- Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy by Moisés Naím
Arrow, 352 pp, £8.99, March 2007, ISBN 978 0 09 948424 0
Moisés Naím identifies a new connection between world economics and world politics: ‘Global criminal activities are transforming the international system.’ This transformation, he argues, requires a wholly new response: biometrics and other new technologies are needed to track perpetrators; fancier security devices will be needed to detect fakes and copies; and governments will have to make bureaucracies more flexible. These, you could say, are alarming developments, and Naím should be congratulated for bringing them so forcibly to public attention. The only problem is to find evidence that any of them is actually true.
Naím’s book lays out several familiar propositions. First, while smuggling is an old story, something changed dramatically in the 1990s. ‘Globalisation’, along with unprecedented technological change, caused government control of borders to weaken, just when the variety and volume of goods (and money) crossing them accelerated. Second, today’s smugglers do not conform to the old ‘organised crime’ model, of centrally administered, transnational hierarchies typical of the time when narcotics dominated underground traffic. What we have now are informal networks embracing people, companies, even countries. These networks can decentralise and disperse, making them harder to crack, and since they pay no taxes or royalties and use sweated labour, they can face down legitimate competitors, who may be forced to enter into partnerships with them. True, this is not unprecedented, but the forms are new, and there are more places of refuge and more corrupt officials and bent businessmen to make it all work. Third, while part of this illicit trade takes the form of the usual banned commodities, especially problematic is the growing propensity of fakes and counterfeits to crowd markets and drive legitimate firms out of business. Fourth, illegal trade is no longer just an economic and moral challenge: it also ‘offers terrorists and other miscreants means of survival and methods of financial transfer and exchange’. Finally, the explosive growth of illicit traffic has undermined governmental powers, not just at the borders but deep within them. Traffickers have become so rich as to corrupt not just this or that official, but entire political parties and systems.
This sky-is-falling hypothesis hinges on the purported effects of ‘globalisation’, a term which, by really meaning nothing, can be used as a surrogate for just about anything. Does it mean that there is more international trade? No doubt there is much more today. But relative volume is just as important as rate of increase; and the problem with the ‘burgeoning trade’ notion is that it takes, as its implicit base of comparison, the disturbed conditions of the 1930s and 1940s rather than the much more expansive late 19th and early 20th centuries.
Or does globalisation refer to the propensity of purely speculative money flows to shake the international financial system? Perhaps, but in the late 1920s, a bank crash in Austria set off a liquidity crisis which helped tip the world into a massive depression. By contrast, in 1997, a huge meltdown of financial markets in Asia was followed by four years of the greatest bull market in history, as the economies of North America and Western Europe continued an unprecedented surge.
‘Globalisation’ is often taken also to mean that today’s businesses source things from many locations, depending on availability and cost, including the cost of labour. But isn’t that what trade has always been about? When (if ever) is it reasonable to declare that a certain point in a long-term quantitative process has signalled a revolutionary qualitative transformation?
At best ‘globalisation’ seems to be a modern term for something which began at least as far back as the time of Marco Polo, if not well before, when information about trade and financial opportunities started to spread across national and/or regional frontiers, and goods and money followed. If this is the case, then citing ‘globalism’ as a criminogenic factor in world trade is the same as saying that over time illicit entrepreneurs, like legitimate business people, expand their geopolitical horizons in line with the opportunities offered by greater ease of long-distance communication and travel. This might be true, but it isn’t very helpful. And while it is doubtless true that there is more economic crime across borders today, there is also much more legal business, and no proof that the proportion of illegality is increasing faster. Indeed, to the extent that exchanges are becoming liberalised, flows more transparent, taxes cut and regulations relaxed, illicit traffic across borders is more likely to be shrinking relative to total economic transactions. What is increasing is the amount of noise made about it.