Stealth of Nations: The Global Rise of the Informal Economy

by Robert Neuwirth

An eye-opening account of the informal economy around the globe, Stealth of Nations traces the history and reach of unregulated markets, and explains the unwritten rules that govern them.

Journalist Robert Neuwirth joins globe-trotting Nigerians who sell Chinese cell phones and laid-off San Franciscans who use Twitter to market street food and learns that the people who work in informal economies are entrepreneurs who provide essential services and crucial employment. Dubbing this little-recognized business arena with a new name—”System D”—Neuwirth points out that it accounts for a growing amount of trade, and that, united in a single nation, it would be the world’s second-largest economy, trailing only the United States in financial might. Stealth of Nations offers an inside look at the thriving world of unfettered trade and finds far more than a chaotic emporium of dubious pirated goods.

Genres: Economics, Nonfiction, Business, International, Politics, Finance, Ebooks

304 pages, Paperback

First published January 1, 2010

Reviews

[Shane · Rating 3 out of 5]

Three and a half stars. This was a very difficult book to for me to rate. It is a well written and entertaining travelogue style look at the informal economy around the world. It doesn't matter if you call it Systeme D, Jua Kali, or the grey market; it exists and it is huge.

All throughout this book I was reminded of my High-School English teacher, who tried to relate "The Stranger" and "Siddhartha" (existentialism and situational ethics) with a profoundly Lutheran fundamentalist perspective. She didn't do a bad job, she just had great difficulty in separating the material from who she was. Neuwirth has a much similar problem; he seems to glorify in the ingenuity and determination of people trying to get by yet he is repulsed by the sheer dynamism and indifference of the free market. The whole book is a dialectic argument with himself over the power of the marketplace to provide solutions, and the desperate want and need to control and regulate it.

Keynesian economists despise and belittle Systeme D because they cannot understand it, other Statists fear Systeme D because they cannot control it. The future of freedom is here, if it isn't first crushed by collectivists trying to 'help'.

[Samuel · Rating 3 out of 5]

I really enjoyed the first-hand accounts of how the global informal economy functions worldwide, but I found the economic analysis muddled and not at all helpful. There is an entire chapter about why the informal economy can't be formalized, only for the final chapter to lay out possible solutions for formalizing the informal economy ranging from a libertarian approach to a communitarian approach. It would have been helpful to lay out some of the economic principles besides just excessive regulation more explicitly to understand why various problems and tensions exist, such as rent-seeking, the free-rider problem, transaction costs, asymmetric information. I know that is probably a big order, but I ended up feeling like there was so much opportunity wasted to really give this book more intellectual heft.

[guiltlessreader · Rating 4 out of 5]

An eye-opening book about the informal economy and its power to provide much-needed jobs and sustain economies. Full review coming soon!
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Full review on my blog guiltlessreading

My thoughts: The title is an extremely witty take on Adam Smith's Wealth of Nations the commonly accepted Economics 101 textbook espousing free market economies. Each chapter opens with an excerpt from Wealth of Nations and is expounded on in throughout the chapter (with rather amusing titles, like "The Global Rummage Sale," "The Culture of the Copy" or "The Honest Con Men").

A few intriguing tidbits that I thoroughly enjoyed, and which got me thinking. And the book is loaded with these:
The resurgence of an interest in Shakespeare in the 1700s ... because copies of his plays were pirated and sold for a penny a piece.

"A century after the playwright's death, piracy helped make William Shakespeare a household name, helped promote literacy across the social classes (because even poor people consider coughing up a penny a play) and helped install Shakespeare's writing as the pinnacle of English usage."
- p. 103-104, Stealth of Nations

Retail giant Proctor and Gamble has adapted their marketing strategy to cater to System D in developing countries, which makes up over 20% of their market base.

