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ERASMUS Programme in Law and Economics
University of Vienna
Professor Dr Erwin Weissel
Some aspects of the private provision of security
(with focus on policing)
|Table of contents1 About private provision of
security, with focus on policing
3.1 What does contract security offer?
Image: Accepting the
I hereby declare and confirm that this thesis is entirely the result of my own work except where otherwise indicated. I have acknowledged on each page the supervision, guidance and inspiration I have received from various sources.
Täby, 4th August 1998
Image: Law & Economics, class of 1997/98 outside Erasmus Universiteit Rotterdam (NL)
Privatization and shrinking of the public sector have been key trends in western societies since the 1970ies. Just about all governmentally provided services have been prey for the hunters of economy. In many countries public spending on police has been cut down to a level of fire brigade policing, suggesting that the current resources does not suffice to any crime prevention. Crimes, like fire, are only dealt with once they have occurred. Therefore private entrepreneurs seizes opportunities to profit from peoples unfulfilled needs. They " will be doing what the police can or will not do because of their limited resources" (Johnston 1991 p 20). The implications of this are hard to understand yet. "[W]hat we are witnessing is not merely a reshuffling of responsibility but the emergence of privately defined orders that are in some cases inconsistent with, or even in conflict with, the public order proclaimed by the state" (Shearing & Stenning 1987 pp 13-14). A renegotiation of the public/private mix is in progress. Justice and security are no exceptions. Private prisons and private courts have been established a long time in the USA. However some fields still seem more delicate to discuss than others. The police and the armed forces are for instance said to be services that " nobody seriously thinks of privatizing" (Hart, Shleifer & Vishny 1997 p 1158). In this thesis the last statement will be proved wrong.
Moreover provision in general is often referred to as either public - or private in the debate. But the distinction is far from as clear as it appears to be, perhaps not even relevant, any longer. This thesis aims at highlighting facts regarding this. In particular two questions are always present: 1) Why do we have private alternatives to public policing? and 2) If the private security industry is growing, why?
Contrary to common belief, economics is not about money, but about resources and the allocation of them. One of the more important aspects of modern economic analysis is to highlight choices. Everything has a price (benefits - costs = price) and every choice made means alternative opportunities foregone. This is as true for the society in its entirety, as for its individuals. Normative economics aims at showing ultimate goals, and the best way to achieve them. Positive economics has two other approaches; one descriptive (what happens and why?), and an instrumental (what can be achieved?).
The goal for a positive economic analysis of crime is to " assess these costs and benefits, illuminate the nature of choices and alternatives, and to the extent possible, draw out some conclusions in the realm of positive economics about the underlying relationships in the process of choice and the implications of trading off one choice for another" (Andreano/Siegfried as quoted in Weissel 1996 p 10).
But not all economists hesitate to tell us what to do normatively. The Law and Economics school aims at analyzing legal problems with the tools of economics, in order to find optimal (or correct) solutions. Every person cannot fulfill his needs and desires, since resources are scarce. Through voluntary exchange, resources find the way to those parties that value them highest (as measured by their willingness to pay). Thus efficiency is reached. In this view, optimal is what is most efficient, e g the most efficient allocation (or use) of a resource.
Regretfully not all exchange is voluntary. Accidents, crime and legal pressure forces people to involuntary transactions. Such a loss of resources has a high alternative cost, since nothing is gained by the exchange. This can affect efficiency in both good and bad ways. Sometimes efficiency is achieved through a rearrangement of resources, but unfortunately it may also diminish the wealth of society. Economic analysis can provide a useful tool for avoiding such losses.
This thesis will try to explain some of the recent findings of sociologists and criminologists in a Law and Economics framework. In order to achieve this, a mixture of positive (descriptive) and normative economics will be used.
This paper deals with some aspects of the rather wide scope of privately provided security. Security is a very wide concept and although some parts sometimes arguably are better covered by one certain actor, quite often a co-operation of private and public counterparts appears preferable. Since long, the private security industry seems to be here to stay. "The need for private action is especially great in highly interdependent modern economies, where frequently a person must trust his resources " (Becker 1974 p 35). But we do not know much about how these private actions effect our society. The topic encompasses more than meets the eye at first glance. Just from the title three questions arises immediately namely: what is private, how can security be defined and what does policing mean? To answer any of these questions at length would demand a thesis of its own. Fortunately it is not necessary here to give anything but definitions relevant for this paper. Other questions that will be dealt with are why and how the private security service industry has emerged and (perhaps) increased, what it offers, who it serves, todays blurred distinction between public and private policing, their respective pros and cons and the future outlook.
The actual word has various meanings but in the sense it is relevant for us, private can be described as: of, relating to, or provided by a private individual or organization, rather than by a public body or the state. An important distinction is who pays for the services performed. In this thesis, policing by private bodies that are paid for by governments, counts as public. The opposite applies for what police officers does outside the scope of their duty.
In this thesis, security refers to precautions taken to ensure against unwanted events. Security services deals with protection of property, persons and information, and that serves as a sufficient definition here.
Police is usually understood as the organized civil force of a state, dealing with detection and prevention of crime and maintenance of law and order. The police are " persons with a special legal status employed by governments to preserve the peace" (Shearing, Farnell & Stenning 1980 I p 16). In the 20th century, man has gradually accepted these men as the sole and ultimate source for performing such tasks but it must be added that today neither employers nor employees necessarily are connected to governments. Policing is not even the work of a particular group of people, it is a set of activities - activities that consists of both private and public initiatives. Not all of them are organized, some of these activities are regular parts of every-day life. The word will be used to describe actions by both public and private elements.
What distinguishes private security services from the public police is that the former operates " almost always in private premises, behind the traditional and legal boundary which the police cannot lawfully cross unless by invitation or in other special circumstances" (Philip-Sorensen 1972 pp 44-45). There are places where the public police may not, cannot or will not work or where they are not welcome. There are also many restrictions and regulations surrounding them that do not constrain their private counterparts. Private security services are therefore arguably " a broader enterprise than public policing, with a wider range of functions" (South 1988 p 4), which is important to keep in mind. To contrast these paid-for services of professionals from regular self-protection, the term contract security will sometimes be used too.
One group which is hard to categorize are the civilians that are being employed in work which the police see as central to operational policing, for instance as scene-of-crime officers and other employees that perform a wide variety of administrative tasks. Although playing different roles in different countries and in spite of the fact that they are not policemen in factual terms, they perform policing and are (although civilian) employed by governments. In this capacity they are a part of the public security machinery and therefore, here they count as public.
