Economies of Crime

The latest issue of the university magazine HSG FOCUS focuses on the complex intersections between economics, law, and crime – from global drug markets and everyday counterfeiting to accounting fraud and organised crime in Switzerland. The articles show how illegal practices depend on legal structures – and where politics, regulation, and society need to take action.
"Facts and figures on the global shadow economy": Daniel Sager's video provides an overview of the extent and geographical aspects of the most important illegal markets worldwide.
"Chemistry and technology fuel the drug trade": Matías Dewey and Alvaro Pastor highlight how closely the illegal drug trade is intertwined with legal markets. Chemicals from global industry, varying government regulations, and digital technologies enable flexible value chains that are difficult to control. From coca cultivation in the Peruvian Amazon to encrypted messengers and digital payment systems, the article shows that illegal economies cannot function without legal infrastructures – and why regulation, platform control, and government enforcement need to be rethought.
"Homo economicus in crime": Nora Markwalder asks whether criminals act rationally. She explains rational theories of crime, according to which perpetrators weigh up costs and benefits and make targeted use of opportunities – an approach that enables prevention. At the same time, she points out the limitations of this view: many crimes are committed without rational calculation and are more strongly influenced by social or psychological factors.
In his article "The Gucci bag and the big business of counterfeit goods", Markus Müller-Chen sheds light on the billion-pound trade in counterfeit products. High original prices, status consciousness, online availability, and deceptively genuine "super fakes" drive demand.
The article highlights legal remedies, but also the risks for companies, jobs, and buyers, who may be liable to prosecution. Under the title "Accounting scandals: it often ends badly when you embellish the figures", Peter Leibfried analyses the similarities behind cases such as Wirecard, Enron, and Signa.
It shows that despite regulation, patterns repeat themselves: overvalued assets, hidden debts, false consolidation. It often starts with pressure and grey areas, not with intent. Leibfried advocates for better education, ethical awareness, and a critical approach to financial data.
"The Mafia is everywhere. Even in allotment gardens": Henry Habegger shows how organised crime benefits from liberal structures in Switzerland. Lenient penalties, federalism, and enforcement deficits create loopholes. Initial reforms point to a rethink – but consistent enforcement remains crucial.

Article

Roohi Mariam Peter: Paper mills are a network – scientific fraud growing rapidly (2025)

In her article, Roohi Mariam Peter explains how commercial "paper mills" are driving a fast‑growing wave of scientific fraud by selling fabricated research papers to paying authors, undermining journals and peer review.

Book

Elena Denisova-Schmidt / Philip G. Altbach / Hans de Wit: Handbook on Corruption in Higher Education (2025)

This Handbook provides an overview of corruption within the context of higher education. Through a variety of international case studies, theoretical frameworks and methodologies, it examines the underlying issues involved in corruption as well as the damaging impact on scholarly cultures and the academic enterprise.

Study

Maritza Paredes / Alvaro Pastor: Illicit crops in the frontier margins: Amazonian indigenous livelihoods and the expansion of coca in Peru (2023)

The expansion of coca-cocaine markets in the Amazon is not solely attributable to state failure or criminal groups. This paper demonstrates how long-term development projects in the Amazon frequently result in the opening of agricultural frontiers, the attraction of settlers, and the transformation of the ecology. The unintended consequences of these state-development projects are the progressive impoverishment of local agricultural communities, the degradation of soil quality, and the deterioration of land security tenure. In this scenario, coca crops emerge as the most viable option for ensuring livelihoods.

Study

Matías Dewey / Andrés Buzzetti: Easier, Faster and Safer: The Social Organization of Drug Dealing through Encrypted Messaging Apps (2024)

Digitalization is not limited to the legal economy. It also permeates illegal markets, improving the way people exchange goods and services while making detection much more difficult. For example, this research shows that perfectly legal apps are used to sell drugs. The experience of drug sellers and users is quite clear: apps like Telegram make drug market activity easier, faster, and safer. This article was the first to bring this phenomenon to light.

Website

Stop Piracy

The Swiss platform Stop Piracy provides reliable, fact-based information on counterfeiting and piracy, thereby making an important contribution to raising public awareness. The compact fact sheets are particularly helpful, as they clearly show how to recognise counterfeits and dubious online providers. Anyone who wants to deal with the topic not only theoretically but also practically will find an excellent point of contact here.

Book

Jens Beckert / Matías Dewey: The Architecture of Illegal Markets. Towards an Economic Sociology of Illegality in the Economy (2017)

If you want to understand how illegal markets work — and not just assume that they are merely the consequence of criminal organizations or failed states — this book offers a fresh perspective on hard-to-research economies. It pays attention to additional elements that constitute economies beyond the law, such as credit, infrastructure, social acceptance, and the meaning of commodities. It is the first serious attempt to conceptualize, classify, and suggest future research directions on illegal markets from a sociological perspective.