"Yes, our biggest customer is Walmart [...] But in reality our largest customer is what we refer to as HFS--high-frequency stores." Indeed more than 20% of the company's business now comes from these tiny, less-than-three-cash-register stores in the developing world. "It is our fastest-growing customer and, in terms of volume, it's our number one customer" [...]
- p. 132, Stealth of Nations

***

After having viewed Christiane Amanpour's interview with the author (see end of post), I knew I had to read this. Coming to a "developed" country like Canada, "informal economy" carries with it a stigma: "When we think of the informal economy, we tend to think of crime: prostitution, gun running, drug trafficking." This is why I feel this book is so important, if but to correct this misconception. While Neuwirth describes the informal economy as an "underground realm," he is clearly coming from a "developed country" perspective.

The stories told here are not uncommon to me. While Neuwirth's encounters hailed from South America, Africa, and China, these could as easily have been transplanted to my homeland, the Philippines. Or anywhere else in Asia for that matter.

Back home, I used to interact with this economy on a daily basis. There's the women who sell clothing at the office during downtime. There's the old lady who comes by during snacktime with her bilao of merienda like pansit, kakanin and other local fare (basically a basket of snacks like home-cooked noodles and coconut-rice cakes etc.). If I want a snack or I've run out of cell phone minutes, I ran over to the guy over at the corner of the street selling balut and phone cards and a hodgepodge under his umbrella. I have been to malls with full floors of branded electronics selling both legit and very good knock offs (your choice), bootleg copies of newly released DVDs, and designer-branded counterfeit bags and clothing.

This is the informal economy. I grew up with it and I never questioned it. It is systemic, it is commonplace. It met people's needs. Receipts? Don't ask. But if the DVD doesn't work, you can definitely come back and return it. But I am rambling ...


***
The book tackles the rather controversial subject of the “informal economy," an economy untaxed, largely undocumented, and in the strictest definitions of the global economy - illegal. But it not only exists, it is proliferating. And it not only happening in developing nations, but also in so-called developed countries. Going by many other names - including the gray market, the underground economy, the shadow economy - Neuwirth rebrands it lovingly throughout the book as System D, shortened from l'economie de la debrouillardise which is slang from French-speaking Africa which roughly means ingenuity or DIY economy.

And ingenious it is. Neuwirth presents very compelling evidence of the existence of System D, told through his own meetings with the many resourceful and hardworking entrepreneurs who has come to depend upon the system for their survival. Neuwirth comes across as an investigative journalist with a heart, taking the time to live among them and they in turn have made him privy to details of their lives, many of which would be quite damning - including bribing and smuggling out as a matter of course. The book is as much about as these people's lives as it is of Neuwirth's insights.

While I enjoyed the travelogue style which takes up much of this book, it turns partially academic towards the middle. Some out-of-the-box thinking by big multinational in order to gain a slice of the burgeoning market that is System D. It looks at the history and the opposing economic thoughts towards System D (see chapter "Against Efficiency"). It examines the rather loaded question "Why Not Formalize the Informal?" It provides some great material worthy of debate, and some thought-provoking fodder.

All this material in this rather slim book of less then 300 pages. This will put you on a merry little path if you want to delve into the topic further. You can check out pages upon pages of references at the back of the book. Or check out Neuwirth's Stealth of Nations blog.

Extremely readable and engaging, this book reminds me how authors like Stephen Hawking, Malcolm Gladwell and Steven Dubner & Steven Levitt have successfully laymanized academic topics. That being said, don't expect the book to answer all your questions but rather to just get you started asking the questions. It's an eye-opener, not a full-blown economics course.

***

First line: These are the products of some people's lives.

Verdict: And engaging, thought-provoking insider look at the informal economy, this book will get you wondering, observing, and asking questions you never thought to ask.

[Isabel Fernandez Acin · Rating 5 out of 5]

New way of looking at the informal economy, or System D ("économie de débrouillardise," meaning the "economy of resourcefulness" or "hustle economy”).

Plays a crucial role in global trade, providing jobs and services that formal systems often cannot meet, and fosters resilience and creativity.

[Vanessa van den Boogaard · Rating 3 out of 5]

Not brilliantly written, while language is often used carelessly. Despite this, overall, Neuwirth presents an interesting in-depth perspective into the informal economy, humanizing the lives and accounts of informal sector workers and firms while remaining grounded in the dominant academic theories and narratives of this growing field of study.

