Home / INTERVIEWS / The Social Order of the Underworld: In conversation with David Skarbek

The Social Order of the Underworld: In conversation with David Skarbek


For those who are not familiar with the book, could you summarise it briefly?

The basic question of the book is to understand why prison gangs are important in some times and some places and not others. The main focus is in California, where for more than a century there was no such thing like prison gangs. Today, instead prison gangs are extremely dominant and influential. As an economist and social scientist it’s fascinating to study such observed variation. I used the tools of economics and politics, especially new institutional economics, to argue that what we see in these two periods isn’t just ‘no gangs’ and ‘gangs’; but different ways that inmates have found to create some order and some structure in their lives.

“The advantage that gangs have is that they can advertise and safely sell valuable goods without fearing to be robbed, because they pose a credible threat to other inmates.”

When prison gangs were first created? How did the gangs come to be?

The earliest gangs formed first in the late 1950s, the Mexican Mafia, and then throughout the 1960s and 1970s. Since then, what we see is an increasing number of gangs, gangs’ membership and gangs’ influence.

What was the motivation that compelled inmates to join gangs?

Historically, inmates form gangs for safety and protection from a dangerous environment. We know this from many different pieces of evidence, such as memoirs of former inmates and long-time prison gang members, and reports by prison officials. What’s interesting is that all of these sources point towards the same conclusion: inmates felt in danger and formed gangs to feel safer.

What sort of activities do gangs perform? And can these activities be described as economic transactions?

Although inmates initially turn to gangs for safety, these gangs have then expanded the scope of their engagement. Offering safety gives gangs comparative advantage in engaging in the underground economy. Prisoners often want things that officials won’t let them have – drugs, alcohol, tobacco.  In that environment, if one is the sole proprietor and seller of goods like heroin, it would be very dangerous to publicize such goods without a safety network. The advantage that gangs have is that they can advertise and safely sell valuable goods without fearing to be robbed, because they pose a credible threat to other inmates.

“Markets flourish precisely because gangs provide regulations and governance.”

So a similar ‘institutionalised’ economic system cannot exist within a non-institutionalised situation, such as prison, without the presence of gangs?

Yes, in fact markets – such as those observed in Californian prisons – flourish precisely because gangs provide regulations and governance. Any market setting needs some mechanism to settle disputes and punish people who have violated commercial agreements; and the gangs are the best institutional solution available to inmates to do that.

Why is it that in disorderly environments like prisons inmates need to create a system, a market, with laws and regulation? What are the differences with real-world markets?

The prison economy is fascinating: inmates are supposed to be the least trustworthy and cooperative in society; and yet gang leaders are the ones who make and enforce the rules most diligently. Regulations allow gangs to make profit more from the underground economy, so they have strong incentives to provide public goods like governance. These findings are difficult to generalise, but the basic lesson is that if the least compliant and the most impoverished people can come up with rules that guide their interactions, then we should think that the arena of self-governance is larger and more robust than we thought. It wouldn’t be surprising to get families, communities or co-workers to cooperate; but the fact that the most unruly people can achieve that means we should have more faith in their ability to do so.

“Regulations allow gangs to make profit more from the underground economy, so they have strong incentives to provide public goods like governance.”

Some reviews mention that you oppose two notorious theories for the formation of prison gangs – the deprivation theory and the importation theory. Why, and what is your alternative?

First it’s useful to think what’s wrong with those theories. The importation theory maintains that the best way to understand the behaviour of inmates is to understand behaviours in the community. Sometimes, however, there are dramatic changes in the prison with no apparent changes on the outside. Moreover, often inmates interact differently even if they come from similar communities. Empirical findings, therefore, contradict the theory, which proves underdetermining. The deprivation theory – which argues that the pains of imprisonment determine inmates’ behaviour – is plausible but limited. In fact, it assumes that there are fixed pains of imprisonment. If the pains of imprisonment don’t change across different prisons settings, however, then variations in gangs’ activity can’t be explained: something that doesn’t change can’t explain a change. I accept the deprivation theory; but instead of assuming that there’s fixed pains of imprisonment, I consider them as endogenous, that is, affected by the inmates’ and the officials’ choices.

Your first assumption is that even ‘irrational’ beings like inmates actually behave rationally. LSE academic Tim Newburn argues that the use of the rational choice theory (RCT) in your book is limiting, because it underplays the role of emotions; and hinders some interpretations of the phenomenon you study. How do you reply to this?

It’s a good question. I think that there is an approach to RCT that excludes non-monetary incentives. What I use in the book is a much less narrowly defined model. I claim that people respond to incentives – which we have to study empirically to understand – and are broadly self-interested. What and who people care about how they respond to incentive are overwhelmingly empirical questions. Obviously feeling anger and jealousy […] can matter. There is a balance between using the RCT and capturing those things into the analysis. For instance I understand that the inmates’ violent response to insults is very emotional. I think the economic way of thinking I use in the book describes emotional reactions pretty well, and that, if wielded correctly, the RCT does not have to exclude them.  


David Skarbek

is a Senior Lecturer in Political Economy and Undergraduate Exam Board Chair in the Department of Political Economy. He is the author of the book ‘The Social Order of the Underworld: How Prison Gangs Govern the American Penal System’.

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