0:00:00.705,0:00:02.930 In System D, this 0:00:02.930,0:00:04.977 is a store, 0:00:04.977,0:00:07.304 and what I mean by that is that this is a photograph 0:00:07.304,0:00:12.619 I took in Makoko, shantytown in Lagos, Nigeria. 0:00:12.619,0:00:15.002 It's built over the lagoon, and there are no streets 0:00:15.002,0:00:16.818 where there can be stores to shop, 0:00:16.818,0:00:18.708 and so the store comes to you. 0:00:18.708,0:00:20.493 And in the same community, 0:00:20.493,0:00:22.245 this is business synergy. 0:00:22.245,0:00:26.351 This is the boat that that lady was paddling around in, 0:00:26.351,0:00:29.091 and this artisan makes the boat and the paddles 0:00:29.091,0:00:30.396 and sells directly 0:00:30.396,0:00:32.560 to the people who need the boat and the paddles. 0:00:32.560,0:00:34.742 And this is a global business. 0:00:34.742,0:00:38.868 Ogandiro smokes fish in Makoko in Lagos, 0:00:38.868,0:00:41.829 and I asked her, "Where does the fish come from?" 0:00:41.829,0:00:44.555 And I thought she'd say, "Oh, you know, 0:00:44.555,0:00:47.456 up the lagoon somewhere, or maybe across Africa," 0:00:47.456,0:00:48.887 but you'll be happy to know she said 0:00:48.887,0:00:50.944 it came from here, it comes from the North Sea. 0:00:50.944,0:00:53.270 It's caught here, frozen, shipped down to Lagos, 0:00:53.270,0:00:56.357 smoked, and sold for a tiny increment of profit 0:00:56.357,0:00:57.879 on the streets of Lagos. 0:00:57.879,0:00:59.730 And this is a business incubator. 0:00:59.730,0:01:03.432 This is Olusosun dump, the largest garbage dump in Lagos, 0:01:03.432,0:01:06.503 and 2,000 people work here, and I found this out 0:01:06.503,0:01:08.921 from this fellow, Andrew Saboru. 0:01:08.921,0:01:13.081 Andrew spent 16 years scavenging materials on the dump, 0:01:13.081,0:01:16.309 earned enough money to turn himself into a contract scaler, 0:01:16.309,0:01:18.919 which meant he carried a scale and went around and 0:01:18.919,0:01:21.143 weighed all the materials that people had scavenged 0:01:21.143,0:01:24.166 from the dump. Now he's a scrap dealer. 0:01:24.166,0:01:26.567 That's his little depot behind him, 0:01:26.567,0:01:31.078 and he earns twice the Nigerian minimum wage. 0:01:31.078,0:01:33.340 This is a shopping mall. 0:01:33.340,0:01:35.515 This is Oshodi Market in Lagos. 0:01:35.515,0:01:37.861 Jorge Luis Borges had a story called "The Aleph," 0:01:37.861,0:01:39.684 and the Aleph is a point in the world 0:01:39.684,0:01:41.979 where absolutely everything exists, 0:01:41.979,0:01:44.324 and for me, this image is a point in the world 0:01:44.324,0:01:46.788 where absolutely everything exists. 0:01:46.788,0:01:49.637 So, what am I talking about when I talk about System D? 0:01:49.637,0:01:51.936 It's traditionally called the informal economy, 0:01:51.936,0:01:55.564 the underground economy, the black market. 0:01:55.564,0:01:57.857 I don't conceive of it that way. 0:01:57.857,0:02:00.614 I think it's really important to understand that something like 0:02:00.614,0:02:05.094 this is totally open. It's right there for you to find. 0:02:05.094,0:02:07.821 All of this is happening openly, and aboveboard. 0:02:07.821,0:02:10.343 There's nothing underground about it. 0:02:10.343,0:02:13.725 It's our prejudgment that it's underground. 0:02:13.725,0:02:18.230 I've pirated the term System D from the former French colonies. 