New OAC Online Seminar: John Conroy Intimations of the 'informal economy', 16th April to 28th April

The seminar opens on Monday 16th April and will be closed Saturday 28th April.

You can read the new Working Paper here (warning it's long, but very interesting and you can be selective).

This paper considers the idea of informality in market exchange, as introduced into the economic development literature by Keith Hart in the 1970s. In addition, it discusses three writers who may be considered forerunners. Each, to a greater or lesser degree, anticipated the idea of informal economic activity and described it in a particular historical period and place. They are the mid-Victorian journalist Henry Mayhew (London, c.1850) (cf. Swift 2011), the libertarian economist P. T. Bauer (British West Africa, c.1948) and the economic anthropologist R. F. Salisbury (colonial New Guinea, c.1952-1963).

John Conroy is an economist, not entirely unreconstructed although he still calls himself a ‘development economist’. He spent the 1970s in Papua New Guinea, finishing as Director of the PNG Institute of Applied Social and Economic Research. After six years in Indonesia, during the 1980s, he ran the Foundation for Development Cooperation through the 1990s, specialising in microfinance and ‘financial inclusion’. He abandoned that field in disgust after its invasion by private equity, and is now a visiting fellow at the Crawford School of Economics and Government at the Australian National University.

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There are four days left in the seminar, and I wanted to encourage others to feel free to participate. John's paper is a real embarrassment of riches, dealing with the idea of informality in market exchange, as introduced into the economic development literature by Keith Hart in the 1970s. It also discusses three writers, who to a greater or lesser degree, anticipated the idea of informal economic activity and described it in a particular historical period and place. They are the mid-Victorian journalist Henry Mayhew (London, c.1850), the libertarian economist P. T. Bauer (British West Africa, c.1948) and the economic anthropologist R. F. Salisbury (colonial New Guinea, c.1952-1963). There's something here for almost everyone. You needn't have read the paper in its entirety. You can be selective. So, please feel free to join in the discussion!

It is difficult for someone who is not already familiar with the work of Hart, Mayhew, Bauer and Salisbury to comment on the specific content of the paper, either to challenge specific interpretations or contexualize them in a different way. At the risk of introducing another detour, however, I offer for reflection the following passage from George Lukacs' "The Phenomenon of Reification" (In Candlin and Guins,The Object Reader, 2009, p.35),

If we follow the path then by labour in it development from the handicraft via cooperation and manufacture to machine industry we can see a continuous trend towards greater rationalization, the progressive elimination of the qualitative, human and individual attributes of the worker. On then hand, the process of labour is progressively broken down into abstract, rational specialized operations so that the worker loses contact with the finished product and his work is reduced to the mechanical repetition of a specialized set of actions. On the other hand, the period of time necessary for work to be accomplished (which forms the basis of rational calculation) is converted, as mechanization and rationalization are intensified, from a merely empirical average figure to an objectively calculable work-stint that confronts the worker as a fixed and established reality.

I offer this passage for reflection because it offers a classic model of transition from an idealized traditional economy in which the worker as craftsman is responsible for the finished product, a product produced in intimate association with those who will consume or use it, to a rationalized, dare we say "formal," economy in which the worker, responsible for only the repetitive actions that produce a fraction of the finished product is alienated from it, and the product becomes a commodity, independent of the social relations involved in both production and consumption. What struck me as I read it is how much the informal economies described by Hart and Mayhew are both urban economies, which are neither traditional nor rationalized in the terms that this classic model provides. That this is so is clearest to see from the rationalized pole of the model. Hustling to cobble together a living from multiple, sometimes illegal, sources of income is not at all "the mechanical repetition of a specialized set of actions." But neither is it a traditional craft, in which the production of a finished product is a contribution to an ongoing and stable set of social relations that make the craft a source of meaning and pride. One is tempted to say that in these cases, what the informal economy exemplifies is — alienation without rationalization, i.e., the typical state of a class of individuals that used to be described by the ugly word "lumpenproletariat."

