Black Market

Black markets are markets that traffic in illegal goods or services. They may exist with the connivance of local authorities. They may be hidden or underground markets found down dark alleyways or they may be openly tolerated. In the shadow economies of the world, commerce is seeking to avoid government regulations or taxes on a vast array of goods and services. The lack of economic freedom in some countries is often a stimulus to the development of black markets. In some cases shadow markets employ people who feel marginalized in a system that favors legal monopolies or has excessive taxes or regulations. Their victimization is seen as a justification for their economic behavior.

Gray markets handle goods that are produced by legitimate firms; however, they are sold through unauthorized dealers. The genuine goods are sold by dealers who are not a part of the producer's distribution system.

Black markets have existed in earlier times as well. For example, in the early 19th century London was a center of medical training. However, there was a shortage of cadavers because many people believed that to enter heaven the body had to be intact. The supply of executed criminals was not sufficient for medical schools. Grave robbers, at times working with church wardens, dug up fresh corpses and sold them to the medical schools. These “body snatchers” were filling the demand illegally. Other types of older black markets included the smuggling of slaves, operating illegal houses of prostitution, and trafficking in drugs or other illegal goods. In general whenever anything is prohibited or priced too high an illegal market can be expected to arise to supply the demand.

Trafficking in human beings is still happening today. Babies can be adopted through back channels [Page 151]for a price. Sometimes the babies are the victims of kidnappings. Smuggling illegal workers into labor markets is a thriving business in the world and one that makes the news in the United States, Canada, or Europe on a frequent basis. Along the border with Mexico authorities have to contend with “coyotes” who are traffickers in humans, as well as with drug smugglers.

After the fall of communism at the end of the Cold War in 1989, criminal gangs arose, in many cases forming the Russian Mafia. They lured women into prostitution, often through deception, as thousands of young, educated women in search of work accepted jobs in western European countries. However, the jobs often were falsehoods told by gangsters to lure their victims into prostitution by force when they arrived at their destination in places such as the Czech Republic. It would have been hard for such activities to operate without the active complicity of the local police.

The demand for goods in contemporary markets evokes all manner of black markets. Pirated goods, knockoff goods, and adulterated goods have been sold in markets around the world. The sale of all of these pirated goods amounts to billions in the black markets even though they are cheap imitations. The cost to the original inventors, designers, manufacturers, wholesalers, and retailers runs into the hundreds of billions of dollars.

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