The ultimate goal for public provision of security is to make society run smoothly by maximizing order. Although the costs for achieving this has attracted increased attention lately, profit maximization is not discussed, since making money is not a part of the concept.
Public security includes a variety of services produced by the state. Economists describes the justice process as a public service industry. The inputs, or raw materials consists of crimes and offenses. The numbers of arrests, prosecutions and convictions can be seen as the value added. However, there is no consensus regarding what the product, the security (or order), actually is.
In daily conversations, we often make a distinction between inner and outer security, the latter being a countrys security against harms from the rest of the world. What this usually means is a national defense. A states inner security is also a sort of defense, but this time against enemies within its own territory and its own jurisdiction. These tasks are performed by guards, intelligence services and primarily by public state police-forces. Order is also maintained by other strategies, one of the more important being social security; a welfare system of public health-care, hospitals, fire-brigades and so forth. All of these makes their important contributions to security because in theory people act in a more responsible way when the level of fundamental threats against their basic well-being is low. Here, focus will be on how different forms of policing succeed in establishing and maintaining order.
The first organized police department paid from public funds was established in New York City in 1844 (Cunningham 1978). Uniformed public police as we know them are mainly modeled after Londons Metropolitan police, which was set up in the middle of the 19th century. Before them, policing (in Europe) was performed by a variety of actors. In order to recognize them as providers of policing, we must adopt a perspective that defines police by their practice and their historical function. Going back in history, we find that the establishing of order and provision of security seldom was systematic, centralized or even organized. A king of course had his personal guardsmen, but that was a local feature, which did not aim at the security of the entire society.
A variety of neighborhood watches were common but they usually only served their own interests. Public official patrolling was often an unpaid voluntary duty after a rotating schedule, similar to - or a part of - military tasks. Needless to say, incentives to do a proper job under such circumstances were low and the risk of bribes and corruption high. The channels for private prosecutions had yet to be opened and therefore most conflicts were dealt with in an arbitrarial way. Since these arrangements were rather unsatisfactory, more private initiatives turned up (one of the more long-lived private outcomes of this period, the factory security guard, has been present in larger corporations ever since). Simultaneously reformed public initiatives surfaced and by the late 18th century, bodies performing functions that we would recognize as policing had surfaced.
The rapid changes in society due to the industrial revolution (for instance large private premises, infrastructures and mobility) created new needs and initiated many reforms. Still the lack of central organization was a problem to a large extent though. This weakness remained until the dawning of the modern public state police.
By definition a public good is: nonrival, that is the marginal cost (providing it to one additional consumer) is zero, and nonexclusive, that people cannot be excluded from consuming it. Well-known examples include air, public parks and national defense.
The majority of public, state-provided services however are not public goods. Security can be a public good, for example national defense. Police appears at first to be a typical public good since everyone in, for instance, a patrol area benefit from the policing without charge (apart from tax) or exclusion. But public police is in fact a good example of the opposite. It is rival in consumption since marginal cost rises when the police helps one consumer, because other consumers gets less attention. Also administrative fees can exclude some consumers from enjoying the polices services.
Policing is publicly provided because that practice is supposed to reduce negative externalities (e g capricious discretion, unauthorized use of physical force and illegal methods), and to achieve economies of scale. That is certainly good for the public, but it does not make no public good of the police in the economists sense.
The major benefit of the public state police is the public accountability that they enjoy in most democratic parts of the world. They are looked upon as the first step in any proceedings for achieving justice. How can this be?
The public police has enjoyed an unique position - a monopoly of policing - for a long time. Being the sole provider of an essential service, policing, advantages of scale evolve and naturally a lot of experience is collected. A trained officer has often acquired a sharp mind and a systematic way of analyzing situations, which hardly can be learnt any other way than out on the beat. "[D]er ständige Umgang mit Kriminellen bringt latentes Lernen mit sich, die Unbewußte Aneignung der Fähigkeit" (Weissel 1996 p 71).
These valuable skills and experiences might get lost when certain police-work responsibilities are transferred to private interests. This is because there might be few or no other ways of effectively learning policing than learning by doing. Education and training of private security personnel have rightfully been heavily critizised, which will be addressed later (see section 3). But at the same time, a surprisingly high amount of ex- and retired policemen - one source estimate that the number is as high as up to 20-30 per cent of the entire police-force (Johnston 1991) - are employed off-duty in the private security business today, usually appearing uniformed. So maybe the experience is not lost after all?
One major benefit that stems from the public polices traditional role as sole providers of security is connected to questions of legitimacy and public accountability. Studies have shown that to some people, an uniformed policeman can transmit a feeling of respect and security and through that, he might even be crime-preventive just by being seen. At least people might feel more secure when they see that the police are around. However, it has been questioned whether this effect is real or not. Does the mere sight of an uniformed police officer really prevent crime, or is the major benefit actually more a case of fear-reduction?
In Britain experience from one particular field of crime, autocrime (burglary and theft), showed that the best way of dealing with the problems - counter-intuitively - was not by having more uniformed policemen around. A decrease in crime was first noted when plainclothes detectives, focusing upon particular areas at certain times, were introduced (Rawlings 1991).
This view must be contrasted with the benefits of having a population who feels secure though. Rawling argues that "the only way the public feel they can have confidence [in walking the streets] is by being visibly assured of protection and support. That can only be given by the uniformed officer" (Rawlings 1991 p 51). Another study from Canada supports this view. It showed that policing performed with regularity, by uniformed (preferably horse-mounted) policemen, gave people a feeling of security (Reiss 1987). It must be noted though, that opinions in this question diverge.
Anyway these findings indicate that if policing is contracted out and this fact causes people to feel less secure (since uniformed policemen no longer are around) a net loss of security to society - perceived or real - occurs. Can that be optimal?
Public police is a wide concept, a true melting-pot of administrative, repressive and preventive functions. A lot of resources are needed (and spent) in order to successfully provide adequate responses to such a smorgasbord of tasks. Some of the major problems of this issue will be addressed here.
The idea that everyone pays for their policing, is the strength of a tax-paid public police. It makes the financial position superior to most private alternatives. Combatting crime can often be summed up as a deep-pocket competition. The competitor with most means will pursue. In an ideal, well-functioning fiscal state without bribes, corruption and organized crime, the strongest party would always be the state.