John Mc's latest observation is highly relevant to the comparative task that John C set himself here, as was Justin's observation that we should question the apparent ability of the informal economy concept to link so many disparate historical and regional settings. If the seminar paper's length and complexity may deter some from entering into direct engagement with the paper itself, I would suggest two tactics that might help to animate our last few days and push the discussion towards a more focused conclusion.

The first would be to read the concluding short section 5 and comment on that (which I will below); the other might be to address the relvance of this paper to PNG to day and 40 years ago when John and I met there in the context of framing a development strategy for the country' s independence. Justin launched the seminar with reference to this particular context and perhaps we could return to it. In my turn I am happy to reflect more specifically on my own thinking then, but only in response to any interest shown by others. Richard Salisbury's work does provide an interesting bridge to the PNG context for discussion of informal economy and to the work of Gregory, Strathern and others. The question here would be whether or not John's compendious researches illuminate pressing contemporary concerns for PNG's development.

My own take on the concluding paragraphs is first that a model of development as being from subsistence agriculture to market and increasingly urban economy needs to be interrogated. Second, all four authors reviewed emphasise the importance of services in this process. Third, rural-urban migration is central to the informal economy literature and it matters how the balance of economic pressures/benefits is conceived (rural affluence, land shortage, urban livelhoods as a source of improvement or just desperate etc); my own work has always stressed the interdependence of city and countryside in West Africa, but the article that launched the formal/informal pair did not. Fourth, the idea of informality is linked to state laws and bureaucracy and is often illegal; it is questionable whether its extension to traditional rural economy is relevant. Fifth, as Mac pointed out, it is easy for ethnographic nuance to be reified as contrasted social objects, whether conceived of as classes, areas or stages of development (subproletariat, urban poor etc). Sixth, moral attitudes are often imposed on the social phenomena being discussed (the dangerous or not respectable classes, economic backwardness vs development).

When I mentioned earlier a tendency to discuss these questions in metaphysical terms, I meant that most participants usually bring to the discussion non-negotiable assumptions about a lot of this: whether informality is good or bad, progressive or retrogressive, whether PNG societies are generally just like any other or organized by wholly distinctive principles of their own, whether markets and money are universal or erupt as transforming forces in particular times and places. I am not immune to this, but I do hold that such assumptions should be exposed to theoretical and empirical discussion rather than being merely asserted, especially when interdisciplinary exchange is at stake. This isn't easy of course.

Of the six points I raised above, perhaps the most insidious is the subsistence/market opposition. I wrote a book once, The Political Economy of West African Agriculture, which I believe is better than anything Bauer wrote on the region's economy, but I would, wouldn't I? In it I replaced the idea of subsistence with a pressure towards local self-sufficiency which was never divorced from commerce. Mauss and Polanyi both held that local societies may aspire to self-sufficiency, but they never achieve it, so that markets and money (often taking forms quite unlike ours which in Mauss's case included the kula ring and valuables) are necessary to extend the reach of such societies for purposes of trade with foreigners. In this reading gift and market are closer than they are held to be by some Melanesianists (but not all), both in "archaic" and modern capitalist societies. This point could be disputed with textual and historical/ethnographic reference, but probably not here.

Services or cultural commodities like entertainment, education, media, information services etc are the fastest growing sector of world trade, not least as a result of the digital revoluton in communications. An older emphasis in development economics on agriculture and manufacturing must eventually take this into account. So the focus on services that is highlighted so prominently here is important for that reason alone. Once economies had as their object the reproduction of human beings, but this was replaced for a time by the production and circulation of things; maybe the focus of economy is becoming once more a matter of what we can do for each other and these cases throw some light on the issue. In any case once telling stories, singing songs or running races are seen to be economic in some sense, the focus on food production in rural economies is thrown into question.

