Editor’s Note: Today’s post comes from contributing editor Dr. Stefano Tijerina, a lecturer in management and the Chris Kobrack Research Fellow in Canadian Business History at the University’s of Maine’s Business School.
As I explained in my first post about Pablo Cáceres Corrales’s research and writing: “narcotrafficking is an essential part of the deregulated dynamics that allows the global market system to navigate the thin line between formality and informality” . In his book, Las Formas Cambiantes de la Criminalidad (The Changing Forms of Criminality), Dr. Cáceres explains how multinational corporations, local and federal governments, and numerous public and private stakeholders have capitalized on the informal market to strengthen or increase their own capabilities. Globalization under neoliberal principles facilitates interdependent relationships between the formal and informal sectors. Contraband, money laundering, state corruption, and the use of shell companies are integral parts of current international business strategies.
Dr. Cáceres argues that criminality changes with time and space; it adapts to the changing social, political, cultural, economic, and technological dynamics of local and international markets . Today, criminal organizations work side-by-side with legitimate business organizations; they feed off of each other, and—incrementally—depend more and more on each other. This type of symbiotic relationship that allows formal and informal sectors to work together is often today’s current spatial and temporal landscape. Governments, through their push for neoliberal adjustments, facilitate and enhance these symbiotic relationships.
Capitalism, says Dr. Cáceres, has historically and continues today to operate in both the formal and informal markets . He cites examples like the vibrant and underground markets in human trafficking, body organ trafficking, hair trafficking, child trafficking, animal trafficking, arms trafficking, drug trafficking, and the sale of innumerable types of contraband. The lucrative world of illicit activities has catapulted into the international market fictitious shell companies that facilitate the dynamics of this overwhelming counterfeit world.
Under these dynamics of globalization, state corruption and complacency serve as the linchpin between the formal and informal worlds. The state, on behalf of private interests, has constructed a murky world of laws, regulations, norms, and policies that facilitate the symbiotic flow between the formal and informal markets. It’s even more discouraging that, often, when government actors focus on the goodwill of “the people,” they find themselves in a vulnerable position—catching up to the everchanging forms of criminality while at the same time swimming against the current of atmosphere of deregulation.
Ultimately, the reality of this Liberal International Order (LIO) shapes the current economic, political, social, and environmental relations of most nations in the international system. In the name of free trade and international capital mobility, governments have deregulated domestic and international norms, policies, and procedures designed to separate the informal and formal markets and intended to stop legitimate and underground economies from building interdependent relationships.
Dr. Cáceres highlights several examples of this process in the context of Colombia and the global market system. Cocaine manufacturing, for example, requires chemicals like kerosene, sulfuric acid, potassium permagnatate, acetate, and methyl ethyl ketone—which are also used in the formal market for industrial and commercial purposes.
These chemicals, originating in industrialized nations, are exported to countries like Colombia to satisfy the demands of both the formal and informal markets. American, Chinese, and European multinational companies that ship chemicals into the Colombian market are therefore directly and indirectly connected to cocaine manufacturing and trafficking . Yet, customs and Interpol authorities seldom investigate the practices of international chemical companies. This is, in essence, the nature of the symbiotic relationship between legitimate and underground markets.
Real estate, entertainment, and the hotel and hospitality industries—controlled in many instances by international firms—also walk the fine line between the formal and informal markets. These sectors of the global economy frequently stay afloat by accepting dirty money and then laundering it back into the formal economy . Banking, insurance, and investment firms, too, navigate domestic and international markets and straddle the line between formal and informal markets—even more so, after the financial deregulation of the 1990s spawned economic trade blocs that facilitate the movement of money across national borders.
Governments, themselves, have also taken advantage of this murky line between formality and informality to advance national security policies. The Colombian state, for example, has utilized paramilitary forces to control and oppress all ideological opposition to free trade, open markets, and other structures of the neoliberal order. Dirty money, in this case, bankrolls extra-legal violence funded by the illicit economy.
Throughout the latter half of the twentieth century, certain sectors of the United States government used money from underground activities such as narcotrafficking to fund covert Cold War operations from Vietnam to Central America. The Iran-Contra scandal of the late 1980s, for instance, brought together arms dealers, narcotraffickers, US government officials, and representatives of the American private sector; it was a clear example of the symbiosis between illicit money and official government policy.
States have used criminal organizations to achieve both internal and external goals , and some multinational corporations have followed suit. American conglomerate Philip Morris’s international business strategy to penetrate and compete in Latin American tobacco markets is a case in point. Dr. Cáceres highlights in Las Formas Cambiantes de la Criminalidad that, backed by the deregulation of trade and fiscal policies and lax supervision by the US government, Philip Morris used contraband routes in the Caribbean to place Marlboro cigarettes in countries like Colombia at below-market prices .
The American company used the same routes and the same networks of regional smugglers as narcotraffickers and criminal organizations. Meanwhile, federal authorities in the US and Colombia encouraged such illegal activities by turning a blind-eye to Philip Morris’s actions—as demanded by the neoliberal principles of open markets, free trade, and deregulation.
The symbiosis between an international tobacco company and illicit contraband rings in the Caribbean confirms Dr. Cáceres’s thesis that, under the current dynamics of globalization, the formal and informal markets are interdependent and coexist side by side—thanks, in part, to the permissiveness of local, regional, and federal governments. Dirty money from narcotrafficking and other illicit activities is an integral part of the global economy and therefore a critical component of the Liberal International Order. Perhaps this explains why the American War on Drugs (50 years and counting…) has a beginning but no end in sight. Otherwise the stability and sustainability of the global market system might be jeopardized.
 Stefano Tijerina “Pablo Cáceres Corrales: ‘Narcotics Trafficking is Just Another Superstructure of Globalization’ – Part I.” Points, May 6, 2021.
 Pablo Cáceres Corrales. Las Formas Cambiantes de la Criminalidad Colombiana a Finales del Siglo XX. (Bogotá: Universidad Nacional de Colombia, 2016), xii.
 Cáceres Corrales. Las Formas Cambiantes de la Criminalidad, xvii.
 Cáceres Corrales. Las Formas Cambiantes de la Criminalidad, 13.
 Cáceres Corrales. Las Formas Cambiantes de la Criminalidad, 20.
 Cáceres Corrales. Las Formas Cambiantes de la Criminalidad, 76.
 Cáceres Corrales. Las Formas Cambiantes de la Criminalidad, 98–113.