The rise of the underground economy (and why it can, and should matter)

Stepping into the real world of the underground economy is, obviously, a revolutionary act.

And yet, most people don’t recognize this.

Most people only enter the underground economy as a last resort, kicking and screaming, or slinking in shame, out of necessity. They “lose their job,” and “can’t find another one,” and so feel forced to “try to make do” until the time when they can “get a real job” and “re-enter the work force,” play a pre-defined “role,” “get a regular pay check.” Apparently, they feel lost without their “self-image,” that mask they wear whenever they respond to a stranger’s question “what do you do?”

Men are more susceptible to this kind of anxiety, even terror. Why? Because, until recently, men have been more conditioned than women to think that everything they do must be for money. Women know better. Caring for children, home, and garden, cooking for the family, tending relationships of all kinds — these daily interactions with one’s most intimate environment have traditionally been part of the underground economy, and unfortunately, once money became a measure of one’s “real” worth, this caring, nourishing core of ourselves was viewed as lacking in value! Then the feminist movement came along; women wanted to have real value in their lives; so they went to work! Oops! Now women are subject to the same kind of conditioning by dehumanizing “market forces” as men are.

All my life, when people ask me, “What do you do?” I answer, “What level do you want to talk on?” That usually sends them scuttling. Just as well; I’m not good at “suffering fools,” meaning those who have not recognized their own essence underneath the masks they wear, the roles they play to “get along” in industrial society.

Those few who do remain to talk, are of course, folks I want to know. They recognize “where I’m coming from,” because they come from there, too. Or they have glimmers of recognition, and want to know more.

So, to those who worry about having to enter the underground economy, of having to become invisible to the outer world of those who still try to keep up appearances, I ask why? Why would you ever want to return to the dehumanizing, polluting, bloated, unsustainable behemoth that was erected with the advent of the industrial age?

You who have managed to reluctantly weave your way into the underground economy: is your “standard of living” lower now? If so, so what? Since when did “matter” — as in material things — matter so much? Let’s go back to what really matters, and remember that the word “matter” comes from “mater” — mother. This Mother Earth, she matters. Her soil and water and air and living plants and critters are what nourish us and what we can work with in harmony to create a world under the radar of the old one that is fast imploding all around us.

BTW: notice that my attitude differs markedly from that of the author of this piece.

The “underground” is always with us. For better and often for worse, it’s how marginalized populations tend to survive—often not very well.

May 18, 2012 |

by Laura Flanders

The following article first appeared on the Web site of The Nation. For more great content from The Nation, sign up for its e-mail newsletters here.

“Where have all the workers gone?” David Wessel of the Wall Street Journal wondered about the labor force this week:

In the past two years, the number of people in the U.S. who are older than 16 (and not in the military or prison) has grown by 5.4 million. The number of people working or looking for work hasn’t grown at all.

So, where have all the workers gone? Have they retired, suspended their labors temporarily or are they languishing on public assistance? asks Wessel.

There are some other possibilities. Since the crash of 2008, there’s no question that millions of Americans have indeed stopped looking for a job. But that doesn’t necessarily mean they’re not working. Look around, it’s much more likely that the officially “unemployed” are busy, doing their best to make ends meet in whatever ways they can. Sex work, drugs and crime spring to mind, but the underground or “shadow” economy includes all sorts of off-the-books toil. From baby-sitting, bartering, mending, kitchen-garden farming and selling goods in a yard sale, all sorts of people—from the tamale seller on your corner, to the dancer who teaches yoga—are all contributing to the underground economy along with the “employed” who pay them for their wares.

The “underground” is always with us. For better and often for worse, it’s how marginalized populations tend to survive—often not very well. (Think of the old, the young, the formerly incarcerated or foreign.) In recessions—surprise, surprise—“irregular” employment grows. Consider recent stories from Greece about wageless public “workers” swapping skills and trading food for teaching. Austrian economist Friedrich Schneider, an expert in underground economies, has documented a surge in shadow economy activity in 2009 and 2010 in Europe. University of Wisconsin–Madison economist Edgar Feige has been doing his best to follow what’s happened here.

