1: In the beginning...
Introduction || 2: The State of the Literature >>
Introduction
The Study
Laws and institutions are the binding force for governance of a state. A state's
reluctance or inability to enforce its own laws undermines its legitimacy, erodes the
authority of its institutions, and destabilizes its society. This case study of Colombia
focuses on the period from the mid-1970s until the present. The study's purpose is to
examine the nature of the deinstitutionalizing impact of illegal narcotics trafficking
upon Colombian economic and legal institutions. Deinstitutionalization means that erosion
of characteristic behavioral norms and the capacity to serve the political and social
needs of the polity has begun. Deinstitutionalization and its effect upon the autonomy of
the Colombian state are conceived as having two dimensions. The first dimension of
deinstitutionalization concerns formal and informal rules as mechanisms which weaken
institutions. The second dimension involves enforcement of these mechanisms both in terms
of transaction costs and transformation costs.
Douglass North notes that formal and informal rules, derived from self-interest, exist
to facilitate political and economic exchange. As such economic rules (property rights)
and individual contracts (political rules) are "specified and enforced by political
decision-making, but the structures of economic interests also influence the political
structure."(1) While solving the problem of human
cooperation is the underlying role of institutions(2), a
major and overt role of institutions is to "reduce uncertainty by establishing a
stable . . . structure to human interaction."(3)
Establishment of National Front regimes to end"la violencia" required high
levels of institutionalization and national autonomy. High levels of autonomy are not
limited to the relationship between sovereign and citizen and "reciprocities of power
and exchanges as mediated by leadership."(4) It also
refers to the activities of an interventionist state including, but not limited to fiscal
and monetary policy, taxation, labor distribution, and social security.(5) Within an interventionist state the reciprocal relationship
between sovereign and citizen are more limited than in a non-interventionist state
characterized more consistently by reciprocal exchanges. The period of
institutionalization provided by the National Front had a predetermined legal end by
virtue of legally limiting its existence to sixteen years. Legally delimiting the
activities of an interventionist state allowed a gradual apertura or opening along
economic and political dimensions as institutionalization deepened.
Domination of the underground economy by narco-entrepreneurs coincided with the period
when the Colombian state began transforming itself from an interventionist state to a more
representative democratic state. Moving to a more representative democratic state meant
that more political parties would be permitted and previously appointed governmental
positions would become competitively elective. Initially, the Colombian state's effort to
deal with the challenge of the narco-entrepreneur involved little beyond established
informal conventions for managing revenue from the underground economy. Opening a side
window at the Banco de la Republica (BdeR) and subornation of customs officials was part
of the reglas del juego (rules of the game) constituting informal conventions for managing
illegal windfall profits. Unanticipated by either the Colombian state or others concerned
with this example of "unproductive"(6)
entrepreneurial activity was the magnitude of revenues generated and the rapid
organizational growth of the INT.
Dramatic increases in the money supply and violence affected the Colombian state's
capacity to build its economic and political institutions. State governance increasingly
occurred under states of siege. The proliferation of executive decrees suggests a model of
reactive, stopgap policy making rather than the carefully thought out responsive
policy-making decisions conducive to maintaining and strengthening institutions. Policy
decisions or new rules changed frequently in response to each major power challenge from
the INT. New rules were subordinated to older informal conventions for dealing with
illegal activities. This resulted in the continuation of antiquated, collapsing
institutions not yet replaced with more modern and durable institutions.
The second dimension of deinstitutionalization refers to enforcement issues. David
Apter notes that different kinds of "risks are entailed in the transition from
predominantly coercion(ive) to information system."(7)
Coercive systems will collectivize economic and social risk and individualize political
risk. Individualized political risk is less tolerated than collective risk in economic and
social spheres. Moves toward privatization and democratization increase social and
economic risks within a context of uncertainty. The state's inability to meet its
obligation during the transition can produce public anger resulting in unconstructive
opposition in the midst of growing uncertainty.(8)
While considered successful in ending `la violencia', during the National Front regimes
much of the state's responsibility remained managed and controlled by the traditional
political parties. However, as the polity became increasingly depoliticized and party
hegemony declined, a serious question remained. Had institutionalization deepened
sufficiently to allow the type of political risk taking involved in Colombia's transition
from a coercive to an information system? Douglass North suggests "the key problems
of institutional change, of contracting and of performance, turn on the degree to which
contracts can be enforced between arties at low cost."(9)
Contracts (laws) are a means of reducing social, economic and political risk. They can
ameliorate or lower the privatization of risk through the administration of sanctions and
exhortation, diminishing the probability of random violence. Contracts, however, are only
as binding as the institutions which support not only the issuance of the contract, but
also the enforcement of the contract.
