A model for analysis
(First of all, Happy Mother’s Day. Having been raised in New Jersey I learned only in my adolescence that the word “mother” could stand alone.)
The War of the Kleptocrats
Now that most analysts consider Dilma’s impeachment is imminent, albeit not yet decided, I have been looking for a “model” to analyze and create scenarios for the path forward.
One that influenced my early years in New Jersey was the aftermath of the Castellamarese War. Two factions of the US-Italian Mafia had gone to war in 1928 to roughly 1931 over who would dominate the lucrative business of organized crime.
On the surface, it was a fight for control (i.e. power in perpetuity) of the US-Italian Mafia between Joe (the boss) Masseria and Salvatore Maranzano.
Maranzano emerged the victor in a bloody conflict marked by betrayals as supporters switched sides (sometimes often) in accordance with the fortunes of the two antagonists, and ending with the assassination of Masseria.
Maranzano set about re-organizing the Mafia around a new management structure. He created a five-member “Commission” – a kind of Board of Directors – made up of the five “families” of the New York Mob, to oversee the new structure and appointed himself as “boss of the bosses” (capo de tutti capi).
Outside New York, the Mob organizations were set up as stand-alone “subsidiaries” under a local “boss” and subject to the governance rules of The Commission but otherwise free to conduct their business (i.e. decentralization)
The Commission would arbitrate disputes between and among the “bosses” of the “subsidiaries”, approve “hits”, and keep the organization running as a criminal enterprise – “nothing personal, just business”.
However, underlying the war was the ascension of a group of “reformists” who rebelled against the “management” of the “old guard”, called the “Moustache Petes” for their adherence to the ways of the “old country”.
Maranzano was also eventually “whacked”, reportedly by one of the “reformists” (Lucky Luciano) in alliance with a leader of the Jewish Mafia (Meyer Lansky).
Luciano kept the Commission as the “ruling body” of the Mafia but abolished the title of “capo de tutti capi” because he felt it encouraged “power in perpetuity”, excessive centralization and continuous power struggles at the top.
The years that followed were marked by power disputes within the Mafia as the new “management model” took hold. However, the five-family Commission served to maintain some degree of order and governance as various “bosses” were occasionally “whacked”.
This was the environment in my early years in New Jersey when I learned a good deal about power struggles in the management of large and complex organizations.
Consequently, I have chosen the aftermath of the Castellamarese War as an appropriate “model” for analyzing the current dispute between two “kleptocratic organizations” in Brazil.
Vice-President Michel Temer currently finds himself in a position similar to that of Salvatore Maranzano. The figures of “Lucky” Luciano and Meyer Lansky have yet to appear to create the eventual power structure that will re-organize Brazil.
This is where the comparison loses its validity. The “lucianos” and the “lanskys” in Brazil will not be charged with developing a new and improved “kleptocraticorganization” but rather with developing a new “model” based on modern, ethical, management principles and transparency.
I do not expect (but also cannot rule out) the emergence of another kleptocratic structure in the case of Brazil. But this is yet to be seen.
Analysis:
Comparisons are dangerous and, as Shakespeare observed, “odious”. However, they serve to provide examples to help us analyze certain situations to guide our scenario construction exercises.
In the case of Brazil, the War of the Kleptocrats and the Castellamarese War have certain similarities and differences that are important to help us analyze the business environment they generate and possible paths to recovery from the self-induced economic and political crises that currently hold Brazil hostage.
Both the Mafia and kleptocrats have the same objective. They seek to confiscate the rents of the society in which they operate.
Both control access to and management of economic resources via the use of blackmail, intimidation and bribery. Kleptocrats have the additional advantage of actually being the government while the Mafia needs to operate at its periphery. It can’t make the rules, it can only breakthem.
Because the Kleptocrats can design and control the system, they can generally rely on a greater degree of impunity if discovered breaking the rules. The Mafia, on the other hand, usually has to face sanctions for violating them or form alliances with the Kleptocrats..
As I have observed in previous posts, we need to remember that the victor in the War of the Kleptocrats will still be a kleptocrat. As in the Castellamarese War, there is in Brazil an underlying demand for reform and the organization of society on a “different” basis (i.e. getting rid of the “Moustache Petes”).
In the case of the Mafia, the reform “from below” was carried out by other Mob members like Luciano and Lansky – both criminals. The demand from below for reform in Brazil is quite different. It is based on a desire for change in the very purpose of government in Brazil – i.e. to provide the means for sustainable economic development and prosperity for its citizens. It’s a demand for “statesmanship” vs. politics as usual.
However, like the years following the Castellamarese War, the kleptocrats will not necessarily go away – they will be controlledby appropriate institutions and sanctioned when they violate the rules.
I do not expect the road to “systemic reform” to be a smooth one. Kleptocracy and the attendant corruption that accompanies it is endemic in Brazil. Resistance to change will be the rule rather than the exception.
However, the change has the support of millionsof Brazilians as evidenced by the huge street protests that have marked recent years. Politicians will ignore this grass-roots demand at their peril.
Temer is quickly finding that recovery and reform will not be as easy as he might have imagined. Old habits die hard!
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