In most anarchist circles it is taken for granted that the black market is a great ally and resource. Is that really the case though? Are there negatives inherent to the black market? Could it be that the black market actually helps the state, perhaps as much as the state creates the conditions for black markets to exist?

Many, if not most of us, celebrate the black market as it exists as a reaction against the state, particularly onerous regulation, and taxation. We might even engage in black market activities to our personal benefit. Through the black market we can get the goods and services that we desire, goods and services that would otherwise be readily available to free people in a just world. Individually, our lives are improved by having access to these goods and services. Greater pleasure and opportunity are always a good thing in our personal lives.

The black market also provides great opportunity for those seeking to make a profit. While regulations and taxation increase the costs for “legitimate” goods and services, when we act voluntarily and peacefully to offer up those same goods and services, we can save on our costs allowing us to give our customers a better price. Since the state causes the price of the same goods and services to be artificially high, we can also raise our prices, remaining under that artificial level set by the state regulation and taxation, thereby increasing our profit. In this way, the black market is a boon for the enterprising businessperson.

So, both as consumers and providers we can benefit from the black market. These are only true because the state has created an artificial situation which moves the bar away from where it would be in a free world. To really understand the overall effects of a black market, we need to take a “god’s-eye-view” of the relationship between the state, the individual, and the black market. We need to look beyond the immediate benefits while at the same time considering what the true starting point for comparisons ought to be.

If we adopt this new view, this broader scope of examination the celebration of the black market becomes much less, perhaps even becoming condemnation. In fact, there is an argument to be made that the black market actually helps the state itself! I understand that this statement is quite controversial, and that any condemnation of the black market goes against standard anarchist dogma. Set aside prejudice and let us examine the broader role of black markets.

Perhaps the most obvious negative with black markets surrounds the issue of accountability. Unlike a free market, a black market is not really accountable. Since the black market is primarily for highly sought-after goods, the demand often outweighs the supply. This means that the pressure to be honest and provide high quality goods and services is minimized. As a result, the unscrupulous enter into the market and many individuals suffer without any real recourse. The black market supplier knows that you cannot use the existing legal system for compensation, and if you report the supplier you are likely to get caught up in the police action yourself.

The black market also creates a separate power structure that can be used to then launch a political career. Perhaps the best example of this comes from one of the most admired Presidents of all time: John F. Kennedy. The Kennedys’ wealth came from bootlegging. Were it not for prohibition, it may be that there would not be “American Royalty” such as the Kennedy’s. With luck we may never have heard of JFK, Robert Kennedy, Teddy Kennedy, or any of the others who have gained political power (and greater wealth) through political careers launched by the black market on alcohol.

Does the black market help the state directly? When the state stifles freedom that individuals value highly, the black markets steps in to fill the desires of the individual. At first glance this is a good thing at the individual level. However, by providing for these desired goods and services, the black market acts as a pressure release for society, easing the pressure on the state to change or remove regulation and taxation. Those individuals who seek out the black market goods and services are now less likely to rebel against the state because they found a way to have their needs met. Put another way, the black market eases the pain so that living under the state is more tolerable.  The same argument can be applied to markets where the state legalizes, then regulates and taxes some desired good or service. The recent trend of states partially legalizing marijuana use is a great example. Those people driven by the desire for marijuana are less likely to oppose the state once the state allows them to have their desired vice.

This isn’t a perfectly defined one to one ratio of course. Not all who manage to find the desired goods or services will automatically be less likely to rebel against the state. The exceptions are those individuals who are targeted by the state, and consequently fined, assaulted, and/or imprisoned, the state has made an even greater enemy in that individual. Until that point however the individual is risking his comfortable life by stepping up to oppose the state, and so is less likely to do so than if he were denied the goods and services that he enjoys through the black market.

For these reasons, it is reasonable to make the case that without a black market rebellion is more likely, thus creating an opportunity for true freedom from the state. This leaves us in a difficult position of either choosing to have the world be harsher because the black market does not exist, in hopes that this will lead to the end of the state sooner, else we support the black market knowing that we are delaying the end of the state.

What then can the practical and principled agorist do? Neither the black market nor the state are going away tomorrow, so as a sort of middle ground, agorists can use the black market interactions as a stepping off point for starting a discussion on the ills of the state, while simultaneously denying the state its lifeblood: taxes. Our audience will likely already be receptive to the idea that the state is at least overstepping its bounds, and perhaps will already want to be rid of the state entirely. Black market exchanges allow for surprisingly frank discussion since both parties to the transaction already know that both are guilty of breaking the law. What more threat can come from condemning the state openly during that interaction?

On a final note, let’s put to rest the idea that a black market is a free market. A free market is defined by the absence of regulation and taxation. A black market is what exists when regulations and taxation exist to such an extent that people seek alternatives. The black market is dependent upon the regulation for its existence. For many reasons, we should understand that the black market isn’t necessarily a friend to the principled agorist.