Where there is demand, the market will inevitably supply. The market is a mercurial, ever-changing group of people pursuing their interests and attempting to acquire as much as possible relative to their skills, capital and desires. It is so unimaginably complex that any system that attempts to mimic it simply cannot keep up with the shape-shifting and color-swapping actualities of market want and whim. However, even with this unprecedented level of change and complexity, there exists a way to segment the market into several easy-to-grasp subgroups. The market’s nature does not change from segment to segment – it is as fickle and elusive as ever, it merely becomes bound by the more clean-cut categories of ethics and law.
The white market is the “cleanest” type of market – moral professions allowed, taxed and regulated by government. This market encompasses things a normal person would consider standard economic activities: Supermarkets, auditing firms, automobile factories and similar businesses that are honest, tax-paying and ethical in their nature. Bordering the squeaky-clean white market is its less inviting sibling: The grey market.
The grey market is a troublesome section to pin down. It is moral in its methods, but is decidedly outside of governmental control. This may be for tax avoidance purposes, ease of doing business, lucrative opportunities or the mere fact that regulation has not caught up with the market. Some examples of a grey market are unregulated goods (Think cryptocurrency), untaxed goods and off-the-books employment. If a market is unregulated, it usually means market forces will reign supreme. Cutting-edge industries originate within this segment by default: If one invents the jetpack, jetpack regulations are sure to follow – but the market begins in the grey segment.
The black market usually elicits the thought of masked gangs shooting it out over a shipment of contraband, backroom deals and shady characters posing as legitimate businessmen. The black market houses goods and services banned by a state, but are not in themselves immoral. Examples include the alcohol prohibition of 1920s America, the current bans on narcotics, some arms trafficking and some of the sex trade. Though these products merely have the potential of harming people, they are treated as if disastrous when left legal or unregulated. A difference that should be noted is sexual slavery compared to voluntary prostitution that is merely illegal.
We now come to murky water. There exists a market for absolutely unethical, immoral and unacceptable behavior such as torture, murder, theft and kidnapping. In some cases they are renamed interrogation, war, taxation and imprisonment respectively. This is the pink market – unethical behavior solicited, perpetrated and condoned by governments. Some governments are more active than others in this field, attracting talent, capital and technology just like in any other market. Private military contractors often fit in this market as well, and this market is nebulous and hard to track. Although we usually think of this as one nation attacking another, it is much more common that a government acts unfairly toward its citizens – the examples of the Soviet Union and African dictatorships spring to mind.
We reach the red market. If there is demand, the red market delivers – assassinations, slavery, rape, pillage and heisting. These people have no scruples, and pull no punches. What’s yours is theirs if they have any say in the matter. International criminal syndicates, cartels and the mafia all fall within this purview, but strive to enter the pink market, where the sheen of government legitimacy can prolong the usually short-lived stroll through red market territory.
One of our previous articles argues that “Red market startup societies” must be universally banned and disassociated from. Since Startup Societies Foundation primarily concerns itself with governance structures, this article's title is a misnomer - we will be analyzing pink-market startup societies. We’ll now look at how a pink market startup society comes to be, what it wants and how to effectively combat it. We’ll take as an example the Pirate Republic of Nassau, and compare it to modern parallels.
On the island of New Providence in the Caribbean Sea there existed a proto-state which survived for just over 10 years in the first 2 decades of the 18th century – the Pirate Republic Of Nassau. Its government was made up of ex-British navy privateers, pirates for hire in the service of the British crown. Benjamin Hornigold, Calico Jack Rackham, and most notoriously of all, Edward Teach (aka Blackbeard) were a de facto council of ministers, who ruled the isle of New Providence with an iron fist. The island was legally governed by a British-appointed governor who was more often than not bribed or threatened into turning a blind eye to the goings-on in the port of Nassau.
The local governance structure was a “code of conduct” which varied from captain to captain, who delivered justice. Duels, drunken brawls, late night throat-cutting and poisonings were regular ways of settling disputes in Nassau. It was only in 1718 that the newly-appointed governor Woodes Rogers finally put an end to what the British termed a “colonist upheaval”. Nassau was never recognized as a sovereign territory.