Tracking the gap between reported and unreported income in the United States since 1940, Feige finds:

Measuring unreported data is not easy, but from Feige’s graph one thing is clear: there’s as much unreported income swirling around the United States today as there was in WWII under rationing, and that number’s not going down with any speed.

Unreported income matters to the IRS because those “unreported” dollars are lost revenue for the taxman. (In 2001, the Internal Revenue Service estimates it was losing $345 billion in tax revenue. In 2009, according to Feige, that estimate could be approaching $600 billion.)

A shrinking workforce matters to policy makers too, as Wessel explains:

“Figuring out how many of those now on the job-market sidelines are likely to come back onto the field matters to gauging the current state of the economy, to fashioning the right remedy for the sluggish recovery and to evaluating prospects for economic growth, which hinge, in part, on an expanding labor force.”

Getting a more accurate picture of our economy matters for another reason too. For one thing, ever since Adam Smith, we (at least we in the West) have been taught there is one set of rules, and one viable economy: the “end of history” economy of jobs and wages, profits and losses, and round the world trading on the stock market. The reality is, as farmer/science writer Sharon Astyk put it recently, what “the economy” is is not the only economy.

“Let us remind ourselves that the informal economy is, in fact, the larger part of the world’s total economy. When you add in the domestic and household economy of the world’s households, the subsistence economy, the barter economy, the volunteer economy, the ‘under the table’ economy, the criminal economy and a few other smaller players, you get something that adds up to 3/4 of the world’s total economic activity. The formal economy—the territory of professional and paid work, of tax statements and GDP—is only 1/4 of the world’s total economic activity.”

Looking ahead at our employment and energy future, it’s not at all clear what the economy will look like in years to come. With fewer dirty Satanic mills to labor in, regular Joe and Jane workers are going to have find income that doesn’t depend on them transmuting into celebrities or high-rolling mobsters of high finance. What are they going to do? For those who believe that stocks and bonds and 9–5 jobs are the only economy there is, the picture is dire.

For others, there’s a world of possibility ahead. Gar Alperovitz and his colleagues at the Democracy Collaborative are about to launch a series on the upsurge of thinking that’s currently happening about different ways in which people might support themselves and restructure the political and economy. They point to the exploding interest in “new economy” conferences and the array of real-world experiments, from solar-powered businesses to worker-owned cooperatives and state-owned banks.

“History dramatizes the implacable power of the existing institutions—until, somehow, that power gives way to the force of social movements. Most of those in the ‘New Economy’ movement understand the challenge as both immediate and long term: how to put an end to the most egregious social and economically destructive practices in the near term; how to lay foundations for a possible transformation in the longer term,” writes Alperovitz in the first of five articles.

Could it be that the old economy is losing its grip, not only on our lives, but also on our ideas? There is much—much—more to come.

Former Air America Radio host, Laura Flanders is the host and founder of GRITtv with Laura Flanders, a daily talk show for people who want to do more than talk. She is the author of the New York Times bestseller BUSHWOMEN: Tales of a Cynical Species (Verso, 2004) and Blue GRIT: True Democrats Take Back Politics from the Politicians (Penguin Press, 2007). A regular contributor on MSNBC, Flanders has appeared on shows from Real Time with Bill Maher to The O’Reilly Factor. Flanders is the editor of At the Tea Party: The Wing Nuts, Whack Jobs and Whitey-whiteness of the New Republican Right… and Why we Should Take it Seriously (October 2010, OR books). For more information, go to or
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0 Responses to The rise of the underground economy (and why it can, and should matter)

  1. Mr.B says:

    You lost me with the statement regarding suffering of fools, in substance. I do not suffer fools lightly. Women tend to be air-headed and tolerate lofty nonsense minus true communication, as communication, is a male trait, rather than foolishness, which is the point, and never, a mask. Why would you stoop down to a fool’s idiocy, and why entertain to fool in their folly? Perhaps it sound good when written however, it is a very poor choice of not only words but conduct, be it in an industrial world, agricultural world, or primal world. The inclusion of the suffering of fools, cants the entire subject matter and diminishes what otherwise is a nice piece of work.

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