Money  /  Argument

The Twin Insurgency

The postmodern state is under siege from plutocrats and criminals who unknowingly compound each other’s insidiousness.

Many of same processes that are driving the plutocratic insurgency also underpin the process of criminal insurgency: the globalization of economic flows, growing wealth inequality, and a collapse of state provisioning of public goods and services. That is partly why these are twin insurgencies, plutocratic and criminal, for they have both thrived on the basis of the same shifting preconditions. The other reason for the twinning is that they abet one another.

From Latin America to Africa to the former Eastern bloc, the 1980s and 1990s structural adjustment and shock therapy programs led to the hollowing out of the state: the physical buildings and institutions of “adjusted” states may have remained in place, but their ambitions and capacities shriveled. The states in these countries dramatically decreased spending on social services—ranging from subsidies for food and fuel to broader social services like public health and pensions. State-owned industries were either shut down or privatized, with wages and employment slashed. The state, in other words, further shed its capacity to deliver a decent life to its citizens, leading to a collapse in the popular expectation that it should serve as a guarantor of progress.

At the same time, the economies of these countries opened rapidly to cross-border financial and trade flows. The combination created both the opportunity for enterprising individuals to make money in new ways and, for many, an imperative to do so as a matter of survival. These effects were not merely a byproduct but in fact the explicit objective of the structural adjustment and shock therapy programs: rolling back the dirigiste state and opening up the economy was meant to unleash entrepreneurial energy, and indeed it did.

Alas, shock-therapy-driven globalization of the formerly closed economies of the Eastern bloc and the Global South turned out to have an unfortunate bug. While the mainstream globalization celebrated by the likes of Thomas Friedman grabbed the headlines, the parallel development of a “deviant” globalization in industries like narcotics, immigration, wildlife harvesting, and antiquities smuggling remained long enough in the shadows for it to set deep roots. Though the weakness of the post-communist and post-developmental state represented a dire problem for mainstream businesses and for imploding middle classes in these countries, it offered comparative advantages for illicit commerce.