System D is for Free

It’s all happening, Fellow Reckoner. Gold, stocks, oil…all have rallied to important highs. That’s what the papers say anyway, so it must be true.

Gold has “reclaimed the rally,” reported one outfit. The Midas Metal was trading for around $1,634 an ounce last we checked, up $24 in as many hours. The S&P 500 is likewise north of where it began the session. The index rose 1% to a 5-month high on what Wall Street determined were solid earnings. We didn’t bother looking at the actual reports. Stocks go up because more people buy them than sell them.

Those people may be right, or they may be wrong. The future will reveal this information in its own sweet time, of course…but news reports are necessarily wedded to the past and, as such, don’t tell us anything about the future. We’ll have to wait and see how things shake out. Today, they’re up.

Oil near $103 per barrel is important too. We would expect escalating tensions between the U.S. and Iran to express themselves in similarly escalating prices. But it isn’t only geopolitical fissures driving the price of the world’s preferred energy. Basic supply and demand fundamentals led Steve Belmont, Senior Market Strategist for the RMB Group, to declare that, “Crude oil may not only be the best commodity play for 2012, it could prove to be the best commodity play of the next three to four years.” Mr Belmont offered some pretty compelling reasons for his call in yesterday’s issue of your Markets and Money which you can read in his article on Crude Oil The Best Bet for 2012.

So there you have it. Everything up…up…and away! That’s what’s going on in the known world. It’s right there in the papers. But what about the unknown world…perhaps better described as the under-known world?

Actually, it’s not really so mysterious. Not for half of the world’s working population who today find themselves in its employ, anyway. We’re referring to that delicious bastion of creativity and unbridled innovation sometimes known as “System D.” Robert Neuwirth, author of the book Stealth of Nations: The Global Rise of the Informal Economy, coined the term to describe the world’s collection of off-book street markets. It’s a kind of “global street market,” or, if you prefer, one of the only truly free markets left on the planet.

“System D is a slang phrase pirated from French-speaking Africa and the Caribbean,” explained Mr. Neuwirth in an article for Foreign Policy magazine. “The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of ‘l’economie de la débrouillardise.’

Mr. Neuwirth, who wisely abbreviated the phrase to “System D,” estimates the size of the off-book global economy to be roughly $10 trillion annually, although he stresses that this calculation is “very rough and almost certainly on the low side.”

It is important to note here that Mr. Neuwirth does not include activities such as gun running, drug or human trafficking or “things like that” in this calculation. Basically, System D refers to the “ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy.”

All in, this admittedly conservative estimate figures the total System D economy at about two-thirds the size of the world’s largest economy, the U.S., with an output roughly 40% higher than that of China. Now accounting for roughly half of all jobs in the world, System D’s share of the global workforce is expected to increase to two in every three jobs by 2020. It’s growing. Fast.

Is this really surprising, Fellow Reckoner? The various nation states of the world, in the final throes of a deadly debt spiral and facing imminent paper currency crises as a result, are erecting all manner of regulatory hurdles in order to protect certain, mollycoddled industries from the evolutionary forces of market capitalism. This, we wager, will not end well for them.

In all likelihood, the U.S., Europe and Japan will never make good on their debt obligations. These three economies count for roughly half the world’s “official” GDP (spurious measure that it is). The U.S., we mentioned, just past the 100% debt-to-GDP threshold. Peripheral states lining Europe are there already. Japan’s debt-to-GDP levels sit at more than double that of the U.S. Good luck with that.

The decay of the nation state has been a while in the making, like a slow, gangrenous rot attacking the vital organs of a once productive economic model. Fellow Reckoners are well-versed in our “march of the zombies” theme. Bill Bonner writes frequently in these pages about their relentless infestation…in health care, insurance, education, financial services and, the mother of all zombies, the murderous military industrial complex.

Thankfully, these are pillars of a dying economic model. They are the life-sucking parasites, the favoured class and the politically connected, yes. But they have cause to be fearful, too. They are part of a dying experiment. We doubt the malevolved cupcake Nazis in the TSA security line know it…but we have a hunch the higher ups are starting to get a little nervous. Surely they can smell the blood on the guillotine by now, just as their ancestors once did. Their days of looting with impunity are coming to a close.

The growth of System D is something entirely consistent with a global trend this editor expects to accelerate in the coming years that of increased geopolitical and economic decentralisation prompted by a continued weakening of the overly-indebted, outmoded nation state model. In other words, as the edifice of the nation state continues to crumble under massive debt loads and the political impotence to do anything meaningful about it, more and more people will look to the unregulated System D markets of the world for both employment and, increasingly, investment opportunities.

