What The Highwayman Knew


Most of my career has been dedicated to studying wars on the front lines. People generally greet my comments that I am taking off to yet another epicenter of violence with a cheerful, "Great, send us a note." That didn't strike me as odd until I began investigating criminal networks, a change that virtually everyone reacted to with consternation: "Aren't you terrified of being killed?" Ironically, I was taking a breather from violence by shifting my research from war to the extralegal. The incongruity in people's responses to my work matched what I found to be pervasive in the world outside the law: Nothing is as we expect.

Extralegal, illegal, illicit, informal, clandestine, subterranean, unrecorded — whatever adjective you prefer, I was interested in it.

My curiosity led me at one point to Angola, where I planned to trace in and out of the country the flows of extralegal commerce — which, by U.N. estimates in the early 2000s, made up 90 percent of Angola's economy. As I stood in a dusty border town and looked at the crumbling buildings hugging the single road that led into a rural part of Angola, I felt as if I were at the end of the world. Barefoot children tried their skills with an old, tattered soccer ball. Prostitutes flirted with truckers making cross-border runs. Dogs slept in the streets.

It was midnight, and I was talking to the owner of the only "hotel" in town, a man I had never met before. We were leaning against the bar that made up the lobby, watching armed truckers play friendly games of pool. I introduced myself only as Carolyn, giving no last name and showing no documents or identity papers. During the course of the conversation, the hotel owner said with a sly smile, "I was born the same year you were, Carolyn." He then laughed, picked up his beer, and began explaining to me the movement of illegal goods through the area.

Suddenly, unexpectedly, in the hotel owner's words, I saw another world open in that ramshackle, remote outpost. For him, the town is a global info-net. He can dip his cyber-fingers in at midnight and find out who I am, when I was born, and whether I am safe to talk to. From his comments, I concluded that he might have read some of my work online — enough to know that I never reveal my sources.

When he looks at the world, he sees intercontinental commodity chains flowing alongside the information and, atop both, an unofficial power grid of financial exchanges that affects the economic health of entire countries. "Much of this moves outside the law," he explained. "All of it travels worldwide. Basic economy today." He went on to discuss the trade in so-called blood diamonds, and other unrecorded activities that brought in even more money.

No textbook, no class in economics, taught me how to study that new world of the extralegal. In the following days, I was tutored by businesspeople, truckers, traders, and bankers for whom the law represented only a small part of life.

You can understand their world only if they invite you in. When I was sitting on a broken plastic chair, eating a stale sandwich, a man in faded jeans and an old T-shirt joined me. "Most of the richest and most powerful men don't advertise themselves in suits. They look like anyone," he told me, and he described the hundreds of millions of dollars and the massive range of undocumented goods — among other things, I could buy a second-hand toilet, a multimillion-dollar satellite-linked computer system, or a counterfeit Armani suit — that passed through the sleepy border town.

People who are successful in the extralegal world control a large chunk of the region's economy and, thus, have an impressive amount of political clout. They are connected to people like themselves throughout the world. Their networks, taken as a whole, represent a significant part of the global economy. Data on the extralegal are available from agencies such as the United Nations, Interpol, and the U.S. State Department, and can be found in books like Moisés Naím's Illicit: How Smugglers, Traffickers and Copycats Are Hijacking the Global Economy (Doubleday, 2005) and R.T. Naylor's Wages of Crime: Black Markets, Illegal Finance, and the Underworld Economy (Cornell University Press, revised edition 2004), as well as my own Shadows of War: Violence, Power, and International Profiteering in the Twenty-first Century (University of California Press, 2004). Together the sources show that uncharted economies generate trillions of dollars each year. Millions of people are involved. Thousands of products that grace our daily lives have crossed the lines of the law.

Unrecorded money acquires value only when someone launders it into the formal economy. A particularly successful launderer can control more money than the gross national products of many countries. A classic example is the drug lord Pablo Escobar, who offered to pay off the national debt of Colombia. That raises the question: How do we study the invisible? Or perhaps better stated: How do we create a new kind of social-science research for the 21st century?

