GU EST E DITORI AL

Introduction

Geoffrey Brennan Æ Giuseppe Eusepi

Published online: 26 September 2008

� Springer Science+Business Media, LLC 2008

Crime has for centuries been the preoccupation of lawyers and legal systems across

the world. It is only recently, however, with the publication of Gary Becker’s (1968)

seminal paper ‘‘Crime and Punishment: An Economic Approach’’ that economists

have become interested in the subject. In the last few decades, the economic

literature on crime has burgeoned—alongside more general developments in ‘‘law

and economics’’, mainly growing out of the work of another Chicago economist,

Ronald Coase. While economists have brought their theoretical equipment into this

field, they have necessarily been influenced by scholarship within legal circles more

narrowly construed—though doubtless the influence has been less than the lawyers

would think appropriate!

The real-world problems of crime in the 21st century do not, in any event, take

much account of the state of disciplinary relations in academia. Those real-world

problems present themselves for solution across disciplinary boundaries (or more

accurately without regard to them.) And here the issues are not exclusively ‘‘legal’’.

Much crime is not perpetrated by ‘‘solo operators’’ but is instead an elaborate and

well-organised process which operates according to various conventions and subject

to interdependencies within that process—so that it makes sense to talk of an

G. Brennan

Department of Economics, RSSS, ANU, Canberra, Australia

e-mail: Geoffrey.Brennan@anu.edu.au

G. Brennan

Department of Political Science, Duke University, Durham, NC, USA

G. Brennan

Department of Philosophy, UNC /Chapel Hill, Chapel Hill, NC, USA

G. Eusepi (&)

Faculty of Economics, Department of Public Economics and ECSPC, Sapienza University of Rome,

Rome, Italy

e-mail: Giuseppe.Eusepi@uniroma1.it

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Eur J Law Econ (2008) 26:233–235

DOI 10.1007/s10657-008-9071-9

‘‘economy of crime’’. For an interesting examination of such an economy and the

institutions that emerge within it, see Peter Leeson’s (2007) recent paper on ‘‘the

law and economics of pirate organization’’ in the golden age of piracy around the

end of the seventeenth century. As Leeson observes, ‘‘to organize their banditry

effectively, pirates required mechanisms to prevent internal predation, minimize

crew conflict and maximize piratical profit’’; and though the pirate case has its

special features, Leeson is right to think that many of the issues extend to ‘‘the

internal governance institutions of violent criminal enterprise’’ more generally.

Moreover, Adam Smith’s remarks about beggars extend also to criminals: they

become participants in the trading nexus as soon as they seek to transform their

acquisitions from crime (or begging) into the things they actually desire. And it is on

this aspect of the crime economy that this special issue was originally focused.

Large flows of financial resources are typically associated with large-scale criminal

activity; and the detection of those flows can be helpful in tracking the underlying

criminal activity itself. Hence the phenomenon of ‘‘money laundering’’—under-

taken by organized crime expressly for the purpose of disguising the profit flows—

and the increased role played in fighting crime via the detection of otherwise

inexplicable financial flows. Simply put, combating money laundering is not less

important than combating crime itself. An increasingly important tool in detection

lies in making the relevant financial flows more transparent (against the efforts of

those who make those engaged in the transactions). And the clue to the fight lies not

so much in an increase in guns. It is rather to be found in more sophisticated

information technologies. In response to the ballooning of criminal activities,

nations unite around a common strategy because criminals have harnessed the

accelerating process of globalization to morph from local organizations into global

networks.

Probably the most important aspect of the economic analysis of crime is the

introduction of the correlation between criminal action and opportunity cost. Under

the threat of a high probability of being caught and convicted, the criminals’

opportunity cost to undertake an illegal activity increases. Our contention is that

crime and money laundering are part of a two-stage game where the result is either

positive or negative depending on whether the second stage—money laundering—

succeeds or fails.

This collection of papers, so far as a special issue logistics permit, attempts to

give an account of the symbiotic life of crime and money laundering along with the

policies that might be adopted to combat money laundering and/or to monitor crime

levels by tracking the financial flows associated with it. Not all the papers fit this

theme directly, but all bear in some fashion on the ‘economics of crime’ in its many

facets.

This special issue is the result of a conference jointly organized by the European

Center for the Study of Public Choice (ECSPC) and the Research Centre for

International Economics (CIDEI) as a part of the centennial initiatives celebrating

the Faculty of Economics of Sapienza University of Rome. We wish to thank

Sapienza University of Rome, the Bank of Italy, the Centennial Program of the

Faculty of Economics for their generous financial support, and Jurgen Backhaus for

234 Eur J Law Econ (2008) 26:233–235

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his overall intellectual commitment to this exercise and to assisting in bringing this

scholarship to the attention of a wider audience.

References

Becker, G. S. (1968). Crime and punishment: An economic approach. The Journal of Political Economy,76(2), 169–217. doi:10.1086/259394.

Leeson, P. (2007). An-arrgh-chy: The law and economics of pirate organisation. The Journal of PoliticalEconomy, 115(6), 1049–1096. doi:10.1086/526403.

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