This strength is however, on the other side of the coin, a weakness. Because when public spending decreases, the superiority and thereby the very legitimacy is diminished and even threatened. "The additional manpower provided has been absorbed largely in bringing strengths up to levels appropriate to the situation which prevailed [long] ago. The demands of policing have changed beyond all recognition since that time" (Police, June 1988 as quoted in Rawlings 1991 p 47). Maybe the current debate focuses too much upon cost, and too less upon value?
Moral and etiquette are our closest barriers for personal protection. They lead and guide people to do right and thereby automatically provide basic security. When that is not enough, we turn to a more formal system of rules and enforcement, primarily to the police and the laws.
The laws major roles in human life are primarily defining certain places, spaces and matters as private. Laws also define what will be regarded as consent and as consent to intrude and will permit certain activities or behavior only on the condition of consent to some intrusion into privacy. Moreover, laws require that certain people, under certain circumstances, disclose what are normally regarded as private matters, under threat of penalty for not doing so. Finally laws delegate authority to certain persons to sometimes intrude upon privacy without consent.
So in order to get our private space protected, we must let the system of justice enter that very same - private - space. To protect privacy, we have to accept intrusions into it, which is a contradiction in terms. So in his efforts to avoid intrusions into private space, modern man has become its prisoner.
The very key to successful policing is to have legitimacy. Without popular acceptance from the policed population, laws will not be respected and policemen will not be obeyed. Police market themselves through their actions, and by maintaining a high standard of performance, the police generate good-will and thus the public trust their own police and its style of policing. This arrangement has successfully been going on all through the 20th century. By today however, with the recent cut-backs in public spending, the level and quality of policing have not been able to remain unaffected (see 2.4.1). As a result, people do not have as much confidence in the state police as they used to.
Another side of the legitimacy coin is whether a policeman can be trusted in all circumstances or not. No-one can be trusted in every situation and since the police represent the ordinary citizen, who is no better or worse than the average man, the average officer will be no more (or less) honest than anyone else. This is a serious issue, since the policeman in his duty has to be entrusted more, and enjoy a higher credibility, than ordinary people, and conflicts do arise from this. An official view of the problem is provided by Weissel (1996 p 90), who quotes a US Supreme Court judgement: "If the officer acts with probable cause, he is protected even though it turns out that the citizen is innocent". It is always hard, many times impossible, to accurately review a policemans cause ex-post. Innocent people might suffer from this, which is a serious weakness of the entire justice-system. On the other hand, when the innocent citizen hits the media, public police legitimacy might also be hurt.
Bad publicity is something that the public police always have suffered from. Bad news sells better than good news, and since most media today are profit-making, a lot of bad news are in orbit. Over the years, correct policing seem to have become more difficult to perform. Provided explanations for this are numerous, e g budgetary cut-backs, increases in crime, decreases in social control etc.
Some scholars indicate that there has been an increase in legislation, which also affects the police. Laws in general are made by politicians as responses to actual or perceived demands from different interest-groups, and do not necessarily correspond to the real needs of society. When such un-necessary legislation is enacted and introduced without any prior consultation with the ones who at the end of the line will be responsible for enforcing them, gaps between logic and reality might surface.
Similarly, the more laws to enforce, the less attention can be given to each of them. The result is that more opportunities for mistakes and misconduct evolves - mistakes that might be made - and innocent people faces a risk of suffering from injustice (see above). The influence of the media and their selection of stories plays an important role here too.
It is also always hard to determine whos voice, or which interest is speaking through the media. Focus can shift - or be manipulated - to serve various more or less legitimate interests, since the media are an important part of the agenda-setting of politics. And even when confronted with rather far-out articles and critique, public opinions can snow-ball into unexpected and even unwanted effects. Studies have shown that the importance of lobbyism and hidden interests have increased dramatically over the years. Might there be a risk that the public police does not get a fair deal?
Naturally, the public policing performed, differ in quality. Such variations occurs at every level. They can be noted within a police-district, within a state or a nation-state, and most obviously between nation-states. When for example travelling in countries in transition (former east-block countries) and war-shattered areas like provinces of the former Yugoslavia, the west-European visitor is stricken by the remarkable amount of police officers around virtually everywhere. Fact is however that this is a rather well-known way of recycling soldiers, whom once no longer wanted as soldiers, can perform similar tasks in a new profession. Regretfully such a practice does not necessarily lead to an optimal - or even satisfactory - quality of policing. Also, where the former army used to be corrupt, the police remains corrupt. This is hard to correct, and in societies that are too corrupt, there might be no other solution available than to dissolve the entire police force and reorganize a new authority.
The performance of policing in countries in transition has been evaluated by the International Crime (Victim) Survey, IC(V)S - a joint-venture between the Ministry of Justice of the Netherlands, the UK Home Office Research and Planning Unit and UNICRI. In their preliminary findings, attitudes towards crime is thoroughly explored.
In the countries in transition and in the developing world, satisfaction with police handling of reported cases is much lower than in the developed countries. When real or imaginary failures of the police to meet the demands of the society or social interest groups, alternative policing styles evolve. Policing is said to be the most targeted process in the continuous evaluative process of the justice system. Other agencies than the public police handles as much as 39% of the burglary cases in the Federal Republic of Yugoslavia (and 31% in the Czech Republic).
Furthermore, the study finds a strong correlation between crime reporting, satisfaction with police actions and the frequency of patrolling. The model for good policing is suggested as " a systematic police presence which both increases the feeling of safety among the citizens and satisfaction with police. Needless to say, both are in turn important for public security". This supports the previous findings regarding the need of uniformed policemen.
Another question connected to policing in general is the risk of having the mentioned variations in the quality and the actual behavior of policing, projected towards different classes of people. An example would be applying one law (generous) for the rich, and another (stricter) for the poor. This problem has been addressed by Reiss and Bordua, who notes that: "[t]he segments of the population most likely to sue are (or were) least likely to be involved with the police. Those most involved with the police, the depressed population are simultaneously unlikely to use the courts in general, because they are fearful of police reprisal and too impoverished to afford counsel" (quoted in Weissel 1996 p 59). Examples would include discrimination against certain social or ethnical groups like foreigners, drug-addicts and the poor, whom all " may be subject to much more personally and physically intrusive policing by regular public police and welfare workers, whereas the middle classes (in fact, most wage earners) may be subject to much greater, but less visible, policing by the IRS and credit agencies" (Nalla & Newman 1991 p 544). Doubtless, the risks of such discrimination are augmented by differentiated security providers that serves special interests. Today research in this field is lagging behind.
