Introduction Such costs are estimated to be in-excess


Crime normally thrives in societies where law and order are rarely or inadequately enforced.

From the void created in law enforcement, criminals and gangs exist to fill the void; not out of poverty but rather, out of the aim of controlling resources (Lawton 1). Crime is likely to increase if there is poor management of the economy by existing governments, but it should be noted that, markets and economies are directly interlinked. Markets cannot be easily controlled because of their dynamic internal and external variables, but economies can be controlled (Lawton 1).

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However, before economies are controlled to subvert crime, the impact of crime on the society ought to be properly understood and how it directly affects the economy or even people’s lives in general. Crime has in the recent past been rated among the highest form of social ills in the society. Basing our analysis from past trends, crime levels in America have remained high and it is even higher in some regions of the world, like Brazil, Jamaica and the likes. Though historically, crime has been condoned as part of human life, the financial impact of crime is staggering. For instance, in the US alone, crime is estimated to cost the economy in-excess of one trillion dollars every year and more costs (running to billions of dollars) are related to production costs associated with planning (Helsley 2).

Such costs include healthcare costs (of crime victims), target hardening, community policing and other similar ventures aimed at reducing crime levels in the society. More costs are experienced as opportunity costs where resources are directed to crime in cases where they could easily have been directed to other productive activities. Such costs are estimated to be in-excess of $130 billion, but similar costs are also experienced in expenditures associated with the loss of life or health in crime-related events (Helsley 2). Since the cost of crime is significant to the overall growth of any economy, it is in the best interest of any government to understand the dynamics of markets on crime so that crime levels can be reduced. So far, we have established that, crime is best controlled through the control of the economy and in the same regard, Lawton notes that: “Thus with strong economies the pressures of the market can be statically forecasted which will lead to complex derivatives and commodities futures.

Derivatives are really just complex futures as well” (Lawton 3). From this analysis, we can therefore deduce the fact that, the market can be used as a tool for the future forecast for crime policies of any country, but policies are a determinant of the performance of the economy, and the economy is equally subject to the operations of the public and private sectors the market (Lawton 1). From this understanding, this study establishes that, crime control can be best established from private and public sector cooperation, complimented by corrective measures to curb market failures.

Controlling Markets

As mentioned earlier in this study, controlling markets is not an easy thing. Often, markets are subject to many variables; some of which are beyond the control of the government or any individual.

Moreover, the market is normally interlinked in a manner that, it is almost impossible to correct one component and expect an effective result. Some of the variables existent in the market making it uncontrollable is the existence of oligopolies, monopolies and such like market imperfections (Barnat 2). Moreover, there is the influence of unions, think-tanks, independent organizations and such like elements in the market which can dilute the effect of a government in controlling the market. Probably, one possible way the market can be controlled is when perfect competition exists, but in real sense, such a state does not exist. From this understanding, it is therefore important to note that, controlling the market is not an efficient way of reducing crime levels (in as much as the market affects crime rates in a country).

The only way through which a government can reduce crime is by controlling the economy as an indirect strategy to control the market.

Relationship between Crime and Economy

Since this study notes that crime is a direct result of the intrigues in the market, and the market is too diverse to control, the only solution to the reduction in crime is the control of the economy and enforcement of laws. Recent research studies have tried to establish the relationship between the economy and crime and they have discovered that the relationship is twofold. First, it was established that, the economy has a relationship with crime because of consumption (Police federation for England and Wales 4). In this regard, it is evidenced that, with the increase in consumption levels, the value of goods available for theft will increase and so will their numbers.

This observation is supported by a theory among many criminologists that, with the increase in stock of goods in the society, the number of opportunities for crime will also grow in the same regard (Police federation for England and Wales 5). However, the increase in consumption also works contrary to the above observation in the sense that, when consumption rates increase, the lifetime income is also bound to increase and the increased lawful income is equally bound to reduce the motivation of criminals to engage in crime. However, in both observations, it is important to note that, the latter observation has a short-term effect while the positive correlation between consumption and crime has a long-term effect (Police federation for England and Wales 5). For instance, in times of economic recession, it has often been evidenced that property crime rates normally surge but when people increase their financial spending, property crime rates do not increase with the same margin (sometimes they even fall). The following diagram shows a surge in property crime in the early 90s when there was a poor economic performance in the UK Source: Police federation for England and Wales.

