Beyond the Formal Economy: Challenges of Conceptualizing and Governing the informal.
Snehashish Mitra
Kalyan Sanyal and Rajesh Bhattacharya, Beyond the factory: Globalisation, informalisation of production, and the new locations of labour. Economic & Political Weekly 44 (22): 35-44, 2009.
Satish Deshpande, Capitalism, exclusion, transition: The politics of the present. Economic & Political Weekly 47 (16), 2012.
Vinay Gidwani and Joel Wainwright, On capital, not-capital, and development: After Kalyan Sanyal. Economic & Political Weekly 49(34): 40-47, 2014.
Keith Hart, On the informal economy: the political history of an ethnographic concept. CEB Working Paper N° 09/042, 2009.
Keeping in retrospect the decisions are undertaken and implemented by India in recent times, such as demonetization and Goods and Service Tax, debates over the comparative benefits of being an affiliate of the formal and informal economy have animated the intellectual circles.[1] More the economic enterprises are a part of the formal economy, easier it becomes for the state to monitor their activities and subsequently collect the tax. Such arrangements, while holds the potential of increasing productivity, does not discount its impact on the employment figures in the informal economy, which provides sustenance to 84.7% of the labour community (NSSO 2011-12) in a country like India.[2] The series of article in this session, the ones based on Kalyan Sanyal’s magnum opus Rethinking Capitalist Development illuminates the different methods of understanding the different facets of the economic structure with a critical focus on the ‘need economy’. Keith Hart elaborates on her understanding of the informal economy over time, on the basis of ethnographical engagements in Africa.
In her earlier days, Hart had considered the informal economy as a mere appendage to the formal economy. Bureaucracy has always struggled to reconcile to the significance and existence of the informal economy. Hart opines that despite the shortcomings of bureaucracy, there remain several large-scale coordination which can be better served by the bureaucracy rather than leaving it to the autonomy of the self-organized economic agencies. Over the time, Hart while realizing the meaningful presence of the informal sector points out that there lies an ambiguity about what does informal economy means, is it everything outside the formal? Moreover when we employ the term ‘informal/formal sector’, the word ‘sector’ creates the impression of a mutually exclusive domain. Such distinction is misfounded, especially in the post-neoliberalization world where we witness outsourcing of many activities to unorganized labour units, which produces goods and services which are traded in the capital-intensive formal economy. The unavoidable question remains, how much of deviation from the ‘form’ in the formal, meaning the binding rules, will be accepted by the society? Do we celebrate the diversity of economic arrangements or do we curtail the plurality by imposing a regime of surveillance? Hart urges the readers to rethink the role of state and to what level of decentralization of power would strike the feasible coordination. Hart’s unwavering faith in bureaucracy needs to be interrogated in the context of the marginal spaces, say the highlander societies (for eg. Schendel’s Zomia), which have historically moved from one place to another, and thereby avoided taxation by any kingdom. Postcolonial borders have splintered many such communities between different nations. The self-governing structures were dismantled to a large extent, modern state bureaucracy in most cases have manufactured a dysfunctional society in such places (eg. –Manipur in India, Chin state in Myanmar). Clearly, bureaucracy demands tax revenue for it to sustain, which is traditionally not possible to extract from such communities despite the development of state institutions and infrastructure. Rather the state needs to allot a significant ratio of subsidy to keep the bureaucracy of such states functioning (centre to state ratio of funds in most northeastern states of India exceeds 75%). Then how does the state compensates for this expenditure? Renting out the resources of such region, which are mostly rich in biodiversity, could be one way out, in the forms of dam, oil extraction, timber collection etc. If the recent sub-regional connectivity projects are considered, most of them attempt to connect such unruly peripheral spaces with the power centre of respective countries. Therefore the uncritical acceptance of the bureaucracy needs to be further engaged before it can be voluntarily legitimized, as Hart does.
The main reason why the highlander societies have had difficulty to adapt itself to the modern state is primarily because they have been alien to the concept of accumulation. When shifting cultivation is practised (in large parts of Arunachal Pradesh, Mizoram and Nagaland), against settled agriculture, it is not possible to harvest more than what one needs. Enters Kalyan Sanyal with his elaborate articulation about the distinction between ‘need economy’ and ‘accumulation economy’. Sanyal’s work is however not derivative of the resource extraction pattern in the highland societies, for him ‘need economy’ remains the ‘postcolonial space of confinement’; however extending his thesis to such frontier regions, some which have managed to stay outside both capital and the nation-state, and thereby ‘do not fall under ambit of neoliberal capital’, can offer some new insights. Coming back to a familiar economic and topographical terrain, Sanyal points out and rightly so, that the transfer of resources from the traditional livelihood, which has taken place in the neoliberal period, have not been accompanied by a simultaneous transfer of labour. This is a process of dispossession which leaves out proletarianization, leaving out a majority of the labouring population. As the informal spaces of livelihood get curtailed, the household becomes the last resort of economic activities where people are self-employed and are often supported by reciprocal kinship network. Sharing the income becomes a potent mechanism for survival. The existence of such informal and insecure living contradicts the earlier models of dual economy, where dualism is fated to wither away with capitalist accumulation. Bringing focus to urban slums like Dharavi in Mumbai, Sanyal argues that the resistance to any redevelopment plan comes from the producers, not the squatters. The mobile nature of the capital has neutralized the potential of labour movements to extract their rightful dues, Sanyal advances Webster et al’s (2008: 12-13) concepts of the symbolic and logistical power of protests, by arguing that they revolve around exploitation of labour by capital. The nature of neoliberalization has created a new class of labourers outside the capital, argues Sanyal. While this group remains outside capital, they are engaged in a constant battle to survive in the periphery, not by confronting capital, but rather opposing dispossession without proletarianization. Through the resistance in Dharavi, Singur and opposition of small traders against shopping mall, Sanyal makes his case.
With regards to Gidwani and Wainwright’s reading of Sanyal, they problematize the dichotomy of need and accumulation economy by deducing that both poor and rich, if they save something for the next can be dressed as accumulation going by Sanyal’s own definition. Gidwani refers to the Marxian interpretation of M (money) to C (commodity), as similar to that of M to C to M model of Sanyal, hence M is the common means employed both by a poor and rich person. However money doesn’t chase the same commodity for different sections of the society, the poor may run to the ration sop with the extra cash, while the rich may reach for a mobile app to buy luxury items which will be delivered at the doorsteps. We need to probe deeper into such diverse consumption pattern, in order to evaluate Gidwani’s objection to Sanyal. Deshpande, in his reading of Sanyal, offers a useful proposition of ‘post-national’ rather than ‘post-colonial’ as he locates that the post-national captures the practice of governing the outsiders of the capital through the small percentage of accumulated wealth in the economy through development programmes. Deshpande urges the readers to think about the shift from politics of transition to the politics of exclusion while questioning the uncritical acceptance of transition by Sanyal.
Keith Hart is not a woman!
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