A Short History of the Informal Economy

Abstract

When coined about half a century ago, employment in the informal economy was discussed by what it was not: formal. Addressed as a sector of the urban workforce, its definition was a summing up of descriptive traits which made manifest how people in the Global South, deprived of most or all means of production, earned their livelihood by selling their labour power. Investigating their predicament zoomed in on the restructuring of peasant economies and societies to post-peasant ones. The anticipated upward mobility, which was supposed to be boosted by the bargaining power of collective action, did not materialise. Rather than expanding formalisation of labour relations, the reverse took place. The small segment which had been promoted to and protected by regular and regulated employment was subjected to informalisation. In the onslaught of neo-liberal capitalism from the last quarter of the twentieth century onwards, labour flexibilisation and casualisation not only intensified in the Global South but also spread to the Global North. The new policies ended the brokerage which the nation–state once developed to mediate between the interests of capital and labour, leading to a worldwide shrinking of public institutions, space and representation. While the debate with regard to informality has remained firmly focused on labour and employment, I argue that corporate capital in collusion with étatist authority has not only effectuated the deregulation of paid work but also abandoned the legal code of formality ending in a state of lawlessness for the people at the bottom of the pile. In the reconfiguration, both politics and governance are next to big business as stakeholders in a regime of informality erosive of equality, democracy, civil rights, solidarity and shared well-being for humankind at large. KEYWORDS: Capitalism; trade unionism; public sector; welfarism; footloose; self-reliance