0:02:18.230,0:02:21.326 There's a word in French that is débrouillardise, 0:02:21.326,0:02:23.446 that means to be self-reliant, 0:02:23.446,0:02:26.809 and the former French colonies have turned that into 0:02:26.809,0:02:29.366 System D for the economy of self-reliance, 0:02:29.366,0:02:32.624 or the DIY economy. 0:02:32.624,0:02:35.753 But governments hate the DIY economy, 0:02:35.753,0:02:38.997 and that's why -- I took this picture in 2007, 0:02:38.997,0:02:43.549 and this is the same market in 2009 -- 0:02:43.549,0:02:45.855 and I think, when the organizers of this conference 0:02:45.855,0:02:47.282 were talking about radical openness, 0:02:47.282,0:02:49.838 they didn't mean that the streets should be open 0:02:49.838,0:02:51.581 and the people should be gone. 0:02:51.581,0:02:55.524 I think what we have is a pickle problem. 0:02:55.524,0:02:58.464 I had a friend who worked at a pickle factory, 0:02:58.464,0:03:00.365 and the cucumbers would come flying down 0:03:00.365,0:03:04.368 this conveyer belt, and his job was to pick off the ones 0:03:04.368,0:03:06.717 that didn't look so good and throw them in the bin 0:03:06.717,0:03:08.623 labeled "relish" where they'd be crushed and mixed 0:03:08.623,0:03:11.949 with vinegar and used for other kinds of profit. 0:03:11.949,0:03:14.260 This is the pickle economy. 0:03:14.260,0:03:16.765 We're all focusing on — this is a statistic from 0:03:16.765,0:03:19.344 earlier this month in the Financial Times — 0:03:19.344,0:03:22.887 we're all focusing on the luxury economy. 0:03:22.887,0:03:25.630 It's worth 1.5 trillion dollars every year, and that's 0:03:25.630,0:03:27.374 a vast amount of money, right? 0:03:27.374,0:03:30.622 That's three times the Gross Domestic Product of Switzerland. 0:03:30.622,0:03:35.420 So it's vast. But it should come with an asterisk, 0:03:35.420,0:03:39.613 and the asterisk is that it excludes two thirds of the workers 0:03:39.613,0:03:40.666 of the world. 0:03:40.666,0:03:44.055 1.8 billion people around the world work 0:03:44.055,0:03:49.591 in the economy that is unregulated and informal. 0:03:49.591,0:03:52.871 That's a huge number, and what does that mean? 0:03:52.871,0:03:57.624 Well, it means if it were united in a single political system, 0:03:57.624,0:04:01.879 one country, call it 0:04:01.879,0:04:04.880 "The United Street Sellers Republic," the U.S.S.R., 0:04:04.880,0:04:06.713 or "Bazaaristan," 0:04:06.713,0:04:10.989 it would be worth 10 trillion dollars every year, 0:04:10.989,0:04:13.045 and that would make it the second largest economy 0:04:13.045,0:04:15.526 in the world, after the United States. 0:04:15.526,0:04:18.366 And given that projections are that the bulk 0:04:18.366,0:04:22.031 of economic growth over the next 15 years will come 0:04:22.031,0:04:25.403 from emerging economies in the developing world, 0:04:25.403,0:04:27.534 it could easily overtake the United States 0:04:27.534,0:04:30.900 and become the largest economy in the world. 