«An investment portfolio of illicit businesses would no doubt outperform Wall Street»
Nils Gilman, consultant with the Monitor Group, on the effects of
globalization on the illicit economy and its unstoppable growth.
Nils Gilman, in a nutshell, what is the Monitor Group?
Monitor Group is a diversified consulting organization that works with organizations to help them grow. For corporations, that often means developing strategies for revenue growth. For governments, it means working on national economic development and capability building. For non-profits, it means helping to grow their social impact.
The Monitor Group is also present in Switzerland and has an office in Zurich. How is the Monitor Group structured on a worldwide basis?
Monitor Group has over thirty offices worldwide, and our global reach is an important part of the value we provide our clients: we can provide direct access to leaders and subject-matter experts on virtually any topic in virtually any geography. Monitor has a variety of specialized groups that focus on topics such as marketing, innovation, product development, organization, leadership, and economic competitiveness.
My group inside Monitor focuses on geopolitical issues, helping governments prepare for the future. Our multi-disciplinary team leverages open-source research and best practices from industry to develop customized frameworks for addressing complex security problems. We offer a network of thousands of creative thought leaders and experts from around the world who bring outside perspectives to governments. We also design forward-leaning custom training programs that teach cutting edge methodologies drawn from business and academia. As recognized leaders in anticipating strategic surprise, we also offer a variety of strategic planning services.
Your talk deals with the global illicit economy. Compared to the legal economy, the illicit economy has grown at twice the rate. What factors explain this fast growth?
Smuggling, trafficking, and transnational criminal organizations have always existed. But with the exception of narcotics—which for reasons of plant biology and economics has long been the world’s most globalized industry—many of these illicit economies were local or regional in scope until quite recently. Since the 1990s, however, there has been a rapid integration of markets, for both political reasons (structural adjustment programs, the end of Soviet socialism, the Washington Consensus) and technical reasons (the Internet, mobile telephony, improved transportation infrastructure). Just as these changes have helped many legal businesses to go global, they have also enabled former street corner thugs to become global gangsters.
The withdrawal of states from their commanding role in many economies and the declining capacity and authority of many states (including states in the so-called developed world) have opened up operational spaces for what I call “deviant globalization”—human trafficking, drug dealing, gun running, cross-border waste disposal, organ trading, sex tourism, money laundering, transnational gangs, piracy (both intellectual and physical), and so on.
The structure of the current global economy is not designed for equitable, plodding growth; it’s designed to reward opportunistic, risk-seeking innovators. It follows logically that illicit industries (which will naturally be led by opportunistic, risk-seeking entrepreneurs) form a particularly high-growth sector. Were one to construct an investment portfolio of illicit businesses, it would no doubt outperform Wall Street.
Globalization tears down traditional national structures and opens doors to illicit actors who fill the void. What can be done to stop this process?
The first step is for governments to realize that the growth of the illicit economy is neither a minor irritant, nor something that can be eliminated. Rather, it is a permanent feature of the contemporary global order, which needs to be actively managed. There are two main ways that governments and nonprofits typically go wrong in dealing with deviant globalization. The first is by more or less ignoring it, or downplaying its significance. The second is by thinking that the deviant manifestations of globalization can somehow be eliminated or separated from the legal manifestations. (This latter fallacy is what leads, for example to the fruitless, demoralizing campaigns like the war on drugs. The street price of narcotics has steadily fallen on the streets of almost every country for the last three decades, which tells you that supply has been growing even faster than demand—a telling indicator of the effectiveness of the war on drugs.)
As long as we continue to combine massive disparities of wealth and power, with a desire to control or stop the flows of certain goods and services, there will continue to be a nearly endless supply of people willing to move goods, people, and services at a premium price. The challenges of deviant globalization are best dealt with in a regulatory framework, not via law enforcement. Of course, such an approach flies in the face of moralizing about these issues.
The old structures may be disappearing, but the human need for them still exists. What happens, in the aftermath of globalization?
An excellent question, and of course nobody knows. Absent a great increase in the capacity and legitimacy of global governance institutions, which I must say hardly appears to be in the cards, great efforts should be made to increase the resilience of regions, urban areas, and small communities so that they can be as self-supporting as possible, without decoupling from the larger global system. The way forward is to build loosely coupled systems that permit integration without dependency.
Is this trend worldwide or more prone to affect certain countries or regions?
This is a global trend, but one affects different regions in different ways. Countries prone to deviant globalization tend to share certain family resemblances: a weak or fragmented central state; long, poorly guarded borders; and a large supply of or demand for goods with dubious moral properties—drugs, antiquities, valuable minerals, exotic wildlife, human organs, sex, oil, highly enriched uranium, and so on. The traditional world leaders in deviant globalization have been probably Russia, Nigeria, Brazil, China and the United States—though today the most deviantly globalized place on earth may be Iraq.
But it would be a mistake to think of the geography of deviant globalization primarily in terms of states, for deviant globalization has a complex microgeography that largely ignores state boundaries: it traverses the archipelago of slums that runs from the inner cities of the United States, to the favelas of Rio de Janiero, to the banlieus of France, to the almost continuous urban slum that girds the Gulf of Guinea from Abidjan to Lagos; it extends across the cocaine supply chain that links the mountains of Colombia, to the slums of São Paolo, to the waterways of West Africa, to the noses of tourists in the Netherlands; it traverses the mountains of toxic garbage that move from the dustbins of rich countries to the landfills of poor ones; and on and on. You will find manifestations of it in every city and in every household that has any connection to the global economy. It is inseparable from the global economy.
What can we look forward to hearing from you at the European Futurists Conference Lucerne?
I’ll be speaking on these very themes, and particularly on the different tangible manifestations of deviant globalization, and the new kinds of political orders that are emerging in places where the deviant economies have become the norm. I’ll also be introducing the concept of “parasitical autonomous zones”—the microzones where deviant globalization takes place that continue to sap resources from the carcasses of the states that contain them.
Nils Gilman is a consultant with the Monitor Group, with a focus on national economic development and security. He has led projects on topics such as the security implications of climate change, the future of terrorism, and the economics of the global narcotics trade.
Keynote «The Global Illicit Economy»,
Culture and Convention Centre KKL, Lucerne, Switzerland
October 27, 2008; 14.45 h