We’re bombarded with statistics these days, and one of the most common is the ranking of world economies.
At present, the U S is considered # 1 and China # 2.
But there exists across this planet another economic system, one that is overlooked by conventional economic measurements.
This economy is described in Robert Neuwirth’s book Stealth Of Nations. If it were a country, he suggests, it could be called Bazaaristan. But this country has no borders and is as ephemeral as smoke, and if estimates of its magnitude are accurate, it bumps China to #3.
As he writes on page 13,
“There is another economy out there. Its edges are diffuse and it disappears the moment you try to catch it. It stands beyond the law, yet it is deeply entwined with the legally recognized business world. It is based on small sales and tiny increments of profit, yet it produces, cumulatively, a huge amount of wealth. It is massive yet disparaged, open yet feared, microscopic yet global. It is how much of the world survives, yet is ignored and sometimes disparaged by most economists, business leaders, and politicians.
You can call it SYSTEM D.”
System D stands for the vast under-the-table world of spontaneous unregulated markets, a world-wide trade system that exists totally off the books, and spans the activities of those who sell produce at a roadside stand to those who smuggle billions of dollars worth of electronic goods into impoverished countries to sell to its destitute inhabitants.
The term System D is taken from the French word, “debrouillard” (pronounced, de broo yar) which describes a person who lives by his wits, is inventive, industrious, self-starting. Another loose translation of the word is “those who need not be given directions.”
The word first appears in literature in George Orwell’s “Down and Out in Paris and London” to describe a person who can get an impossible job done no matter how trying the circumstances. And chef-writer Anthony Bourdain devotes a chapter on System D, and the debrouillards he has met, in his book, The Nasty Bits
System D was earlier referred to as the, “informal economy” by British anthropologist Keith Hart., a name he now regrets originating, because it has come to lump together those who sell at farmer’s markets with those who deal in drugs and guns. The word “informal” has become a pejorative, just as “untested” is often used to discredit an herbal supplement, both terms implying that anything without the express approval of government authorities is automatically suspect.
The term System D has now been widely adopted, but regardless of what name you give it, this unregulated economy appears to be growing robustly. Freidrich Schneider, an economist at Johannes Kepler University in Linz, Austria, has made a decades-long study of the dollar value of this system. He admits that there can be only estimates, as those who work in the informal economy are just as unwilling to be truthfully forthcoming as those in regulated businesses. In 2010, he estimated the annual output of System D at 10 trillion dollars. Which would make Bazaaristan the true second largest economy.
Neuwirth’s book is based on direct contact with participants in System D. He speaks with Africans who travel to China to buy products that are sold in street markets in their native countries, laid-off San Franciscans who use twitter to sell home-cooked foods, and huge multi-national companies that sell products through unregistered kiosks and market vendors around the world.
His book is full of stories of people with little education and extremely limited recourses who, with nothing more that determination and gall, create their own livings.
The Organization of Economic Development and Cooperation, a multi-national think tank, estimated that half the workers of the world, 1.8 billion, are employed in System D, and that by 2020, two-thirds of the workers in the world will be employed in it.
Given those estimates, the author of Stealth of Nations concludes,
There’s no multi-national, no Daddy Warbucks or Bill Gates, no government that can rival that level of job creation. Given its size, it makes no sense to talk of development, growth, sustainability, or globalization without reckoning with System D.
In the western world, we have come to insist, to insure our safety and security, that all activities be organized, regulated, overseen and micro-managed. This has led to massive sclerosis in all regulated central economies.
But System D functions so well because it is free of all that. As Neuwirth writes,
It seems to specialize in exploiting the economic and political fault lines of the globe, but it is fractured and haphazard and for the most part, silent. System D is a massive in-between space, strikingly independent, yet deeply enmeshed in the legal world. It involves small-scale entrepreneurs but links them to global trading circuits. It is the economic way of the global majority, guided not by corporations or politicians or economists, but by ordinary citizens.
Even if the conclusions about System D are exaggerated, the age of long-term fulltime employment with benefits will soon be a thing of the past except, of course, for government employees. Most of the working world may well benefit from the thriving nature of system D, and if it becomes the economic norm, the regulated economies will then take on the same name, only in their case, the D will stand for……Decline.
Wishing you vast under-the-table profits, my friends,
Stealth Of Nations, Pantheon Books, 2011
Down And Out In Paris And London, Harcourt Brace Javonavitch, 1961
The Nasty Bits, Bloomsbury Publishing, 2006