As an anthropologist, I figure ethnographically — on foot — is the best way. So my goal was to follow the linkages of extralegal products and power from the rural outposts of Angola into other resource-rich countries, and out across continents to the vortices of legal finance, industry, and politics. In other words, follow worldwide the goods and information that the Angolan hotel owner talked about.

Such a study is not easy. Sophisticated inroads in researching the extralegal have been made by scholars like Naím and Naylor. Yet classical economics still measures formal economies — for example, figures for a country's gross domestic product consider only legal transactions and thus are far from being truly gross. Simply put, we do not yet know how to find out, say, the extralegal profit made in Europe in 2006, or how laundering that money into the legal economy affects stock values or interest and exchange rates.

But the people who successfully circumvent the law do have a sense of those realities. So for my new book, Global Outlaws (University of California Press, 2007), I sat and talked with some of them and looked at the world through their eyes.

Their information challenges us to re-evaluate how we do economic research in general. Classical economics is about products. Things. Value. It makes an accounting by capturing a slice of life, and that slice is by definition static. An analogy is investigating a light beam by looking at particles. But every schoolchild knows that is only half the story of the light, which is simultaneously a fluid wave.

And almost every outlaw — from the street vendor to the head of a multinational enterprise — knows it's about flow. Movement. The very fluid act of exchange. Product is often largely irrelevant. Postclassical economic analyses that deal with networks, turbulence, and game theory are struggling to capture those complexities. Ethnography holds a key to the puzzle: Understanding actual practice is critical. Everyone in the extralegal world knows that what matters is being able to manipulate the sometimes gentle, sometimes turbulent circulation of people, goods, moneys, bribes, negotiations, valuations, risks, and payoffs around the planet.

My research, then, amounted to jumping into the river of extralegality and investigating its flow.

One surprising pattern quickly emerged. I found that the river carried almost every commodity, not just the highly publicized traffic in drugs, arms, and people. Real and counterfeit pharmaceuticals, from common analgesics to the most expensive AIDS medications, are flooding into all corners of the world. Some smugglers say they can make more money on the endangered but delicious Patagonian toothfish than on illegal narcotics like heroin. Many robber barons are more interested in illegally trading fuel and energy than diamonds. Timber lords can have more power than drug lords.

Customs agents told me that if you want to know what the most frequently smuggled goods are, just look around your home and office at the commonly used items made and transported by respected companies. They explained that in some cases, less-ethical companies skirt the law to maximize profits; in others, goods are diverted into illegal markets or counterfeited by third parties.

Gold, diamonds, seafood, timber, people, industrial equipment, medicines, computers, weapons, food — pick your commodity. "Personally," a foreign contact of the Angolan hotel owner told me, "I'm moving air-conditioning systems into the country today. Great profits."

Following those profits sheds light on global extralegal financial patterns and their impact on economies. The denizens of the clandestine world taught me a simple fact: "We don't tend to use formal banks." That took some getting used to.

I would ask incredulously, "You mean you are walking around with enough money to buy a new Mercedes truck capable of hauling 50 tons and all the merchandise to fill it?" The answer was invariably, "Yup." "That can run into the millions of dollars," I'd observe. "Yup." "Aren't you scared of being robbed?" "Nope." The whole conversation bored them.

When I pressed people on the point, they explained what to them was obvious: "We work in groups. Groups work with other groups. There are rules governing all this. Rules work. You break the rules, you break the groups and lose your work. Simple."

For the system to function, people have to be able to move money easily back and forth across the boundaries of the law. Stock markets, tourist resorts, ostrich farms, art galleries, horse racing, government bonds, currency speculation, real estate — the laundering sites seem limitless. Virtually no one sends 10,000 "hot" dollars to a bank. Instead smugglers put their profits in a sophisticated international grid of investments, businesses, and markets, sometimes even buying their own banks.

"Laws are national," smugglers explained to me, "so we are international. You know, out law." The most successful shape the markets, even the countries, they work in through investments that cannot be tracked. For example, the laundering of extralegal money has been linked to the market crashes in Asia in the 1990s and in South Africa in the early 2000s.