0:04:30.900,0:04:34.435 So the implications of that are vast, because it means 0:04:34.435,0:04:37.958 that this is where employment is — 1.8 billion people — 0:04:37.958,0:04:42.580 and this is where we can create a more egalitarian world, 0:04:42.580,0:04:46.551 because people are actually able to earn money and live 0:04:46.551,0:04:49.546 and thrive, as Andrew Saboru did. 0:04:49.546,0:04:51.707 Big businesses have recognized this, 0:04:51.707,0:04:53.686 and what's fascinating about this slide, 0:04:53.686,0:04:55.944 it's not that the guys can carry boxes on their heads 0:04:55.944,0:04:58.459 and run around without dropping them off. 0:04:58.459,0:05:01.554 it's that the Gala sausage roll is a product that's made 0:05:01.554,0:05:04.264 by a global company called UAC foods 0:05:04.264,0:05:06.831 that's active throughout Africa and the Middle East, 0:05:06.831,0:05:10.520 but the Gala sausage roll is not sold in stores. 0:05:10.520,0:05:13.857 UAC foods has recognized that it won't sell if it's in stores. 0:05:13.857,0:05:17.962 It's only sold by a phalanx of street hawkers 0:05:17.962,0:05:20.775 who run around the streets of Lagos at bus stations 0:05:20.775,0:05:25.248 and in traffic jams and sell it as a snack, 0:05:25.248,0:05:28.270 and it's been sold that way for 40 years. 0:05:28.270,0:05:30.440 It's a business plan for a corporation. 0:05:30.440,0:05:32.933 And it's not just in Africa. 0:05:32.933,0:05:36.046 Here's Mr. Clean looking amorously at all the other 0:05:36.046,0:05:37.966 Procter & Gamble products, 0:05:37.966,0:05:40.414 and Procter & Gamble, you know, 0:05:40.414,0:05:42.991 the statistic always cited is that Wal-Mart 0:05:42.991,0:05:47.832 is their largest customer, and it's true, as one store, 0:05:47.847,0:05:51.034 Wal-Mart buys 15 percent, thus 15 percent 0:05:51.034,0:05:54.134 of Procter & Gamble's business is with Wal-Mart, 0:05:54.134,0:05:57.695 but their largest market segment is something that they call 0:05:57.695,0:06:00.615 "high frequency stores," which is all these tiny kiosks 0:06:00.615,0:06:03.926 and the lady in the canoe and all these other businesses 0:06:03.926,0:06:09.273 that exist in System D, the informal economy, 0:06:09.273,0:06:12.671 and Procter & Gamble makes 20 percent of its money 0:06:12.671,0:06:14.720 from that market segment, 0:06:14.720,0:06:18.156 and it's the only market segment that's growing. 0:06:18.156,0:06:21.264 So Procter & Gamble says, "We don't care whether a store 0:06:21.264,0:06:24.158 is incorporated or registered or anything like that. 0:06:24.158,0:06:27.991 We want our products in that store." 0:06:27.991,0:06:30.163 And then there's mobile phones. 0:06:30.163,0:06:32.003 This is an ad for MTN, 0:06:32.003,0:06:34.645 which is a South African multinational 0:06:34.645,0:06:37.394 active in about 25 countries, 0:06:37.394,0:06:38.955 and when they came into Nigeria — 0:06:38.955,0:06:40.912 Nigeria is the big dog in Africa. 0:06:40.912,0:06:43.236 One in seven Africans is a Nigerian, 0:06:43.236,0:06:45.938 and so everyone wants in to the mobile phone market 0:06:45.938,0:06:47.972 in Nigeria. And when MTN came in, they wanted 0:06:47.972,0:06:50.932 to sell the mobile service like I get in the United States 0:06:50.932,0:06:54.706 or like people get here in the U.K. or in Europe -- 0:06:54.706,0:06:58.595 expensive monthly plans, you get a phone, 0:06:58.595,0:07:00.595 you pay overages, 0:07:00.595,0:07:02.723 you're killed with fees -- 0:07:02.723,0:07:04.527 and their plan crashed and burned. 0:07:04.527,0:07:06.567 And they went back to the drawing board, and they retooled, 0:07:06.567,0:07:08.071 and they came up with another plan: 0:07:08.071,0:07:10.257 We don't sell you the phone, 0:07:10.257,0:07:12.087 we don't sell you the monthly plan. 0:07:12.087,0:07:15.223 We only sell you airtime. 