in a fair and efficient manner. While market forces might lead to similar private solutions, we argue that market failures such as those seen in the Japanese condominium market probably make law a preferable option.

The Resolution of Karaoke Disputes: The Calculus of Institutions and Social Capital

Commentators often assert that low levels of litigation in Japan are the result of either (a) social norms or (b) institutional and structural factors such as high litigation costs. This article examines another cause of nonlitigiousness: an alternative dispute resolution mechanism that handles many cases that might otherwise become lawsuits. While the system applies to all pollution disuptes, I examine a particular subset in detail: karaoke noise-related complaints. Relying on interviews and quantitative analyses in the karaoke context, I argue that an examination of both institutional factors and social capital (and their interaction) provides a significantly richer and more accurate account of Japanese dispute resolution patterns than one set of factors alone.