When Wilbert Rideau was 19, in 1961, he killed a man in a bungled bank robbery. After being convicted and sentenced to death, he was sent to Louisiana State Penitentiary, known by prisoners, guards and locals as Angola after a slave plantation that previously existed on the site. Rideau was given the label C-18. The C stood for “condemned”, and the number denoted his place on the death-row list. His fate was to be the electric chair.

Rideau lived in isolation on death row for more than a decade, and read voraciously. He became interested in journalism and started to write. By the mid-1970s he was living in the main prison and editing the penitentiary’s in-house monthly magazine, the Angolite. In the end Rideau avoided execution, and today he is undoubtedly Angola’s most famous former prisoner. Under Rideau’s 20-year editorship, the magazine won many national awards, but he first made his name as a prison reporter with a column he called The Jungle. The very first topic he chose was the working of the prison economy.

Today there are almost 2.3 million prisoners in the US – by far the highest number of any country in the world. Louisiana today has the second-highest incarceration rate in the US (after Oklahoma overtook it in 2018), with a male incarceration rate that far exceeds the national average, and Angola is the state’s only maximum-security jail. It is also the country’s largest, covering an 18,000-acre site that is larger than Manhattan. On a mission to investigate the world’s most extreme economies, I set out for Angola. My hunch was that I would find examples of simplistic barter; what I discovered was an innovative, complex and modern system of hidden trade that offers an important lesson about the way economies work.

Facebook Twitter Pinterest Louisiana state penitentiary. Photograph: Aerial Archives/Alamy

Serving prisoners and ex-convicts say the first law of prison economics is unsatisfied demand and the innovation that it stimulates. Cut off from the outside, prisoners find themselves lacking staples and unable to make choices that they had previously taken for granted. The urge to get hold of simple material goods is strong, and prisoners I met described the first few weeks inside as a shock during which time they learn the rules of their new world and adapt to the reality that they have lost not only their freedom but also their possessions. Today in Louisiana new inmates receive basic supplies: standard-issue clothing, a bar of soap and some lotion. But there are lots of day-to-day items they lack and want: deodorant, decent jeans, better sneakers. It was the same in the 1960s, Rideau told me when we met in Baton Rouge, Louisiana’s capital: while you got simple provisions, a lot of effort went into getting hold of extra comforts.

Some goods are available via official channels, but getting hold of them takes a long time. When a prisoner in Angola orders a book or is sent one, it can take six months, or longer, to reach them, since censors need to check the content. The delay is an example of a general theme in the Louisiana prison economy: it operates in a time warp.

Time works differently in Louisiana prisons in part because the state’s sentences have, historically, been so long. Reforms since 2017 have begun to make some sentencing guidelines more lenient, but for decades everyone convicted of murder in the state got a mandatory life sentence, as did any accomplices or friends who were at the scene. Even nonviolent crimes have often led to huge sentences in Louisiana. Mandatory sentences for repeat offenders often doubled with each conviction. There was also, until recently, another rule that meant a fourth offence could have a mandatory minimum of 20 years and a maximum of life in jail. I met one ex-Angola resident, Louis, who spent 20 years in Angola on a drug charge. He explained his case isn’t the worst: Timothy Jackson, a man caught stealing a jacket from a shop more than 20 years ago, is set to spend the rest of his life in Angola. The average sentence in Angola is almost 90 years.

In many prisons, simple goods that are cheap and insignificant on the outside can have huge value inside; in facilities like Angola, the ultra-long sentences take this to another level. In his memoir, In the Place of Justice, Rideau explains how tiny improvements can transform a prisoner’s life. Like the other men on death row, he was confined to a small cell. Three of the walls – the back and two sides – were brick. The front wall was a grid of bars, offering no privacy as guards and other prisoners walked past, and letting in a cold draught during winter. Getting hold of a blanket or a curtain to hang over the bars could have a transformative effect on an inmate’s life. When your world shrinks to a three-sided box, a piece of cloth that will grant you privacy and warmth becomes a fundamental need you will work hard to satisfy.

