Monday, February 6, 2012

The Apolitical Economic Superpower

Christiane Amanpour of ABC News is the latest to grasp the significance of the world's off-the-books, untaxed, unregulated marketplace. This surprising economic superpower was featured in her Around the World segment on February 1st.

This market is most often referred to by government spokesmen everywhere as the "black market," in the hopes that people will equate dodging the taxman and bureaucratic busybodies with slavery, child trafficing for pornography, murder for hire, heroin sales, and other, such unsavory pursuits. But people are waking up to the reality behind the hype. When a market is the second-largest in the world, topping 10 trillion dollars, second only to the United States $14.26 trillion, and currently provides approximately half the world's jobs, it becomes increasingly hard to conceive of it as fundamentally evil.1

The future holds only increased respectibility, as estimates indicate that by 2020, 8 years away, fully two-thirds of the world's workforce will find themselves employed outside of officially-approved channels. This is occurring in an official world-wide economic slump where every new job is considered reason for celebration and pontification. It becomes ever more obvious that the biggest contributor to the growth of the global standard of living is not government programs, but avoiding government involvement in the economic realm to the greatest extent possible.

As Christiane puts it, "far from the canyons of Wall Street, far from the banking capitals of the world, the economy of the streets is booming." The same can hardly be said for the listless, if not moribund, state of the officially-recognized economies. Even in the United States, where avoiding political class meddling in the economy grows more difficult every day, $1.2 trillion, or about 8.3 percent of the economy, is off-the-books -- although the US is among those countries with the smallest percentage of such activity.

And as this economy has grown, new, less loaded, terms have risen to describe it, with Christiane's economy of the streets only the latest. Long referred to as the grey market by those who wished to distinguish it in some small way from the black market that deals in malum in se crimes such as slavery, human trafficing, and murder for hire, it is also referred to as the dark market, the underground economy, the informal economy, the hidden economy, and most recently, from France, System D -- for obscure language-related reasons that need not concern us here.

I prefer a more descriptive term, the apolitical economy, which expresses an antipathy toward the political machine that attempts to control free exchange among individuals.

In her Around the World segment, Christiane interviews Robert Neuwirth, author of Stealth of Nations: The Global Rise of the Informal Economy. Both his analysis and the resulting numbers quoted above are based on the sales of legal products in what he calls quasi-legal ways, thereby excluding locally-prohibited goods and services such as gambling, drugs, prostitution, and even such esoteric products as raw milk from the equation.

Mr. Neuwirth explains that Proctor & Gamble was one of the few corporations willing to discuss the apolitical economy on the record, while noting they are only one of many global corporations that willingly work with the apolitical market in those countries where approved channels are unavailable to them. He goes on to point out that although Wal-Mart is P&G's largest single customer, the apolitical market as a segment eclipses their sales to Wal-Mart, represents approximately 20% of their world-wide business -- and is also the fastest- growing segment of their market.

He goes on to explain: "If you talk to merchants in these markets, they don't want aid, they want business relationships... It raises the question of whether in pursuit of efficiency2, we have neglected the principle of access to the economy and egalitarianism. The black market and the informal economy is much more egalitarian. It's where people can enter the economy and grow their businesses."

"It's nothing short of miraculous," responds Ms. Amanpour.

"Correct," he responds. "People are starting with nothing, and making their whole lives out of it. It's actually worthy of an incredible amount of respect."

As an agorist, I believe that the only free market possible is an apolitical one, and that only truly free markets can maximize opportunity and the standard of living for everyone. It appears that around the world, people are voting with their dollars, and they are voting in agreement with this Tireless Agorist.

There is much to be said about the impact that the ascendency of the apolitical economy will have on the world as it is politically structured today, and about rapidly oncoming technologies best summarized as the Homebrew Industrial Revolution that will accelerate this trend beyond even the rapid growth that Mr. Neuwirth estimates. Growing egalitarianism is but one of the countless areas we can expect this trend to impact.

Because those issues cannot be succinctly summarized and dismissed, they are beyond the scope of this introduction and are best reserved for a future essay. However, for those who wish to explore ahead or in more depth, allow me to recommend this article by Mr. Neuwirth that appeared in Foreign Policy, a brief essay by Tom Woods addressing that article, entitled "How the Poor Are Prospering by Ignoring the State," and the Homebrew Industrial Revolution online book.

...and that's all I have to say about that.

Author's Note: The series continues with The Rise of the Phoenix Society. Here's a Table of Contents for the Phoenix Society series of posts.
1A more careful analysis suggests that it may already hold the top spot among world economies if one speaks in terms of consumer goods and services. The $10 trillion dollar figure quoted by Ms. Amanpour excludes sales of prohibited goods and services such as specific foodstuffs and materials, publications, gambling, drug use (including drugs approved for sale in other countries) and prostitution.

On the other hand, the $14.26 trillion figure for the US economy includes the ultimately non-productive costs of attempting to deny those choices to consumers, as well as tremendous bureaucratic overhead and military consumption that, again, represents zero production of consumable goods and services. Adjusting for those differences may well move the apolitical economy ahead of the recognized economy of the US in terms of consumer goods and services.

2One man's efficiency is another man's crony capitalism, but this, too, will be reserved for a future essay.

1 comment:

  1. So far, this is easy to understand.:) I remember you mentioning something along these lines in at least one post on AW.