The Rule of Laws, page 41
In these ways, relations between the subcontractors and the union agents followed clearly established but unwritten rules which allowed them to ignore the union’s requirements. Cashflow difficulties, meanwhile, might mean that the subcontractor had to seek a loan from the workers, which they were often able to provide. And the jobber might in turn look to the subcontractor for a source of funds to pursue some private business venture. Everyone colluded to avoid the terms of the employment contracts and subvert the protection it was supposed to give its members. On either side, parties would also extend credit or wait to call in a loan or payment for work done in times of need. Most people were aware of their legal rights, but no one expected to enforce them.
Within the fashion industry, then, the owners and agents of the most successful businesses carefully built up a web of personal relations. If these were managed properly, people could expect that favours would be extended and contractual rights would not be insisted upon. The union’s agent could have insisted on enforcement of his agreement, and anyone could have turned to the state courts to insist on payment under the terms of their contractual arrangements. But those who wished to flourish had to follow an alternative set of rules, giving gifts, extending favours, and expecting the same from their colleagues in the industry.
IN ANOTHER PART of the city, meanwhile, a network of traders, many of Jewish origin, controlled the market in diamonds.15 The New York Diamond Dealers Club was, and still is, the largest and most important diamond trading network, or ‘bourse’, in the United States. It brings together importers, wholesalers, manufacturers, and brokers, and in the 1980s, when one researcher investigated the network, around 80 percent of the rough diamonds coming into the United States passed through the club, along with a fair proportion of the polished stones. Membership was limited, and even nonmembers sought to conduct deals on its premises in the heart of Manhattan, though anyone who did had to obtain a suitable introduction and secure sponsorship from a member.
Membership of the club offered access to important networks and a reputation for trustworthiness. It also meant complying with a set of bylaws, which set out the membership requirements. Dealers had to have been in the industry for at least two years, and they had to comply with requests for information from the club’s directors. Any member could object to a prospective member, and those admitted had to undergo a two-year probation. An initial payment of $5,000 was followed by an annual fee of $1,000. Membership was highly prized, as it signalled that the dealer could be trusted. But the limits of space, and probably a sense of exclusivity, encouraged the directors to limit their numbers to around two thousand. The rules for membership were not particularly onerous, but there was always a waiting list.
More favourable rules governed the admission of sons, daughters, sons- and daughters-in-law, and members’ widows. This reflected the club’s origins in the Jewish family networks that still dominated large parts of the international diamond trade. Jewish merchants have controlled parts of the trade since the late fifteenth century, when they and their families settled in the trading centres of Amsterdam and Antwerp. Many of the club’s bylaws, which specified how transactions could and should be conducted, were ultimately derived from Jewish laws and the commercial customs they had developed over the centuries. The rules provided, for example, that a dealer could accept an oral offer by using the term ‘Mazel und Broche’, a Yiddish phrase literally meaning ‘luck and blessing’, or a similar form of words. Dealers also had to respect unwritten rules and customs, including procedures that allowed them to establish the state of the market and the appropriate price before committing themselves to a transaction. A buyer would, for example, make an offer for a stone but allow the seller time to accept it. Meanwhile, the seller would place the stone in an envelope, which he folded and sealed in a specific way and signed with the terms of the offer. Sellers used a similar process to give an option to a buyer for a limited period. In each case, the parties understood that the arrangements, although unwritten, were binding.
The bylaws required that each member sign an arbitration agreement promising to take any dispute to the club, rather than to the state courts, for settlement. The club’s directors appointed a number of arbitrators to a ‘Floor Committee’ which considered most disputes. As one of them explained, the arbitrators would take the club’s rules into account, but they would also consider trade custom, common sense, a little Jewish law, and, when they thought it appropriate, the common law principles that applied in the state courts. They sought to broker compromises, but they did not make findings of fact. This made it difficult for dealers to appeal to the state system. Instead, an Appeals Board, made up of the club’s arbitrators, would consider appeals internally. In any event, the state courts recognized the exclusive nature of the arbitration agreements that the club’s members signed and generally refused to entertain appeals. Some dealers complained of the arbitrary nature of the committee’s decisions, but most saw the advantages of a process that was cheap and quick, certainly compared to the lengthy procedures of the state courts. Even some nonmembers brought their disputes to the club for arbitration, valuing the privacy of the process, which helped to safeguard their reputations.