A public state police can be enormously powerful and when wrong persons are enjoying that power, there is no way telling where it will end. For instance, public police in practice nullifies laws that they do not wish to enforce. Every code is full on non-enforced clauses. And this is in spite of the fact that police is not recognized as law-makers. However this is normally not connected to deficits in the good will of the police departments, but to budgetary constraints.
Obviously there are a lot of problems connected to law enforcement by public police and to the entire system of justice in modern society. Even worse, some studies suggests that an alternative, criminal, society exists side-by-side with the official society. And such an alternative society is, according to the theories, a by-product - a negative externality - of the current criminal justice system. When criminals are sentenced to jail for instance, they exchange new ideas with other criminals and thereby, they might leave the penitentiary as even more full-fledged criminals than they were when they first came. Weissel concludes that this means " daß die Polizei Sicherheit produziert, indem sie eine limitierte Menge von Kriminalität und/oder Kriminellen produziert" (Weissel 1996 p 71).
When describing the situation in Nigeria, Chambliss puts it even stronger: " law enforcement systems are not organized to reduce crime or to enforce the public morality. They are rather organized to manage crime by cooperating with the most criminal groups and enforcing laws against those whose crime are a minimal threat to the society. In doing so the law enforcement end up as crime producers" (emphasis in original). Although being a very pessimistic view, it also is a very realistic one. Maybe such drawbacks are inevitable? Or maybe new systems are required? And if so, could private alternatives possibly offer a better solution? In the next section, these are some of the questions that seeks their answers.
In every society a certain amount of security is produced without actually being paid for, for instance through private interests such as etiquette or the need to feel secure. Criminology scholars have found that there are three basic ways that people respond to the threat of crime: 1) restricting their own behavior, for instance to avoid crime-ridden areas at certain times or the habit to look after property, 2) creating physical and psychological barriers to potential offenders, e g better locks, fences, alarm systems and insurance, and 3) joining others in active efforts to prevent crime (Lavrakas & Herz 1982). Self-policing community solutions such as neighborhood watches are common features of modern urban life.
Many of these private precautions benefit the parties who take them, but that does not necessarily mean that they benefit society in general. The fact that one citizen is safer does not give more safety to other citizens. If precautions are not known until after a crime has taken place (ex-post), as much policing and crime will affect the secure people as the insecure. But with ex-ante observable precautions (such as window-bars, dogs and lights) the criminals, who are most likely to quickly respond to obvious precautions, will concentrate on areas without these protection devices. The result is that un-protected, insecure citizens and/or areas will be more frequently attacked. This phenomenon is called crime redistribution and does not benefit society in general.
Measures of these kinds are the very corner-stones of security. However they do not manage crime, they simply provide a sense of control and security within a specific community. But they also have an alternative cost (e g time, money and effort spent) - a cost that has to be borne by society. To understand whether they benefit society or not, the ex-ante/ex-post distinction regarding crime redistribution (mentioned above) is a useful tool.
The major components of private security are security guards, alarm services and investigative services. Most of them perform perfectly legal services with a bias towards crime prevention.
The type of private security personnel that the public comes in contact with most frequently are the in-house security staff. Major tasks include control of access to, and general monitoring of, site premises as for instance public buildings, factories and shopping malls. Factory guards often also perform surveillance of workforces. This first category is closely connected to the "gate-keeping" work of static guards, like pre-boarding checks at airline terminals and other entrance/exit security (and bouncers). A third group are the mobile units / patrols. They perform various tasks like irregular checks (night watchmen) and body guard services. Their work can be similar to traditional policing. This category also include one of the first privatized fields of policing, transports of cash (CIT) and other valuable goods, in for instance armored cars.
Some scholars indicate that fear of crime and the publics feeling of insecurity have increased over the years. The last century has seen the birth of many innovations to overcome these problems. Security hardware are provided in many shapes and forms (e g locks, alarms and various detectors). The work is rather technical, often more suited for carpenters or engineers, than for policemen. Consulting also include analyzes of security routines, where many achievements have yet to come.
This field of private security services has for decades tickled the minds of authors and film-makers. The investigative services include store detectives, shopfloor spies and the inevitable private detectives. Which side of the law they are operating on, can often be questioned. In reality however, the work is seldom as glamorous and adventurous as suggested in the novels.
This category includes the darker sides of the business like industrial espionage, "strong-arms", agent-provocateurs and security provided by the Mafia etc. Although certainly offering privately provided security in relative terms, the latter categories - being illegal - falls outside the scope of this thesis.
Historically, security was always provided privately until the 19th century (see paragraph 2.1). The first public police department was in 1844 in New York City, and its first modern private counterpart was established in Chicago in 1850 (Cunningham 1978). Therefore, it can be argued that privatizing of policing is merely returning to the traditional way of law enforcement. And the development of modern private security was obviously parallel to the public polices.
By the mid-20th century the term police was synonymous with public police. Private policing was hardly on the market at all, except for the provision of money-transports, lock-smiths and such. The government was recognized as sole provider of security in practice. In theory however, new (or maybe not so new?) ideas were shaping. In his 1971 book The Machinery of Freedom, libertarian writer Friedman describes an all-out privatized society, including market-solutions for the provision of police, courts and law (Friedman 1971). From this point of view, the policing tasks could be solved by protection agencies who " would be selling a service to their customers and would have a strong incentive to provide as high a quality of service as possible, at the lowest possible cost. It is reasonable to suppose that the quality of service would be higher and the cost lower than with the present governmental system". When recently asked why such an alternative society is not discussed more extensively, professor Friedman replied: "Most people take it for granted that the institutions they are used to are the only ones possible". There might be a lot of truth in this answer, but the developments in society since those days supports the idea that as far as private policing is concerned, Friedmans visions have basically become reality, and the private alternatives have in fact long been here. How can this be?
"There are indications that the public has begun to figure out that the police do not prevent crime and cannot be expected to. One indication is the growth of the private security industry over the past thirty years" (Bayley 1994 p 10). Many scholars have in a similar way indicated recent changes in society, resulting in a rapid growth of the private security sector, with the starting point dating back to the early 1970ies. If this apparent consensus is true, how can these increases in demand for private security services be explained?
