It is amazing how laypeople sometimes imagine the “black market” or the darknet. Thanks to Netflix, crime reports, and government scare stories, most people picture something out of “Mad Max.” Constant chaos: brutal cartels, automatic weapon shootouts over distribution points, gloomy sociopathic hackers trading uranium and contract killings, and absolute brutality.
But let’s come down to earth and see how it looks in reality. Imagine a typical transaction on the “terrible and horrible” black market:
– Psst, man, did you bring the goods?
– Yes, here. Here is some farm cheese made from unpasteurized milk, freelance design without paying an exorbitant tax, crypto bought without KYC humiliations, and medication from abroad that our Ministry of Health decided to ban for some reason.
Sounds less bloodthirsty already, right? Because 99% of the so-called “black” market is an absolutely peaceful, voluntary exchange between people who simply want to live their lives. It is the reaction of a healthy organism to the suffocating grip of a stationary bandit. Therefore, it is worth understanding where the shadow economy comes from in the first place and why it has nothing to do with violence:
First, it is protection against financial striptease (AML/KYC). Today, to transfer your own honestly earned money, you have to turn yourself inside out. “Anti-money laundering” procedures have turned banks into branches of intelligence services. “Where did these 500 dollars come from? Prove it! Bring a certificate! We will freeze your account pending investigation!”. People move to crypto and the darknet not because they are laundering millions of dollars from cartels. They do it because they want to reclaim the basic right to financial privacy.
Second, it is an escape from the over-regulation of every single breath. The state loves to create monopolies and feed bureaucrats. Want to start a business? Get 150 permits, pass the fire inspection (which requires a bribe), buy a license. For many small entrepreneurs, this is simply unaffordable. The shadow sector consists of garage masters, tutors, home bakers, and IT freelancers who simply say: “Leave us alone, we want to work, not feed an army of inspectors.”
Third, these are goods banned by the whim of the Leviathan. The state constantly decides what we can read, watch, eat, and how we should treat ourselves. Banned the import of decent antidepressants? They will appear on the gray market. Blocked convenient subscription services? People will appear to help bypass this. Banned vapes or certain types of plants? Welcome to the darknet. Demand does not disappear just because a man in a suit banged a wooden gavel on a table.
But what about violence? What about the mafia? Now, this is the most interesting part. Violence on the black market is a direct consequence of state intervention, not a property of the free market. Remember Prohibition in the USA. Before the alcohol ban, brewers fought in courts or competed on price. As soon as alcohol was banned, Al Capone, shootouts, and Tommy guns appeared. Why? Because legal dispute resolution mechanisms vanished, and risks skyrocketed. The state itself creates crime by pushing entire industries outside the legal framework.
By the way, the darknet itself is a brilliant example of how the free market solves the problem of trust without any state. There is no police there and you cannot sue. But there is a system of reputation, reviews, and escrow accounts (where money is frozen by a guarantor until the goods are received). Sellers on darknet marketplaces tremble for their rating more than a legal restaurant does for Michelin stars. If a shop cheats a customer or sells low-quality goods, it will simply be destroyed by reviews and lose its business. Pure reputation economics and agorism in action.
So next time someone tells you horror stories about “illegal” markets, remember: the largest and most dangerous gang, which regularly employs violence and takes money from people, is not in the darknet, but collects taxes.