The last two centuries have seen the land as a matrix for human production largely replaced by the city. I have long felt that the main point of the informal economy is as a holding operation allowing migrants to exist in cities when the latter have not developed more stable means of absorbing their work. But its contemporary application is much wider than that. If informality is by definition negative, what could the urban informal economy be said to be positively? I would say mainly self-generated urban markets covering a vast range of needs that the formal economy cannot reach. The issue then becomes, as John insists, what the relationship is between such activities and sustained economic development. This topic is vast...

I have touched on the fourth question earlier when discussing the dialectics of form. The fifth and sixth likewise underpin some of my earlier remarks. So I will quit here for the time being.

A really interesting, illuminating essay, John.

As an anthropologist whose knowledge of economics is sadly limited to what I get from 'experts' on nightly news programmes - where the expertise is generally presented as being somehow universal and transhistorical - it's been a real pleasure to read your arguments, with their focus on locality and history. (Now I realise I ought to read more of Keith Hart's work, for the same reasons!)

Not knowing much about economics made your section on Mayhew especially interesting for me. What, if I may say, drew me to his work, when I first came across it in a second-hand bookshop, was its extraordinary vitality as ethnography - his electric, arresting testimonies. "I was brought up a Roman Catholic, and was christened one," says the turf-cutter, but he doesn't go to church now since "it seems like mocking going to chapel, when you're grumbling in your soul."

Anyway, I feel my ignorance of economics prevents me from asking a good question. But working on a market stall in London - as I currently do - for which I feel a distant affinity with Mayhew's costermongers - made me realise, in the light of your argument, and Keith's comments above, the extent to which what I don't understand (i.e., in this case, informal economics) is in fact what happens every week where I work.

     

Although street markets in London are - compared to Mayhew's time - now highly formalised and regulated (by bye-laws - so, the position of pitches, times of trade, etc), and the regulations enforced by market inspectors employed by the local council, many of the traders I know lead highly precarious existences, living from week to week, often hoping to trade under the radar of inspectors, tax officials, and other such bureaucrats.     

     

But this is merely a comment, and I don't wish to derail Keith's excellent questions!

First, an apologetic bit of editing. Sorry that the opening line of the quote from George Lukac got mangled by inept typing and a “helpful” computer.

If we follow the path then [sic]  by labour in it[sic] development from the handicraft via cooperation and manufacture to machine industry we can see a continuous trend towards greater rationalization, the progressive elimination of the qualitative, human and individual attributes of the worker. 

should read

If we follow the path taken by labour in its development from the handicraft via cooperation and manufacture to machine industry we can see a continuous trend towards greater rationalization, the progressive elimination of the qualitative, human and individual attributes of the worker. 

Then, since Keith sees some relevance in the enterprise, allow me to run on a bit more about models. Consider a series of classical possibilities.

  1. Command rationalization — the development that Lukac describes. The world becomes an assembly line or bureaucratic organization in which workers perform routinized tasks prescribed by their superiors.
  2. Market fundamentalism — The stuff we learn when supply and demand are introduced in Economics 101. Utterly autonomous rational actors pursue their interests in a market where both information and the power to act upon it are uniformly distributed. All the variance is in the interests, which must be diverse enough to motivate arms-length transactions, what you want for what I want, then we’re quits.
  3. Communist ideal — “From each according to their abilities, to each according to their needs.” Farmers, herders, housewives, and craftsmen share what each does best, taking pride in their contributions to theh communities in which they live.
  4. Anthropological gifts — the Communist ideal tempered by the realization (1) that exchange based on social categories may lie athwart—orthogonal to—communally oriented sharing based on ability and need and (2) that humans are a competitive species, so pecking orders are part of the game. 

The “informal” in “informal economies” looks different depending on which of these four models we begin with. 

