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A network is a setof interconnected nodes.A node is the point at which a curve intersectsitself.What a node is, concretely speaking, depends on the kind ofconcrete networks of which we speak (Castells 1996: 470).Nodes caninclude anything from stock exchanges, private companies and gov-ernmental forums through to socially controlled coca and poppy fields,secret landing strips and money-laundering organisations.At the sametime, cultural institutions such as TV systems, entertainment studios,the popular media and academic establishments are also included.Thedonor governments, NGOs, military bodies and private companies thatare brought together in the strategic complexes of liberal peace likewise,146Duffield 6a 24/4/07 11:47 Page 147THE GROWTH OF TRANSBORDER SHADOW ECONOMIESto use Castells terminology, occupy the place of nodes within the flowof networks.The networks of transborder trade are multi-levelledsystems intersected by nodes of producers, traders, fixers, carriers,suppliers, and so on.Moreover, depending on the trade involved, suchnetworks are capable of linking some of the most remote areas of theworld with the advanced technological heartlands of metropolitansociety.The non-formal economy embodies the systems of actualdevelopment that keep people alive and in so doing have forged newrelations of protection and legitimacy.At the same time, however,through creating flexible and adaptive networks linking local and inter-national actors, while not usurping the role of the state, transbordereconomies have proved effective in challenging its regulatory authority(Roitman 2001).The international networks of which transborder tradeis part, while residing in the shadows, reflect economic and politicalpower that can match, even exceed, that of some states (Nordstrom2001: 1).Indeed, the transborder shadow economy has compelled manyto adopt its logic and mode of operation (Reno 1998).Changing interpretations of non-formal economiesThe global shadow economy constitutes a significant power bloc lyingoutside formal regulatory structures.In many respects, this situation isindirectly reflected in the Cinderella status that the parallel economyhas enjoyed within development discourse.While not being formallyaddressed, its existence has nonetheless been interpreted in differentways to support a number of developmental positions.Since the 1970sattitudes towards the informal economy have undergone a number ofnoticeable changes, from hostility through to acceptance as a positiveform of proto-development, until today when, with increasing concernabout war economies , a more negative view has returned.Kate Meagher (1997; 1998) has given a useful and insightful accountof this changing perception.The IFIs, for example, saw transbordertrade in Africa at the end of the 1970s as a threat to liberal economicreform.Price distortions following independence were argued to haveencouraged the haemorrhaging of foreign exchange to neighbouringcountries.Such activity provided a justification for robust reform andeconomic adjustment measures to rectify imbalances and eliminateparallel trade.During the course of the 1980s, however, criticism of thesocial effects of structural adjustment began to grow (Cornia 1987).Inresponse to increasing poverty levels, the UN s International LabourOrganisation (ILO) rehabilitated the local informal economy as anessential survival mechanism for the poor.At the same time, popularresistance in the South to structural adjustment continued to erupt.147Duffield 6a 24/4/07 11:47 Page 148GLOBAL GOVERNANCE AND THE NEW WARSFollowing cuts in public spending and nutritional subsidies, food riots,for example, were common during the 1980s (Walton and Seddon1994).Faced with criticism and resistance, by the end of the 1980s theWorld Bank had changed its position on the parallel economy.Anxiousto create allies for structural adjustment, it redefined the groups involvedin non-formal activity as a surrogate constituency that was supportiveof economic liberalism.From being a threat, the parallel economy wasreinterpreted as a popular form of resistance to arbitrary colonialborders, patrimonial corruption and state inefficiency (World Bank1989).In other words, the informal economy was reinvented as areassertion of social solidarity and popular economic initiative in theface of restrictive state practices.It was part of the revolt of the pooragainst the modalities of underdevelopment, as discussed in theprevious chapter.The informal trader became a living expression of lib-eralism s ubiquitous economic man and hence a genuine force for mod-ernisation.In this form the shadow economy has been variouslyclaimed by aid agencies as complementing their developmental efforts.In relation to economic policy, for example, since informal practices falloutside regulatory frameworks, policy recommendations have usuallyfocused on how to graduate them to the level of the conventionaleconomy (de Vletter 1996: 2).While this populist view of parallel trade still dominates the litera-ture and is periodically rediscovered, since the mid-1990s the mood hasbegun to shift once again towards interpreting non-formal economicactivity in negative terms
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