Nassau’s short and merry life was founded on a relatively basic domestic economy of shipbuilders, smiths and similar manufacturing artisans augmented by the greatest campaign of murder and plunder that part of the world had seen since the conquistadors. The Pirate Republic of Nassau is a clear example of a pink-market society. The question of whether it is a startup society is difficult for us – it is an experiment in local governance, but runs afoul of many of our 10 basic tenets for an ethical startup society.
If we may borrow from an award-winning videogame franchise: “War never changes.”
The fundamental goal of war is economic domination of one form or another. From the days of arrows and clubs, to smoothbore muskets and deadly WORM programs, the primary goal of any form of warfare is the stripping of resources from another group. The ancient empires of the Fertile Crescent would maraud, enslave and steal what they could at the edge of an iron blade. The colonial empires of the 18th century used the power of gunpowder and advanced military organization to subjugate less advanced societies and plunder them for resources. Today, conflict exists in the form of 4th generation warfare: Proxy wars, false flag attacks, hacking breaches and narrative-controlling sleights of hand are the norm by which less on-the-nose methods are used to siphon wealth from a populace – such as trade embargos, levies and customs.
The primal instinct of taking resources by force won’t depart the human psyche anytime soon, so we must better analyze how to dissuade conflict so as to maximize ethical behavior as well as economic efficiency. We’re not talking about interpersonal conflict or criminal elements – but specifically about how to prevent one government from attacking another through more (Violence, occupation and annexation) or less (Stealing state secrets, graymail, and favorable trade legislation) conventional means.
If we analyze the incentives that underlie (economic or open) warfare, we come to the conclusion that the best way of protecting one’s resources is by making it cost-ineffective for potential attackers to steal it. A safe is valuable not only because it is hard to get into, but also because of its weight – which makes it difficult to carry away the safe with the loot in it. This is also an argument for an armed populace: It significantly increases the potential cost for an assailant, be it through foreign invasion or common criminal elements. This directly makes it less likely that such agents will attempt siphoning resources from a society.
As in medicine, the best cure is prevention. Modern WMD (Weapon of mass destruction) armed powers never get militarily attacked for fear of nuclear reprisal. This is one way to dissuade attackers, though not one we’re terribly fond of. The advent of blockchain technology and cryptocurrency make possible the cryptographic locking of goods such as electronics, vehicles, weaponry and industrial machinery – this is a step in the right direction in reducing the value of stolen loot. However, we have only taken into consideration conventional methods of resource plunder. The problem arises with trade restrictions that can benefit the decision makers in a certain government, but are relatively free of cost if politically maneuvered in a sleek way.
Few if any trade barriers actually increase the wealth of a nation; the fruit of such programs is enjoyed mostly by government officials and the domestic producers enjoying protectionism. However, the allure of such action is too great for the powers-that-be in a given society. How can we effectively regulate these powers in a trade environment without resorting to “constitutions” and similar internal checks and balances that never seem to deliver? Perhaps competitive forces of the governance market will steer capital away from closed societies, perhaps citizens will desert non-transparently operating governments. Escalating such trade wars will do nothing to reduce the ills befalling a society done wrong by trade restrictions.
It would be idealistic to assume that startup societies would construct a network of checks and balances keeping an eye on the policy of one another out of the will to be ethical. Perhaps competitive pressures will make it more likely that transparency and non-intervention become the modus operandi for most startup societies, but we may never rest assured. Media, insurance, citizenry and anybody else with a vested interest in startup societies keeping their operation models ethical will have a smaller incentive to uncover such dealings than the perpetrators of these offenses do in keeping them opaque.
Without a system of incentivizing honest business and refraining from engaging in pink-market activity, there are solutions to be had against the scourge of violent resource acquisition, though these are by no means simple or easily applicable. The greatest force in this field would be competitive pressure, and as we mentioned – where there is demand, the market provides.