The Global Criminal Economy

Castells, Manuel. 2000. “The Perverse Connection: The Global Criminal Economy.” In End of Millennium, The Information Age: Economy, Society and Culture Vol. III. Oxford: Blackwell. [Chapter 3]

Manuel Castells sums up the scope, scale, and importance of the global criminal economy in this chapter. The major leader in this criminal economy is the illegal drug trade. Besides enumerating this vast “shadow economy” and identifying it’s various parts, he spends a good chunk of the chapter highlighting the criminal transition to capitalism that accompanied the final decline of the Soviet Union. One report from the Italian government called this criminal underworld a “genuine criminal counter-power” (171). As I often note, while of course true in some respects, it’s clear that illegal economies have a much more complex relationship to power “proper” than is often admitted—from high finance to material, local investments. The difficulty, of course, is that the power of this dark economy is precisely constituted by its supposed invisibility. As Castells notes, it still behooves us to try to study it (173).

Castells emphasizes the increasing international linkages forged by criminal groups. “A myriad of regional and local criminal groupings in all countries, have come together in a global, diversified network, that permeates boundaries and links up ventures of all sorts” (172). In Russia, global criminal networks became fully integrated into the emergent capitalist economy, as I’ve noted before. “The economic chaos that resulted in the partial criminalization of business came, first of all, from a process of transition from a command economy to a market economy operated without institutions that could organize and regulate markets, and hampered by the collapse of state agencies, which became unable to control or repress developments” (189). In fact, “the law” was seen as the main impediment to Russia’s irreversible capitalist transformation by the capitalist nomenklatura, fully disregarding it was seen as a structural necessity. Summing up Russia’s experience, Castells writes:

This crime-penetrated business linked up with politicians at the local, provincial, and national levels, so that, ultimately, the three spheres (politics, business, crime) became intertwined. It does not mean that crime controls politics or that most businesses are criminal. It means, none the less, that business operates in an environment deeply penetrated by crime; that business needs the protection of political power; and that many politicians, in the 1990s, have amassed considerable fortunes through their business contacts. (192)

Corruption, speculation, privatization, money-laundering, and investment merged into a free-wheeling capitalist transition.

The section of the chapter on Latin America and the drug trade didn’t have a whole lot I had not seen before, though it’s pretty prescient for its time. For me, the parts of the chapter on money laundering, which he calls the “matrix of global crime” (183), were some of the most interesting. “The critical component of the entire drugs industry is the money-laundering system. It is also under the control of the main traffickers from Colombia and Mexico, but it is performed by specialized agents whose main locations are in the banks and financial institutions of Colombia, Venezuela, Panama, and Florida”.

In a section specifically about the impact of the criminal economy on the legal sector, he writes:

Because of its volatility, and its willingness to take high risks, criminal capital follows, and amplifies, speculative turbulences in financial markets. Thus, it has become an important source of destabilization of international finance and capital markets…. Still in other countries, such as Russia and Italy, its penetration of business and institutions transforms the economic environment, making it unpredictable, and favoring investment strategies focused on short-term returns…. The distorting effects of the unseen criminal economy on monetary policies, and on economic policies at large, make it even more difficult to control nationally based economic processes in a globalized economy, one component of which has no official existence. (209)

The interesting question here is: what sorts of peculiar dynamics do narco-dollars and money laundering exert on the “normal” logics and movements of capital? This is a big underlying question in my research. Is there something with sufficiently unique characteristics that we could call “narco-capitalism” or “capitalism on drugs”? As some of my research tries to show, I think the answer is yes.