Drug cartels are called cartels because, like traditional cartels in legitimate industries, they are organizations that join together or operate collectively to control the production, distribution, and pricing of illegal drugs, effectively limiting supply to keep profits high.
Understanding the Term "Cartel"
The term "cartel" has evolved significantly over time, but its modern usage perfectly describes the operational structure and market manipulation tactics employed by these illicit drug organizations.
The Evolution of the Word "Cartel"
Historically, the word "cartel" had a different connotation:
- Original Meaning: It referred to political parties or groups that joined forces to promote a common cause or agenda. It was more about alliances in a political or social context.
- Modern Meaning: Over the years, the term acquired a distinctly negative connotation. It now predominantly describes groups or organizations that collude to restrict competition, limit the supply of a product, and thereby artificially inflate or maintain high prices. This practice directly harms consumers and undermines free markets.
This table illustrates the shift in the word's meaning:
| Aspect | Original Meaning (Historical) | Modern Meaning (Current) |
|---|---|---|
| Members | Political parties, social groups | Businesses, organizations, criminal groups |
| Purpose | Promote common cause, political alliance | Limit supply, control prices, eliminate competition |
| Connotation | Neutral, cooperative | Negative, illicit, anti-competitive |
How Drug Organizations Fit the Definition
Drug cartels embody the modern definition of a cartel by engaging in practices designed to monopolize the illegal drug trade. They operate similarly to how an illegal cartel in a legal industry might function.
- Supply Control: They control vast networks of production (e.g., coca cultivation, methamphetamine labs) and trafficking routes, limiting the amount of drugs available on the market.
- Price Fixing: By controlling supply, they can dictate prices, ensuring maximum profitability for their illicit products.
- Market Dominance: They often divide territories, eliminate rivals through violence, and enforce strict rules among their members or associates to maintain their dominance and prevent new entrants from disrupting their control.
- Collusion: While often violent towards competitors, members within a cartel or allied cartels may collude to manage the overall drug supply reaching various markets.
These activities directly align with the core economic definition of a cartel, which is an agreement among competing firms to control prices or exclude entry of a new competitor into a market. In the case of drug cartels, the "firms" are criminal organizations, and the "market" is the illegal drug trade.
For more information on the economic definition of a cartel, you can refer to Investopedia's explanation of cartels.
