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The $10 Trillion Black Market

Posted by Josh Rothman  November 2, 2011 01:28 PM

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When we talk about "the economy," we usually mean the clearly visible world of office towers, factories, commuters, assembly lines, and cubicles. But what about the black market? According to author Robert Neuwirth, the black market is as large as any of the world's 'official' economies; in fact, if you were to total up all that under-the-radar economic activity, the black market "would be an economic superpower, the second-largest economy in the world," with a GDP of $10 trillion. Writing in Foreign Policy, Neuwirth argues that "it makes no sense to talk of development, growth, sustainability, or globalization without reckoning" with the underground economy.


Psst. (Photograph by V. Vizu).

Given its size and importance -- it contains, Neuwirth claims, nearly half of the world's workers, around 1.8 billion people -- it doesn't seem entirely right to call this economy a "black market." Neuwirth prefers "System D," a term common in the French-speaking world. The French," he explains, "have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is." The most important fact about System D isn't that it's illegal, but that it's an economy full of self-starting, do-it-yourself entrepreneurs. "What happens in all the unregistered markets and roadside kiosks of the world is not simply haphazard," Neuwirth argues. "It is a product of intelligence, resilience, self-organization, and group solidarity, and it follows a number of well-worn though unwritten rules."

System D exists everywhere. In some places, like Lagos, Nigeria, it accounts for most of the economic activity; in other places, like New York's Chinatown, it accounts for only a portion. But regardless of where they live, Neuwirth writes, System D'ers work in the same economy, a single, networked "Bazaaristan." Even small, off-the-books businesses can be engaged in globalized commerce. (Neuwirth profiles one man who imports generators from China to start an entirely underground electricity company in his Nigerian city.) Bazaaristan, Neuwirth argues, is actually a pretty good place to be. It's true, he writes, that employment in System D means working "off the books, in jobs that were neither registered nor regulated, getting paid in cash, and, most often, avoiding income taxes." But, if you work in System D, it's likely that the regulated economy wasn't doing much for you in the first place. If you're ambitious and smart, you can thrive in System D, even when official doors are closed to you.

To a degree, Neuwirth is after policy changes: If we want to help struggling people around the world, we need to recognize that nearly half of them are working, and sometimes even starting businesses, outside of the normal economic channels. But he's after a change of attitude, too. Sometimes System D businesses are shady -- but just as often they're productive enterprises helmed by strivers trying to do something great. Whether we're looking at an independent jewelry designer in Las Vegas, or an off-the-books electricity company in Nigeria, we ought, Neuwirth argues, "to salute the achievements of those who are engaged in this alternate economy." They are doing real work, and starting real businesses, sometimes right in our midst.

[More: see Foreign Policy's excellent slideshow, "Welcome to Bazaaristan."

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About brainiac Brainiac is the daily blog of the Globe's Sunday Ideas section, covering news and delights from the worlds of art, science, literature, history, design, and more. You can follow us on Twitter @GlobeIdeas.
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Joshua Rothman is a graduate student and Teaching Fellow in the Harvard English department, and an Instructor in Public Policy at the Harvard Kennedy School of Government. He teaches novels and political writing.

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