Crime and the Economy. May. 2009. Web. 19 May. 2011.>

Private and Public Cooperation

Since we have already established that, the market is directly controlled by the economy, and the economy is a result of the private and public partnership of various institutions, we can acknowledge that, focusing on how to collaborate private and public initiatives, with the aim of reducing crime is a viable strategy of reducing crime levels in the country. In the past, private policing initiatives have been relied on as an effective form of crime prevention as compared to public policing (Nemeth 269). This is the reason why private security has been growing three times the rate public security has (Robertson 4). Moreover, it has been affirmed in several research studies that, public policing has a lot of shortcomings and from the gap created by this shortcoming, crime rates have soared.

This is also the reason why private security policing has come in place to fill this void. Already, we have seen that, crime occurs because of the lapse in the enforcement of laws and not necessarily the increase in poverty levels of a society. From this understanding, it is only obvious to note that, to reduce crime rates, there ought to be a mechanism in place to bridge the gap created by public policing in law enforcement. This means that, the shortcomings of the public policing initiatives should be supplemented.

There is no better way to do so than to encourage private policing initiatives. However, this strategy should not be assumed to eliminate or shun public policing altogether because public policing is also critical to the stabilization of a country’s security. For instance, private security is often paid for by the citizens and it is only available to people who can afford it. If public policing is eliminated, this would mean that, only those who can afford private security will be safe. Public security or government security can therefore not be eliminated. However, this study establishes that, it is important for the two security agencies to partner or collaborate in the reduction of crime so that, security can be enhanced. This would equate to public-private partnership which is needed in the realization of adequate security within a country.

This partnership is one factor needed for the good performance of an economy because economies cannot efficiently perform if the levels of insecurity are high. With a poor performance of the economy, the markets are bound to perform poorly as a result, and consequently, crime rates are likely to surge. Many countries have struggled to create a framework where private and public security can be simultaneously used to reduce crime, but many have not succeeded (Robertson 4). Factoring recommendations made by various researchers who have explored the failure of countries in merging the activities of private and public security agents, it is important to note that, people should move away from the notion that, in public and private partnerships, public policing is above private policing.

In other words, there ought to be a mutual platform where private and public security agents can easily share expertise and experiences regarding the control of crime. However, this should not mean that, the police should delegate its legislative role to private security agencies; it only means that, there needs to be a willingness by public security agents to acknowledge they have certain inadequacies and other security agents may have the same level of security intelligence they posses. Robertson advices that, “Partnership does not imply that public policing agencies are necessarily to be regarded as the dominant partner members. Maximum benefit in partnerships is more likely to come from an approach of partnership equity” (2).

Labor Markets and Crime

Labor markets are an important constituent to the changes in crime levels within a given country because it touches on the economic makeup of a country (which also determines the crime levels of a state). The relationship between labor markets and crime-data is undisputed because labor opportunities have been proved to have an inverse relationship with crime rates (National Institute of Justice 1). For instance, in the US, labor opportunities decreased during the 80s, but declined in the 90s. In the same manner, the crime rates increased during the 80s but significantly reduced in the 90s. Many economists have attributed the reverse relationship between labor markets and crime levels to the propensity to commit crime, viz-a-viz the costs and benefits of committing crime (National Institute of Justice 1). When a country experiences a vibrant labor market, the cost of undertaking illegal activities cannot be compared to the cost of undertaking legal activities. So far, crime statistics recorded during periods of poor labor market performance show that, crime rates increased with a poor performance of the labor market because the youth who are especially predisposed to crime, lack a viable channel to make a living and so they resort to crime (National Institute of Justice 1). It is feared that, the relationship between the labor market and crime may be stronger because not all crime is reported.

There is therefore the possibility that, there is possibly more crime being committed when labor markets are not performing; if the current statistics are anything to go by. For instance, according to the previous example explaining the poor performance of the labor market in the 80s, it was established that, property crime significantly increased during the same period by (13%) and during the90s, the property crime rates fell by about 24%, until 1997 (National Institute of Justice 1). Gould explains that “The global peak for property crime in 1980 was about 4% larger than the local peak in 1991. Property crime increased through the latter half of the 1980s, but the absolute levels were not extraordinary” (Gould 46). The following diagram explains this trend Source: Gould, Eric. Crime Rates and Local Labor Market Opportunities in the United States: 1979–1997. The Review of Economics and Statistics, 2002, 84(1), 45–61.

Print. From this relationship, we can establish that, if unemployment levels are checked, or if the labor market is properly managed, crime can significantly reduce. What lacks is therefore the commitment of the government in formulating prudent policies which can make the labor market sustainable to provide employment opportunities for young adults.

Not only will the formulation of viable policies to make the labor market sustainable, reduce crime rates, it is likely to reduce income inequality and significantly reduce poverty levels as well (Gould 46).