Nevertheless, I would challenge his generally rosy view of the sector, including both the challenges of formalizing and remaining informal. While the success stories he often relies on are interesting, they are by no means representative. At the same time, his views for policy reform offer little in terms of realism given the political economy contexts of his case studies (largely, Lagos, Guangzhou and Ciudad del Este). Would also have appreciated a deeper look into the structures of informal governance and regulatory associations and networks within the sector, which are obviously critical to thinking about "real" and "hybrid" governance models.

On the whole, I agree with the general thrust of the book and appreciate his attempt to personalize the sector, though he doesn't push his analysis far or deep enough, while over-explaining simple ideas to the point of redundancy.

[Dave Burns · Rating 2 out of 5]

Ive been craving a book on the informal market. Unfortunately this author makes it seem dull.

[HansBlog · Rating 4 out of 5]

Neuwirth beschreibt Händler im informellen Sektor vor allem heißer Länder wie China, Nigeria oder Brasilien. So leben nach Neuwirths Informationen vielleicht 30.000, 100.000 oder 300.000 Afrikaner allein im chinesischen Guangzhou, zumeist ohne gültiges Visum. Sie schaffen chinesische Ware wie Handys oder Autoteile nach Afrika – und zahlen nur einen Bruchteil der regulären Steuern und Zölle, oder gar nichts. Dazu kommen sozialpolitische und volkswirtschaftliche Argumente pro Schattenwirtschaft, pro Deregulierung und Regelübertretung.
Dabei interessiert sich Neuwirth besonders für die Geschäftsmodelle der Händler und rechnet ihre Kalkulation teils vor; weniger schildert er Persönliches, Kulturelles oder Interkulturelles (kleine Ausnahmen: die "Lehrlinge" der Igbo-Kultur und die Stellung der Afrikaner in Guangzhou). Ich wünschte, Neuwirth hätte etwas breiter gestreute Interessen, auch wenn er auf jeden Fall hochinteressante Einblicke verschafft.
Den Unternehmergeist seiner Gesprächspartner, die mit wenig Kapital und harter Arbeit robuste Geschäfte aufbauten, scheint Neuwirth zu bewundern. Kritik an Steuer- und Zollbetrug, Korruption, Schwarzarbeit, Produktpiraterie und Umgehung von Genehmigungen äußert Neuwirth nie; er amüsiert sich über den Ärger von Produktpiraten, die ihrerseits kopiert wurden.
Einmal vergleicht Neuwirth heutige Produktfälscher und die Piraten früherer Jahrhunderte wie Francis Drake und kommt nach ein paar Historikerzitaten zu dem Ergebnis, das einstige blutige Piratentum ähnele weitgehend dem aktuellen Marktgeschehen.
Neuwirth beleuchtet auch Raubkopien von Büchern, Musik und Software und will in langen historischen Rückblenden u.a. aus London nachweisen, dass nicht genehmigte Kopien viel Gutes leisteten. Ein weiteres Kapitel handelt vom Schmuggel, u.a. von Paraguay nach Brasilien oder zwischen Hongkong und Festlandchina. Außen vor bleiben die Themen Altenpflege und Raumpflege. Auch Mafia, Prostitution und Drogenhandel kommen nicht vor, vielleicht auch, weil Neuwirth sein engagiertes Plädoyer für Schattenwirtschaft und Deregulierung nicht trüben möchte (er erwähnt jedoch allgemein, dass Bargeldwirtschaft Kriminalität anlockt).
Neben den Händlern beschreibt Neuwirth auch Müllsammler in Lagos und illegale Bäcker in San Francisco und New York, die wegen lebensmittelrechtlicher Vorschriften etc. kaum in den genehmigten Bereich gelangen. Indische Städte wie Mumbai fehlen in Stealth of Nations komplett, ebenso Illegale in den USA oder irgendetwas im Europa von heute, zum Beispiel Italien mit den Afrikanern und den Erntehelfern im Süden oder Putzfrauen in Europa; ebenso fehlen mittelöstliche Basare in Kairo oder Iran wie auch Südostasien mit Bangkok, Manila, Jakarta, Singapor; und aufs Land geht Neuwirth ohnehin nicht.
Auffällig: Die Orte aus seinem 2004er Vorgängerbuch Shadow Cities – Mumbai, Istanbul, Rio, Nairobi – besucht Neuwirth für Stealth of Nations nicht erneut.
Seine Kapitel gliedert Neuwirth nicht streng regional, sondern nach übergeordneten, wenn auch nicht immer klar umrissenen Themen. So reist der Leser mehrfach in unterschiedlichen Buchteilen nach São Paulo oder Guangzhou. Lagos fasziniert den Autor wohl am meisten; er beschreibt die nigerianische Wirtschaftsmetropole öfter und tiefenschärfer als andere Orte und fast wähnt man sich in einem Basarführer für Lagos. Nur Lagos erscheint auch in Neuwirths 2014er TV-Dokumentation Der Glanz der Schattenwirtschaft.
Neuwirths Buchtitel Stealth of Nations lehnt sich an Adam Smiths Wealth of Nations (Wohlstand der Nationen) an. Vielen Kapiteln stellt Neuwirth auch Zitate von Adam Smith voran. Gelegentlich zitiert Neuwirth, mehrfacher TEDx-Redner auch in Deutschland, zudem andere Geistesgrößen wie Nietzsche, Proudhon, Enzensberger, Aristoteles, Deleuze/Guattari oder Ken Saro-Wiwa plus einige Ökonomen und Soziologen.
Der Stil des etablierten Journalisten Neuwirth erinnert deutlich an Reportagen in der New York Times: Solid lesbar, aber nie funkelnd, häufig im Präteritum. Neuwirth streut ein paar reportageartige Elemente ein, etwa die Getränke seiner Gesprächspartner. Vor allem aber schildert er immer wieder schon zu detailliert das Verkehrschaos im nigerianischen Lagos und das überbordende Warenangebot auf den vielen Märkten weltweit. Regelmäßig nutzt er Wörter wie "current", "recent" oder sogar "this year" (S. 234) – unpassend in einem Buch, das über Jahre auf dem Markt ist.

