Sunday, November 29, 2015

The intricate economics of terrorism

The world has suddenly changed. Our fragile societies realize that ordinary people  have to cope with the fear of terrorist attacks. In Paris, Brussels and other parts of the planet, we are at the mercy of an invisible enemy. But to combat this new global phenomenon, we have to look at the complex economics  behind terrorist networks. 

A few years ago, an Italian economist, Loretta Napoleoni developed the idea of 'rogue economics'  where she tries to explain the connexions between crime and unregulated finance. This new reality of capitalism has been expanding over years on a global scale ranging from drugs and weapons, sex slavery and other forms of human trafficking.

Terrorism is just one aspect of it : it does not just imply an efficient organization but needs substantial financing. For instance, Daesh finances its activity thanks the traffic of oil it controls in a vast territory bigger than Great Britain. 

The big change came with the excesses of globalization and big finance ; deregulation has also facilitated these uncontrolled flows in the form of money laundering. According to Napoleoni, the scale of the rogue economics is about 1,5 trillion dollars, so much bigger than (again) United Kingdom's output. The economic significance is that this money is detracted from productive investment to support growth and jobs. This happens because the States have lost control of their economies. 

The crisis will not end  if unregulated finance and growing criminal markets are not brought under control of the States or any supranational power.

1 comment:

  1. Terrorism is undermining the economy of weak States in Africa @