By Sunil Garodia
First publised on 2020-07-08 12:17:05
In Stealth of Nations: The Global Rise of The Informal Economy, Robert Neuwirth talks about the people who sell goods and services within the economy and are yet not part of it as their businesses are not legal or officially registered. Although the book was first published in 2011, I read it again during the lockdown and found it even more relevant in these troubled times.
To Indians, familiar with the terms "parallel economy" or "black market economy" this book holds a special place. But Neuwirth has not dwelt on the Indian informal economy at length. Instead, he talks about vendors in the US, Canada, Brazil, Senegal, Lagos, Nigeria and China. Any attempt to document the Indian informal economy would warrant a complete book that would be much bigger than Stealth of Nations.
Neuwirth calls this informal economy the System D or a system that works by evading government control. It can consist of people selling legal products and services through unregistered businesses or people who deal with illegal or counterfeit products. The main thing is that this kind of economic activity, though forming a major part of the total, does not contribute to the GDP or government taxes.
The book makes for an interesting read as Neuwirth fills it with real people and real businesses and traces their supply chains. It shows how these people battle several impediments (the police, local councilors, politicians and local toughs) to set up their businesses (early morning bazaars on thoroughfares busy later in the day or in shady alleys, inside busy markets with a legal front or even from homes and on the internet) and the kind of people who come to buy these products and services.
He also identifies China as the source of many of the goods that are sold through System D worldwide (though other countries like Vietnam and Thailand have also started making such products now). He finds "first copies" of international brands or counterfeits like Sansuung, Motorloa, Hogoo Boss, Zhoumani, Verscc and S. Guuuci. These Chinese companies are the source of goods for System D and are also part of it as they avoid taxes too.
Stealth of Nations is an important book and it is written in a way that will make it an interesting and informative read for the layman too. Since most people have dealt with such vendors many times, they will relate to the experiences recounted in the book. System D is everywhere and many countries are devising ways to bring it under regulatory control. But it is not going to work as the whole system is based on cash transactions and no records are kept.