In the 20th century, the public police has been the power entrusted to deal with crime. But crimes can be of more or less serious nature. In order to deter the public from committing misdemeanors and larceny (such as shop-lifting) it is understood that even crimes regarding relatively low values should be punished. But at the same time, the police must assign a lower priority to such petty crimes when facing thefts regarding higher values and other, more serious crimes (like robbery and burglary) that often comes together with property theft. From a Law and Economics standpoint, this is sound reasoning - it is rational and cost-effective - and the more at stake, the more efforts and resources can legitimately be spent.
Moreover, it is difficult for the police to provide crime-preventive patrols on a regular basis directed specifically at shoplifting and retail crime. Given the limited resources and broad demand for service by the public, it is virtually impossible to assign public police protection at, or inside, retail establishments. Same goes for protection of very valuable property, such as precious metals and cash. Notwithstanding, these questions are of highest priority to the retailers and shop-owners. And this is the gap that private entrepreneurs have detected, and are willing to fill.
Given the definition of security in the introduction, protection of property, persons and information, the natural answer to why there is a private security industry would simply be that the rapid growth of population that the world is facing from the improvements in medicine, care and agriculture since the 1950ies, generates more property and information, and the latter is also more frequently exposed today due to the modern use of information-technology.
The new technologies for surveillance (cameras, computers, satellites, mobile phones, breathalyzers, DNA-analyzers etc, etc) for example, produces more information than ever before. The limits for monitoring, investigating and analyzing have been pushed beyond imagination.
All these new possibilities automatically raises the demand for surveillance and security. Due to lack of resources, the police are unable to perform adequately and also this has opened up gaps which are being filled by the private security sector and other initiatives. So in economic terms, in order to capitalize on this excess demand, the supply has increased by new entries.
Another rather important change in society, leading to a blur in the distinction between private and public places, is that today society faces something called mass private property (e g shopping malls) which are similar to public places, but privately owned. We also have gated communities, which looks like ordinary residential areas, but in fact are rather tightly closed, privately owned communities. For the protection of these areas, private security are employed to a large extent.
There is yet another dimension to it; the personal private space of 20th century man has been vastly extended as compared to previous centuries. Private security and private justice are not simply market responses to the crime and other loss-prevention needs of their customers, but also to " deep-rooted needs to feel secure: to feel that lives and property which are personally valued are protected, and that offenders can be identified and redress obtained. Security is then, in one important respect, a commodity, to be bought and sold in the market place the value of such a commodity reflects not only material criteria but also an inner human dimension of personal fear and feelings" (South 1988 p 152). So maybe there is rather a case of excess supply of insecurity than an excess demand of security?
Contradictory to the generally held notion that private policing has increased substantially over the years, one study by Nalla & Newman (1991) suggests that " the growth of public policing agencies has been as great or greater than that of policing organizations in the private sector". The use of the word agency indicates that the findings are based on US research, but they are still interesting enough - especially since agencies are growing in numbers throughout Europe currently. However an analysis of the pros and cons of policing by agencies would fall outside the scope of this thesis.
According to Nalla & Newman the pioneers in this scientific field have set the agenda in an incorrect way. The criticism that is leveled towards previous findings is mainly projected against definitions. There has been an inability to define neither policing, nor private and public bodies and functions properly. For example, the policing performed by private interests do not correspond to those traditionally linked to the public police. However, the current tasks of the public police does not do that either, because time has changed their respective roles. The failure to address such problems in a correct way has lead previous research, according to the authors, to incomplete and/or incorrect results.
Nalla & Newmans approach reassesses the categorization of policing on a functionalistic basis. Many public agencies house a lot of policing functions, that are not automatically linked to traditional policing. The US tax-collection as performed by the IRS provides a good example.
When confronted with this idea, one realizes that a lot of state bureaucracy functions actually includes a portion of policing, and in the light of this it becomes obvious that some previous conclusions regarding policing has to be reconsidered. The statistical observations of Nalla & Newman shows " that agencies with more explicit policing functions all experienced substantial growth In addition to the increases in personnel in various federal agencies, the scope of their policing activities also expanded considerably" (emphasis in original). It has to be added that this study was made before the IT explosion of the 1990ies, so in fact even this study might underestimate the total amount of actual policing currently.
In the case of increasing mass private property such as shopping malls, Nalla & Newman argues that a substantial, although not equally rapid, increase in public property such as park systems and public housing, must be acknowledged.
The ambiguous approach towards private policing is summed up by South as follows: "On the one hand, concern is expressed that private security can be overly intrusive, less than scrupulous in its adherence to self-imposed guidelines and, on occasion, the law, and threatening to civil liberties. On the other hand, problems undoubtedly stem from the inefficiency of some private security operators, low pay, inadequate training, poor standards, cut-throat competition which leads to cutting corners on contracts and so on The key to the problem lies with the issue of the accountability and regulation of the private security sector" (South 1988 p 88). Now let us examine some of these issues more closely.
In comparison to the public police, its private counterparts suffers from a serious legitimacy deficit. One of the main reasons for this is that they lack the laws justification. There are few, if any, statutes or laws that gives the private security industry governmentally granted rights or powers. However, with the increased co-operation between the public and the private, this might slowly be changing.
The private security industry also encounters negative views from the public in general. Private police are not seen upon as working for the general public security. No, if anything, they are present in order to protect someone elses interests. In some ways this observation seems correct too, for example when the issue of crime redistribution is kept in mind.
Critique also stems from the fact that private security is hired and paid-for. In order to enjoy their protection, you have to have money. Private policing clearly does make a contribution to, for example, crime prevention in some respects, although how much this is offset by a displacement effect, which means those less able to pay for additional security become more heavily victimized, is unknown but probably significant (South 1988).
But on the other hand, it must be recognized that the last century gives numerous examples of public intelligence services (democratic and other) committing crimes against constitutions, harassing certain groups and so forth. Media has focused heavily on such scandals. And the question must be put: If such covert actions can be endorsed by governments, can it really be more hazardous to let private companies, from whom full transparency can be asked, perform basic policing? Maybe it can. We cannot know for sure; the argument is valid - but maybe not as strong as it first seem because - do we really have any indications that private police is offensive by nature? Are they going to attack us, or what? Hardly, and their main reason is that most entrepreneurs have a reputation to live up to. They will act in an open and transparent way, to ensure legitimacy, if they do not want to go out of business.
