Lu Dewen's peripheral organized crime anthropology: "The 'path to survival' for county-level organized crime groups."
This is an article by Lu Dewen 吕德文, a sociologist at Wuhan University (at the time this was published, he was still working at Huazhong University of Science and Technology). This is a report written after doing field work at a Public Security Bureau office in an unnamed county seat in Central China. Lu Dewen writes most frequently on rural governance, with a focus on preserving grassroots management against increasing centralization, and although this article is about organized crime, it covers some of his standard concerns. It appeared originally in Southern Reports 南风窗.
PRELIMINARY NOTE 1: In the title and throughout the article, Lu Dewen speaks of hēishèhuì 黑社会, which could be more literally translated as “black society.” It can refer both to discrete criminal organizations, as well as the underworld itself. Although I have translated it as "organized crime groups" or “the underworld,” I have some reservations about my choice. Perhaps it should just be “black society.”
PRELIMINARY NOTE 2: Other terms used are jiānghú 江湖, jiānghú rénshì 江湖人士, jiānghú yìqì 江湖义气, which are, literally, "rivers and lakes" and "people of the rivers and lakes" and "rivers and lakes righteousness." People in the “rivers and lakes” were beyond the supervision of local officials. If you read a martial arts novel, you will see it used for bandits, who mostly operated in rural areas. At present, the “rivers and lakes” are everywhere. The term is no longer restricted to criminals but could encompass nearly anyone that makes a living beyond respectability and stability. Again, although I have translated it in this article (jiānghú rénshì becomes “men of the demimonde”), a more literal translation would have worked.
PRELIMINARY NOTE 3: Chinese administrative divisions might not be familiar to most readers. Lu Dewen refers here to county-level districts, or xiàn 县, which are below the level of province and above the level of township and village. This is a simplification of a complicated system, but I think it’s enough to understand what he’s talking about.
The 'path to survival' for county-level organized crime groups
Lu Dewen
A social network of friends and acquaintances
To understand how county-level organized crime groups survive, we must take an ecological perspective.
These underworld organizations are not monolithic, in fact, but are composed of a diverse group of individuals, criminal gangs with loose ties, and business-minded organizers. Underworld society and above-ground society have innumerable links between each other. Criminal organizations draw power from market society, personal networks, and power networks. Therefore, organized crime has a spectrum, running from black—strictly illegal—to gray—tolerated—to white—completely legitimate. To survive, a criminal organization must be careful to ensure that their foundation is gray, rather than black or white.
A county might be home to several hundred thousand people, but less than a thousand of them have real power or influence. Out of those, perhaps two or three hundred are ranking cadres, a couple dozen are influential corporate leaders and entrepreneurs, and several will be respected men of the demimonde.
During our research in the county seat, what struck us most deeply was the discovery that these several hundred most powerful people in the county constitute a social network of friends and acquaintances. Even if they don't have a direct connection, people in that social network will be aware of each other. If they run into any difficulty, it is easy to get in touch with someone in the network that can solve their problem. Our research project proceeded so smoothly precisely because we managed to gain the trust of key people within central circles of the network. It was quite easy, then, to get in touch with anybody we needed to talk to.
The Public Security Bureau is a unique place because it serves as a junction of power, as well as a collection and distribution point for information. This first description should be quite easy to understand, as it is the only county-level organ legally empowered to use force. If the county government wants to carry out a work item with brute force, they rely on the power of the Public Security Bureau; if the forces within a society are exercised smoothly, it is down to the supervision of the Public Security Bureau. It can be described as a collection and distribution point for information because it is the only organ that can penetrate all corners of society without resistance; the Public Security Bureau is itself an information nexus.
It is apparent that nothing that takes place in the underworld can avoid the notice of the Public Security Bureau. In our many interviews with middle-ranking cadres, we found them to be incredibly adept at gathering intelligence. The issue with this is that before they can act on any information, it must be proven. This is where things get complicated.
Ordinarily, underworld bosses do not reveals themselves as such, but hide behind registered enterprises and legitimate occupations in a number of industries. Therefore, the typical underworld boss has connections to important people within the county, whether in industry or government. If only to maintain their legitimate credentials and have some success in business, a crime boss must necessarily be embedded in the local power network.
Economic grey areas
Although the basis of an organized crime group's survival is violence, there is no way for them to earn a living simply from beatdowns. The objective of a organized crime group is to earn profit. The returns on violence are too low. If an organized crime group wants to survive, they must have some other economic support. Once an economic base is secured, it can be protected and monopolized through threats of violence.
During our investigation, we found that the ventures favored by local organized crime groups had particular characteristics.