0:07:15.223,0:07:17.136 And where's the airtime sold? 0:07:17.136,0:07:21.229 It's sold at umbrella stands all over the streets, 0:07:21.229,0:07:24.953 where people are unregistered, unlicensed, 0:07:24.953,0:07:27.658 but MTN makes most of its profits, 0:07:27.658,0:07:30.345 perhaps 90 percent of its profits, 0:07:30.345,0:07:35.007 from selling through System D, the informal economy. 0:07:35.007,0:07:36.843 And where do the phones come from? 0:07:36.843,0:07:39.717 Well, they come from here. This is in Guangzhou, China, 0:07:39.717,0:07:43.153 and if you go upstairs in this rather sleepy looking 0:07:43.153,0:07:47.779 electronics mall, you find the Guangzhou Dashatou 0:07:47.779,0:07:50.652 second-hand trade center, 0:07:50.652,0:07:53.836 and if you go in there, you follow the guys with the muscles 0:07:53.836,0:07:56.498 who are carrying the boxes, and where are they going? 0:07:56.498,0:07:59.315 They're going to Eddy in Lagos. 0:07:59.315,0:08:02.019 Now, most of the phones there are not second-hand at all. 0:08:02.019,0:08:03.326 The name is a misnomer. 0:08:03.326,0:08:06.234 Most of them are pirated. They have the name brand 0:08:06.234,0:08:09.315 on them, but they're not manufactured by the name brand. 0:08:09.315,0:08:11.971 Now, are there downsides to that? 0:08:11.971,0:08:15.219 Well, I guess. You know, China has no — 0:08:15.219,0:08:18.511 (Laughter) — no intellectual property, right? 0:08:18.511,0:08:20.412 Versace without the vowels. 0:08:20.412,0:08:22.474 Zhuomani instead of Armani. 0:08:22.474,0:08:27.481 S. Guuuci, and -- (Laughter) (Applause) 0:08:27.481,0:08:30.610 All around the world this is how products 0:08:30.610,0:08:33.130 are being distributed, so, for instance, 0:08:33.130,0:08:36.289 in one street market on Rua 25 de Março 0:08:36.289,0:08:38.258 in São Paulo, Brazil, 0:08:38.258,0:08:41.554 you can buy fake designer glasses. 0:08:41.554,0:08:43.617 You can buy cloned cologne. 0:08:43.617,0:08:46.392 You can buy pirated DVDs, of course. 0:08:46.392,0:08:49.249 You can buy New York Yankees caps 0:08:49.249,0:08:52.455 in all sorts of unauthorized patterns. 0:08:52.455,0:08:55.544 You can buy cuecas baratas, designer underwear 0:08:55.544,0:08:57.841 that isn't really manufactured by a designer, 0:08:57.841,0:09:02.215 and even pirated evangelical mixtapes. (Laughter) 0:09:02.215,0:09:04.969 Now, businesses tend to complain about this, 0:09:04.969,0:09:08.508 and their, they, I don't want to take away from their 0:09:08.508,0:09:10.546 entire validity of complaining about it, 0:09:10.546,0:09:15.044 but I did ask a major sneaker manufacturer earlier this year 0:09:15.044,0:09:17.941 what they thought about piracy, 0:09:17.941,0:09:19.288 and they told me, "Well, you can't quote me on this, 0:09:19.288,0:09:21.388 because if you quote me on this, I have to kill you," 0:09:21.388,0:09:27.092 but they use piracy as market research. 0:09:27.092,0:09:30.316 The sneaker manufacturer told me that if 0:09:30.316,0:09:34.003 they find that Pumas are being pirated, or Adidas 0:09:34.003,0:09:37.289 are being pirated and their sneakers aren't being pirated, 0:09:37.289,0:09:40.174 they know they've done something wrong. (Laughter) 0:09:40.174,0:09:43.251 So it's very important to them to track piracy 0:09:43.251,0:09:45.615 exactly because of this, and the people who are buying, 0:09:45.615,0:09:47.735 the pirates, are not their customers anyway, 0:09:47.735,0:09:50.467 because their customers want the real deal. 0:09:50.467,0:09:51.960 Now, there's another problem. 