A topic of high relevance when it comes to legitimacy, as we saw in the case of public policing, is how the tasks are performed. The private security industry has faced severe problems regarding the quality of employees and their enforcement. One observer even claims that "[t]he security industry appears to be a magnet for socially dispossessed" (Zielinski). This is of course a reason for serious concern, since "[p]rivate security agencies and personnel are in fairly unique positions. They are, after all, invited by others to watch over their property, personnel, families, private information and premises" (South 1988 p 101).
It has been shown that to a surprisingly large extent, persons with criminal records have been employed for security tasks. Naturally such facts are awkward for the industry. How can this problem be solved?
One suggestion is licensing, which has been a long established method for control of the private security industry in the Scandinavian countries. Sweden pioneered this approach by introducing government-approved training programmes for private security guards in the 1970ies (South 1988). Many countries have followed. The idea behind licensing is not so much to empower the private providers, as to control them. By setting certain standards of training and education, by setting a minimum-wage and by making it the responsibility of the employee to provide a certificate that no previous criminal record exists, the quality level of the personnel can be ensured. This method of course imposes costs on the entrepreneurs, but at the same time the asking price for their services can be higher, since they are more likely to provide high-quality performance than their untrained counterparts. With such a system, the public can monitor the private industry well.
Another part of the performance question is whether the tasks are managed at a sufficient level or not. Overenforcement means that more resources are spent on policing and enforcement, than are efficient. If for instance a private company can harvest the returns of a convicted criminal (bounty-hunting) or collect a share of fines, they might be willing to spend a lot to gain that money. And the higher values in sight, the more they are willing spend on enforcement. In a competitive situation, other companies might also enter this race of apprehensions, resulting in that too much resources are wasted on catching too few criminals. This is not optimal.
The problem of underenforcement is the opposite, that private enforcers are not taking their job as serious as they should, due to the fact that the returns are too low. In practice, this means that not enough criminals get caught.
How can this be balanced? It is understood that it is complicated setting the right level of fines and bounties. "[I]t is difficult, with private enforcement, to get the right amount of enforcement" (Posner 1992 p 596). Garoupa (1997) offers some suggestions how to overcome these difficulties. Using a mathematical model, he concludes that for very harmful acts, private provision will lead to underenforcement. The reason is that with increased detection, deterrence increases as well, which in its turn leads to that less people turn criminal. With fewer criminals to apprehend, less money can be collected and the returns shrinks to a level where enforcement no longer is attractive (= underenforcement). This is not the case with less (or non-) harmful acts. They will always be committed at a level sufficient to provide the enforcers with substantial returns. Therefore, a risk for overenforcement will be at hand. Garoupas over-all conclusion is, just as Posners, that the ambiguous results makes predictions hard.
When it comes to the investigative section, there might be a risk for " a somewhat individualistic modus operandi which might take its actions well into the unethical and sometimes the illegal" (South 1988 p 74). Some people will always give in to temptations when high values are at stake, and anyone " who are prepared to resort to unlawful methods, or indulge in dishonest activities such as industrial espionage, will find that some people are ready to pay a lot of money for their services" (Draper 1978 p 30).
The same naturally goes for what has been called Mafia, or organized crime. They basically provide, on a private basis, protection for subjects who cannot ask the public police for help. When such people have money, someone are always willing to provide security for them.
Agent-provocateur actions are other possible problems in the gray zone between legal and illegal. An example of an agent-provocateur action would be an agent, posing as a company employee provoking a riot in a workplace. The riot is recorded and this material is later used as evidence in order to discharge certain employees. This certainly is dirty work, but it is also a reality in the modern, complex world. It can hardly be insured against.
Other problems, like blackmail and corruption, are also more or less inevitable. However this is far from unique for the private sphere - anyone, anywhere can be corrupt anytime.
Few entrepreneurs work out of sheer love for their company. It cannot be denied that making money is the ultimate goal of the private security industry. There are many ways of coping with competition. Some are sound economic strategies, but in the race for efficiency, a risk always remains that some actors are cutting corners too sharply. Tax money, and insurance expenditures are avoided by non-filing. And unrecorded work is paid for with "black" money.
One way of cutting corners that is rather popular to quote as a deterrent example among critical writers, is the idea that profit-maximizing private enforcement leads to more non-offenders being charged. In his mathematical framework, Garoupa (1997) shows that such problems easily can be eliminated by sanctioning dodgy enforcers and ticket-collectors when non-offenders wrongly have been accused. When facing a risk of being fined themselves, rational entrepreneurs perform their job correctly.
It has been noted that services offered to and paid for by customers often not are of as high a quality as they could (or should) be. Some customers pays for all-night guards who leave the premises as soon as the working day is over, not to return until shortly before work commences the following day. It all goes back to the classical question: Who guard the guardians?
However, cheating of this kind is detected sooner or later, and the good-will loss that an accused company faces is deterrent enough. Problems of this sort will usually be solved by a well-functioning market-competition. There is too much at stake in terms of credibility and public accountability, to stand such risks for the serious entrepreneur. And those who do take them, soon goes out of business. The unrestricted market is a self-regulating one.
Going back in history, we found that the policing function was initiated as a response to the demands for monitoring the market place. "Den Kern der städtischen Selbstverwaltung bildete die Polizei, deren erste Form die Markt-, insbesondere die Lebensmittelpolizei war Vonhier aus entwickelte der Stadtrat nun eine Verwaltungsrecht, das [mehrere Arten von] Polizei umfaßte" (Planitz as quoted in Weissel 1996 p 32). But does the fact that the police originates from the market mean that they are suited to act on the market? Can policing and security really be seen as a commodities to be bought and sold in the market place? One answer was given by a british police spokesman who put it this way: "[The police] are no different to a company making baked beans. People come to us for a product and, in some areas, we have competitors like the security industry. But we are a public service and not simply subject to market forces. I cannot just cancel a patrol because it is too expensive - although we do have to strive to deliver the service in a cost-effective way". Does this line of reasoning also apply to the private counterparts?
First it must be noted that co-operation and collusion between public and private police is increasingly extensive. It can often be hard to tell what is what. The base for the division is found in the laws.
Most western legal systems have a division between civil law (private) and criminal law (public). Historically the "[p]olice and law-enforcement powers, because they developed originally from the peace-keeping powers of ordinary citizens, have also evolved closely constrained by the legal recognition of the rights of private ownership In places which were the subject of private ownership, it was originally not the Kings peace which prevailed but the private peace of the owner/occupier" (Stenning & Shearing 1980 II p 233).