The club also had procedures for managing those who got into financial difficulties and could not pay their debts, thereby keeping cases away from the bankruptcy courts. But while the state’s insolvency procedures generally allowed debtors to pay a certain percentage of their outstanding debts and then wipe the slate clean, the club was not so lenient. Conscious of the reputation its members needed to maintain in the national and international industries, it effectively required 100 percent payment of all debts on pain of permanent expulsion from the club. The club had no direct means of enforcing its rules and decisions, but it did have the very powerful sanctions of suspension, expulsion, and reputational damage. Under its bylaws, the Floor Committee could fine or temporarily suspend anyone who failed to fulfil his or her obligations or who otherwise engaged in conduct it felt was ‘unbecoming’. Moreover, it could publish the picture of any dealer who failed to comply with an arbitration award. As a last resort, the club could ask a Jewish rabbinical court to intervene and threaten expulsion from the Jewish Orthodox community. In an industry where trust and reputation were everything, these were powerfully effective sanctions.
In the mid-1980s, the club was experimenting with new technologies, and some of its younger members were using written contracts in place of the oral agreements relied upon by their elders. And the club has doubtless changed in significant ways over the subsequent decades. But it still functioned like a mutual aid society and was dominated by its Jewish members. Its premises included a kosher restaurant and a synagogue, offered medical services and the assistance of a social committee, and negotiated discounts for group travel during the monthlong annual closure. The personal connections that these activities fostered undoubtedly helped to cement relations of trust among its members and encouraged observance of the unwritten rules that governed many of their commercial activities. They also reinforced the secrecy that shrouded many of the club’s operations, including its arbitration awards. All of this reduced external competition and helped to ward off governmental regulation.
THE DIAMOND DEALERS Club published its rules in bylaws, which it made available to all its members as well as the inquisitive researcher. Carefully formulated and explicit, they had to be respected, even by the club’s directors and committees. In this way, the club’s officers recognized a form of rule of law. But some of the club’s activities, including arbitration awards and bankruptcy arrangements, were hidden from the outside world. As well as enhancing the prestige and air of mystery that surrounded the club and the reputations of its members, this tactic kept the state at bay. Another group of New York families used similar methods of concealment, albeit to hide much more nefarious activities.
The mafia was formed by families of mainly Italian origin. Over the years, they developed a complex network through which they engaged in the elaborate, lucrative, and illegal business of ‘protection’. In doing so, they enforced a code of secrecy that successfully shielded the majority of their activities as well as the organization itself, and its membership, from the attention of law enforcement. The New York mafia was related to an older cousin across the Atlantic, the Sicilian Cosa Nostra. This crime syndicate had an even longer history of providing ‘protection’ services to the local populations. It controlled businesses and extracted payment for protection against threats, either real or of its own making. It offered to enforce extralegal contracts, mediate disputes, and ensure a form of order. Scholars have long debated whether the Sicilian and other mafias mimic the state and exercise an alternative form of government—and if so, to what extent—or simply operate as businesses or ‘brotherhoods’.16 Some have even claimed that mafia structures and organizational principles are law-like, and that their members have to follow strict norms of behaviour, as described by pentiti, those who turn their backs on the organization and give evidence to state prosecutors. But these norms are never written up into laws or codes, and neither are the internal structures and hierarchies of the organization. The norm of secrecy, omertà, makes these rules and structures inexplicit and obscure, sometimes even from a mafia organization’s own members. It stops them, in fact, from becoming law-like.
The Sicilian mafia had its origins in the early nineteenth century. Sometimes genuinely stepping in where the state was unable to protect businesses from raids and bandits, local strongmen gradually developed more organized forms of protection. They demanded payments from legitimate businesses and sheltered others involved in illegal activities. By the early twentieth century, judges were talking about the mafia as having law-like practices (ordinamento giuridico). ‘Cosa Nostra’ literally means ‘Our Thing’, and the organization was formed of different ‘families’ based in different regions, which selected their own leaders. Some were dominated by extended families, although all incorporated people unrelated by blood. Until the 1970s, members captured by the authorities steadfastly denied that they belonged to an organization, local or regional, merely claiming they were ‘men of honour’ bound by common rules of proper behaviour. But with anti-mafia campaigns and prosecutions came the discovery of a superior organization. Some pentiti finally admitted that the leaders of each Sicilian ‘family’ formed a committee that met to regulate violence between them and, to a limited extent, coordinate their activities. Each family also had its own committee, leaders, and deputies along with rules and rituals for membership. And each demanded absolute loyalty and strict secrecy.
