Thailand has three economies. The first is the mainstream one, which the government measures to estimate economic growth, the bean-counters tax, and the mainstream businesses exploit.

The other two are the self-reliant economy and the illegal economy. We cannot pinpoint how big they are. But we can be sure they are huge. Just incorporating them, wholly or partially, into the mainstream economy would have major impact - on statistics, on people, on business, and on politics. That is what the current government is trying to do.

The self-reliant economy is mainly rural. Just under half the population still live in the villages. Most are small family farmers with a little land. They are involved in the mainstream economy. They sell some rice, come to Bangkok to drive a taxi, buy TVs and motorbikes, and eat instant noodles. But they also operate in a self-reliant or "hidden economy" of local production and exchange. A few follow the model of a totally self-reliant mixed farm advocated by Headman Wibun or H.M. the King. Many, many more put a priority on growing their own rice, and hunting and gathering for food and other necessities. Most localities have markets where these products are exchanged between households and villages, without reference to the price levels in the mainstream economy.

These economies can be very complex. Take Chaiya in the south. It used to be famous for the quality of its rice, but now households can buy rice cheaper from the market. Yet most still grow their own rice because they prefer the taste and the independence. They also fish in the paddy fields, collect wild vegetables, grow their own fruit trees, make palm sugar, and raise cattle and ducks. Because the ducks feed on the good local rice and crabs and shellfish from the paddy fields, their eggs have a unique taste and colour. Families began to sell salted ducks eggs locally. Before long, the eggs gained a reputation. Sales boomed. Other places started making counterfeit "Chaiya eggs". The Chaiya farmers had to use branding, packaging, and other modern marketing techniques to defend their market.

The production of Chaiya ducks eggs is a thriving business in the mainstream economy. But it is mounted on another "hidden economy" which is highly self-reliant.

The criminal economy is also big. One survey reckoned it was around 8 to 13 per cent of the mainstream economy, but that survey was partial and now outdated. A reasonable guess would be around 20 to 30 per cent. The main segments are drugs, gambling, prostitution, protection rackets, and human trafficking.

Over recent years, both the self-reliant and criminal economies have probably been growing faster than the mainstream one. The economic crisis boosted both, in different ways. Drug dealing was an attractive option when legal business and employment opportunities collapsed. Gambling expenditure probably stayed constant; when rational openings to make money disappear, then irrational optimism takes over. Human trafficking has expanded with the breakdown of borders. And there is scattered evidence of a surge in selling protection, especially by people in uniform.

The self-reliant economy began to expand as a reaction against the failure of top-down "development". Farmers found their lives had become less secure because of expensive technology, fluctuating markets, and mono-cropping. Community advocates counselled they would be happier if they relied more on their own resources and less on the market. That was the essence of H.M. the King's "New Theory". This strategy became more attractive as a cushion against the economic crisis. Advocates of self-reliance became more vocal, more prominent, and more persuasive.

A recent book* attempts to estimate the size of the "shadow economy" in various countries. This shadow economy includes the self-reliant or hidden economy, the illegal economy, and things like tax evasion. The estimate for Thailand was a huge 71 per cent of GNP, making Thailand number two in the world after Nigeria. The book's method was devised to analyse Europe, and may overestimate in less sophisticated countries. But still, it suggests how large these non-mainstream economies are in Thailand in world perspective.

Converting just some of the self-reliant and illegal economies into the mainstream economy would have lots of benefits for the government and mainstream business. It could increase the rate of economic growth without difficult things like technical innovation. It could expand the tax revenue so government could restart the infrastructure spending which has been devastated by the crisis and which politicians love. It could make available the capital, labour, and ingenuity now devoted to selling drugs, trafficking girls, and trashing entertainment places.

This is the true meaning of the first, "inward-looking" component of the Thaksinomics dual-track strategy. Over the past two years, the government has pumped up consumption by fiscal stimulus and by recycling stagnant debt. This has been rather successful, but can only be short-term. Converting the self-reliant and criminal economies has much larger and longer-term potential.

For a long time, advocates of the rule-or-law and social justice have argued that some criminal activities should be suppressed by better policing while others should be legalised. They got almost nowhere. But now the Finance Minister has become an enthusiast, things will start to happen.

Before the 2001 election, leaders of the Thai Rak Thai party consulted with NGOs, and adopted the language of community and self-reliance. But it is now clear that the government has no interest in promoting self-reliance. The prime minister's handling of the Pak Mun dam issue tells the whole story. On the day after his victory, he took lunch with the protestors and promised to be sympathetic. When he visited the dam and debated the issue on TV, he was clearly looking for a way to buy off the protesters with money. When they refused, he decided the issue against them. The Pak Mun protest has been the most public symbol of the self-reliance agenda for over a decade. Crushing this protest was a decisive signal.

(* F. Schneider and D. Enste, The Shadow Economy, CUP 2002.)