BAGHDAD — At the bottom of the economy here, life revolves around that humblest of commodities, garbage.

On a recent morning, Hamad Tarish dropped down a bag of cans and scrap metal, showing off blackened hands that rarely touched running water. For Mr. Tarish, 22, garbage is his capital. Every night around 3 a.m. he leaves his home to scavenge in a neighborhood to the south before the sanitation trucks come, hustling to avoid the police and to compete with other collectors.

In front of a stretch of makeshift cinder-block houses he threw his haul onto a scale. Seventeen pounds of aluminum cans, worth $6. A hunk of scrap metal and a pound of wire from which he had burned the rubber insulation, each good for $2. In all, $10 to buy food for himself, his wife and their two children.

For Mr. Tarish, who said he usually earned about $4 a day, it was a good harvest. Tomorrow might not be as good, he said. You could never tell. His eyes were bloodshot, his limbs hung heavy with exhaustion.

“A kilogram of meat is $15,” he said. “It’s impossible. I don’t buy sugar for tea.”

As Iraq’s economy languishes, Mr. Tarish has found his livelihood in an underground economy that sustains and organizes whole neighborhoods. Around him were his fellow foot soldiers in this new marketplace — the nocturnal scavengers, the middlemen who bought the scrap for cents on the pound, the dirty horse-drawn carts bringing in more debris from more remote parts of the city. And around these were piles and piles of garbage, sorted by type and swarmed over by flies.

“People here are living on garbage and animals,” said Ali Hasun, 27, a middleman, gesturing around him at a horizon of improvised houses pressed one against another as far as the eye could see — a midsize city subsisting on refuge.

Mr. Hasun is a father of four. Like others, he said he would like a regular job but could not find one. Some days he earns as much as $20, other days, nothing.

“Before it was embarrassing to let other people see us buying garbage,” he said. “We are young and care how we look. But after a while you forget.” And besides, he added, noting the brisk trade going on all around him, everybody else was doing it, too.

Mr. Hasun and Mr. Tarish live in a vast slum named Naser City, or Victory City, one of dozens of squatter settlements that have sprung up around Baghdad since the American invasion of 2003. Naser City, one of the largest, grew exponentially through the waves of sectarian violence that displaced people from other areas, and more recently because unemployment has forced others to leave their homes. With Baghdad experiencing a housing shortage, the squats — where land is free but illegal, and housing is whatever a family can erect — are in a construction boom.

Residents of Naser City believe that as many as 500,000 people live here, but that is just guesswork. The governor of Baghdad estimates that 600,000 people live in 42 squatter encampments around the city — roughly the population of Boston. But in a country without a census, where few government agencies venture into the squats, this, too, is more belief than fact.

“Those people need to pick up garbage because there are no chances to work,” said the governor, Salah Abdul-Razzaq.

Because the communities were not legal, he said, the province did not provide services like education, medical care, security, electricity, sewage and clean water. “The neighborhoods become places for criminals, thieves, terrorists, kidnappers. But we can’t move them out because there are no alternatives.”

Thijel Ebrah, 58, moved to Naser City from Amara, a city to the east of Baghdad, in 2005, at the height of sectarian violence there. He could not find work in Amara; in Baghdad, the situation was even worse.

He stood in front of the two-room cinder-block structure he built on vacant land, where he now lives with his wife and five children. Three of his children commute to a school outside the settlement; two support the family by collecting garbage. They cook and heat the house by burning wood, because oil is too expensive, he said; when there is no wood they wrap themselves in blankets. An open sewage ditch ran in front of the house.

But the hardest part, he said, was sending his children off to collect garbage.

“I’m afraid one day they won’t come back,” he said. “If they go out in the morning I’m afraid. If they go out at night it’s worse. The security forces see them digging in the garbage and think they’re hiding I.E.D.’s,” he said, using the shorthand for improvised explosive devices.

“We lived with injustice during Saddam, but now it’s worse,” he said. “The government does nothing.”

For the collectors, scavenging has its codes. Informal turf agreements keep people from fighting over the same territories. And timing is everything.

“There’s two shifts,” said Karar Kareem, 16, who lives in a large squat at the edge of Sadr City, the Shiite enclave in Baghdad. “People throw out garbage late at night and early in the afternoon. It depends on how early you go out, and how quick you are.” Cans are more plentiful during the hot summer days, when people drink more.

And holidays like Id al-Fitr, at the end of Ramadan, are bonanzas. “I get luckier during Id, when people throw out more garbage,” he said.

For now, garbage is plentiful, because sanitation crews cannot keep up. But there are signs of change. On a recent morning, Haider Saad, 23, found his usual hunting ground dried up. “The garbage truck collected the garbage at midnight instead of early morning,” he said, gazing with despair at a clean street.

Baghdad’s mayor, Saber al-Essawy, said the city planned to move all pickups to overnight hours, and was building two recycling plants. “In the future, those people will have to find jobs,” he said. “That’s what we want, because they are a bad mark on our society.”

Mr. Saad did not take this challenge lightly.

“We look at the garbage truck as our first enemy,” he said.

Then he moved on. For the collectors, there is no rest.

Wirtten, Jan. 2011