[Don · Rating 3 out of 5]

Much of the tone as well as the argument used in Neuwirth's book resonate with those of Doug Saunders in Arrival City. It is quite simply that people must persist, even when the rules and regulations of the societies they live in seem to require their extinction. When those rules and regulations are intended to sustain a market in which all the necessities of existence are traded at the rate that supports the market, and when that rate is beyond the means of a sizeable proportion of people, then the first course of action will be to subvert the market.

Subvert the market, but not yet destroy it. The people who Neuwirth talks to are like Saunders's informants - close, penetrating watchers of the market,observing it in all its shades and shadows,looking for the bits where it can be made to work for them.

Saunders applied this notion to his examination of the physical space of the city, the rules that govern its 'normal', intended functioning, the costs of entry,and the ways these could be evades by people who couldn't afford the fee. He noted that, contrary to popular prejudiice, the fare of such personages was not always to remain in squalor at the bottom of the pile, but sometimes to move upwards. What were they doing when the did this? Where there conditions locked up in the fabric of cityscapes that sometimes worked with them in their endeavours, but other times blocked them off with apparently impassable barriers.

Neuwirth starts his account a few steps earlier by looking at the nature of the political economy that struggling, marginal people have to operate in. He sees it as being made up of a series of operating modes, with System D being one that froths around everything that is official like a haze of soap bubbles. The term is derived from the French Caribbean word for people who trade in informal markets, debrouillards. Once the economy of hucksters and street vendors was small, concerning only those established in niches and trading in goods that would have been close to luxury items for most ordinary people. But things have been happening in the global economy which have detached millions from older systems of subsistence - essentially growing and consuming their own food - and drawing them into places where more sophisticated commodities circulate, and being adroit in managing these systems has increasingly become the condition of survival.