We’re interested in stories of freedom, Fellow Reckoner, and System D is full of them. Untaxed, unregulated, unlicensed individuals trading freely with one and other and with little or no regard for those that would tell them, “No!” Stay tuned for more…

Joel Bowman is the Managing Editor of Markets and Money USA

Publisher’s Note: This article first appeared in Markets and Money USA (

Joel Bowman
Joel Bowman is managing editor of Markets and Money. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.

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11 Comments on "System D is for Free"

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Interesting article. I can relate to it. A furniture storage business on a wholly owned property I developed, funded and marketed was severely hindered by a particular compliance officer from the local council who wanted a bribe in the end, no kidding! The local council was upset I dobbed in an employee from the same council for dumping waste down a minshaft on an adjacent property.
Even the Victorian Ombudsman was ignorant of laws regarding dumping of waste! They tried to whitewash the local councils attitude to the dumping of waste, saying the waste was still ‘their property’ (sic).
No kidding!


Be quiet o vocal one!
The regulators are already trying to close down some of these .. didn’t I only read a few days ago of some poor sole setting himself alight after being harassed by the authorities for illegal operation of a business.

Regulation and fees / taxes. It’s what keeps the insiders happy!

John Smith

Can you enforce a contract in System D? You need the courts, so you would be back in the hands of the government. Take matters into your own hands and you might be charged with a crime (assault etc). So, if you come into contact with unscrupulous traders in System D you are still screwed. I was a steel fabricator and had a builder bluntly refuse to pay for additional work I completed for him at his request. He stated to me: “There’s a lesson for you. Next time make sure you get a variation (order) in writing”.


Methinks Max Keyser of would love this as it would be used as a way forward to starve the banksters and other zombie parasites… I live in hope…

Sorry this post got a bit big. I have mentioned this many times. Governments have to raise money by imposing taxes in order to pay for the things that make a community of people living together a society. This (however) does not excuse some of the waste and unnecessary projects they venture into, but when we understand that politicians who have to appeal for the right to hold their post make some of these silly decisions, perhaps we can appreciate how democracy can bankrupt economic principles. My over the top pragmatic view is to simply do away with all taxes… Read more »

No rich folk affording all the luxuries they desire without paying a proportionate contribution to maintaining the order that keeps them well served and safe.

John Smith

I think you mean “the order that keeps them well served and safe and sage”. Hasnt the ‘insiders’ theme been that the order gives them knowledge which is power we outsiders dont have?

I agree with Joe. Mostly. Great start! Our western countries were developed on the basis of not wanting beggers on the streets. Principals of both individual freedom and a helping hand if really needed. So a simple universal weekly payment to all passport holders. Yep. Up GST a bit more to cover this and then you have a bottom end safety net that is s o easy to administer. If you are a one man start up this payment helps keep you going till you are a money winner. If you are begger then this will be a huge help… Read more »
Joe, I like your ideas….hope some politician reads this and goes and checks out spending figures in Australia and what this idea could potentially bring in for the country. There may be even more spin offs from this system such as Andrew mentioned, some of the zombies in our current sytem would have to find different jobs but maybe we could even job share with them if we didnt have to work so many hours to cover high taxes ( a little Japanese comradary attitude could help us do that if we wanted to…the Japanese people apparently took their own… Read more »
Joe, your idea has many merits… but it might foster another Black Market economy, for those who can supply goods and services to buyers, bypassing GST. And what do you do about fellas like me*, who are completely content with what we _already_ have… spend little… grow most of our own food… service half-a-dozen elderly vehicles ourselves… and barter with friends? (And meanwhile, most online sales bypass GST anyway…) I’m not against what you propose (such a system would serve us well!) but any new policy/process is vulnerable to financial ‘mechanics’… * OK, you’ll catch us on airfares, but not… Read more »
“If government services were valuable and the market wanted them, they wouldn’t be provided on a compulsory basis.” ~Marc Stevens Government has no voluntary support. Taxes are compulsory. Pay the tax or be put in a cage/jail. It’s like the mafia; pay the protection money or “Guido” will bust your legs and/or bust up your shop. A word to government workers: For gawds sake, put down the gun. You — politicians, bureaucrats, government thugs — lost the debate of ideas. Get over it. If you disagree with someone or something, inform and educate or walk away. Pulling a gun and… Read more »
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