The economy of hope
The shadow economy, or the black market as some call it, could provide a viable option for poor people to make ends meet and save many lives, and not only that. It could stimulate a stagnating economy in times of strife. Such heretic ideas were expressed by one Robert Neuwirth in his book Stealth of Nations, where he urges the reader to look a very neglected truth about global economic life straight in the face.
He claims that the shadow economy should have been looked at as a form of "big business" a long time ago because it already has the revenue and scope of real big business. In principle, the black market mostly includes the illegal street trade and services with fake and contraband goods. It does not contribute to the public budget because it does not pay taxes (or pays very little), and in that it could be viewed as a detriment to the economy. But on the other hand it is often the only means of livelihood for millions of people, and their only chance to have access to these goods and services, and access to jobs which would have been impossible in the regular cycle of entrepreneurship and employment - for various reasons.
This of course is a very bold statement. Moreover, Neuwirth is putting in the category of "shadow economy" a myriad of activities involving over 1.8 billion people around the world, mostly in jobs that are one or another form of fully illegal economic life, with no proper oversight and therefore hiding many risks for the consumers. Sometimes we are merely talking of some industrious vendors who are trading small quantities of stuff like electric gadgets or fashion items, clothes and cosmetics outside the officially established channels and outlets of the big trade chains. Very often this is the only way for a broader array of consumers to access these goods and services in markets that are otherwise widely neglected, bypassed and forgotten by the big firms and trade chains.
Neuwirth also includes a lot of forms of small entrepreneurship in the shadow economy. Ones that are unregistered, stay under the radar and do not pay taxes and do not receive social benefits. All of this he calls the economy of hope and he provides evidence that it is growing much faster than any other segment of economy, and is often the driving engine for economic growth and recovery. It often creates the largest number of jobs, especially in the poorest communities.
One might not agree with all the author's arguments, but this doesn't make the book any less relevant and intriguing. Let alone that it is very easy to read. Neuwirth has traveled a lot around the world and has gathered tremendous amounts of evidence to make his point. At one point he cites the Harvard professor Roberto Unger who recommends informal business as a possibility for a broader democratic participation in the economic cycle. He also uses the ideas of John Cross, an American sociologist and expert on the street markets, who's calling for the legalisation and public acceptance of the shadow economy as a crucial factor for sustained economic and social development, especially in the developing countries.
And of course there are plenty of strong arguments against labeling this segment of economy as the ultimate saviour of the world. Understandably, there are ample reasons for legal sanctions against illegal activities such as the dangerous working practices, for example in manual recycling of waste around the dunhills of the big cities (there was a very informative recent documentary on the subject, referring to India), also the contraband of computer parts, the trade of unsolicited medicines and fake goods of potential danger for people's health.
Neuwirth's book is strongest in those areas where it's apparent that the official economic world of the big corporations and the expensive marketing campaigns is staying away from the poorer segments of the market. And it is exactly this niche that a number of illegal or semi-legal entrepreneurs have discovered and comfortably occupied. The world of the poor and developing societies and communities. And probably it is worth looking into this shadow economy more closely because the legal economy could certainly learn a few lessons from it.
He claims that the shadow economy should have been looked at as a form of "big business" a long time ago because it already has the revenue and scope of real big business. In principle, the black market mostly includes the illegal street trade and services with fake and contraband goods. It does not contribute to the public budget because it does not pay taxes (or pays very little), and in that it could be viewed as a detriment to the economy. But on the other hand it is often the only means of livelihood for millions of people, and their only chance to have access to these goods and services, and access to jobs which would have been impossible in the regular cycle of entrepreneurship and employment - for various reasons.
This of course is a very bold statement. Moreover, Neuwirth is putting in the category of "shadow economy" a myriad of activities involving over 1.8 billion people around the world, mostly in jobs that are one or another form of fully illegal economic life, with no proper oversight and therefore hiding many risks for the consumers. Sometimes we are merely talking of some industrious vendors who are trading small quantities of stuff like electric gadgets or fashion items, clothes and cosmetics outside the officially established channels and outlets of the big trade chains. Very often this is the only way for a broader array of consumers to access these goods and services in markets that are otherwise widely neglected, bypassed and forgotten by the big firms and trade chains.
Neuwirth also includes a lot of forms of small entrepreneurship in the shadow economy. Ones that are unregistered, stay under the radar and do not pay taxes and do not receive social benefits. All of this he calls the economy of hope and he provides evidence that it is growing much faster than any other segment of economy, and is often the driving engine for economic growth and recovery. It often creates the largest number of jobs, especially in the poorest communities.
One might not agree with all the author's arguments, but this doesn't make the book any less relevant and intriguing. Let alone that it is very easy to read. Neuwirth has traveled a lot around the world and has gathered tremendous amounts of evidence to make his point. At one point he cites the Harvard professor Roberto Unger who recommends informal business as a possibility for a broader democratic participation in the economic cycle. He also uses the ideas of John Cross, an American sociologist and expert on the street markets, who's calling for the legalisation and public acceptance of the shadow economy as a crucial factor for sustained economic and social development, especially in the developing countries.
And of course there are plenty of strong arguments against labeling this segment of economy as the ultimate saviour of the world. Understandably, there are ample reasons for legal sanctions against illegal activities such as the dangerous working practices, for example in manual recycling of waste around the dunhills of the big cities (there was a very informative recent documentary on the subject, referring to India), also the contraband of computer parts, the trade of unsolicited medicines and fake goods of potential danger for people's health.
Neuwirth's book is strongest in those areas where it's apparent that the official economic world of the big corporations and the expensive marketing campaigns is staying away from the poorer segments of the market. And it is exactly this niche that a number of illegal or semi-legal entrepreneurs have discovered and comfortably occupied. The world of the poor and developing societies and communities. And probably it is worth looking into this shadow economy more closely because the legal economy could certainly learn a few lessons from it.