According to the OECD, System D now supports the livelihoods of about one half of the world's workers - 1.8 billion people. These are jobs that are neither registered nor regulated, with the principal effect that any tax that might otherwise be due is avoided. It is easy to sport with the idea that System D represents the most though and consistent application of the free market, and Neuwirth pushes this by providing quotes from Adam Smith at the head of each of hs chapters. "...where a great deal [of wealth] is in circulation, some shares of it may fall to them" we are told, and one of the outcomes of System D is to substantially increase the rate of circulation. It has allowed high value added goods, like soap powder, automobiles, computers and phones to appear in marketplaces at prices which the even the poorest might dream they will someday afford.

But it is system made up of ambitious and enterprising who are required as the first thing they have to do to place themselves in spaces where System D can do its worki. Neuwith fiinds scores of these System D cities, from Lagos to London, Guangzhou, Lima, Gibraltar, Brooklyn and the Paraguayan border town of Ciudad del Este. He pours over the detail of how the entrepreurs of System D construct networks of suppliers, do deals to guarantee the flow of the goods, and direct this towards the places where the price is paid and the profit realised. It is all about movement and knowing how to hike up value at each stage of the way.

The typical story is that of the Nigerian trader who scraps together enough capital to support a trip to China where he can rummage amongst the unregistered IT traders, looking forthe best deal he can get on mobile handsets and SIM cards. Whatever he gets, and smuggles out the country, goes into the network of umbrella stands - a foldup table under the shade of an umbrella, where a female trader will supplement the income from her official wage with whatever she can get from the sale of this product.

The street trader network does not limit itself to surrupticiously obtained goods, but is even the means which multinational giants like Proctor and Gamble will use to get their house cleaning goods into the hands of purchasers who would not go into supermarket stores. The ubiquitous Gala Sausage Roll, a snack consumed widely in Nigeria and produced by one of the country's largest and oldest System A companies, is distributed exclusively across the country by street hawkers.

The description in this book of System D works is vivid and informative, but there is less consideration of why it has become necessary to global market systems, or if indeed it has. Circumventing taxation seems a poor excuse in itself if one assumes that, on the basis of this stream of income, states are able to establlish the infrastructure of regulation and governance which would allow the market to function well. It is the fact that this ostensibly noble end cannot be achieved, or is achieved less and less effectively as time goes on, that the need for System D arises. But Neuwirth has little to say on this, though the terms of his analysis are suggestive of an analysis. Regulation of markets becomes ever more difficult because the factors which have to be taken into account and the scope of the information processed grows ever larger as capital grows.

The true contradiction at the heart of the system is that it is success that is killing regulated capitalism, not failure, and as it continues to be more successful in penetrating regions and drawing more people into its maw so will regulation seem less and less plausible.

Until recent times the capacity of the economic system to produce welfare gains for the population has been predicated on regulation and the extraction of taxes from profits and incomes which would support investment in housing, health, education, etc. But if System A can no longer support the welfare of populations willo System D be able to do any better.

Neuwirth thinks it might if its protagonists can be nudged in the direction of a Proudhonist programme of association of traders aimed at providing security and cooperation. His final chapters give examples of where he thinks that is already happening. The challenge seems to be rolling it up into an explicitly political programme which aims for the displacement of the authority of the standard model of capital accumulation and its replacement with a proto-anarchist variant.

In times when we all seem to be starting again from the very beginning Neuwirth has provided some insights as to way cooperation and solidarity might arise as people are required to adjust their lives to the challenges of living in increasingly market societies. Perhaps it is time to take on board some of the principles of anarcho-mercantilism to see what leverage it might make available to subaltern people who need to fight daily to secure their existence. But markets are a long way from being reliable friends of the poor, even if they do bring into existence pound shops as well as Fortnum and Mason. They are more likely to be the nursery of exploitation than the support for collectivist social justice.

But that said the book goes a long way to explaining why the poor but hopeful are doing their best to jump on planes and trade across borders, and why the understanding of the advantages that come from understanding the potentiality of space and place are crucial to this. So, mark this one down as a stimulating read that poses lots of interesting questions.

