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System D and "The Stealth of Nations"
January 15, 2012 - 8:29pm

Stealth of Nations: The Global Rise of the Informal Economy by Robert Neuwirth

"System D" is Neuwirth's term to describe what others have called the "informal economy", "the gray market", or the "underground economy." Any good or service that is bought or traded outside of formal taxation, licensure, certification or regulation.  Neuwirth's concern is not the economics of organized crime, drug smuggling and distribution, prostitution or weapons - but rather economic activity that is out-in-the-open, non-criminal in nature, but seldom counted in economic statistics.  

Neuwirth tells the story of the rise of System D through both the characters he meets in the informal economy (from Africa to China to South America to the U.S.) and through the data and theories available to explain this economic sector. The informal sector may account for as much as $10 trillion dollars of the world economy, and because it is concentrated in the high population emerging countries, may employ as much as half of the the world's workforce. The informal economy is both a magnet for the enormous worldwide urbanization now underway, and a counterweight to the concentration of wealth that accompanies market based economies.   

Neuwirth has great admiration for system D workers who rely their creativity and hard-work to create a living for themselves, in the process providing goods and services that would normally be out of reach to most of the poor and working citizens. Stealth of Nations is a terrific book to read if you are curious about how the world economy actually works (as opposed to how we are told it works), and if you wonder how the world's billions actually go about the task of making a living.   

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