AK-47s in an Iraqi grocery store, 2006. Photo by Christoph Bangert
Over 15 percent of the world's GDP comes from criminal activity. So comes the word from long-time journalist and crime investigator Misha Glenny.
Yes, that means that every time you put down a $20 bill for dinner, $3 of that comes from illegal activity: drugs, guns, smuggling, cyber-crime, you name it.
Think about that.What I'm trying to unravel is why exactly organized crime has boomed so much, so recently. One of the reasons, of course, is globalization. With more economic connections than ever before, and large underdeveloped swaths of the world desperate to escape poverty, so there's no shortage of opportunities and those willing to take advantage of it.
But there's another factor here as well: decades of attempts by nation-states to crush out certain activities by making them highly criminalized. The U.S. has led the way in this, especially with the War on Drugs, but they're far from the only state to try to put the lid on activities or products they view as undesirable.
Every time this happens, it creates a gap, and into that gap driven individuals or groups looking for quick money will race in, as the risk and rarity that come with making something illegal raise the selling price through the roof.
This happens even outside of products that are strictly illegal. To use an example fairly close to home, a Hezbollah cell in Charlotte made millions smuggling cigarettes. While it's perfectly legal to smoke or buy cigarettes, increasing taxation in most parts of the country made it well worth the cell's while to smuggle them to other states. This also, for some time, sailed below the radar for law enforcement, who were more preoccupied with hard drug trafficking.
Bureaucracy and force were the main methods nation-states used to bring some semblance of structure to vast areas and complex societies. Overall, those have been remarkably successful — look how well tribal or feudal systems have fared against it.
But the times are changing. Perhaps the first strain could be seen with the widespread failure of alcohol Prohibition in the early part of the 20th century. Looking back, it does seem like its collapse was the beginning of the end for the idea that if a state just passed a law — and enforced it — humanity could be increasingly perfected towards a noble, if utterly boring, ideal. Importantly, Prohibition also jump-started organized crime networks as we know them.
Desire and need are amazing drivers and as long as they exist, someone will find a way to provide. Recently, I've been re-reading W. Bruce Lincoln's Red Victory, the best account of the Russian Civil War I've found. The USSR, especially in its earliest days, was the epitome of the bureaucracy + force approach. Facing widespread shortages and possessing an apparatus who wouldn't hesitate to steal and ration any resource they found, it should have been the ideal time to enforce total control on the populace's economic activity.
Yet even when the people of Petrograd and Moscow had nearly nothing, the black market still thrived, trumping doctrine. The anarchist Emma Goldman reported of the open-air markets that "Here gathered proletarian and aristocrat, Communist and bourgeois, peasant and intellectual. Here they were bound by a common desire to sell and buy."
Eventually even Lenin and Trotsky had to rein in their desires for total control and allow the private markets some leeway.
Today, there's also an entire, legal, private economy that makes a great deal off criminal activity: or, more accurately, the increasingly large fights against it. Drug arrests keep the prison-industrial complex booming, and local criminally-connected paramilitaries and gangs simplify some matters greatly for corporations operating in the developing world. The same social problems caused by such activity also provide politicians with convenient boogeymen in their own searches for meaning and votes.
At the same time, this raises the Disruption Problem I've talked about before. Criminal organizations can rush into the gaps formed by the trembling remains of old-style nation-states and they can sure as hell disrupt the traditional economies and power structures, but they can't replace them with anything viable.
After all, that's not their goal. They're just out to gain money and power.
And for that the black market needs the law. What it makes difficult criminal organizations profit by making easier. It's clear that a radically different approach to law and trade (e.g. drug legalization, just to name one possibility) would be necessary to suck much of the power out of the cartels, smugglers and terrorists. It's also doubtful that we'll see those steps until matters get a good deal more desperate.