In the everyday world there exists a myriad of ways by which to assure contract
compliance. These range from informal kinship ties to more formal laws, including
constitutions. Enforcement is often placed in the hands of third party agents who exist as
part of state institutions and include the judiciary, police, military, and private
security firms. Ideally third party agents are neutral with the ability to costlessly
measure the attributes and enforce the contract. Realistically, however, there are
considerable costs attached to developing and enforcing contracts. The agent's utility
function, or position, dictates her own perceptions about contract costs. These, in turn,
are affected by the agent's own interests.(10) This study
will show that narco-terrorism raised the costs of developing and enforcing contracts as
judges and magistrates were routinely threatened and killed. The study will also explain
that every organization requires some form of legitimate institution through which to
issue and compel contract compliance. The fact that an enterprise is illegal is not enough
to discount such need. If the enterprise is to continue to grow, it must either generate
such a legitimate institution or, as we shall see with the INT, appropriate as many
institutions as required to meet its needs.
The use of third parties to enforce a state's coercive capacity is required. Thus, the
formal structure of rights defined within a hierarchy of rules, such as constitutional,
state, or common law, may be incomplete as we shall see when we examine the role of
producer associations and paramilitary squads in Colombia. Colombia's constitution
remained unchanged from 1886 until rewritten and passed into law December 1990. Its
justice system has remained archaic and rigid with little technological innovation.
Increasingly informal conventions and constraints have dominated third party enforcement
in the form of state civil society relations such as those between the government and
producer associations and paramilitary squads.
Informal constraints such as reputation, standards of conduct and conventions related
to associational groups, networks, and voluntary organizations often converge with
incomplete formal constraints and conventions to form part of the enforcement milieu. The
question then becomes one concerning the degree of balance between formal and informal
constraints. What affects or tilts that balance in either direction of increased
institutionalization or deinstitutionalization?
North notes that organizations are purposive entities and seek to maximize their stated
objectives as provided by a society's institutional structure.(11)
As such organizations have the capacity to alter the institutional structure(s). The
institutional weakness of the Colombian state derived from the period of "la
violencia." Efforts by the interventionist state of the National Front regimes met
with limited success because of resistance to significantly alter the formal structure of
enforcement.(12) Conceptualizing the INT in Colombia as an
evolving "firm" with changing organizational patterns enables us to identify
ways in which it has altered the formal enforcement institutions of the state. The decline
in state autonomy is shown by the dominance of informal constraints in contract (law)
enforcement and examined through two specific hypotheses concerning the economic and
judicial institutions of the state.
Specifically, the goal of the study is to identify the processes in economic and legal
institutions that have contributed to the emergence of the illegal narcotics trade (INT).
Identification of structural processes allows a clearer vision of what British political
economist, Susan Strange, calls structural power or "the power to shape and mould the
structures of production, knowledge, security, and credit within which others have no
choice but to live if they are to participate in the world market."(13) Strange additionally observes that the creation of wealth
bestows power upon the creator. Such power includes the power to alter the structure of
institutions through monopolization of channels of political inclusion or more
circumventive behavior including bribery.
The study also examines the efficacy of policies to contain or combat the illegal
narcotics trade. What is the impact of institutionalized violence upon a country
attempting to move from a predominantly politically exclusive system to a more politically
inclusive system through expansion of democratic principles, values, and institutions?
Accordingly, the study will focus upon Colombian financial institutions, principally
banking, gremios de la produccíon (producer associations), and the Colombian judiciary.
Peter Lupsha notes that a chief characteristic of organized crime is its need to
interact with the body politic, its agents, and institutions. That is to say "Without
the protection and risk minimization of the political system, the organized criminal
cannot operate."(14) He points out the subservient
position of "organized crime to the politician and political machine" changes
proportionately to the amount of capital and influence generated by the criminal activity
and has "often served to reverse the balance."(15)
The greater the influence and capital generated by criminal activity, the more autonomous
and less subservient organized crime becomes to the political structure and the body
politic.
