The Dark Side of Globalization

Illicit: How Smugglers, Traffidackers, and Copycats Are Hijacking the Global Economy. By Moisés Naím. Doubleday, 2005. 340 pp.

Moisés Naím, the editor of Foreign Policy magazine, has written an important and disturbing book. Many works have dealt with one illicit activity or another, but this book groups them all together as part of one global trend. The author's thesis is that all kinds of illicit economic activities have grown to frightening proportions since the end of the Cold War, while governments have failed to catch up. Half of the book is devoted to a description of the five main illicit activities—the arms trade, the drug trade, human trafficking, counterfeiting, and money-laundering—but Naím asserts that the panoply of illicit trade is much greater. The picture he presents is as shocking as it is credible.

Lacking Tom Friedman's optimism about globalization, Naím illuminates its dark side by focusing on the growth of illicit trade. It has exploded with the opening of borders, the elimination of currency regulations, and the rise of the Internet, which offers discreet forms of communication and anonymous transactions that suit international criminals. "Since 1990," in Naím's words, "the phenomenal spread of political reforms aimed to lower barriers to trade and investment, and the accelerated pace of technological change, have infused global commerce with unprecedented energy. Illicit trade received the same boost for the same simple reasons" (p. 219).

Less obvious is how the nature of organized crime has changed. The old centralized crime syndicates have become as obsolete as centralized, hierarchical corporations like General Motors, and they have been replaced by decentralized, flexible international networks. A corollary is that organized crime is no longer as specialized or as localized as it used to be. Illegal entrepreneurs swiftly move from one activity to another, driven by nothing but the combination of profit and the risk of detection and punishment. Time and again, the author emphasizes that illicit networks are "multicountry, multiproduct, and decentralized." Counterfeiting often produces goods of the same quality as the original; it might even be done by the same crew. As Naím points out, "illicit trade has transformed itself in three ways. It has grown immensely in value; it has extended its scope of products and activities; and the different illicit trade specialties of old have come together" (p. 217).

Another emphasis of this book is the weakening of many states, some of which have become rogue states while others have been taken over by armed factions and terrorist groups that are often allied with illegal networks. Many governments are outright criminalized. Abdul Qadeer Khan was allowed to run his nuclear-proliferation trade in Pakistan. The world's leading arms trader, Victor Bout, operates from a safe base in stateless Transnistria. Many small island-states market themselves as money-laundering centers. "Illicit trade is deeply embedded in the private sector, in politics, and in governments" (p. 217). Naím goes further and points out how coca growers have become a political force in Bolivia, where their man has just been elected president. Political influence gained through enormous profits from illicit trade may lead to the prolonged capture of certain states. Today's illicit trade is reminiscent of contemporary terrorism, with which it often cooperates.

Naím depicts a Hobbesian world that increasingly eludes the rule of law, and such a world has little room for democracy. Strikingly, during the last decade some ten million people have been trafficked to the United States, while centuries of the slave trade brought only 12 million slaves to America. Not only law and order, but democracy is breaking down in many countries.

Something must be done, but the state is clearly not up to the job. Naím provides multiple examples of how pathetically states are failing to curb illicit activities. The 9/11 Commission showed how badly the fragmented, hierarchical, and highly compartmentalized U.S. law-enforcement system functions. Even if politicians actually understood what needs to be done, they would consider such actions politically suicidal, because the electorate is even more hypocritical. Moreover...