The Exogenous Shock of Prohibition on Crime in Chicago

Chris Smith, University of Toronto

Criminal organizations, like legitimate organizations, adapt to markets, competition, regulations, and enforcement. While small organizational changes are common, exogenous shocks dramatically restructuring organizations are rare and incredibly consequential. The Eighteenth Amendment to the US Constitution prohibiting the production, transportation, and sale of intoxicating beverages went into effect in January 1920. Whereas Chicago organized crime prior to Prohibition was rather inclusive of women and men from different ethnic backgrounds, Chicago organized crime after Prohibition tripled in size, consolidated power and influence, and stratified Chicago’s illicit markets to push out the most vulnerable participants from the most profitable opportunities. The question remains whether Prohibition was an exogenous shock to Chicago’s illicit economies and organized crime or whether organized crime’s growth and power during Prohibition was an extension of more endogenous organizational processes that started before 1920. This paper focuses on Chicago's illicit markets during 1919 and 1920 to establish that Prohibition was an exogenous shock that transformed organized crime in Chicago. This historical case illuminates how profits and rapid restructuring outside of regulatory environments (and in response to regulatory environments) are so effective at displacing people at the margins.

No extended abstract or paper available

 Presented in Session 173. The Social Construction of Criminality and Deviance: Sexuality, Race, Housing, and Booze in 1919 Chicago