This study is time bound between 1974, when the National Front regime in Colombia
legally ended, to the present, 1995. Bounding the study in this way allows us to track the
evolution of the INT in Colombia and the response of the Colombian state. Examination of
deinstitutionalizing processes taking place and responses, if any, of the Colombian
government (GOC) can be better situated within the historical context and changing
organization of the INT.
Coyuntura
Although narcotics trafficking existed in Colombia before 1974, it was essentially a
regional phenomenon confined to trafficking within the Colombian state and only later
expanded to the contiguous Andean states. Transnationalization of the INT became part of a
confluence of events. Consumer preferences changed from marijuana to cocaine and the bulk
of the drug trade shifted from Asia to Colombia. Policies pursued by the National Front
regimes incorporated the INT into what Tokatlían calls a "socioeconomic
rationale."(16) The INT was not perceived as a
challenge to state power. As we shall see, the state saw no reason to not recover revenues
generated from the drug trade. Control of the INT, as I have argued elsewhere(17), never became a driving force for the Front governments.
Rather, it was considered, when necessary to respond to pressure by the United States, as
only one of several issues with which the government had to deal. The end of the National
Front in 1974 marked the emergence of the INT as the dominant smuggling activity when
Colombia gained prominence as a processing and transhipment state for cocaine. Few
anticipated the incredible growth of cocaine capitalism whereby the INT would present a
challenge to the existing Colombian power structure.
Why Colombia?
Colombia is the country chosen for the area focus of the study. Its development as a
powerful producer and transhipper of illegal drugs, principally cocaine, permits the study
of the evolution of the drug cartels. Colombia, unlike other producer/transhipper nations
of illegal narcotics, developed a center of power with resources that rival the State's.
The long tradition of export smuggling in Colombia developed an informal economy that
incorporated the INT into the national economy. Smuggling and its traditions are part of
Colombia's historical cultural process. Its impact on the interactive relationships
between values and behavior has received little attention by scholars. Nor has its effect
upon the state's ability to govern received systematic study. The INT, as part of the
informal economy, provides resources for citizens that the state cannot provide.
Colombia is considered a middle-range South American nation, representing a median in
most respects of its national development. Colombia has experienced few of the extreme
phenomena that beset other Latin American nations. With two brief exceptions, it has
experienced primarily civilian rule founded upon liberal democratic ideology and culture.
Its economic growth, recessions, and debt, have been moderate when compared with other
nations. It is comparable in size to the two states of Texas and California.
Geographically, it possesses similar topographical problems of other middle range Andean
countries. Areas of the country have, in the past, been inaccessible due to mountainous
and jungle enclosed terrain. This has produced enclaves of population that remain quite
distant from the control of the national state and has resulted in an intense
regionalization. Demographically, the population is about 33.0 million, of which 88% are
considered literate. Despite occasional border skirmishes since its independence from
Spain, Colombia enjoys essentially good relations with its proximate neighbors. Colombia
has not been involved in any external war and has long been considered a staunch ally of
the United States. This allows the analyst to examine resource development and allocation
without having to deal with extraordinary exceptions such as invasions from other
countries or mass migrations into Colombia.
Violence, however, is the one area in which Colombia cannot be considered within median
range. The civil strife that was a constant, although regionalized, presence in Colombia
from the early 1920s until the mid-1940 was considered an unfortunate side-effect of a
modernizing nation striving to consolidate its power.
Beginning with the assassination of populist presidential candidate, Jorge Eliécer
Gaitan, on April 9, 1948, Colombia entered a period known as `la violencia'. Between
1946-1966 the deaths of an estimated 150,000 to 200,000 people or approximately 2 percent
of the total population, have been attributed to `la violencia'. Averaging approximately
10,000 deaths annually over twenty years, this figure is lower than the current figures
for homicide deaths in Colombia that currently average approximately 15,000 deaths
annually.(18) While difficult to detect with a high degree
of accuracy how many of these deaths are drug-related or political deaths, the numbers
suggest a decreasing capacity of Colombian institutions to protect and/or serve as redress
for its citizens.
CONCEPTS DEFINED
The illegal narcotics trade (INT), as it pertains to Colombia, is defined as that
activity which involves the cultivation, production and/or processing, and transshipment
of marijuana or coca. Following Hartlyn, I exclude the cultivation of opium and production
of heroin, which has greater significance in other countries such as those of East Asia
and Mexico.