Informers described the obligations of the mafia’s members to respect one another and take care not to allow outsiders to infiltrate their organization. Some even talked of the ‘ten commandments’ of Cosa Nostra, and researchers gradually pieced together a set of commonly accepted norms.17 These included the principle that members should never introduce themselves to one another directly, to avoid the danger of infiltrators, that they should not be involved in prostitution, that they should respect one another’s wives, and that they should always tell the truth. Nor could they ever change their ‘family’. Above all, they had a duty of omertà, silence. This meant that they should not know, or try to find out, too much about other parts of the organization, and that they should use signs, symbols, and metaphors to communicate, avoiding explicit statements about sensitive information. These rules of secrecy and communication were in effect designed to obscure details of the organization’s structures and practices from the outside world. Complicated though the organization of Cosa Nostra was, with its councils and hierarchies, none of its structures, rules, or procedures were ever reduced to writing. Indeed, it was an absolute rule that nothing relating to the organization should be written down.18 In all these ways, the mafia kept its existence and procedures largely hidden from the attention of state authorities. There are parallels in other extralegal organizations, whose members use codes to signal to one another in order to avoid more explicit means of communication.19
The mafia ‘families’ do not need laws in order to exercise power. They extract resources from both legal and illegal businesses and manage many of their activities effectively, relying largely on their own reputations, not least for the ability to use or order the use of violence. They exercise their power to provide ‘protection’, enforce agreements, and mediate disputes. But they do not establish bureaucracies, and their members rarely play fixed roles or perform explicit duties, as officials in modern administrations do. This allows their most powerful members to change the rules when it suits them. In the early 1980s, a coalition of ‘families’ headed by the chief of the Corleone group, Salvatore (Totò) Riina, took over much of the Sicilian mafia. Riina was able to turn it into a quasi-dictatorship until he was imprisoned in 1993. During this period, some of his most powerful allies flagrantly breached the rules that had formerly been held sacrosanct—for example, those concerning marital fidelity and keeping women out of mafia affairs—and murdered several of their rivals along with their wives, sisters, and mothers.20 When rules are not written they cannot constrain the abuse of internal procedures. The mafia does not recognize the rule of law.
IN THE CONTEMPORARY world, many tribes, villages, and clubs, along with mafia organizations, turn their backs on the state and its administrative control more or less successfully. Some use written laws to reinforce patterns of solidarity and exclusion, while others reject legalism, relying on unwritten rules and expectations. Some use perfectly legal means to keep disputes out of the state courts, while others resort to secrecy and violence as they pursue projects of protection and extortion. All, in different ways, limit the power of the state and its mission to regulate and impose order on its citizens’ lives.
Some of these dynamics are thoroughly legalistic and it would be illogical to dismiss them as mere rules. They may not have the disciplinary power and means of enforcement deployed by the modern state, but legalism has its own force. The Tibetan tribesmen, Berber villagers, and diamond traders all created law-like rules which effectively regulated and controlled their members’ lives and activities. Making them explicit gave the rules a life of their own, the ability to promise order, justice, and predictability. They constrained village headmen, specified the fines they could impose, or placed limits on the sanctions that the diamond traders club could apply. And would the young Berber graduates have been quite so diligent about making contributions to village funds if they were not aware that a historical qanun required it?
But social order has never depended upon law. The unwritten norms of the Ladakhi villagers, the expectations of the New York garment traders, and the commands of the mafia bosses were also effective means of ordering lives and activities, albeit producing very different dynamics. Unwritten norms can be changed, misremembered, and ignored, while explicit written rules can be quoted against those who would flout them, requiring justification and inviting condemnation. Those who want to exercise autocratic forms of control and oppression need to avoid making their rules explicit. The lengths to which mafia bosses went to deny their organization and its structures was testament to the power and potential of written rules. Whether or not we call them ‘laws’, legalistic practices can be used to limit power as well as offering an effective means of ordering the world. Avoiding them is one route to autocracy.
CHAPTER SIXTEEN
BEYOND THE STATE
International Laws
The New York Diamond Dealers Club went to great lengths to keep disputes away from the state courts and maintain its own rules and regulations. But by publishing its bylaws, it was also presenting itself as a reputable organization with fair and transparent processes of self-government. Beyond the structures and power of the state, numerous international organizations do the same, including the International Diamond Manufacturers Association. Trade associations, financial organizations, international corporations, and the bodies that regulate the Internet and international sport all make laws that transcend national borders, providing means of coordination, common standards, and even disciplinary procedures for their members and networks. Their ambitions are surprisingly similar to those of the merchants who formulated pragmatic rules for international trade many centuries before states took their present shape.
These laws do not have the backing of direct enforcement mechanisms as state laws do. Nor is there a world government to ensure compliance with international conventions and resolutions. The United Nations can exert pressure on its members, but defiant leaders flout conventions, manipulate resolutions, and commit acts of aggression in the face of condemnation. So why do the UN delegates persist, and why do pressure groups continue to lobby for new international laws? Campaigns to eliminate oppression, uphold human rights, alleviate poverty, and protect a region’s cultural heritage often culminate in new laws. These projects are not so different from those of the Mesopotamian kings, who promised justice to their people by writing out sets of laws even if they were probably never applied in detail. Beyond the disciplinary authority of the state, law and legalism have a power of their own.