Film

Martin Scorsese: The Wolf of Wall Street (2013)

If you want to know how opportunities encourage crime, we recommend the film The Wolf of Wall Street. The film is based on the story of stockbroker Jordan Belfort and is set in New York in the 1980s and 1990s. The scene of the crime is the barely regulated market for so-called penny stocks. The film shows how easy it was to manipulate the market and defraud unsuspecting customers at the time and how low the chance of getting caught was – especially when you lock the financial regulators away in ice-cold offices...

Study

OECD: Counterfeiting, Piracy and the Swiss Economy 2025

For an additional economic perspective: the OECD study highlights the economic consequences of counterfeiting and piracy in Switzerland. It shows how severely export-oriented industries such as the watch and pharmaceutical industries are affected and provides up-to-date data on trade routes, damage costs and global contexts.

Book

Christof Schürmann: Die Bilanztrickser – wie Unternehmen ihre Zahlen frisieren und den Anleger täuschen (2003)

As a journalist at the German business magazine WirtschafsWoche, Christof Schürmann has been critically monitoring corporate reporting for many years. He not only looks at general business and financial developments but also addresses related issues of accounting and financial reporting. He shows where there is room for manoeuvre and provides examples of how this can be exploited.

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When AI art has no author: Study finds generated images often can’t be traced to training data
Education

When AI art has no author: Study finds generated images often can’t be traced to training data

A new method for surgically removing training examples from a model reveals that as datasets grow, the link between what a model learns and what it produces dissolves.

MIT

Wildfires and extreme heat show climate change is now Europe’s biggest security threat
Politics

Wildfires and extreme heat show climate change is now Europe’s biggest security threat