One way for an inmate to improve his lot in Angola is through official work. Another nickname for the penitentiary is “the Farm” – it is surrounded by fields planted with crops including corn, wheat, sorghum, soybeans and cotton. Inmates toil all year, including in August, when temperatures can rise to around 38C. Fruit and vegetables are grown and supplied across the state prison system. It also raises revenue: Louisiana’s Prison Enterprises, which sells goods produced by inmates, brought in almost $29m in 2016, much of it from Angola.

The prisoners’ official work schedule is designed to take up most of their day. Inmates cannot refuse to work, and the vast majority have a job of some kind (exceptions include men on death row or in solitary confinement). There is a clear hierarchy of jobs, and those in the fields are at the bottom. One current prisoner explained to me why being sent out “picking greens” is the worst gig in the prison: the shift lasts eight hours and it is hot, hard work. The men work in parallel lines, tossing waste plant matter to their side. Accidentally hitting another prisoner with a discarded stalk can cause a fight; cutting your own hand while picking can be taken as an attempt at self-harm, leading to a tedious investigation. Those who serve a full decade without breaking any rules – fighting or self-harm can both set the clock back to zero – are awarded “trusty” status. These prisoners get prized jobs such as working as a caddy at the guards’ golf club, or as a cleaner at the small museum devoted to the history of the penitentiary located just outside the main gates.

The official payroll at Angola works on a different scale from the outside world. For years, inmates say, pay in the penitentiary ranged from 2¢ to 20¢ per hour. While recent reforms lift this, most of those I spoke to said picking greens or other basic farm work would earn just 4¢ per hour, giving them a weekly wage of $1.60. At this pay rate a convict must work for 181 hours to earn $7.25, the federal minimum hourly wage in the US. Those on the higher rates of pay can be quickly demoted. One lifer explained how his trusted status was revoked and his pay put to the bottom of the scale when he was accused of taking a wrench from the workshop, something he said he did not do. Whatever the truth, with good behaviour he can expect an annual raise of 4¢ – it could take him several years to get back to the higher scale. Work in Angola is hard, mandatory and not lucrative.

Facebook Twitter Pinterest Prisoners at work at the Angola penitentiary. Photograph: Sophie Elbaz/Sygma via Getty Images

Once cash has been earned, a prisoner can spend it at the commissary, of which there are seven in Angola. These official shops are a lifeline for prisoners seeking material comforts. In Angola they carry Russell Athletic sweatshirts, Fruit of the Loom T-shirts and a range of footwear. The other big category is food. The inmates are served three meals a day but say they are tasteless; by contrast, the commissary offers snacks such as sweet and hot Asian sauce, Texas Tito’s jumbo whole dill pickles and jalapeño-flavoured cheese curls. The quantities Angola orders reveal the scale of the operation: a recent document sets out a tender for 3,000 boxes – 312,000 packets – of Cool Ranch-flavour Doritos.

Prisoners know they are a captive market. The biggest complaints are about the prices: prisoners are convinced they are being ripped off, paying more than they would in the outside world, and that their cost of living is rising faster than their wages. They have a case. Until recently, pay scales in Angola have been held at the level seen in the 1970s. A packet of rolling tobacco back then retailed at less than 50¢, so an inmate on 20¢ could earn a packet in half a day. Today it costs around $8 – they would need to work a full week to buy a pack.

Louisiana is not alone in requiring its prisoners to work on pay scales that bear no relation to the cost of goods they might want to buy. Legally speaking, prisoners do not need to be paid at all (the US constitution’s 13th amendment prohibits all forms of slavery and involuntary servitude, “except as punishment for crime”). Prisoners in Georgia make furniture and road signs, and receive no payment. In Missouri, convicts are paid $7.50 a month for full-time work – an hourly rate of around 4¢. The UK’s system is less extreme, but similar. Pay rates average around £10 for a 35-hour week, and the same price complaints arise: favourite canteen purchases – a bag of salted nuts, noodles, breakfast cereal – often sell for over £2. Earning one of these items on prison pay can be almost a full day’s work.

