Trained as an historian at UC Berkeley, Nils Gilman is a practitioner at Monitor 360 in San Francisco, focusing on geo-strategic issues. He is co-author of the forthcoming book Deviant Globalization.

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Hidden and powerful and growing worldwide at twice the rate of the legal economy, "deviant globalization" is described by Nils Gilman as "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."

He adds: "The structure of the current global economy is not designed for equitable, plodding growth; it's designed to reward opportunistic, risk-seeking innovators. Were one to construct an investment portfolio of illicit businesses, it would no doubt outperform Wall Street."

In some parts of the world, with the decline of state sovereignty and growth of grassroots communication technology, outlaw organizations are taking over statelike duties.

Trained as an historian, Nils Gilman is a consultant at Global Business Network/Monitor for licit organizations, including the US intelligence community. He is co-author of the forthcoming book, Deviant Globalization.

The anti-state economy

Gilman described deviant globalization as "the unpleasant underside of transnational integration."

There's nice tourism, and then sex tourism, such as in Thailand and Switzerland. The vast pharmacology industry is matched by a vast traffic in illegal drugs. The underside of waste disposal is the criminal dumping in the developing world of toxic wastes from the developed world. Military activities worldwide are fed by a huge gray market in weapons. Internet communications are undermined by floods of malware doubling every year. Among the commodities shipped around the world are exotic hardwoods, endangered species, blood diamonds, and stolen art worth billions in ransom. Illegitimate health care includes the provision of human organs from poor people---you can get a new kidney with no waiting for $150,000 in places like Brazil, the Philippines, Istanbul, and South Africa. Far overwhelming legal immigration are torrents of illegal immigrants who pay large sums to get across borders. And money laundering accounts for 4-12% of world GDP---$1.5 to 5 trillion dollars a year.

These are not marginal, "informal" activities. These are enormous, complex businesses straight out of the Harvard Business Review. The drug business in Mexico, for example, employs 400,000 people. A thousand-dollar kilo of cocaine grows in value by 1400-percent when it crosses into the US---nice profit margin there.

The whole phenomenon is driven by state regulators acting on ethical taboos. When we outlaw or tax certain goods and services, we reduce supply while demand increases, and that provides an irresistible opportunity for risk-taking entrepreneurs.

Also, historian Gilman points out, international development practices are partially to blame. From 1949 to 1989 the Cold War was played out with the US and USSR trying to create new states like themselves. It mostly failed, and it ended with the end of international Communism. Then came the neoliberal "Washington Consensus" theory of structural adjustment---governments in developing countries must "stabilize, privatize, and liberalize." That sort of worked, but it hollowed out the governments and dismantled their regulatory capacity. People in those countries realized they were on their own, forced to "survival entrepreneurship." In some places like Eastern Europe criminals took over the economy.

There is a certain Robin Hood effect on the large scale. Serious money is moving from the rich global north to the poor global south and enriching some people there.

Politically, the deviant entrepreneurs don't want to take over the state, just undermine it. For their own communities they often provide state-like services of infrastructure, health care, and even education. They are "post-modern, post-revolutionary, and post-progressive." They resort to violence against the state only when the state suddenly attacks them---as is playing out in Mexico now.

What to do? If you try to shut down the deviant economy, you just make the profit margins greater and exacerbate the problem. If you shrug and legalize everything, you condone hateful practices like child sex slavery and the total deforestation of tropical hardwoods.

We are left with making judicious choices about which deviant practices to take most seriously, and then dealing with them patiently in a non-sudden way, realizing that the unsavory economy will never be fully eradicated.