Stealth of Nations: The Global Rise of the Informal Economy

Neuwirth (Shadow Cities) explores the global significance of the “informal economy,” those small transactions of incremental profits eked out in city dumps, outdoor markets, and unlicensed bazaars that employ roughly half of the global work force. The author takes his cue (and title) from Adam Smith and links such activity to a fuller conception of economic development, offering the alternative term “System D” (borrowed from an Afro-Caribbean slang term for the unofficial economy). As Neuwirth’s roving narrative shows—in case study chapters on Lagos, Nigeria (where System D has provided potable drinking water and public transit); São Paulo, Brazil; San Francisco, California; and Guangzhou, China—this “unregulated economic activity” is indeed a system, relying on individual and group organization, social solidarity, and surprisingly universal sets of unwritten rules. It also captures much more than the microprofits of the roadside sale: in the U.S., for instance, (where System D is on the rise amid a larger economic downturn), there are the unlicensed mobile kitchens of San Francisco’s Mission District that can mature into full-blown companies feeding chains like Whole Foods. In many cases, System D and the formal economy are directly intertwined, and Neuwirth makes a striking case for both the influence of System D and the need to engage it as a partner in economic development. (Oct.)