In contradistinction to Hartlyn, however, I do include peasant growers of marijuana,
the laborers and service personnel required for processing coca into cocaine in the larger
context of the INT.(19) Inclusion of this group is
important for the light it sheds on the evolution of the drug cartels and the power that
continues to be exercised through production factors and domestic use.
Although the concept drug cartel is not used in the strict economic sense of the
term, it shares the characteristic of a cartel as an "agreement amongst producers to
restrict output or coordinate policies to increase profits of the current producers."(20) Such agreements became possible following the "turf
wars" among drug traffickers that dominated the late 1970s and early 1980s. The
dominance of the Medéllin, Cali, and Bogotá organizations featured a centralized
distribution network providing greater guarantees for product and revenue than the smaller
traffickers could obtain. Such centralization provided the organizational framework that
formulated and implemented(21) policies to restrict output
or increase profits.
In this study, drug cartel is defined as a loose coalition of criminal organizations
specializing in drug trafficking (narcotraficantes). These criminal organizations are
called "crime families" to identify their organizational structure. A form of
organized crime, drug cartels exhibit many attributes identified with Peter Lupsha's
definition of organized crime as a process as well as an organization. These include the
following: 1) interaction by a group of individuals that is ongoing over time; 2)
interactive patterns that consist of role, status, and specialization; 3) the existence of
corruption of public officials; 4) participants who have a lifetime occupation orientation
toward their activity; 5) participants who view criminal activity as an instrument, not an
end; 6) the long term accumulation of capital, influence, power, and untaxed wealth is the
goal orientation of this group; 7) long term planning and multiple levels of execution and
organization comprise the patterns of complex criminal activity 8) interjurisdictional,
often international patterns of operation are the norm; 9) the existence of fronts,
buffers, and "legitimate" associates; 10) ongoing activity that attempts to
insulate key members from the risks of identification, involvement, arrest, and
prosecution; 11) attempts to maximize profits through cartelization or monopolization of
markets, enterprises, and crime matrices.(22) This
definition and its accompanying attributes facilitates analysis of the INT in Colombia
generally and specifically. Defining organized crime as an ongoing process precludes any
identifiable and specific temporal starting point and enables tracing the evolution of the
INT within its historical and cultural context.
The State
Currently the field of political science is experiencing considerable activity and
"contestation" regarding the meaning of the concept, the state. Broadly speaking
this contestation is divided between two general approaches. One approach is the `society
centered' approach where the state is perceived as a manipulated, constrained, dependent
entity, "little more than an arena in which . . . contending societal interests come
together to hammer out their interests."(23)
The contending approach treats the state as independent, both as an actor and a
variable. This approach looks to the internal characteristics of the state, such as its
officials and the way they are recruited and socialized, as explanations for varying
degrees of state autonomy.(24) Nordlinger suggests that
the importance of the state as an independent variable is understood by exploring its
`institutional weight'; that is "the impact of its recurring activities, decision
rules and processes, organizational arrangements, and structural features upon both public
and private actors."(25) Although Nordlinger accepts
the need to include societal factors in an explanation of state autonomy, he suggests this
occur only after exhausting the statist focus. Nordlinger contends that it is the
intersection of the variables included in both approaches wherein "State autonomy
will be fully explicated."(26) He conceives state
autonomy as having four subjective properties whose variations are explained by four
structural features. Variations in the malleability, insulation, resilience, and
vulnerability of state autonomy are explained by the structural context of its
boundedness, differentiation, cohesiveness, and policy capacities.(27)
Kalman Silvert appears to agree with Nordlinger when he observes that the most
desirable paradigm would be one where elements of a system [or state] would be
"directly relevant to the creation and aggregation of public power and political
efficacy."(28) Silvert de-emphasizes autonomy as a
discreet state characterization and focuses on the roles of institutional specialization
and differentiation for explaining the autonomy of a state.
