Prison Gangs and Polycentric Governance Regimes

Abstract: How do prisoners create order in the inmate social system? Inmates must devise their own self-governance mechanisms to define and enforce property rights to personal and common property. They cannot rely on formal governance mechanisms to enforce agreements in contraband markets. Officials will not provide many of the public goods that inmates demand, such as assaulting those deemed undesirable, including sex offenders, former police, and informants. Inmates provide these self-governance mechanisms in a polycentric system organized around race, ethnicity, and geographic origin. The core features of this system coincide with the lessons that Elinor Ostrom has identified as characterizing sustainable governance regimes. The high volume of contraband activity demonstrates the effectiveness of these mechanisms. The prison setting provides a difficult case for extralegal and polycentric governance regimes because it houses people of a biased agent type. In contrast to conventional wisdom among economists, this paper shows that a large group of heterogeneous people with high discount rates, few resources, and a willingness to violate the law can produce order and engage in a flourishing marketplace outside the law.