Keith Hart on Fri, 19 Jul 2002 14:24:09 +0200 (CEST) |
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Re: <nettime> Deflation, anyone? |
>I'm not even sure how to ask this: but is there any way of gauging the extent of "illicit" and/or "escaped sectors" of The Economy? I've a nagging suspicion, coupled with known instances, that a relatively large proportion of the global populace operates in a vastly different/indifferent financial climate, and that the global economic rhetoric is a needlessly servile ruse.< There is no way of quantifying the global informal economy, but it is possible to conceptualise its constitutent parts and relations with the official economy, as well as throw in anecdotal and research-based evidence. To start with the last, a number of studies are currently being carried out under the auspices of the Ministry of Culture (sic) into the informal economy in France. There is a flourishing illegal trade in cars and car parts for Africa based on Marseille and Montpellier and run largely by North Africans. This trade extends into Germany and Belgium. It is so large that the whole shape of the French car industry has been altered to accommodate it. The participants operate without papers, taxes and other impedimenta of bureaucracy. They see the networks they are developing as part of a re-islamization of the Mediterranean. There partners include Russian and Latin American mafias. It may be recalled that the Mitterand presidency's slush fund (used among other things to help out with Kohl's electoral efforts) also depended on the sale of lucrative monoplies to firms operating in Africa and that a parallel secret service and banking system was financed by links to the oil company Elf-Aquitaine. None of this shows up in the official statistics of course. Players at the top of the system are just as much involved in illegal money scams as people at the bottom. If not more so. Illegal drugs are estimated to be the single largest commodity in the world market. We hear often enough about Colombia, since that is the US's current target within 'its' region. The last time I saw a report on this, marijuana was the most valiuable cash crop in twenty US states. Every day a war is fought on the border of Iran and Afghanistan for control of opium exports to the West. In Jamaica during the 80s, ganja sales exceeded the three largest legitimate exports in total (tourism, bauxite and garments)The world's arms traffic is notoriously corrupt, much of it supplied from the former Soviet Union. Bootleg copies of everything imaginable swamp markets for manufactures. And let us not forget that most of the money circulating the globe is beyond regulation by national governments. What was once a lucrative sideline, offshore banking, is now the norm. The informal economy has gone global since world war two. Before asking how all this relates to what is supposed to be happening in world markets as officially recorded, it is worth remarking on the very large proportion of humanity who have next to no money to spend in the first place. They live mainly from self-provisioning or from unrecorded exchange. This sector is signifcant even in the most bureaucratised economies. There is a small but substantial development of self-organized exchange employing barter or local money, with Argentina the most prominent current example. Commerical barter systems are growing rapidly alongside e-business. The whole question of the how to regulate international e-commerce is a further aspect of the official economy losing its grip on reality. So what happens to all this when deflation hits? Property (especially in stocks) and commodities lose value and the worth of cash appreciates. The value of access to non-marketed goods and services rises. So that in real terms this represents a relative gain for the world's poor, since they have less to lose. But the collapse of commodity markets affects poor areas disproportionately, if they depend on one or two exports for all their import consumption. Illegal markets avoiding taxes and other bureaucratic expense are better placed to compete with official versions of the same. A country like Japan is tremendously vulnerable to world deflation. Competitive devaluation seems inevitable, given the isolationist tactics of the biggest player. The US economy will benefit quickly from a lower exchange rate -- its own exports will be more competitive and the world's money will soon enough return to buy propertythere at bargain prices.This is after all what happened in the 80s. What produced the Great Depression was protectionism. Capitalism was still national then. As long as money and commodities can still circulate relatively freely in this world economy, the various shades of its markets, official and unofficial, will adjust sufficiently to prevent a similar meltdown. But would you bet on Bush avoiding the pitfalls of 1931? Keith Hart # distributed via <nettime>: no commercial use without permission # <nettime> is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: majordomo@bbs.thing.net and "info nettime-l" in the msg body # archive: http://www.nettime.org contact: nettime@bbs.thing.net