Information Asymmetry

Information asymmetry is normally a leading cause of crime because it creates an imbalance of transactions, thereby causing market failure. Normally, when one party in a transaction does not have adequate information regarding a given transaction, he or she is likely to suffer the consequences of ignorance, which may sometimes cause crime (Chalk 11). For instance, in a court of law, when one party does a crime out of ignorance, he or she is still deemed guilty regardless of the fact that, he or she never understood the law. Also, in insurance, when a person takes a policy with an insurance company, he or she may (out of ignorance) start behaving recklessly because of the insurance cover. Due to a lack of information, such a candidate would be considered ignorant of the premises underlying the purchase of the insurance policy and he or she would be at loss as a result.

Information asymmetry in the market is therefore a leading cause of market failure which often amounts to an increase in crime levels. Such situations are normally evidenced because information asymmetry occurs when people are unable to retaliate certain breaches of agreements. Also, such information imbalances are likely to lead to adverse selection and moral hazards which are complimentary to the increase in crime levels.

Public Goods

Public goods can sometimes cause the failure of markets because public goods are often viewed as a common pool resources, while in real sense, the market demands transactional costs, agency problems or similar costs which cannot be passed down to the consumers (Schinasi 21).

This factor causes an imbalance in the operations of the market and consequently, crime rates are likely to soar, especially if a society perceives most public goods as limited to the protection of the right to property. For instance, the internet has led to the invention of cyber crime and in the same regard, many software developers have had trouble trying to safeguard their intellectual properties once developed. This kind of situation creates a sense of helplessness for stakeholders operating public goods (such as the internet) because they cannot control the users of such goods. Moreover, it is more difficult trying to get compensated for the costs directed towards the development of goods and services subject to public goods. For instance, in cybercrime, the original composers of music, movies, softwares and other copyrighted materials cannot be compensated for their intellectual property if there is no mechanism to safeguard such rights because they are sometimes deemed public goods. This is a market failure which can be corrected by a stronger enforcement of laws to protect people from such extreme events.


This study establishes that, markets can significantly affect crime rates but it is difficult to control markets as they are. From this understanding, this study advocates for a control of the economy because the market is dependent on the economy, but in the same regard, the economy is dependent on private and public activities in the economy.

Due to this relationship, to reduce the rates of crime, this study advocates for a collaboration of private and public institutions to tackle crime. This is a way of controlling the economy, the market and indeed reducing crime rates. This relationship is factual because with improved security from such a partnership, the economy is likely to flourish and so is the market. This study also proposes that good management of labor markets should be upheld as a determinant of market performance because labor market performance directly affects the levels of unemployment and unemployment levels share an inverse relationship with crime rates. To tackle crime therefore, the government ought to ensure the labor market is properly performing to create more opportunities for young people (who are highly predisposed to crime) to engage in productive and legitimate activities. Also, this study establishes that, information asymmetry is a leading cause of market failure and indeed, a factor causing an increase in crime rates. This observation is closely related to the contribution of public goods to market failures because when public goods are perceived as such, they lead to an increase in crime rates because people have access to public goods without having to pay for the costs directed towards the production of such goods.

An example of cyber crime has been advanced to explain this relationship. From this analysis, it is increasingly important for the government to take action against crime, based on the failures of the market by managing the important components identified in this study affecting markets and which contribute to the increase in crime rates.

Works Cited

Barnat, Ryszard. Market Control. 2007.

Web. 19 May. 2011. Chalk, Nigel. The Potential Role for Securitizing Public Sector Revenue Flows: An Application To The Philippines, Issues 2002-2106.

London: International Monetary Fund, 2002. Print. Gould, Eric. Crime Rates and Local Labor Market Opportunities in the United States: 1979–1997. The Review of Economics and Statistics, 2002, 84(1), 45– 61. Print. Helsley, Robert.

Mixed Markets and Crime. Vancouver: University of British Columbia. Print. Lawton, Carol. Tirade on Economies, Markets and Crime. December. 2010. Web.

19 May. 2011. National Institute of Justice. Labor Markets, Employment, and Crime.

June. 1997. Web. 19 May. 2011.

htm> Nemeth, Charles. Private Security and the Law. London: Butterworth-Heinemann, 2005.

Print. Police federation for England and Wales. Crime and the Economy.

May. 2009. Web. 19 May. 2011.

Robertson, Don. Public and Private Policing: Issues and Options for Collaboration within Australia. Sydney: University of Western Sydney. Print. Schinasi, Garry.

Private Finance and Public Policy, Issues 2004-2120. London: International Monetary Fund, 2004. Print.


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