Bustling Arabian Sea port symbolizing the interplay of capitalism and smuggling.

Beyond Free Markets: Uncovering the Hidden World of Smuggling and Capitalism

Author's portrait.
Samir D’Costa in Business & Economy August 2025 • 5 min read.

"How the illicit trades of the Arabian Sea shaped the modern global economy and what it reveals about capitalism's true nature."


Conventional wisdom often portrays capitalism as a system built on free markets, property rights, and the uninhibited flow of goods and labor. However, a closer look at history reveals a far more complex and nuanced picture. What if the very forces that seem to undermine capitalism – smuggling, trafficking, and illicit trade – are, in fact, essential to its development and function?

Johan Mathew's "Margins of the Market: Trafficking and Capitalism across the Arabian Sea" challenges traditional economic theories by exploring the critical role of smuggling and illicit trade in shaping the capitalist landscape. Focusing on the Arabian Sea region from the nineteenth to the twentieth century, Mathew uncovers how these 'margins of the market' were not merely deviations from the norm but were deeply intertwined with the development of capitalism itself.

Mathew's work reveals that capitalism's expansion was inextricably linked to activities that existed outside the boundaries of formal markets and regulations. By examining the history of the Arabian Sea, he sheds light on the often-overlooked aspects of capitalism, highlighting the complex interplay between licit and illicit activities, state control and private enterprise, and the constant negotiation of economic boundaries.

The Arabian Sea: A Crucible of Capitalism and Illicit Trade

Bustling Arabian Sea port symbolizing the interplay of capitalism and smuggling.

The Arabian Sea, a region known for its mutable and dynamic nature, served as a critical site for the development of capitalism in Asia and Africa. During the period under examination, the British Empire exerted unprecedented political dominance, attempting to regulate and standardize economic practices while simultaneously creating and destroying 'free' markets. This created a fertile ground for smuggling and trafficking, as local traders and other European officials sought to navigate and subvert imperial control.

Mathew's research dives into the colonial archives, uncovering ethnographies of smuggling in police surveillance, court transcripts, interviews, and regulatory memoranda. These documents, combined with imperial business records, reveal the 'multiple entangled histories' of labor, goods, and money, blurring the lines between what was considered licit and illicit, state and private, human and commodity.

  • Challenging Free Market Ideals: Mathew argues that the conventional theories of political economy, which emphasize property rights and free labor, fail to account for the regulations and coercion that make such abstractions possible.
  • 'Framing Out': Applying sociological theory, Mathew illustrates how the trades excluded from the legal free market are just as integral to the functioning of capitalist economies as those included within it.
  • Beyond Standard Narratives: In the Arabian Sea, capitalism was less about free labor, private property, and wealth-generating capital, and more about the abolition of slavery, violence, and unstandardized currency.
One of the key arguments in "Margins of the Market" is that state-imposed frames created the free market. Mathew illustrates this point through a detailed analysis of the arms trade, where violence was both a commodity and a method of regulation. Laws designated approved firearms as private property, while state-sanctioned violence protected this property, blurring the lines between licit and illicit activities.

Relevance and Implications for Today

"Margins of the Market" offers critical insights into the nature of capitalism and its historical development, Mathew's work encourages a more nuanced understanding of the global economy, urging us to look beyond traditional narratives and consider the hidden forces that shape our world. By examining the history of the Arabian Sea, Mathew provides valuable lessons for understanding the complexities of capitalism and its impact on societies around the globe. His work is relevant to geographic specialists, scholars, students interested in political economy and the historical development of 'varieties of capitalism'.

About this Article -

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Everything You Need To Know

1

How does "Margins of the Market: Trafficking and Capitalism across the Arabian Sea" challenge conventional views of capitalism?

"Margins of the Market" challenges conventional economic theories by highlighting the significant role of smuggling and illicit trade in shaping capitalism, specifically in the Arabian Sea region. It posits that these 'margins of the market' weren't deviations but integral to capitalism's development, suggesting that activities outside formal markets and regulations are crucial to understanding capitalism's expansion. This perspective contrasts with the traditional emphasis on free markets, property rights, and uninhibited trade.

2

What role did the British Empire play in the development of both free markets and illicit trade in the Arabian Sea, according to Johan Mathew?

Johan Mathew argues that the British Empire, while attempting to regulate and standardize economic practices, inadvertently fostered smuggling and trafficking in the Arabian Sea. The empire's efforts to create 'free' markets alongside imposing controls led local traders and European officials to navigate and subvert imperial control, thereby creating opportunities for illicit trade to thrive.

3

What primary sources did Johan Mathew use to research the connection between capitalism and smuggling in the Arabian Sea?

Johan Mathew utilized a range of colonial archives, including ethnographies of smuggling from police surveillance, court transcripts, interviews, and regulatory memoranda. He also examined imperial business records. These documents revealed entangled histories of labor, goods, and money, blurring the lines between licit and illicit, state and private, and human and commodity aspects of capitalism.

4

What is meant by "Framing Out" in the context of Mathew's analysis of capitalism and illicit trade?

In "Margins of the Market", "Framing Out", applying sociological theory, illustrates how trades excluded from the legal free market are just as integral to the functioning of capitalist economies as those included within it. It refers to the idea that the boundaries defining what is considered part of the formal, legal market are constructed, and that what is excluded (e.g., smuggling, trafficking) is still fundamentally connected to and shapes the capitalist system.

5

How does violence relate to the arms trade and the establishment of the free market, according to "Margins of the Market"?

According to Mathew, violence is both a commodity and a method of regulation in the arms trade. The state designates approved firearms as private property, while state-sanctioned violence protects this property. This blurs the lines between licit and illicit activities, showing how state power and violence are intrinsically linked to the creation and maintenance of the free market. This also implies that the idea of a 'free' market is contingent on the state's capacity to enforce property rights, often through violent means, thereby challenging the notion of a truly unregulated market.

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