Could it be argued that a publicly defined peace still today should be maintained publicly? Well, the very definition has changed and today private interests defines and maintains their own peace to a large extent. But the public versus private distinction still is a helpful analytical tool. The Kings peace would today be equivalent to a states inner security, that is a nations domestic peace as provided by the government. However this is a far from satisfying answer, since inner security today often in practice is provided by private entrepreneurs paid for by the government - the US government is said to pay more dollars for the services of private guards than it does for police forces.
Considering the last decades rapid change in technology, and thereby ways of life, it is increasingly hard to distinguish private from public and they are not opposing each other any longer. The practice of contracting out once public tasks (e g parking enforcement, traffic control, prisoner transfer, court security etc) also contributes to the current confusion. Attention must be given to a number of dimensions that interweave the basic public-private distinction (for example, sponsorship, function, interest(s) served, organizational form, and location) (Marx 1987). As it seems, we will have to learn to accept these difficulties.
The motives for private entrepreneurs to open their ventures differ quite a lot from the societys goals for public policing. Private security is not in business to serve the general public good; it is in business to serve the needs of its paying clients and to make money. Thus profit maximization is the ultimate goal rather than public utility (order) maximization.
Ultimately what distinguish the two groups from each other are that although laws in different countries vary, and therefore also the powers of private security personnel, it can generally be said that a security guard seldom has any powers beyond those of a regular citizen regarding arrests, powers of search and the right to use physical force (apart from self-defense).
But at the same time, Johnston gives an example from New York City, where a police department is said to have made an arrangement with security officers in a shop, enabling them to provide surveillance, make arrests, transport suspects to holding facilities, make record checks and even enter criminal history information. "Increasingly, private personnel are granted Special Police Officer status" (Johnston 1991 p 23). More examples of exceptions can be given. Reiss argues that " a customs or airport control agent can search all persons and their possessions with only the simple presumption that some persons might be violating the law and that implied consent is given; indeed they assume that most searches are negative." And that in contrast to a public officer who " has far less authority to make comparable searches and certainly not without a reasonable presumption that a crime has been or is about to be committed. [ ] Similarly, although a customs agent may detain one for a considerable period of time without formal charges, such lengthy detention is [usually] prohibited under police discretionary powers" (Reiss 1987 p 23-24).
These examples from USA shows that the public police not necessarily have the widest of discretion any longer - at least not in private premises. It also underlines why it is important to keep the ownership question in mind.
However this indicates a division of tasks. For private policing, focus is more on ex-ante approaches towards criminality, since the majority of the tasks performed are in order to deter from crime. We find them present in shopping malls, in office buildings and airports. But they are also increasingly employed by public or semi-public bodies to patrol certain districts or neighborhoods. In Sweden, for example, the city council of Nynäshamn hire a private security company to patrol the streets of the city in the nights as an addition to the declining public police-force. All in order to ensure compliance with the laws, rather than to chase bandits once the crimes have been committed (ex-post), for which the public police still have somewhat of a monopoly. In those cases, private policing is usually limited to alarming the public police.
To make the diffusion complete, an example of an alternative approach where the public versus private distinction is equally hard to make, is given. The policing functions in the streets of Nicaraguan cities are performed by an interesting outfit, the vigilancia revolucionaria as provided by the Comites de Defensa Sandinsta CDS ( = Sandinist Defense Committees). It is neither private because it has some statutory status. Nor is it public, because it is organized by private interests and it is voluntary. The vigilancia revolucionaria has a higher public accountability than most western police forces could even dream of. It is hard to fit this body into our concepts of policing. Still, that is what they provide.
Nicaragua, is a typical developing country with a history of agro-export based economy and half a century of dictatorship under the highly corrupt Somoza family. It has a policing tradition that stems from the days of brutal control of the society, spiced up with corruption. Force without public accountability is however not enough to control the people in the long run, and in the late 1970ies there was no way stopping the uprisings. From this chaos, spontaneous organizations of different groups who needed and trusted each other grew, providing safe houses, escape routes, security and various other helps. When the old regime collapsed, they were to be the only formal government organization in society. Out of this, the new society was built, the transfer of power to the CDS was done in the streets. They enjoys a tremendous support (both moral and physical) from the population. In 1984 there were 15.000 active committees.
In practice the vigilante revolucionaria resemble a well-organized neighborhood watch. They work in well-organized shifts. The majority of the volunteers are women. The tasks are performed mostly unarmed and usually by contacting the public police when matters gets too complicated.
Their most noteworthy achievement is the dramatic decline in the crime-rates. The overall figures of crime for 1984 is just about a fifth of the 1980 numbers. But regretfully, to put the CDS in this all-out lucid frame is not the entire truth. As always, there is a problem to control the guardians. There are examples of harassment and assaults, and corruption is in no way unknown. CDS have been accused of exercising political and military control of the population. Therefore, statutory regulations have been imposed on the once so free organization.
Although vigilancia revolucionaria shows us an example of privately provided security by the people and for the people, the risks connected to ideology-based systems are obvious. But what it at the same time shows us, is the importance of engaging the population in the work, because that automatically gives public accountability, which in its turn helps and enhances the outcome. Can we learn something from this?
20 years ago, the private security industry was still in its wake. Cunningham predicted that "[t]he most significant advance in the professionalism of private security will be top managements recognition that security is no longer a necessary evil. Instead, private security will be seen as an active participant in maintaining the economic viability of business by reducing crime-related losses" (Cunningham 1978 p 267). As the public police focused on the activities of non-police providers, they highlighted severe limits in their own capabilities. At the same time they also found out that they were not the only ones competent to perform policing. That the private security industry now was responsible for large areas of once public space without this situation being recognized as a challenge to the role of the public police, indicates that the development had followed from economic and social changes rather than political and legal ones.
A decade after Cunningham, South indicated a new situation: "it is now highly unlikely that even the most generous increases in public police resources and establishment levels would lead to any considerable decrease in demand for and use of private security services" (South 1988 p 150). A couple of years earlier he had outlined the future as " a model of continuum of policing organization in society in which both the public and private contributors exchange expertise, key personnel, and, importantly, accommodate each others shifting parameters of operation and priorities in action" (South 1984 p 173). To a large extent, this is where we are today.
