Session 6 - Informality - Nitesh

SESSION 6 – INFORMALITY

Papers reviewed:

Hart, K. 2009. ‘On the informal economy: the political history of an ethnographic concept’.

Sanyal, Kalyan and Rajesh Bhattacharyya. 2009. ‘Beyond the Factory: Globalisation, Informalisation of Production and the New Locations of Labour’. Economic and Political Weekly. Vol:  XLIV. No. 22: 35-44.

Deshpande, Satish. 2012. ‘Capitalism, Exclusion, Transition: The Politics of the Present’. Economic and Political Weekly. Vol. XLVII. No. 12: 41-44.

Gidwani, Vinay and Joel Wainwright. 2014. ‘On Capital, Non-Capital, and Development: After Kalyan Sanyal’. Economic and Political Weekly. Vol. XLIX. No. 34:40-47. 

SUMMARY

Papers by Hart, and Sanyal and Bhattacharyya, focus on the idea of ‘informal economy’. Hart tries to understand the concept by looking at the history of the concept as it was used in different time periods, in the last four decades of the twentieth century, in the context of development. Sanyal and Bhattacharyya focus mainly on the conceptualization of the ‘informal’ by bringing in the idea of the ‘need economy’. Informal economy, for Hart, is something which has always been defined vis-à-vis the formal economy. For Sanyal and Bhattacharyya, ‘informal economy’ refers to those activities which is formed through ‘exclusion’, i.e., dispossession of property because of the capitalist accumulation and the impossibility to join the formal sector. This ‘exclusion’ then gives rise to a mode of production which is completely different from the capitalist mode of production.

Deshpande, and Gidwani and Wainwright write a review of Sanyal’s book ‘Rethinking Capitalist Development’ and point to some of the main features of the book. One of the many points, that are common to both the reviews, is the difference between ‘need economy’ and the ‘accumulation economy’. Sanyal and Bhattacharya, also discuss this difference in their paper. ‘Need economy’ is considered as something entirely different from the ‘accumulation economy’. The main purpose of the accumulation of economy is the accumulation of capital, whereas the ‘need economy’ is focused mainly on subsistence. The need economy is non-expansionary. The proceedings gained in the need economy is used to buy materials for future production and for subsistence and not for accumulation.

One of the reviewers question this distinction in the sense that ‘accumulation’ can be considered as the ‘need’ for the future. The ‘informal sector’ is mainly related to this need economy and not to the formal economy. Hart notes how the idea of ‘informal’ was always in opposition or related to the ‘formal’. He traces its history to the formation of ‘National Capitalism’ and the constant evolution of socio-economic structures in history. The formation of the ‘informal sector’, for Sanyal, is also closely related to the process of globalization of capital. Hart considers ‘neoliberalism’ as a transformational shift in the capital-labor relations and in the formation of the ‘informal sector’. Deshpande, and Gidwani and Wainwright also are a little critical of how the ‘need economy’ is different from Marxist idea of ‘reserve army’. They claim that more arguments are needed to make the claim that both are different in fundamental ways.

Deshpande, and Gidwani and Wainwright, note that Sanyal argues against the idea that primitive accumulation is only a feature of ‘pre-capitalist or non-capitalist’ society. Sanyal argues that primitive accumulation is a feature of the today’s global capitalism in the sense that there is no transition of informal to formal as they both exists in the global capitalist society. Sanyal argues against the traditional Marxist idea of ‘historicism and transition’. Deshpande notes that for Sanyal the idea of primitive accumulation is a part of the capitalist economy which operates by continuous dispossession. Sanyal considers that the different modes of productions in a capitalist society, not as acontrary to the capitalist modes of production, but an essential part of it. Economic ‘difference’ then becomes as essential part of capitalism.

Sanyal also emphasizes on the idea of reversal of primitive accumulation, where the surplus in the capitalist production is distributed to the non-capitalist or informal sector in the form of ‘development’ and this causes the ‘capital and non-capital complex’. Sanyal, contrary to the traditional Marxist ideas’, argues that ‘informal’ and ‘formal’ go hand in hand and the idea of ‘transition’ form the informal to the formal is not a valid argument. Hart also notes that informal and formal sectors are not mutually exclusive and their definitions and understanding have evolved constantly in the last few decades. One of the many features that differentiates the formal from the informal is that of ‘regulation’. Formal sector is regulated by the state or some other forms of regulation, whereas in the informal sector this kind of regulation is not seen.

Sanyal and Bhattacharya also look at the idea of the informal economy through the idea of ‘self-employment’, without the traditional capital-labor relationship. The space created by ‘exclusion’ allows the laborers in the informal sector to form social and economic relations which are not based on the capitalist idea of ‘profit’ but trough the idea of ‘need’. Hart, as well as Sanyal and Bhattacharya, describe the relationship between the formal and the informal economy by pointing out that the formal economy ‘outsources’ some of its work to the ‘informal’. Sanyal and Bhattacharya see a potential for new forms of labor activism in the context of the informal sector. The traditional Marxist idea of labor activism which was mainly based on the idea of labor-capital dichotomy, is something that needs to relooked at.   

Sanyal and Bhattacharya note that ‘informalized self-employment’ is a result of surplus labor in the economy and this surplus labor is treated to have access to resources which can be instead used in the circuit of capital. The surplus labor is exploited not in the traditional Marxist idea of ‘exploitation’, but through dispossession and this is what they term as ‘exclusion’. The surplus labor force is excluded from the capitalist mode of production. They claim that pre-capitalist economies were broken down only by transfer of resources and not the transfer of labor, and this has led to the informalisation of the economy.

Sanyal and Bhattacharya, and Hart point to one important aspect of formal and the informal. Both the papers seems to argue the formal and informal are not mutually exclusive categories and both operate parallel to each other. The formal/informal ‘dualism’ is not a right way to understand the operations and processes which constitute formal and informal activities and they are not contradictory to each other. Formal and informal are intertwined through ‘sub-contracting’ and outsourcing, and also other activities which makes it harder to consider them as mutually exclusive categories.  

Sanyal and Bhattacharya, and also the other two review of Sanyal’s book, argue against the traditional Marxist idea of historicism and transition, which suggests that certain economic activities (especially the ‘informal sector’) are present only in a particular time period and it gives away to a more integrated system (the ‘formal sector’) over time. Contrary to the idea of ‘historicism and transition’, the ethnographic work done by Hart and the assessment of the post-colonial capitalist economy by Sanyal and Bhattacharya, gives us some evidence of how those ideas are not coherent.