[Srikanth · Rating 3 out of 5]

The informal economy, black money etc etc. The names while sounding exotic are nothing but livelihood of people who are trying their level best to survive. The book talks about various ways and means that people around the globe have worked on to make a living. I mean honest living minus lot of government red tape. The author has traveled the world to all the right places starting from Brazil, Africa & China. Really interesting stuff going around which goes around in spite of corruption, lack of governance. From an Indian context, at-least 60% of our country runs in the informal or System D (the name that i given to this informal sector in some places) An honest hawker does a world of good than a formal corrupt bureaucrat. The book has beautiful context from an Indian perspective, post demonetization, GST and various other globalization led issues. The book is more of observations and stories of people and places on ground rather than anything else. There are no answers but lot of stories.

[Erik Surewaard · Rating 4 out of 5]

I was always under the impression that the informal economy (think of unregistered companies; not paying taxes) was bad for the economy. Well... this book changed my opinion. Not for all cases though... For developing countries this informal economy clearly makes sense.

This book is a combination of different stories that the author experienced. The stories are most likely collected by the authors visits. The stories cover mainly South-America and Africa.

I think the book could be presented in a more structured way. The ‘scientific message’ was too packaged in the stories / experiences that are told. I however was able to gain some valuable economic insights that I decide this book is a four star experience.

[Tin Wee · Rating 3 out of 5]

The book explore the informal economy in both the developed and developing world, and highlights it's rise due to the formal economy's inability to provide for societal needs. The book urges governments to recognize it and work with it instead of trying to stamp it out. I think it's a tall order- on one hand there is an inherent distrust of the `black/grey` market due to the criminal elements who operate in that space, on the other, society's penchant for rules which somehow inadvertently exclude certain people. The book looks at certain examples where efforts have succeeded or failed, but all tie in to a particular social/political/economic context that it's hard to imagine successfully replicating a model elsewhere. Still, an interesting read to understand human nature.

[Tunde · Rating 3 out of 5]

Worth a read. Insightful. And an important area of economic activity. Great stories and descriptions of the so called informal market, its necessity and value. Analysis of how to transform or scale it is limited. Bibliography but limited.

[Sam Mouat · Rating 3 out of 5]

Interesting concept though was a bit dry at times. The first hand accounts from Rob’s travels are fun, and the informal economy aspect is something people don’t tend to think about too much (as data and official reporting doesn’t exist).

[Nina Chachu · Rating 4 out of 5]

Interesting read, with a focus on Lagos, China and part of the Paraguay/Brazil border. Definitely worth reading if one is interested in entrepreneurship in Africa.

[Melissaj · Rating 4 out of 5]

A great read about the global economy for non-economists, pirates, hustlers and entrepreneurs

[Matthew Gibb · Rating 3 out of 5]

This crazy white guy spent lots of time in Nigeria and other countries such as,Brazil,Paraguay,China,India and Angola studying what he calls System D. An underground economy,which amounts to half the world's economy. There are plenty astute observations about what people are smuggling,recycling or simply selling without the government on board as a third party taking a cut of the profit via taxes as happens when we are part of the formal economy. My problem with this book is it would logically be organized by country and then it would talk about the specific ways each one has figured out to take advantage of being in the informal economy. Instead the book starts out talking about Nigeria. Diverges into Brazil and meanders all over the world like one endless rant. Even the ending doesnt sum things up. I suppose that could be the point. The informal economy isnt well organized and neither is this crazy romp of a book,but it's still interesting to see how industrious people still meed to eat when the formal economy lets them down they still find a way to make ends meet.

[Matt · Rating 4 out of 5]

Written in much more of a literary travelogue style than I'd expected, although this isn't a criticism. Neuwirth does a great job of exploring the various incarnations of "System D", the underground grey and black markets of the global economy that defy, avoid, or even replace formal government. Contrary to our expectations, the shadow economy produces an enormous output, second only to the GDP of the United States. Neuwirth takes us to China, Nigeria, and Paraguay, introducing us to street merchants and informal market associations that do what governments can't or won't: providing a higher standard of living and all-important employment.

Neuwirth is making a case for the free market, as evidenced by the play on Adam Smith's Wealth of Nations, and indeed a quote from Smith's seminal economic work introduces each chapter. However Neuwirth doesn't evangelize and his case never crosses into the heavy-handed. He does make a strong case for engagement with the underground, a kind of quasi-legitimacy that allows formal institutions to operate alongside the informal markets and trade associations, rather than treating them as useless criminals.