One example of a successful co-operation between private and public elements is the insurance industry. The high incentives of the private counterpart (the insurance company) initiates a lot of activity, which complements the police-work in an effective way. Auto-theft recovery provides a good example, where "die Zahl der wiedergefundenen Fahrzeuge doppelt so hoch liegt wie die Zahl der aufgeklärten Diebstähle, bei gestohlenen Mopeds mehr als dreimal so hoch" (Weissel 1996 p 53).
There are two facts that highly contribute to this positive outcome. First, high values are at stake. Cars are costly (and often over-valued: many times, for instance, fraud is initiated by an inability to pay for a costly repair) and the insurance companies can save a lot of money by helping the police (and thereby themselves). Moreover, cars are subject to registration and do have etched identity numbers and so forth, which all contribute to making a proper identification easier.
In 1986 the British Home Secretary gave a defeitistic statement: " however many laws we change, however much equipment we provide, however many police officers we put on the streets, these measures will not alone turn back the rise in crime" (quoted in Rawlings 1991). Indications were that society had been changing rapidly over a long time, and that problems were not to change easily.
Reviewing the 20th century history, it is possible to see different phases clearly leading to this situation. First the end of the era prior to the development of the public police. Communities were able to manage crime themselves by informal social control and a lot of personal responsibility. Thereafter came a period when the public police took over the responsibility The social control diminished, but was still active. People were taught more about their rights than of their responsibilities. In the next phase, an elimination of the informal mechanisms of crime control took place. That lead to a disintegration of the traditional social control mechanisms. Every citizen knew what to demand, but hardly no-one was willing to offer something in return. The fourth period has been dictated by fiscal crises and cut-backs in public spending, where politicians and leaders slowly seem to lose control over the situation. Apparently, new ideas and visions are needed for the next millenium.
"Combating crime is everybodys business, everybodys responsibility. It cannot be left solely to the police" (M Thatcher, as quoted in Rawlings 1991)
The public polices major asset is their public accountability. They have potentially bottomless pockets and they are supposed to act as an independent third party (as opposed to their private counterparts). Since they are not profit-maximizing, on one hand, problems connected to over- and underenforcement are fewer. For the same reason they have the option to enforce all laws without considering efficiency aspects. But on the other hand, they do not make efficient use of the potential gains that could be collected if they were profit-maximizing, and that means that a lot of self-supporting enforcement is lost. And the sad reality is that lack of money prevents a lot of enforcement that is needed badly in society. This has opened the market for private alternatives.
In spite of the fact that the public police often is under-paid and therefore leave their employment for private engagements, not many of them would have been willing to take the private job initially. This fact indicates that training and experiences from public policing are valued highly. From that perspective, maybe public duties can be seen as additional education?
One way of making public policing more efficient, would be to let them act more according to the rules of the market. If they could sell their services legitimately, as well as harvest the profits of their policing, resources could be saved and allocated to where they are better needed. Police officers could then also receive higher salaries, and would thereby get incentives to perform their duties even better.
Other important gains would be made by letting policemen concentrate on policing. Today a lot of other tasks that could be performed at least as well by less qualified civilians, are performed by trained officers. For instance typing reports, analyzing evidence, writing parking-tickets, making telephone check-ups and transporting prisoners could with favor be entrusted to private entrepreneurs or civilians.
Statistics show that 50 per cent of all crimes cleared-up are solved within the first eight hours. An additional quarter is solved within a week. The last 25 per cent can take any amount of time. One suggestion to make a better use of resources could be as follows: Do not let the public police take part in the investigative work for more than the first eight hours. The reasons are simple: What makes the public police unique are their powers to intrude upon privacy, and to use violence. Those features are needed initially when the crime still is fresh. But thereafter, most investigative tasks are of a nature that anyone without such powers could be entrusted. By doing so, the police could concentrate on what they are good at: hard-core policing. The rest of the work would be more efficiently handled by someone else.
The major benefit with the private providers of security are their flexibility. They can, and will, perform most tasks they get paid to do. Their customers can demand a lot from them, since they are directly answerable to the paying clients and their needs. Moreover, they will happily enforce all laws that gives positive returns, which means that all their enforcement could be efficient (from the economists point of view). The private entrepreneurs are also forced to do right by the market. If they fail, they will lose their money.
But they are not defending everyone, and they do not need consider the general good for society. Private policing is more a question of loss prevention than of crime prevention, because they are primarily protecting the interests of their paying clients. This results in a risk that maybe just a few privileged will be able to afford private policing (and thereby enjoy security) and that they might become too powerful. In such a case, the public police would be needed as a central authority, balancing and monitoring the interests of the less fortunate.
The current debate has been focusing very much on whether crime has increased or not. Few alternative explanations have been offered. In this paper it has been argued that the care-level and responsibility of the individual citizens have decreased significantly during the last century.
Another contribution has been that the informal social control in urban locations, that used to be a very strict control instrument, has almost ceased to exist. Both these changes apparently lead to effects similar to those of increases in crime. "The traditional liberal view of citizenship is one where the citizen is a passive bearer of rights. But where the state is unable or unwilling to meet expressed demands for services, active citizenship is likely to increase" (Johnston 1991 p 36, emphasis added). What is active citizenship?
An active citizen increases his engagement in society and starts taking responsibility again. How can this be achieved? The Law and Economics answer is simply: Make it profitable to act responsibly! The idea is that the rational human being will act in the most efficient way, and if an active citizenship is encouraged, or even profitable, it will materialize.
But some versions of active citizenship can be dangerous. Numerous horrible examples of citizens taking rights of their own and making their own justice can be given - just think about lynch-mobs and riots. For that reason it is of utmost importance that such activities are monitored carefully. What is needed is an active partnership between the population and the police (both public and private). The Guardian Angels provide a successful example of how to transform a potential bad into something good. By engaging young persons on the border to criminality in crime (foremost violence-) preventive groups, safe streets with less criminality was achieved. "The most significant factor of [them] may be that they represent a group of young people generally recognized as contributing to the crime problem" (Penell as quoted in Johnston 1991 p 32). This result is encouraging, and might give politicians inspiration.
So all in all, we can conclude that neither public nor private policing can provide a satisfactory level of order by themselves. Both parties must be used in combination. However, that is not enough. If we want a better society, each and every citizen must be prepared to join forces. A co-operation of private and public subjects does not only appear preferable, it is necessary.