Cubans Use the Web to Expand Black Market

When government regulation becomes too burdensome, people turn to the black market. When transactions need to be secret and based on trust rather than formal contracting, though, exchange networks tend to remain small. This is unfortunate since, as Adam Smith pointed out, the division of labor is limited by the extent of the market: gains from trade increase greatly with the number of potential trading partners.

In Cuba, which has always had a thriving underground economy, people are beginning to use the web to widen their network of potential black market trading partners. The site currently most popular with Cuban black-marketeers is the Craigslist-like Revolico.com. According to this article from Globalpost, Revolico is being used to sell everything from cars to sex to fake marriages:

On this Communist-run island, the black market is a vast, irrepressible force, an underground river of unlicensed services, goods pilfered from government stores and coveted items carried in from abroad. Cuban authorities go to great lengths to curtail it; they cannot.

Over the years, buying and selling en la calle — in the street — has been practiced by generations of Cubans forced to make ends meet in a state-controlled economy where official wages are woefully inadequate and most forms of private commerce are banned.

But Cuba’s informal economy is an imperfect marketplace. Without advertising, it relies heavily on word-of-mouth, and its commercial activity tends to flourish in small circles — among neighbors, coworkers and other trusted acquaintances.

Then came Revolico.com. Its name essentially translates as “disarray,” and while Havana residents jokingly call it “the Cuban eBay,” the site is really closer to Craigslist. For Cubans who make a living through the black market, it’s a godsend. (…)

“If you want to make a deal to leave the island, send me an email with your contact information,” wrote one user claiming to be a 24-year-old Cuban American woman traveling to the island with the intention of setting up a fraudulent marriage. “Half the money when we start the process, half the money at the end,” she wrote. “Price is negotiable.” (…)

Interview requests to Revolico’s administrators went unanswered, but the site claims to be among the top three most-visited web sites in Cuba, with 1.5 million page views per month and 100,000 classified listings created in the past 60 days. If accurate, those would be impressive figures in a country that ranks toward the bottom for web access among Latin American countries, according to United Nations data.

While the classified listing are free, the site sells advertising space (in euros) for banner ads and other high-visibility spaces. There’s no indication where Revolico is based, but since it lacks Cuba’s .cu domain extension, the site is clearly not hosted by any servers on the island. According to its mission statement, it claims to work by “collective intelligence” and a spirit of “cooperation” that asks users to refrain from political discussions or postings. There are also no ads for drugs, gambling or other more serious criminal enterprises.

Still, vendors on the site are generally skittish about undercover police and it may only be a matter of time before authorities decide to block access on the island. If that happens, other Cuban classified sites like dicuba.com and cu.clasificados.st — which now receive far less traffic — will surely fill the void.

This is another great example of advances in information technology pushing power outwards – empowering people and making it more difficult for the state to enforce its diktats. Ignore the State!