My whole economic worldview changed when I read the works of Hernando de Soto Polar (http://en.wikipedia.org/wiki/Hernando_de_Soto_Polar). He demonstrated that a huge free market economy of honest, legitimate work (like private buses) exists completely outside the law, technically illegal, all over the world. The more restrictive the regulations, the more free enterprise pops up. There are two problems with this. First, those entrepreneurs lack protection of the law, so they are vulnerable to losing their livelihoods due to crime or motion of power. Second, this shadow economy is simply not measured by mainstream economics, so in countries where the shadow economy is large, our perception of their relative economic status is skewed.
It's sobering stuff for a libertarian to read.