Wildfires and extreme heat show climate change is now Europe’s biggest security threat Expert comment thilton.drupal 18 August 2026 The continent is increasingly vulnerable to arson attacks, while climate disasters are diverting militaries from other threats. Policymakers must respond with a security-based approach to climate change. Climate change is now Europe’s biggest systemic security risk. As the continent faces its worst ever summer of extreme heat, drought and wildfires, no other threat is simultaneously affecting so many countries, people and critical systems. The extreme heat contributed to an estimated 10,000 excess deaths during the June heatwave, which also destroyed roughly 9 million tonnes of crops from the European harvest. Drought and wildfires have affected almost the entire continent; so far this year over 600,000 hectares of land and forests have burned, with hundreds of thousands of people forced to evacuate. The disruption extends far beyond the immediate disaster zones and across national borders. Extreme heat and water shortages are threatening water and food security, restricting river and rail transport and putting strain on health and emergency services. Homes, businesses and essential infrastructure have been damaged. Falling river levels have forced nuclear reactors to shut down due to a lack of suitable cooling water, threatening to disrupt energy supply chains. Climate terrorismClimate change is also making Europe more vulnerable to non-conventional attacks. Prolonged heat and drought can turn countries into a ‘tinderbox’, as UK prime minister Andy Burnham warned last week, before his government sent a national emergency alert over wildfires.  Arson attacks are easy to carry out and difficult for authorities to prevent. In these conditions, a single act of arson can cause mass evacuations, destroy infrastructure and overwhelm emergency services. These arson attacks are easy to carry out and difficult for authorities to prevent. This makes wildfire a potentially devastating instrument of terrorism or asymmetric warfare. This year, France has arrested almost 500 people on suspicion of starting fires; as of 30 July, the interior ministry said around 70 per cent of those detained were accused of deliberate arson. Meanwhile, Russian strikes have repeatedly set forests ablaze in Ukraine. In May 2026, drone attacks caused multiple forest fires in the Chernobyl exclusion zone and Zhytomyr. Demands on militariesClimate change also affects European military readiness by damaging bases, airfields and transport networks. For example, prolonged dry conditions contributed to wildfires that began at military training grounds in the Netherlands in April. Any disruption to wider infrastructure such as electricity or transport networks can also directly undermine military operations. Europe’s armed forces must now prepare to be called upon more frequently to fight fires, reinforce flood defences, support evacuations, deliver emergency supplies and restore critical infrastructure. This will divert personnel and logistical capacity away from other security threats.This is already happening. According to the Council on Strategic Risks, militaries were deployed over 30 times in response to wildfires across Europe in June and July alone. In July, Spain deployed more than 1,200 military personnel and 400 vehicles for a single major fire. In the UK, around 200 military personnel are currently fighting wildfires in south Wales. How to respondThe scale and scope of these risks require action. The NATO Science and Technology Organization’s January 2026 climate security assessment already acknowledges climate change as a ‘systemic problem’ that impacts all other security risks.  It concludes that NATO’s existing Climate Change and Security Action Plan (published in 2021) should be thoroughly updated and translate climate knowledge into practical action. This should be supported by better, more institutionalized coordination between scientists, defence professionals and policymakers. Beyond NATO’s plan, a broader European security-based approach to climate change is needed. It must achieve four goals.Deal with wildfiresFirst, it must strengthen preparedness for climate disasters that are already happening. In the case of wildfires, this means acting before they break out. This involves managing dry vegetation and landscapes, enforcing fire-safe building and land-use rules, monitoring high-risk areas and reducing preventable sources of fire. It must account for both deliberate and accidental fires. It also requires adequately staffed and trained emergency services, better specialist equipment such as ‘water bomb aircraft’, stronger early-warning and evacuation systems, and greater capacity to respond to several emergencies at once. The military has an important supporting role within this system. Armed forces will need to provide aircraft, engineering expertise, communications, logistics and personnel when civilian capacity is overwhelmed, particularly during large-scale evacuations or simultaneous disasters. But they should form part of a planned, multi-agency response rather than become a permanent substitute for underfunded fire and rescue services.Consider climate spending as securitySecond, governments need to consider spending on climate as a core security investment. European NATO members have committed to spend 5 per cent of GDP on defence by 2035, including up to 1.5 per cent on broader investment related to defence and security, such as critical infrastructure and resilience. Despite NATO recognizing climate change as a security threat, it has not explicitly designated climate adaptation as defence-related spending. But investing in climate change adaptation can make a critical contribution to long-term resilience.  Related work Preparing NATO for climate-related security challenges Likewise, investments in infrastructure, civil protection and preparedness should all be climate-resilient and future proof. These could potentially be categorized under the vaguely defined 1.5 per cent of broader security-related spending. Considering climate measures as important security investments would therefore help to focus scare resources and improve resilience, while also potentially helping members to meet their spending commitments.Address underlying causesThird, a security approach must accelerate decarbonization to mitigate climate change as the underlying cause of the escalating threat. European climate and energy policies have helped cut EU27 emissions to approximately 35 per cent below their 1990 levels, but the EU27 is still responsible for 3.2 gigatonnes of greenhouse gas emissions annually, or six per cent of global emissions. Europe’s decarbonization matters not only for reducing emissions but also for its global signalling effect in encouraging other countries to follow suit. Preparedness and adaptation can reduce casualties and damage, but they cannot keep pace indefinitely with worsening heat, drought, floods and fires. Europe is the world’s fastest-warming continent. Its existing policies and climate pledges will not be sufficient to adapt fully to the expected 2.4°C to 3.9°C increase in global mean temperature this century. Investment in resilience must therefore be accompanied by rapid emissions reductions and stronger political commitment to decarbonization. This is the principal way to prevent the threat from becoming progressively more severe and unmanageable. Public involvementFourth, building societal resilience to climate shocks will depend on governments working with the public. This does not mean just issuing one-off instructions during emergencies. People need trustworthy information, practical guidance and opportunities to participate in local preparedness activities. Examples include ‘heat-health’ plans to protect people from heat-related risks, water conservation to cope with drought, and evacuation exercises and support for vulnerable neighbours.Such measures are all part of the basic infrastructure that allows society to continue functioning during a crisis.The benefits outweigh the costs What will all this cost? Assessments suggest the EU needs to invest approximately €70 billion a year in climate adaptation until 2050 to prevent the worst impacts. The UK needs to invest around £11 billion annually, according to a May report by the UK Climate Change Committee. Although these sums may appear substantial, they are modest compared with the escalating cost of inaction. Climate-related disasters caused a yearly average of €45 billion in direct EU losses during 2020–2024, while inadequate adaptation could cost the UK £60-260 billion annually by 2050.  Related work Europe’s summer of fires: Burnham must centre climate adaptation in policies Many measures will pay for themselves several times over. For example, according to the European Commission’s Joint Research Centre, every euro invested in protection against coastal flooding can avoid around €6.35 in damages while also saving lives and protecting other resources. The estimated costs for adaptation are small compared to the risks averted and damage avoided. Climate adaptation should therefore be understood not as an environmental expense, but as a cost-effective and necessary investment in European national security and strategic autonomy.Tune in to our upcoming episode of the Independent Thinking podcast this Friday to hear more from our experts on the challenges of climate change. 

Chatham House

AI to help planes avoid climate-warming vapour trails
Education

AI to help planes avoid climate-warming vapour trails

A new UK trial hopes to reduce the condensation trails from planes, which can trap heat in the Earth's atmosphere.

bbc

Kondensstreifen verhindern: Mit KI gegen Erderwärmung
Society

Kondensstreifen verhindern: Mit KI gegen Erderwärmung

Google und Forschungspartner testen erstmals, wie Künstliche Intelligenz die Bildung von klimaschädlichen Kondensstreifen im Luftverkehr verhindern kann. So soll die „Operation Blue Skies“ gelingen.

FAZ

US states call for big changes to Instagram and Facebook as Meta child privacy trial begins
Politics

US states call for big changes to Instagram and Facebook as Meta child privacy trial begins

US states are suing the social media giant to force an overhaul of its platforms for young users.

bbc

A French Start-Up, Inbolt, Makes Robots See, and Work, Better
Business

A French Start-Up, Inbolt, Makes Robots See, and Work, Better

Inbolt, a French start-up that sells robot vision systems, helped a Stellantis plant in Detroit become a top performer in the company.

New York Times Business