Organized crime is a grassroots phenomenon, started without access to large amounts of capital or expertise, so most groups are restricted to low-end economic activities, such as operating hotels and entertainment venues, or running construction firms. These industries are ideal for organized crime because they are labor intensive and require negotiation with multiple facets of society.
Hotels and entertainment venues, for example, go hand-in-hand with prostitution, gambling, and drug sales, so legitimate entrepreneurs are unlikely to take a risk on them. The best way to avoid interference is to collaborate with powerful local joint ventures. In recent years, urban capital has begun moving to the countryside, seeking opportunities working with county seats on real estate or developing industrial zones. The men running these operations are content to do basic marketing and then wait for profits, so they don't pay much attention to who is investing. The meager profits of low-end ventures might not mean much, but they can get their foot in the door through deals with higher-end local enterprises. A classical example of this is with difficult land acquisition processes that require relocation of uncooperative residents: jobs that might get messy are subcontracted to demolition companies connected to the underworld. The county we did research in does not have a major hotel, but the most famous guest house is run by a man whose reputation is for getting his hands dirty. Local land acquisition and tenant relocation schemes undoubtedly involve the active or passive cooperation of organized crime.
In general, business ventures run by organized crime tend to be monopolies. This might be due to regional isolation, the nature of the industry, or resource scarcity. It is quite easy for organized crime groups to muscle in on the business with threats of violence and quickly secure complete control.
In the county that was the site of our field work, we found that there are three industries controlled by the underworld: long distance buses, wholesale rice-flour noodles, and earth and stone work.
The long distance transportation industry is regulated by permits issued by the local government, which means that competition is limited and passenger traffic is stable. The Bureau of Transportation will not issue permits to qualified transportation companies, but that does not necessarily mean acquiring and maintaining a fleet. Local companies bring a number of large and small fleet operators under their alliance. The parent companies takes fees from the fleet operators, who must assume all risk. The capital required to run such an operation is not the barrier to entry; the issue is managing the numerous quasi-independent fleet operators. Any of the larger fleet operators could perhaps run the business themselves, but it turns out to be easier to work with organized crime groups as administrators of the system. There is a clear division of labor, with the fleet operators carrying out the transportation of passengers and collecting fees, and organized crime bosses maintaining monopoly.
In 2010, the county's Transportation Bureau approved licenses for more than a dozen taxi operators. They quickly found themselves squeezed out of the local market by tricycle cab operators. The taxi drivers began running long distance routes, competing on trips from the county seat to the provincial capital. This has led to constant conflict between the taxi drivers and the long distance bus drivers. On the first day we arrived in the county, there was a mass incident in which taxi drivers surrounded the local government office. The cause of this was the beating of a taxi driver by a long distance bus driver. It seemed obvious to many people with knowledge of the situation that the bus driver's actions were directed by organized crime.
Some have remarked on how strange it is that the wholesale rice-flour noodle industry in this county is also controlled by organized crime, but careful analysis shows that it was only logical for the underworld to show an interest. This is a county that eats a lot of rice-flour noodles, especially for breakfast, so there is a large volume of sales. Although rice-flour noodles are not a particularly luxurious product, the margins are good and sales are steady. On top of that, most of the rice-flour noodles come from a handful of factories in the county seat, so cornering the market would require relatively little work. That left space for organized crime: they dispatched some of their thugs to visit the factories and get them to agree to a two mao per jin price increase, which would be turned over to the gangsters. This was a small price increase that consumers would not notice. The factories had nothing to lose by agreeing to these terms. Some local people have noted that although prices of commodities in surrounding counties are generally the same, rice-flour noodles are always a few mao more expensive.
The sky-high profits of local earth and stone works companies is directly connected to the real estate boom of recent years in the county. Some large national firms are involved in real estate development, but it is driven by the investments of local firms. Whoever invests in a project, earth and stone works are undertaken by firms connected to organized crime. In the county, gravel quarrying and demolition are both monopolized by the underworld. The gravel business is crucial to earth and stone works, and it is easily monopolized because of resource scarcity. It is further restricted by applications granted by the local government. Demolition, as everyone knows, now frequently requires violence, so it is ideal for underworld operators. The government is increasingly unwilling to throw their resources behind clearing out tenants that don't want to leave, so developers rely on the underworld.
Two red lines
To continue to survive and develop, organized crime groups must solve several potential problems. The first potential problem is contention between underlings and leaders. If internal competition is not controlled the leadership and lower levels will both suffer. The second potential problem is changes within elite power networks. If an underworld boss throws his weight around too much or his patrons in the government fall, he is in danger of being brought down. The third potential problem is management expertise. If legitimate operations are not run adeptly, underworld ventures can suffer.