In many ways, a prison’s official economy is like that of a regular town. In Angola there is a world of work, with jobs and pay, promotions and demotions. And there is a world of shopping, with consumer goods and stores. But prisons are economic systems in which the cost of goods bears no relation to wages or the buying power of the workforce. The most important connections of a market economy – the prices that link work and pay, demand and supply – have been severed, intentionally, by the authorities. The official prison economy exists, but it may as well not, leaving the prisoners to build their own underground markets.

In the underground prison economy, things that might seem simple are hard, and things that might seem impossible can be pretty easy. The case of John Goodlow and his pecans illustrates why. For 20 years Goodlow was the pecan king of Angola, Wilbert Rideau told me. Pecan nuts are grown across the US south, and homemade pecan pralines are a favourite treat in Louisiana. Goodlow made his own – the best ever, said Rideau, “better than outside” – and sold squares of it for $2. He probably could have raised his prices, said Rideau: they were so sought after that Goodlow had often pre-sold a whole batch before he had even finished cooking it.

The fact that making pralines was possible in a maximum-security prison is surprising. Cooking them requires lots of ingredients, as well as pots, a hotplate and an oven. “Prisoners are never powerless,” Rideau said. “They always have the power of rebellion, violence, and just screwing up operations and making life hard for the management.” The power prisoners have means that management often cooperate, and facilitate certain requests, he explained. In prisons, on low-level matters, power is shared, and there is room for simple tradeoffs. So getting hold of a pan can be fairly easy.

But some things that are mundane outside are outlawed in jail. Anything that raises the probability of escape or violence is banned: weapons, drugs, cigarette lighters, mobile phones. But a host of innocent-seeming items are contraband, too: savoury spreads like Marmite contain yeast and can be used in illicit brewing; chewing gum can be used to make an imprint of a key or lock; baby oil can make an inmate’s arms slippery, rendering them impossible to restrain.

Facebook Twitter Pinterest Inside Angola prison. Photograph: Giles Clarke/Getty

Physical money itself counts as contraband. Instead, prisoners’ wages are loaded on to cash cards that can be used at the commissary. This keeps hard cash out of prisoners’ hands and is a way to deprive powerful inmates of resources that could help them bribe guards. The logic means cash is treated as top-level contraband, and any prisoner with “trusty” status caught handling it loses their privileges.

The lack of cash is a problem for prisoners operating one of the businesses to which guards tend to turn a blind eye: baking pecans, selling fried chicken, grooming services ranging from haircuts to tattoos to shirt-pressing. These prisoner entrepreneurs can offer the goods or service, but cannot accept cash as payment. One Angola inmate told me that a prisoner with a spotless record for good behaviour would be unlikely to take a $5 bill as payment, even if the item being sold is worth $2. Money is too risky to hold – making US prisons one of the few places on earth where the dollar is not accepted. Instead, prisoners are pushed towards a barter economy, in which goods are swapped rather than bought and sold with money.

The problem with barter is that it can be hard to find a swap that works. Often the person who wants what you are offering will not own the thing you want. Economists have called the rare situation in which a swap will work out the “double coincidence of wants”, ever since William Stanley Jevons explained the problems with barter, and how money solved them, in his 1875 book Money and the Mechanism of Exchange. Jevons outlined four separate roles that money can play. First, money is a medium of exchange, something that everyone accepts and that “lubricates the action of exchange”. Second, it is a “measure” – the way that prices are set out today. Third, it is a “standard” by which future prices may be set. Finally, it is a way to “store” value – it can transport economic value over distances or through time.

Because lots of things have the properties Jevons set out, lots of things can become a circulating currency. When a currency emerges in this unofficial way, it often has particular physical attributes that make it suitable. Above all, it must be an object that can change hands hundreds of times without losing value. Consumer goods – clothes, shoes, books – would be no good as currency since once they are bought they become second-hand and their price drops. Commodities – salt, sugar or grain – are much better currencies: second-hand salt is as good as new.

Furthermore, a commodity tends to make a good currency if it is “divisible” – easily chopped up and used in smaller trades. Another key criterion is durability. Food commodities that rot or spoil would make a poor currency. And finally, ease and cost of transport matters. Cotton, which is divisible and durable, may seem like a good informal currency, but it is so light that it lacks value in small quantities: any meaningful trade would require transporting huge sacks of it.

