Organized Crime in the Age of Disorganized Capital
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If the Bush Administration’s harping on the ever-present threat of global terror hasn’t sufficiently stoked your paranoia level, then pick up a copy of Illicit: How Smugglers, Traffickers, and Copycats Are Hijacking the Global Economy by Moisés Naím. According to the author, who is editor of the influential journal Foreign Policy and a former executive director of the World Bank, the postmodern world is plagued by a pandemic of illicit activity. While traffic in contraband has been around for as long as there has been trade, what makes the current situation so pernicious, according to Naím, is its unprecedented scale and interconnectedness. From bootleg DVDs and knockoff purses hawked on the streets of Shanghai and New York City to blood diamonds coming out of Africa to the global trade in armaments, drugs, migrant workers, and human body parts, black marketers are doing a great business, often in cahoots.
Today’s illicit activity mirrors the process of globalization. In keeping with the latest international business practices, drug lords outsource product delivery to contractors who may transport cocaine one day then AK-47s or illegal aliens the next. Intellectual-property pirates in China often use the same standardized cargo containers as suppliers to American companies like Wal-Mart knowing full well that less than two percent of the contents are ever checked at their port of entry. They’re also into e-commerce big time. Gun runners, counterfeiters, and other gangster types keep in touch by cell phone and email. They use the global electronic transaction system and offshore accounts in financial safe-havens to move money around at lightning speed. And just like today’s nimble transnational corporations, they run circles around government bureaucrats and the police who can’t keep up because they’re too bogged down by regulations and procedures, limited by jurisdictions, constrained by budgets, and otherwise hamstrung. Revenue from illicit activity funds rogue governments and terrorist organizations, Naím further alleges.
According to Naím, one of the major factors in the upsurge of illicit activity over the last decade or so is the breakup of the Soviet Union, which left in its rubble a number of failed states susceptible to cooption by cadres of nasty characters who don’t play by conventional rules. Besides providing a secure base of operations, a number of these countries had caches of weapons stockpiled from the Cold War that soon went on sale at bargain-basement prices, plus other resources that could be profitably exploited. Many of the countries embraced the black market as a viable means of economic development even though it entailed a Faustian bargain. The book offers several cases where economic necessity has blurred the line between legal and illegal activity in many parts of the world.
But it isn’t all jihadists, brigands, and apparatchiks coming in from the post-glasnost cold; many ostensibly legitimate players in the developed world have also been drawn in. As many countries loosened control over their financial sectors to help facilitate international trade and investment, opportunities arose for currencies to be exchanged and substantial fees to be collected without inconvenient questions being asked. Money laundering is central to illicit trade, but it’s extremely difficult to stop, especially when information technology and innovations like financial derivatives keep opening new doors for capital to slip through. With an estimated US$800 billion to US$2 trillion in dirty money in need of laundering each year, there’s too much business piling up in the hamper to walk away from the Maytag without doing a few loads. Similarly in a reproach to the Bush Administration’s narrative of good vs. evil, Naím’s thesis as to what underlies illicit activity in general is purely pragmatic—it’s all about profit not morality. The rewards are simply too great when compared to the risks.
As an international policy wonk, Naím is obliged to do more than present an exposé of the dark side of globalization. It’s incumbent upon him to offer a plan of remedial action. But some may find more than a few of his remedies as disagreeable as the ills they are intended to cure.
Naím begins with the premise that although illicit trade is globalized, government authority isn’t and won’t be for the foreseeable future. In the past, governments have failed because they sought to extend their authority in areas beyond their control, especially in trying to deal with the supply side of the equation in things like the so-called war on drugs. But as long as there’s demand and enough of a profit margin, someone will step up to supply whatever’s wanted. Where governments should focus their efforts, Naím claims, is improving methods of “identification, surveillance, tracing, and detection” to better monitor the transaction process and regulate demand. Certification techniques like radio frequency identification devices (RFIDs), holographs, digital watermarks, and chemical and biological tags can be embedded into products to verify their authenticity and point of origin. Biometric scans of human irises, DNA-matching, and microchip implants likewise can be used to establish the identity of human beings and follow their whereabouts. The effectiveness of government can also be strengthened by breaking down fiefdoms and allowing freer information sharing between various agencies and authorities.
In exchange for this expansion in the power of Big Brother, Naím puts on offer the enjoyments of a brave new world of decriminalized drugs, freely ripped CDs and movies, and guest-worker moratoriums, which under a calculus that measures harm done to society against cost to regulate don’t add up to being worth worrying about. This seems more than a little disingenuous, though, given the controls that would be built into the system under Naím’s other proposals.
One thing Naím doesn’t question is globalization itself. It’s given that transnational capital rules. As he looks to the future, Naím sees a new dialectic of “black holes” and “bright spots,” places where illicit networks are in control vs. areas where political order and civil society are such that illicit activity, though admittedly still present, is forced to maintain a lower profile. According to Naím, this dialectic transcends Cold War paradigms of communist East and democratic West, dependency theories of impoverished South and affluent North, and clash-of-cultures notions of jihad vs. McWorld. But surveying where black holes and bright spots tend to be reaffirms the existence of peripheral and core sectors of the global economy, places that tend to be exploited and places that do the exploiting. Indeed, failed states aren’t the only legacy of the reported demise of socialism. The biggest casualty may have been the idea, the hope really, that there might be a more humane alternative to the regime of bare-knuckled capital whether of the licit or illicit variety.