The booming shadow economy around the world is getting a lot of attention this year, as people struggle to escape tanking currencies, crippling taxes and intrusive red tape. Robert Neuwirth brought the term "System D" into wide use with his book, Stealth of Nations, an excerpt of which became a chat-fueling Foreign Policy article, which suggested that two out of three workers are likely to work in the shadows by 2020. There are big implications for policy and planning in the discussion over the shadow economy, but much of the chatter misses just how frigging cool underground entrepreneurial activity can be.
In Foreign Policy, Neuwirth cited a 2009 OECD study which says informal businesses and workers "often represent the most dynamic part of the economy." That's an awfully dry way of pointing out that people who duck into the shadows often have promising ideas that might not survive the taxes and red tape of the official economy. And not just ideas — really interesting ideas.
Adding some juice back into the topic is Makeshift:
a quarterly print and online magazine about creativity in unlikely places, from the favelas of Rio to the alleys of Delhi. These are environments where resources may be scarce, but where ingenuity is used incessantly for survival, enterprise, and a self-expression. We believe in an industrial future fueled by networks of makers, from roadside engineers to co-working creatives. We are documenting a movement of hackers, sharers, and entrepreneurs innovating under resource constraints. Makeshift is about people, the things they make, and the context they make them in.
Makeshift fatures a regular column, "The Misfit Economy," on black-market innovation. The column is penned by Alexa Clay and Kyra Maya Phillips, two economists with a forthcoming book on exacty that topic. The inaugural installment examines the similarities in entrepreneurial dynamics between street gangs and Google.
Another feature, "From the Makery," surveys the Web for evidence of innovation in odd places, including kitchen-table workshops and street markets. The latest edition looks at a home-made powered prosthetic leg from Poland, as well as a healthy market in Ahmedabad in rope spun from plastic and foil packing material.
The sit also features a video presentation about Anil Gupta, a management professor who travels India researching (and promoting) grassroots entrepreneurship. Much of what he looks at is low-tech or traditional techniques that address common concerns in ways that may be saleable elsewhere — everything from tree-root bridges to hinge springs made from old tires.
And there are features on traditional black markets, like the one for smuggled Vietnamese gasoline in Cambodia.
Gasoline is more expensive in Cambodia than anywhere else in Southeast Asia because the country imports virtually all of its oil. As a result, informal entrepreneurs began smuggling gasoline from Vietnam—where gas is cheaper thanks to domestic oil production and state-subsidized prices—and reselling it in Cambodia. The lucrative trade has grown into a booming industry—so much so that Vietnamese authorities announced a plan to limit the operating hours of border gas stations and require them to issue receipts in an attempt to combat cross-border gas running. In March 2011 alone, Vietnamese officials seized 520,000 tonnes of gasoline.
Nonetheless, smugglers still find workarounds, exploiting sparsely manned crossings, outrunning law enforcement with speedboats, and bribing border guards. Much of this smuggled gasoline finds its way to dusty mom-and-pop roadside stands dotting city corners and rural roads throughout the country.
Makeshift looks like it's coming out a makeshift phase itself, and starting to come together. It's turning into a good place to see just how innovative people can be when necessity and opportunity meet.