In general, most localities will have multiple underworld forces competing with each other. This can play out in multiple ways. If these forces are under the influence of a single leader, he must negotiate internal contention and prepare for generational succession problems. If there are multiple bosses in a locality, they will likely define boundaries between different spheres of influence and industries.
During our research, we noted that the entertainment industry in the county seemed to be in decline. Several venues in the county seat were shuttered. The objective reason for the decline is that the local government has enforced the Eight-point Regulation of the Center. In an inland county, that can mean drastic consequences for the entertainment industry. The direct reason for the decline is that the local Public Security Bureau has launched a strike hard campaign against prostitution, gambling, and drugs. That has made investing in the entertainment industry a risky proposition. But the more important reason for the decline is that underworld forces have themselves been in decline since the arrest of a powerful crime boss, who formerly controlled the entertainment industry.
In general, the leadership of the local Public Security Bureau will be from outside the locality, which can cause problems for underworld networks. When new leaders are transferred in, organized crime groups will try to curry favor and restrain their activities. If necessary, they will do their best to make a connection with the leadership. Security cadres and heads of local police stations told us candidly that upon first arriving at their post local criminals had gone out of their way to befriend them, going so far as to invite them to dinner. One gang leader even offered a cut of proceeds from a brothel in exchange for reduced scrutiny. This was refused, of course. The attraction of bribes is minimized by the fact that penalties for receiving them are far more significant than anything local gangsters could offer.
In the opinion of people within the Public Security Bureau, it is very difficult to completely eradicate organized crime groups, since it is nearly impossible to extricate it from the network it relies on. To do so requires a great effort and excellent tactics. In a criminal organization that is run correctly, lower level gangsters will not sell out their bosses, and their bosses, even if they can be tied to crime, will not sell out their patrons in government. Why? This is because of security mechanisms within underworld groups. An experienced gangster is aware that there is not much benefit to be gained from snitching, since sentences will not be reduced significantly; the criminal organization can provide rewards and protection for maintaining the code of silence. The gangster that keeps his mouth shut will have his family looked after and can look forward to steady work once he leaves prison. The reason that crime bosses won't sell out their patrons in government is because they are aware that the organization itself will not survive without that support remaining concealed. If the boss comes out and wants to return to the underworld, he will still need his old support network. Therefore, underworld ethics are not merely the ideology of the organized crime groups but also a pragmatic survival mechanism.
Two years ago, when the county's largest underworld forces were rooted out, it was not due to the organization itself failing but rather tremendous changes in the network that they relied upon for survival. The fuse was lit by a minor player in the group being caught in a murder case. Although the Public Security Bureau couldn't link it to gangster leadership, it seemed clear to them that it had been directed by the organization. At the time of the murder, a new Party secretary had just arrived and wanted to make an example of the organized crime group. He used the murder case as a jumping off point for a wider crackdown on crime in the county. Multiple layers of the Public Security Bureau collaborated on investigations into gang activities, resulting in the arrest of one of the leaders of the group on gambling charges. The Public Security Bureau broadcast to the underworld a rumor that the boss had been linked to the murder. The minor player that was charged with the crime believed that the rumor was true, so he signed a confession implicating his boss. The organized crime group was completely obliterated, but no government officials ended up being implicated.
The elimination of the group was not down to organizational failures but tactical failures. They went over two red lines by committing a murder and impeding on the functions of local government.
If a murder is committed the local government is likely to elevate it from an ordinary criminal case to a political case. Apart from a murder, that step is unlikely. Tactically speaking, committing murder endangers organized crime groups.
From the perspective of Public Security Bureau investigators, different types of cases will be given different priority. Administrative and criminal offenses of less seriousness will be assigned to local police departments and brigades, who have limited jurisdiction and investigation tools. If the case is turned over to a criminal investigation brigade, many tools are available to them, including information tools and surveillance, so it becomes quite easy to solve the crime, as well as related crimes. In general, if the budget is available, any case turned over to the criminal investigation brigade will be solved.
That is why organized crime groups avoid committing serious crimes. Even if they have to use violence, they will exercise some restraint. They know that a murder will result in serious and unpredictable consequences.
Organized crime groups need to understand politics. They know that some political considerations are now incorporated in the common sense of Public Security Bureau investigators. For example, during strike hard campaigns, most underworld groups will restrict their operations. They might even do their best to ensure that the Public Security Bureau can declare a victory in the campaign.
But deeper political understanding is a test of the intelligence of an underworld boss. During our research, the county Party committee and county government were taking steps to completely root out criminal organizations. The reason for this was their interference with land acquisition, relocation, and development: they were playing both sides, collecting payment from construction contractors, and also encouraging residents to hold out, so that other gangsters would need to be contracted to drive them out. Local authorities took this as a challenge to their authority. This situation will necessarily force the Public Security Bureau to investigate underworld groups and crush them.