Prisons have a rich tradition of inventing informal currencies. The most obvious prison currency – always saleable and easily divisible – is tobacco. For a century, underground trading in Angola ran on it. But in 2015 smoking was banned, and tobacco and cigarettes became contraband. Around the same time, an aggressive new drug called mojo – a type of synthetic cannabis – began to infiltrate the prison, and many men became hooked. The underground economy was rocked. Its currency was now illegal, yet there was huge demand for this new drug. The foundations of the prison economy had shifted: what many men wanted changed, as did the way they could pay for it.

The response in Angola, and across Louisiana’s prisons, was to adapt rapidly, inventing a new currency, one that is as high-tech as the designer drug it is often used to purchase.

On my second trip to Louisiana, I arranged to meet an ex-convict in his mid-30s who had recently been released after 16 years in state prisons, including Angola. “Most people in prison are looking for some kind of way to get high,” he said. “It is a way to kill time.” But there is a more specific reason why mojo took off so quickly: “It changes so much that it is hard for them to drug test for it.” Continual adjustment of the compounds used in synthetic cannabis means there are thousands of variants, making detection difficult.

Louisiana prisoners remember mojo first appearing in 2010 or 2011. One ex-convict I met in New Orleans remembered the rumours: “Everyone was like: ‘You can smoke it and pass the drugs test.’ But in my mind I was like: ‘They test you for THC, so if it is not THC that is getting you high, what is getting you high?’” It was a wise decision to be cautious, he recalled: “I said no, but they all started smoking it. Some started having seizures and aneurysms, and people were freaking out and getting paranoid and scared. I saw a dude get butt-naked and jump in a dumpster and refuse to come out. They were going crazy on it. But they loved it.”

The first rule of prison economics is unsatisfied demand, and on this measure mojo had become king in Louisiana’s prisons. The demand was huge. Once the drug had been smuggled in, the only challenge that remained was how to pay the smugglers. The informal currencies used inside the prison are often of no real use outside, so prisoners running serious hustles like mojo smuggling don’t use them – the way to persuade guards to smuggle contraband in is with cash.

The use of dollars inside the prison is a puzzle. Anyone running a major drug operation is going to need to shift large cash balances, but dollar bills are something sniffer dogs can detect, and any digital transfers can be traced. It turns out that drug traders and smugglers face none of these risks, because Louisiana prisons have a remarkable new currency innovation. “Cash is contraband, but people have got cash,” the former prisoner explained, “but it is not cash like cash in hand. It is untraceable. It is all based on numbers. People pay each other with dots.”

Facebook Twitter Pinterest Life inside Angola. Photograph: Gilles Mingasson/Getty

The new “dot” payment system is the latest in the ever-evolving system of prison currencies. This new form of money started with a technological innovation. It was an idea that Blockbuster video came up with in the mid-1990s to replace the old, inefficient system of paper gift certificates: its first store card. Plastic and shaped like a credit card, it could be loaded with dollars. Unlike a paper gift certificate, it was durable, allowing parents and relatives to make periodic uploads as part of an allowance. The card formed a so-called “closed loop” between the person loading the credit, the company providing the goods and the person consuming them. Other stores quickly followed suit. By the late 1990s, most retailers had adopted some form of gift-credit system using plastic cards.

Financial firms spotted an opportunity, and soon offered their own cards. Money still had to be pre-loaded on to these cards, but the system was now an “open loop”. The cards were not restricted to a specific store – the cardholder could spend the money anywhere, or even withdraw it as cash. The idea was that the cards would be used by young adults – parents loading college kids’ cards with a monthly allowance – or as a modern alternative to traveller’s cheques.

The use of prepaid cards has rocketed in the US in the past 20 years. Usage tripled from 3.3bn transactions in 2006 to 9.9bn in 2015. While the innovation was a hit, the initial customers the financiers had in mind – well-to-do parents, cash-rich retirees on trips to Venice – were way off. Prepaid cards are favoured by people with a poor credit history, usually because they have overdue debts or are recent immigrants. In the US, users are more likely to be African American, female, unemployed and/or have no college degree. The cards are predominantly used in the south, most of all in Texas.