This isn't the capitalism of the brand we've come to expect in the West, dominated by large firms operating in close cahoots with civilian government, but rather the original entrepreneurism: the informal can-do make-it-happen spirit that should, ideally, define free market enterprise. Neuwirth is sympathetic to their cause and advocates for measures to negate some of the undesirable aspects of System D, while recognizing and promoting the obvious benefits of informality.

All in all, an interesting read both for its look at the inner workings of the underground and an alternative to the way most of us are used to doing things.

[Ethan · Rating 3 out of 5]

Stealth of Nations is an anecdotally driven exploration of an important and often overlooked slice of the global economic pie. Neuwirth uses mostly journalistic techniques to make the easily convincing case that the staggering amounts of informal markets, street hawkers, unregistered merchants, and other extra-legal small business people thriving all over the developing world make up a significant (and invisible) portion of many country's total GDP. He then does a competent job of diving into the economic controversy surrounding the questions of whether this is a good thing or a bad thing, whether economists and policy-makers think about these informal markets in a fair minded way, and whether the people operating in this informal environment are part of a vital stepping stone, or mired in an exploitative trap. Needless to say, despite the vital role this informal business world plays in employment generation and economic survival for many regions, there is massive disagreement about its merits, dangers, and opportunities.

It's a fascinating topic. I give the book only three stars for the following reasons: the depth of sophisticated academic research was light; his engagement with world class economists and/or development economists that could have provided more context was insufficient; and his writing style in general was rather pedestrian. I can't question Neuwirth's work ethic or dedication: he went all over the world and dug deep into some incredibly uncomfortable places to get amazing interviews and tell amazing stories. But I was desperately hoping for more scholarly support for his primary theses, and I didn't get it. He convinced me that his argument is interesting and important, but I can't tell the scale of its importance because I'm not willing to just take his word for it.

[Jeff · Rating 4 out of 5]

I tend to shy away from books like this, mostly because they tend to be more about expanding magazine-level journalism into a book-length treatise when it isn't necessary. The good thing is that Stealth of Nations would definitely make a good magazine treatment while being interesting and detailed enough for a book.

The book is more or less a quick and easy read about the underground economy - the selling of pirated materials in China, unlicensed food vendors in San Francisco, the sale of water itself in Nigeria. All sorts of different ways the "stealth economy" works on a regular basis for millions of people worldwide exchanging trillions of dollars yearly.

While a lot of my enjoyment of this book was centered around my favorable political biases toward those sticking it to governments and licensing boards, it's more fascinating to me about all the different ways we see this type of economy pop up, both in developed and underdeveloped nations. How so much of what we take for granted - selling a book online, for example - is part of this economy even if we dislike the concept personally.

Definitely an interesting read if this is up your alley. It's generally nonpolitical, so there's no concern there on a whole, and it's chock-full of a lot of fun and different information.

[John Wolter · Rating 4 out of 5]

Stealth of Nations: The Global Rise of the Informal Economy is a discussion of the "informal economy", also known as "System D". These are the businesses that operate partially or completely outside of the formal economic system, i.e. without licenses, without paying taxes, bypassing customs duties, outside of the rules. The author does a good job of examining a variety of these businesses from a variety of perspectives. For example, is a business that operates without a required license a criminal enterprise that should be shut down, or an opportunity for a bold entrepreneur to be able to keep a small business going and employ a few poor people who would otherwise be jobless?

The author is an economist, who occasionally strays into the details of his field, but generally does a good job of writing to a more general audience. Overall, I found this to be a very interesting read.

[Stephen Yoder · Rating 4 out of 5]

I'm glad I bought this book. For me it has expanded upon the writings by Sudhir Venkatesh where he examines a number of working class neighborhoods in Chicago and how economic exchange happens outside of taxable transactions. Neuwirth's focus is much more global, clearly. He's showing how "System D" adds tremendous value to nations as well as many entrepreneurs (and all sorts of levels in between), which is a concept rather foreign to many in the elite and government policymakers. I don't see many governments turning over a new leaf to give amnesty to System D individuals and businesses, but Neuwirth's concluding point, that right now countless deals are being made all over the globe and that these exchanges are making the world a smidgen better, is inescapably true. I'll be thinking about this book for a while, plus i'll view informal economic behavior a shade differently.

