“Narco-Capitalism” refers to a specific type of Capitalism where the bulk of economic activities revolve around the international drug trade. Practically every kind of narcotic, from uppers to downers, can function as its own currency so long as there are pushers and users. When integrated into the framework of Liberal Capitalism, an unavoidable problem given the worldwide hegemony of the Empire of Liberty, Narco-Capitalism eventually takes on political forms. While drug cartels resort to terroristic methods and subvert the political processes of the countries in which they operate to maintain their power, others engage in the international drug trade to acquire an illegal slush fund that is unaccountable to governmental budgets. Naturally, governments throughout the Empire of Liberty recognize the harmful effects of the international drug trade, and so devote large sums of Kapital toward combating it. This creates a feedback loop where there emerges an arms race between Liberal Capitalists and Narco-Capitalists within a series of drug wars that have become known collectively as the “War on Drugs.”
Most notorious examples of Narco-Capitalism have consistently been post-1945 phenomena emanating from countries like Mexico, Colombia, Peru, Bolivia, Afghanistan, Myanmar, Thailand, and Laos. Unlike Liberal Capitalism, where economic life is demarcated into a very fine line between Parliaments and Markets, Narco-Capitalism eventually coalesces around oligopolies of drug cartels whose members control the production, distribution, and sale of narcotics. Our historical understanding of the War on Drugs is that it is a post-1945 matter that began during the Cold War, a conflict that I have incessantly described as the latter half of the Second World War. The same is true for any and all notions that certain ideologically-driven paramilitary organizations derive part of their income from the international drug trade. And that the means of production within Narco-Capitalism have to be controlled not by States or their intelligence services but criminal organizations and terrorist groups that ostensible operate outside State apparatuses.
As one continues to study the War on Drugs and the economic actors which drive it, any keen observer will eventually discover a few policy proposals predicated on a desire to eradicate Narco-Capitalism. Would legalization eliminate the oligopolies of the international drug trade and provide users with safer avenues of getting treated for their addictions? Should the Empire of Liberty try to improve the economic conditions of countries involved in the international drug trade, encouraging the rural communities involved to invest in more legitimate crop production? Or should governments resort to increasingly violent methods to eliminate the oligopolies, up to and including the deployment of military and intelligence personnel?
Missing from the discussion is one that deserves mention here, especially in the context of the Second World War: Should the Parliament or the State embark on a “Narco-State Capitalism?” What sort of difference would that make? What are the ethical, moral, and legal implications of Narco-State Capitalism?
Instead of being controlled by drug cartels, Narco-State Capitalism envisages a nationalization of the international drug trade, the purpose of which is to control the flow of product and provide an additional source of revenue through nationalized industries. Even though such a thing is literally unthinkable post-1945, it did exist at one point before and during World War II. Between the 1930s and 1940s, the Imperial Japanese puppet regime in Manchukuo or Manchuria had a Narco-State Capitalist apparatus that was propped up by the Imperial Japanese intelligence services and Military-Industrial Complex. There were nationalized industries producing opium, morphine, and heroin and distributing them across Mainland China.
What is especially important to note is that this was not a purely legal operation. Even before the First World War, there were already international treaties forbidding nations from establishing Narco-State Capitalist economic systems:
“Imperial Japan signed and ratified four international treaties between 1912 and 1931 that banned the sale or export of drugs and narcotics for non-medicinal purposes, and Japan was censured by the League of Nations for violating those treaties in the 1930s. Yet British, Americans, French, Germans, and other Western individuals continued to traffick [sic.] in China in the 1930s; and, furthermore, Chinese warlords, the Kuomintang (KMT), and collaborator regimes continued to exploit opium as a key source of revenue. KMT suppression campaigns did make progress in the 1930s and executed some 964 Chinese on drug charges in 1935. But overall, the desire and ability of Chinese regimes, including the KMT, to enforce anti-drug laws was highly dubious. Within that broader historical context, however, the fact remains that Imperial Japanese subjects began to smuggle opium in China as early as the 1890s. What is more, their activities changed decisively in nature and in scale during the 1930s and 1940s. In those decades, the Zaibatsu became involved and the Imperial government itself began to make and sell hard narcotics–not just opium–in contempt of international treaties and domestic Chinese law.”
When any government, regardless of its Ideology, gets involved in the international drug trade, the motivation has been to acquire illegal funds in order to finance activities that cannot be reported within official government budgets. One might recall in the 1980s that the Contras, these paramilitaries who opposed the Sandinista regime of Nicaragua, partly relied on the international drug trade besides whatever support they got from the CIA. One might also recall from the same decade that Manuel Noriega’s Panama was particularly active in the international drug trade and did in fact establish its own Narco-State Capitalist economic system, which would later be deposed by the Jeffersonians under Bush 41. Both cases are examples where the international drug trade was used to finance the activities of those supportive of Jeffersonian ideological goals, which in those two happen to be the Monroe Doctrine. But they have also demonstrated that there have always been long-standing frictions between Liberal Capitalism and Narco-Capitalism.
But is there any other motive for why any intelligence agency would be involved in the international drug trade? For the Imperial Japanese intelligence services that oversaw the Narco-State Capitalism in Manchukuo before and during World War II, the justification is that criminal organizations are capable of operating as Deep States outside the apparatuses of Parliaments and States. Should there be a military invasion of a given country, there is always the possibility that the affected nation’s criminal underworld would find themselves helping resistance and dissident groups, who may or may not be backed by the intelligence services of another nation. Thus, exerting influence over the criminal underworld in pre-1945 China became synonymous with control over the international drug trade in pre-1945 China.
This was the whole rationale behind the Imperial Japanese General Doihara Kenji, who became a drug lord due to his reputation for cultivating criminal ties in the interests of Imperial Japan. Doihara believed that Narco-State Capitalism could not only provide a lucrative source of revenue, but also render enemy nations too weak to resist. Although I have not found any precise figures on exactly how much was made from these ventures, it has been argued in the academic literature that Doihara and his men were able to rake in more than ¥1.4 billion by 1937 (which was a lot of money in those days) because so much of the revenue was eventually spent on financing the Imperial Japanese military’s wartime expansion.
What is even more fascinating is that this facet of early 20th century history is for the most part obscure and not well-known in the Western world. It probably is known to some extent throughout parts of Asia, especially in places where the international drug trade ravaged local populations during the Second World War. While Doihara and his men were prosecuted for their activities – Doihara himself executed by hanging in 1948, the pharmaceutical and construction firms that were involved survived and are doing quite well for themselves as of late. They even denied that they were involved in Doihara’s affairs to begin with. In any case, I was shocked to find out that the concept of Narco-State Capitalism is not a post-1945 phenomenon associated with places like Noriega’s Panama but has its origins before 1945.
Categories: Economic History
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