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The name of the prisoners’ new currency comes from the popular Green Dot brand of these cards, which carry the Visa or Mastercard logo and can be used to make purchases wherever regular credit and debit cards are accepted. Some users have found ways to set up an account for the card without using their true identification details. They then buy a second card, this one a single-use scratch card called a MoneyPak, which is used to load the debit card with credit of anywhere between $20 and $500. Both cards can be bought pretty much anywhere: at Walmart, at CVS or any other pharmacy. Scratching away the back of a MoneyPak reveals a 14-digit number. This number, the “dots”, is the vital link, carrying up to $500 of buying power. The user goes online, logs in to their account and enters the number, and the credit appears, instantly, on their debit card.

The person buying the Green Dot card can pay in cash, as can the person buying a $500 MoneyPak, so there is no trace of who owns them. The beneficiary of the credit does not need to see the MoneyPak itself – all they need are the numbers. Texting someone the 14-digit “dots” using a contraband phone, sending them a photo or letter with the numbers, or simply communicating the numbers over a telephone call will do. The dots are a currency close to cash: an instant, simple and safe transfer of value over long distance.

To make a large cash payment, a prisoner asks a friend on the outside to buy a MoneyPak and to pass on the dots once they have done so. These 14 digits can then be exchanged with a guard or another prisoner for something in the prison, including drugs. By exchanging dots instead of cash, the prisoners keep their hands clean. The free people on the outside – one buying the MoneyPak, the other receiving its value on a Green Dot card – do not need to meet each other, know each other or link bank accounts. Using prepaid cards in this way creates an informal currency that is durable, divisible into payments as small as the MoneyPak minimum of $20, and is accepted everywhere. It fits precisely the standards for a good currency that Victorian economists set out in the 19th century.

There are broader lessons from this currency invention. Many policymakers regard the rise of online banking as a way to tackle illicit trade and money-laundering, because banking digitally leaves a trace. This should mean that digital economies are easier to police than cash-based ones. Some countries are even considering banning paper money entirely as a way to clean up their economies. Yet an understanding of how currency innovation works suggests these hopes are credulous: from remote islands to high-security prisons, money invention is informal, organic and – as Louisiana’s prisons show – can now be untraceable. The new digital “dot” currency is reportedly already being used to launder cash across national borders.

Despite the damage illicit prison markets can do, one ex-convict in his 30s defended the underground prison economy to me: “I’ve got friends inside. This is how they support their families.” He said most prisoners have limited chance to improve their lot. “So they sell drugs, they run tickets and they gamble; this is how they make their money.” Veterans who have spent decades in Louisiana’s prisons defend their economy too, insisting that underground exchanges are a way to keep life inside the prison calm.Simple trades – haircuts, pecans, books, shirt pressing and even tattoos – that were once made using tobacco have shifted to alternative currencies including coffee, packets of noodles and even tins of mackerel. They are a way to make the ultra-long Louisiana sentences a little easier to bear.

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For those concerned about the future, the hidden economies of the Louisiana prison system offer a vital lesson. It stems from the power of the informal economy in enabling a society to recover from a shock, and the extraordinary levels of effort and innovation that people will use to establish a trading system if theirs is damaged or destroyed.

Louisiana’s prisons have parallel economies. There is the illicit drug economy that runs on its untraceable dot currency, and alongside it a more innocent marketplace where basic necessities are mediated with some agreed item – currently coffee – acting as a currency. Trades in both economies work because of the most basic law of prison economics – that a prison is a place defined by unsatisfied needs, tastes and demands. Both economies are self-built, organic and highly innovative. Both show that a currency, the provision of which can seem like the ultimate role of the state in an economy, can be established completely informally. Prisons show that the human urge to trade and exchange is impossible to repress, and that solutions to future challenges are as likely to come from informal markets as formal ones.

Adapted from Extreme Economies: Survival, Failure, Future – Lessons from the World’s Limits by Richard Davies, published by Bantam Press on 5 September and available at guardianbookshop.com

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