Perhaps the most important, and disturbing, highwayman's lesson is that national security is an illusion. Following extralegal currents from the rural outback of Africa to the world's industrial, financial, and shipping centers, I spent several weeks as a commodity myself, traveling aboard a freighter.

The ship had about 20 crewmen, thousands of containers, and a lone anthropologist; it traveled in U.S. waters, across the Atlantic to Europe, and in the South Seas. I can't speak for the crew, but the thousands of containers and I got on and off the ship without inspection in every port and every country we visited.

My experience gives the lie to governments' claims that ports are essentially secure, and that containers are inspected. As the ship reached ports in the United States and Europe, it became a game to see if I could wander the entire dock area, climb through the stacks of containers, and rummage through warehouses.

I always won the game. I was never stopped. I never met a customs official. In fact, no one ever checked my passport or identity papers. I began actively looking for someone to stamp my passport. I found no one. To this day, my passport says I never entered and left those countries.

As to the cargo, I asked crane operators moving loaded containers how many times they stopped to have one opened. All the people I spoke with said they couldn't remember the last time that had happened.

That's not surprising. An average container ship holds around 6,000
containers, while superships carry twice that number. It takes hours to inspect a single container, and in any case, a scan by X-ray machines can't distinguish cocaine from flour, or weapons components from simple industrial equipment.

Hold up one ship to scan a container that is underneath six others, each weighing 35 tons, and you delay all the necessities that ship carries in their trip to market, and all the ships waiting in line to berth. Of course, the labor and transport systems that move the containers are also affected.

"What happens if you hold up transportation to inspect cargo?" I asked port officials in Los Angeles, Rotterdam, Cape-town, and Singapore. They replied that you essentially shut down industries in the country and abroad by delaying critical products — and if you shut down critical industries, you can effectively shut down countries.

The merchants of extralegal commerce know that. They know that smuggling is not merely easy, it is virtually foolproof. Consider what it would take to inspect the 200 million containers and 8.7 billion metric tons of cargo trade that move through just the world's busiest 50 shipping ports a year. Or the 75,000 commercially recognized flights that take place in the United States and Europe alone each day. Dropping smuggled heroin or cigarettes or weapons into that torrent is like pouring glasses of water into a river. No security measure known today can change that fact.

So we create the illusion of security.

Security forces are aware of those truths. "How many businesses break the law in some way?" I asked detectives at Scotland Yard. "A hundred percent," they responded, without hesitation.

Perhaps we focus on studying the legal because the extralegal presents us with such a conundrum. Encompassing both the lethal (trafficking in children for the sex industry) and the beneficial (trafficking in essential medicines in devastated war zones), the extralegal is central to the way economies function today. Because no one quite knows what to do with extralegal commerce, we often avoid investigating it. But in a post-9/11 world where, as one longshoreman put it, "you can drop a bomb in a shipload of Barbie dolls coming into port and shut down not only the port, but the supply chains sustaining the entire country," we need to face our illusions.

The solutions are far easier than you might think. First, we need to stop worrying that people will die if they study the extralegal world, and start creating honest methodologies for that research. We must not think that just because classical economic theory can't measure extralegal commerce as a whole, or because you cannot get from a government office or an international agency like the World Bank statistics on a country's gross domestic extralegal product, it therefore cannot be quantified. If the highwayman can do it, so can the scholar.

Postscript: "Highwayman" is not gender neutral. Neither is the world of the extralegal. To fully appreciate what research throws our way, we have to remember that people are motivated by things beyond profit and power. "It's hard to get a date when you're into smuggling — most everyone's male," said a man who had been one of the world's largest drug smugglers in his heyday. Now retired, he was a proud father showing me pictures of his five children.

Carolyn Nordstrom is a professor of anthropology at the University of Notre Dame and author of Global Outlaws: Crime, Money, and Power in the Contemporary World, published in June by the University of California Press.
Section: The Chronicle Review
Volume 53, Issue 49, Page B10