0:09:51.960,0:09:55.292 This is a real street sign in Lagos, Nigeria. 0:09:55.292,0:09:58.356 All of System D really doesn't pay taxes, right? 0:09:58.356,0:10:00.161 And when I think about that, first of all I think that 0:10:00.161,0:10:03.875 government is a social contract between the people and 0:10:03.875,0:10:06.391 the government, and if the government isn't transparent, 0:10:06.391,0:10:08.612 then the people aren't going to be transparent either, 0:10:08.612,0:10:11.660 but also that we're blaming the little guy 0:10:11.660,0:10:13.597 who doesn't pay his taxes, and we're not recognizing 0:10:13.597,0:10:16.370 that everyone's fudging things all over the world, 0:10:16.370,0:10:20.403 including some extremely respected businesses, 0:10:20.403,0:10:21.543 and I'll give you one example. 0:10:21.543,0:10:25.694 There was one company that paid 4,000 bribes 0:10:25.694,0:10:28.092 in the first decade of this millennium, and 0:10:28.092,0:10:32.993 a million dollars in bribes every business day, right? 0:10:32.993,0:10:35.288 All over the world. And that company 0:10:35.288,0:10:38.194 was the big German electronics giant Siemens. 0:10:38.194,0:10:42.072 So this goes on in the formal economy 0:10:42.072,0:10:44.270 as well as the informal economy, 0:10:44.270,0:10:46.400 so it's wrong of us to blame — and I'm not singling out 0:10:46.400,0:10:50.119 Siemens, I'm saying everyone does it. Okay? 0:10:50.119,0:10:53.568 I just want to end by saying that if Adam Smith 0:10:53.568,0:10:56.408 had framed out a theory of the flea market 0:10:56.408,0:10:59.719 instead of the free market, what would be some 0:10:59.719,0:11:01.728 of the principles? 0:11:01.728,0:11:05.488 First, it would be to understand that it could be 0:11:05.488,0:11:07.679 considered a cooperative, and this is a thought 0:11:07.679,0:11:12.264 from the Brazilian legal scholar Roberto Mangabeira Unger. 0:11:12.264,0:11:14.857 Cooperative development is a way forward. 0:11:14.857,0:11:19.535 Secondly, from the [Austrian] anarchist philosopher Paul Feyerabend, 0:11:19.535,0:11:23.823 facts are relative, and what is a massive right 0:11:23.823,0:11:26.808 of self-reliance to a Nigerian businessperson 0:11:26.808,0:11:30.819 is considered unauthorized and horrible to other people, 0:11:30.819,0:11:32.836 and we have to recognize that there are differences 0:11:32.836,0:11:34.893 in how people define things and what their facts are. 0:11:34.893,0:11:37.993 And third is, and I'm taking this from 0:11:37.993,0:11:41.273 the great American beat poet Allen Ginsberg, 0:11:41.273,0:11:44.425 that alternate economies barter and 0:11:44.425,0:11:47.176 different kinds of currency, alternate currencies 0:11:47.176,0:11:50.018 are also very important, and he talked about 0:11:50.018,0:11:53.009 buying what he needed just with his good looks. 0:11:53.009,0:11:56.640 And so I just want to leave you there, and say that 0:11:56.640,0:12:00.856 this economy is a tremendous force for global development 0:12:00.856,0:12:02.823 and we need to think about it that way. 0:12:02.823,0:12:05.839 Thank you very much. (Applause) 0:12:05.839,0:12:08.964 (Applause)