[Scott Schneider · Rating 3 out of 5]

Stealth of Nations is about the "underground" economy and how important it is to world trade. The book focuses mostly on Nigeria and Argentina. It makes a strong case that these workers, selling smuggled goods, pirated DVDs, etc. play a very significant role in global trade. While governments would like to regulate them and tax them, it is best for governments to develop relationships with them and give them a break to allow them to thrive. I wish this book had spent more time talking about the role of these workers in the US, i.e. the 2 million self employed construction workers, etc. It was interesting though. I would recommend it as a good eye opening read, but just don't get your expectations too high.

[Carol · Rating 4 out of 5]

An amazing look at how half of the world earns money. Neuwirth introduces us to entrepreneurs in South America, Africa and Asia who are making a living (sometimes barely) in what he calls "System D," or the unofficial, underground and often illegal economy. You don't have to visit a large flea market or be accosted by purse vendors in Rome to come in contact with System D. Neuwirth counters many of the arguments against the system with a few steady points: governments not only can't stop the system but actually benefit from it, it works for many people, and the official economic system often does no better than System D at protecting workers' health or rights.

[Katherine Collins · Rating 4 out of 5]

To me, these books are a trilogy of tales for our new, webbed-together world: Slaughter discusses the political and philosophical implications of a system that is no longer structured by nation-states. Gilman explores the awful underside of globalization, where more efficient flow of trade combined with uneven social, economic, and legal conditions have led to an exploitable “moral arbitrage”. Neuwirth examines the gigantic informal economy (NOT the same as Gilman’s – we’re talking street vendors, care providers, agricultural workers…) – $10 trillion worldwide! – that is the basis of economic activity in so many communities, yet still uncounted by most analysis.

[Richard Knight · Rating 4 out of 5]

The author challenges you to consider the existence and the importance of System D (the informal economy). The real life examples provide excellent insights into how these local economies function and participate within the global economy. I recommend this to anyone with a curiosity about how the world functions outside of the tradtional Western business model, and to those with the foresight to consider System D as a potential untapped distribution channel.

[John Doe · Rating 5 out of 5]

I am giving this book 5 stars for its very interesting and sympathetic treatment of a subject (thankfully) ignored by all the mainstream economists. Its well written and enjoyable as well as genuinely covering new ground. From an analysis viewpoint I may proceed differently on some chapters (as an experienced analyst) but nothing takes away from the entirely sympathetic and original thoughts in this work. Well done Neuwirth and you will enjoy it if you study cities, countries and economics.

[Michael · Rating 4 out of 5]

Finally finished this one, professor. I should've actually read it for the class. Would have been worth it. It's a fascinating look at the scale of the informal economy worldwide that leads with journalistic/literary profiles of individuals within their respective markets. The writer's breadth of knowledge and experience is staggering too. You imagine someone has either the time to read/study or the time to travel. Lucky boy managed both.

[mayhugh]

When we think of the informal economy, we tend to think of crime: prostitution, gun running, drug trafficking. Stealth of Nations opens up this underground realm, showing how the worldwide informal economy deals mostly in legal products and is, in fact, a ten-trillion-dollar industry, making it the second-largest economy in the world, after that of the United States.

[Luis Sossa · Rating 3 out of 5]

Stealth of Nations is a window into the realm of entrepreneurs in the developing world. Some reviewers say this book isn't about economics, and although it may be so, it did remind me of how resilient men and women can be to overcome financial hardship and make an honest living. Success is not only about seizing opportunities available, but creating them, and that is the moral of this story.

[Cordelia · Rating 4 out of 5]

This is an interesting look at some economic activity in the developing world and even the US. For all of you that love to watch the hive of activity on the busy streets of a developing world city, this will be familiar and add some perspective.