The Morality of Illicit Markets: 'Greasing the Wheels' or 'Greasing the Palm'?

37 Pages Posted: 3 Apr 2023 Last revised: 12 May 2023

See all articles by Peter J. Boettke

Peter J. Boettke

George Mason University - Department of Economics; Mercatus Center at George Mason University

Rosolino Candela

George Mason University - Mercatus Center; University Francisco Marroquín

Konstantin Zhukov

George Mason University

Date Written: January 27, 2023

Abstract

When and why are illicit markets regarded as morally legitimate? We address this question in the context of Soviet and post-Soviet Russia, where the moral legitimacy of commerce has waned since the collapse of the Soviet Union. We do so by analyzing the continued resiliency and robustness of illicit markets and their moral perception in Soviet and post-Soviet Russia, where de facto private property rights have remained insecure in spite of de jure political and economic reform. Given the continuity of illicit markets across both periods, we argue twofold. First, what has remained constant in the moral nature of illicit markets across both periods has been the entrepreneurial drive to realize gains from trade by circumventing and evading a predatory state. Secondly, given this constancy in the form of illicit market exchange, we contend that changing moral attitudes toward commerce have resulted from the changing manifestation of illicit market exchange, in response to the predatory nature of the state. In both the Soviet and post-Soviet period, the state has remained a means to create monopoly privileges. However, whereas in the Soviet period, illicit markets served as a means to “grease the wheels” of commerce, economic transition in post-Soviet Russia corrupted the moral legitimacy of a market economy by transforming illicit markets into a means to “grease the palms” of government officials in the name of “privatization.”

Keywords: Illicit markets; Economic transition; Morality; Property Rights

JEL Classification: B53; P26; Z13

Suggested Citation

Boettke, Peter J. and Boettke, Peter J. and Candela, Rosolino and Zhukov, Konstantin, The Morality of Illicit Markets: 'Greasing the Wheels' or 'Greasing the Palm'? (January 27, 2023). Journal of Economic Behavior and Organization, Forthcoming, GMU Working Paper in Economics No. 23-17, Available at SSRN: https://ssrn.com/abstract=4397337 or http://dx.doi.org/10.2139/ssrn.4397337

Peter J. Boettke

George Mason University - Department of Economics ( email )

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Mercatus Center at George Mason University ( email )

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Rosolino Candela (Contact Author)

George Mason University - Mercatus Center ( email )

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University Francisco Marroquín ( email )

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Konstantin Zhukov

George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

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