Prohibition in a market economy

Are organized societies capable and willing to manage and control psychoactive substances, instead of leaving it to organized crime?

The funding dogma of capitalism and the basic principle of market economy, the law of supply and demand, is inescapable. It must be obeyed one way or another and there is absolutely no way to tamper with it. If it cannot be obeyed within the framework of legality, it will find other means and if supply creates its own demand, its corollary is also true that demand will create its own supply, which is why the supply reduction strategy of the war on drugs is condemned to fail and the demand reduction strategy is just as doomed.

The drive for mind-alteration, either through psychoactive substances or otherwise is deeply ingrained in human nature as the study of the brain reward/pleasure system clearly indicates. Whether we like it or not, this basic drive creates a demand for psychoactive substances. As a result of globalization and prohibitionist policies, this demand increasingly is not being adequately met by legal psychoactive substances as consumers want to diversify from alcohol and tobacco. The thrill of forbidden fruit adds to the appeal of illegal substances while the shadow economy in which black market thrives give rise to sub-cultures revolving around the commerce and use of such substances. Such sub-cultures are increasingly the dominant culture in many parts of the world from the US-Mexican border zone to West Africa or Central Asia and even in Northern California.

Drug trafficking arose as an unavoidable consequence of prohibition’s attempt at violating the inescapable law of supply and demand. Prohibition and drug trafficking grew in symbiosis, mirroring each other like the yin and the yang of the same entity, and as the war-on-drugs became harsher and harsher, the law of supply and demand mandated a reciprocal market response as drug traffickers became tougher and tougher and ever more powerful. Harsher enforcement also creates scarcity, which increases profit to the illegal trade.

Prohibitionism not only attempts to violate the basic principle of capitalism, it created a capitalist aberration by promoting the emergence of a class of super-capitalist, the drug traffickers, operating unencumbered by the rule of law and who became criminals first and foremost as a direct consequence of the illegal status of their activity. Far from me to try to exonerate drug traffickers; lots of them are clearly ruthless criminals in their methods and their means. But Al Capone was right when he said that he was just a businessman filling up a market need. In a sense, black markets are the rawest and purest form of capitalism, unregulated, unbridled capitalism, without check and balances, without the rule of law, unburdened by taxes and drug traffickers are the purest types of capitalist.

Because their activity, the commerce of illegal substances, is illegal, conflicts arising from their activity cannot be resolved in a legal manner as drug traffickers are denied the rule of law to regulate their activity. Thus an activity that had been artificially and somewhat arbitrarily declared illegal and therefore criminal led to an explosion of real crime as violence became the only mean for resolution of conflict arising from the commerce of the illegal substances. If a dealer doesn’t get paid, his gun is his collection agency. Violence is the only way to resolve disputes. Territories are protected by guns, not by contracts and lawyers, and conquered at gun point. Agreements are enforced by guns, not by judges. Violence is the rule of law.

The use of violence in conflict resolution has a dual purpose, a punitive role and a dissuasive role, which logically leads to ever-escalating violence. The level, the intensity, the savagery even of drug violence has been spiraling out of control as a logical consequence of its dissuasive function. Rothstein was a gentleman compared to his trainees and disciples Lucky Luciano and his peers; Al Capone and Luciano were altar boys compared to Pablo Escobar; Escobar is a saint compared to Los Zetas, the Gulf Cartel or La Familia Michoacana. It is hard to imagine how the current wave of gory and gruesome atrocities can be surpassed but I am afraid we will find out soon enough.

Drug trafficking organization try to reduce the negative effects of violence on their activity and set up hierarchies, rules and alliances, but when hierarchies are shattered, rules are broken or alliances fall apart, violence takes over. Violence tends to grow with instability in a shadow economy and as law enforcement efforts become more successful at disrupting drug trafficking networks, narco-violence increases exponentially. As newcomers rush to fill the void created by arrested or killed drug kingpins, turf battles rage.

As for corruption, it arises inevitably at the unavoidable interface between the black-market and the open economy. Borders need to be crossed, merchandise needs to be transported, raw material and equipment need to be purchased, crops need to be protected, money need to be laundered, profits need to be turned into legitimate businesses, real estate, mansions and yachts. For all of these and myriad other operations, the beautifully simple formula, the magic bullet is “plomo o plata”; greed and fear are the motivators; they are the cement that seal loyalties, the universal facilitator and lubricant. For the black market, corruption is like a tax, part of the cost of doing business.

Black market naturally thrives in chaos. Whenever it needs to interface with the open economy, it logically seeks the path of least resistance. In a global world, it seeks the weakest states, the failing states, further destabilizing them and them taking advantage of the power vacuum to take further control. Central America, East and West Africa are particularly vulnerable.

Market economy naturally favors profit-maximizing strategies, which in the case of illegal substances, will favor substances with the highest bang for the bulk as substances need to be concealed at all time and bulk comes with a severe handicap. Unsurprisingly, drug dealers much prefer heroin or cocaine to marijuana. There is virtually no market for coca leaf outside its traditional area and the market for raw opium for direct consumption has evaporated in most of the world and receding rapidly in India, Pakistan and Iran, sadly replaced by heroin.

After over 100 years of prohibition, more than 20% of the US adult population use illegal drugs on a regular basis and close to 50%, including the current and last two former US presidents have used at least once in their lifetime. So, it is quite obvious by now that drug prohibition is not practically and efficiently enforceable; the prohibitionist model for controlling the use of psychoactive substances is clearly flawed and a paradigm shift is urgently needed. It is time to ask the simple but fundamental question: “Can organized societies do a better job than organized crime at managing and controlling psychoactive substances?” If we cannot respond with a resounding Yes! To this fundamental question, then we must despair of our societies and their governments. Besides, the vast majority of psychoactive substances, including the two deadliest, tobacco and alcohol, are already legal.

The use of psychoactive substances is an issue of personal choice, while substance abuse is a health issue, which has been turned into a criminal issue with catastrophic consequences. The real crime is to give control of the illegal drug marketplace to organized crime.

Jeffrey Dhywood
Investigative writer,
Author of “World War D – The Case against prohibitionism, roadmap to controlled re-legalization”

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Author: Jeffrey Dhywood

Jeffrey Dhywood is a European-born investigative writer, lecturer and public speaker, drug policy analyst, author of "World War D – The Case against prohibitionism, roadmap to controlled re-legalization" Jeffrey Dhywood holds a degree in Mathematical logics (Model Theory). He lived 20 years in the US and is currently living in Latin America. He is also very familiar with Asia, which gives him a good grasp of the global dimension of the War on Drugs, and its global failure. His academic background and his direct experience allows him to bring common sense and sanity to an issue often mired in confusion, misconceptions and preconceptions.

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