Towards a new model of the Philippine political economy IV

Posted: January 11, 2011 in Philippine politics, Political economy

The criminal economic sector


The criminal economy covers all activities carried out in pursuit of economic gain that cover the production and/or provision of illegal goods and services.  These may include gambling, prostitution, gun-running, and extortion, among others.  These activities may also include the illegal production/provision of otherwise legal goods and services.  For example, a pack of imported cigarettes is a legal product.  But a criminal entrepreneur finds it profitable to smuggle it into a country.  In the process, the cigarette pack becomes an illegal good.  A video compact disk (VCD) may be a legal good.  However, if an entrepreneur duplicates it without permission from the copyright holder and sells the same without paying royalties, then the product is illegal.  The illegality of goods and services is the primary distinction of criminal transactions from formal and informal economic activity.  While there may be overlaps in some of the commodities sold within the formal and informal economies, criminal commodities are exclusive to the criminal sector.  Demanders of these commodities can satisfy their requirements only in this sector.  In the Philippines and elsewhere, the main retailers of pirated products are formals and informals.  In the national capital region, a major source of inexpensive, pirated DVDs are the stalls near the mosque in the Quiapo district.  In this sense, the criminal sphere includes formal and informal economic actors.


Obviously, no taxes are paid or could be levied on criminal economic activity.  Similarly, no receipts are issued nor are contracts drawn to cover specific transactions.  However, a criminal entrepreneur may find it necessary to pay an implicit ‘tax’ to agents of the state or to another criminal actor for protection or tolerance.  While transactions in the formal and informal economic sectors are voluntary, we see a mix of voluntary and involuntary exchanges in the criminal sphere.  For example, the transaction between a prostitute and her/his trick may be voluntary.  However, the ‘exchange’ between a robber and a victim is obviously involuntary.  The same is true with the money given by a shopkeeper to the ‘friendly’ neighborhood toughie or police officer for protection.  In these cases, violence (its actual use or the threat of its use) is an essential element that clinches the transaction.


Not all crimes can be included within the sphere of the criminal economic sector. It must be criminal activity directed toward acquiring a gain.  For example, a homicide committed in a fit of passion is not a gainful activity while an assassination for a fee is.  In general, rape is not a gainful activity unlike white slavery.


  1. bongmendoza says:

    Reblogged this on bong mendoza's blog.

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