The underground economy is usually divided into two distinct sectors. In the first, transactions (and transactors) are classified as unambiguously criminal, as a menace to legitimate society that must be addressed by police measures. In the second, otherwise legitimate citizens deal in legal goods and services in illegal ways, through tax and regulation evasion. Not only have the frontiers between the legitimate and the criminal sectors of the economy blurred, but the distinction between the explicitly criminal and the merely "informal" aspects of the modern underground economy has become largely meaningless. Given the growth of underground activity, this means that the issue must now be addressed not just on the enterprise level, as a police matter, but on the level of the economy as a whole, by economic policymakers. This is something that many developing countries realized long ago. The paper therefore asks whether developing countries have been any more successful in using monetary, fiscal, and balance-of-payments policy to mitigate the adverse social and economic impact of widespread underground economic activity than have Western countries that have relied mainly on the sanction of criminal law. The author concludes that both approaches are deficient insofar as they neglect the degree to which modern underground activity can no longer be viewed as a manifestation of "deviant" economic behavior so much as a virtual economic insurgency against the status quo distribution of income and wealth and the codes of economic behavior that accompany it. However dramatic are the financial manifestations of the spread of enterprise crime, ultimately the challenge it poses must be addressed at the political and ideological level. 189 notes and references