These elements constitute what Joel Migdal calls the context of the state. An important
part of this context is the existing power relationship among social organizations the
state is attempting to supplant. "The major struggles in many societies . . . are
struggles over who has the right and ability to make the countless rules that guide
people's social behavior."(29) Migdal unconvincingly
attempts to separate state autonomy to make the rules from the power relationships
exhibited in social organizations. Unable to establish some method of measurement, he
returns to Nordlinger's subjective and structural variables of the state to measure
autonomy. There remains the question of how does one reconcile these two approaches to
understanding the degree of autonomy of the Colombian state. Gaitan, during his
presidential campaign in 1947 in Colombia, noted that Colombia had two states or two
nations, un pais nacional and un pais politica; a country of nationhood and a country of
politics.(30)
This study suggests that a dialectical approach based on political economy will best
serve to reconcile the two approaches. To this end, and for the purposes of this study,
the Colombian state is defined as a dependent or peripheral industrializing state. This
definition allows us to place the Colombian state into a context which enables recognition
and treatment of the "fundamental differences concern (ing) basic organizing
principles . . . or basic dynamic structural underpinnings" of the Colombian state.(31) Benjamin and Duvall's conceptualization of the state within a
twofold typology, peripheral and industrializing, permits a firmer grasp of the political
dichotomy existing in Colombia and that has defied explanation by any social science model
of either modernization or development.
State 1 is a continually operating, relatively permanent institutional aggregate of
public bureaucracy and administrative apparatus as an organized whole.(32) Its functional scope and orientation are limited to the
provision of "pure" public goods and intervention on behalf of the production
side producing some variant of state capitalism. The social composition of State 1 is
distinguished by its technobureaucratic elite with a Western orientation, rather than the
socially indistinct sector of an advanced-industrial capitalist state.(33) Structural relations between government and legal order are
constrained by government that defines legal order. This definition is particularly
salient for Colombia that, until approval of the new constitution in 1990, often operated
by executive decree under either an economic or political state of siege.
The above defined characteristics accord with Hartlyn's characterization of the
contemporary Colombian government as a "limited democratic consociational
regime."(34) He considers Colombia consociational
because of the mutual and extensive guarantees the two major political parties, the
Liberals and Conservatives, devised with the establishment of the National Front.
Guarantees of parity and alternation of office integrated into the National Front were an
effort to end `la violencia' and effect a return to civilian rule.(35)
These consociational regimes had, however, limited democratic practices such as
competitiveness and increased participation. Despite the legal end to the power-sharing
arrangement of the National Front, direct elections of mayors did not occur until 1988. In
part this was due to the reluctance of the Liberal and Conservative parties to relinquish
the perks provided by the National Front.
Silvert suggests that if social scientists really want to diagnose and predict the
political human, they need to learn about humans' institutional locations: "the types
of relations individuals and groups have to social institutions; also the patterns of
institutional orders, their real and ideal interlocking."(36)
State 2 is a more encompassing institutional legal order. As such, it is the enduring
structure of governance and rule in a society. Concern for property rights is paramount in
the dependent-industrial state where they do not infringe upon "quality of life"
rights emphasized in the advanced-industrialist state. A clearly demarcated distinction
between the public domain and the private domain exists with the public domain being quite
limited in the dependent-industrializing capitalist state. Thus among the tensions between
freedom, equality, order and justice, State 2 is committed to economic freedom and the
maintenance of social order is of paramount legal concern.(37)
Benjamin and Duvall's model of the differing emphasis of the state depends upon within
which capitalist context the state is situated. This provides a means to identify what
Silvert calls humans' institutional locations. State 2's commitment to social order
regards social inequality as a necessary, even an acceptable, by-product of development.
Benjamin and Duvall note that State 1, containing the organizing principles of the
administrative apparatus, is the more paramount conception of the state in a dependent
industrializing state. The distinguishing dimension is found in ways that the public
bureaucracy contributes to the " . . . making and shaping of the legal order."(38) I suggest that State 1 best describes the Colombian state
with the establishment of the National Front. During this period, the Colombian state
moved from being a collection of regional fiefdoms ruled by caudillos (military strongmen)
to a centralized, hierarchical state with a burgeoning bureaucracy. The legally mandated
bipartisanship of the National Front, however, retained much of the fragmented nature of
Colombian politics. As practices of official bipartisanship relaxed after 1974 and remain
in the process of being dismantled, the issue, Hartlyn argues, is whether the state can
"(re)gain the coherence and capacity to act."(39)
While Colombia has not faced a debt crisis of the proportion of other Latin American
countries, its economy remains fragile and dependent. Opening the economy to expand
economic growth has dominated the concerns of the Post-Front regimes. Coincident with
increased economic freedom has been concern with maintaining social order, especially as
the I
Introduction || 2: The State of the Literature >>