  1. From a command rationalization perspective “informal” is getting out of line, bending the rules, doing favors where favors are corruption.
  2. From a market fundamentalist perspective, the same sorts of behavior are distortions in the market place, introduced by special favors and asymmetric information, another form of corruption.
  3. From a Communist ideal perspective, anything which blocks the the smooth matching of ability and need is exploitation, yet another form of corruption.
  4. From an anthropological gifts perspective, custom channels the distribution of goods in ways that are neither command rational, market fundamentalist, or Communist ideal. Now the question re corruption is whether those playing the games people play play fairly by the rules, which they themselves embrace. Since the rules are culture-specific, there is no general criterion by which corruption can be judged. 

How then do all these ideas look from the perspective of a moderately successful small business person in the service sector? I refer to myself. 

Having worked in and around advertising, a “creative” culture industry, I see command rationalization as the diabolical antithesis of how I make my living. Our business exists precisely because there are no routine, repetitive actions to take when the product in question is intended to communicate “new, exciting, desirable.” Command rationalization is the death of creativity from which new value springs.

Neither, however, is what I do a good fit with the market fundamentalist model. I succeed precisely because of market-distorting asymmetries in information, talent and skill, because I know a lot of miscellaneous stuff in odd combinations unique to myself that sometimes come together to produce something interesting. I know, too, that our business survives because of relationships built up over the years, not only by being good at what we do, but also by being willing to do favors to help clients in a pinch, being there for them at 3:00 a.m in the morning of a critical pitch or knocking a bit off a bill to fit their budget. A friend once told me that until forty we live off our talent. Then we live off our networks. Has certainly worked for me.

The Communist ideal? David Graeber is right. It works real well for family and workplace, wherever I find myself in the same boat as other people, sharing a predicament and working together to get something done. Elsewhere, not so well. Large-scale organization requires leadership and leaders accrue privileges not available to the rest of us. 

What, then, of anthropological gifts? What I think I know for a fact is that these make the world go round. It is no accident that successful people are constantly meeting over dinner, organizing ceremonies that celebrate success, taking trips to interesting places, passing on bits of information, doing each other the favors that maintain the relationships on which repeat business depends. Only a fool would try to give orders to customers, treat each transaction as an arms-length, instantly cleared exchange of equal value, resulting in no relationship or, conversely, as selfless sharing. Scratch my back, I’ll scratch yours can be taken too far — but the primates that survive and thrive have been doing this for eons. 

How, then, should I think about Mayhew’s costermongers or Harts’ urban hustlers? I see them as people like me, trapped in tougher circumstances. They lead harder, riskier lives than I now do; but those who had the time and inclination to think about it would have, I suspect, have come to similar conclusions as those sketched above. Is this not true in the PNG today?


First, replies to John (McCreery), Philip (Swift) and Nathan (Dobson); then (separately) a response to Keith Hart:

John, thank you for your many insightful comments; you build your most recent comments around a description by Lukacs of the rationalization of work processes in the modern factory system. This, you say, ‘offers a classic model of transition from an idealized traditional economy in which the worker as craftsman is responsible for the finished product … to a rationalized, dare we say "formal," economy in which the worker, responsible for only the repetitive actions that produce a fraction of the finished product is alienated from it, and the product becomes a commodity, independent of the social relations involved in both production and consumption’. You go on to remark that ‘what the informal economy [of Mayhew and Hart] exemplifies is — alienation without rationalization, i.e., the typical state of a class of individuals that used to be described by the ugly word “lumpenproletariat”.  I tend to agree with your characterization and Hart himself called his people a ‘subproletariat’, while in Mayhew’s account it is clear that his street people were not members of the new industrial proletariat more typical of the rising industrial cities in the north of England. I quote extensively from Gareth Stedman Jones’ Outcast London to support this view. However, there is an important distinction I make (informed by Stedman Jones): while the north was industrializing, London was going through (at least in certain industries) a process of de-industrialization. Beatrice Webb said that ‘informal’ activities (as we now call them) were very largely absent from the northern towns. There was a kind of ruthless rationalization going on in London, in textiles and furniture for example, which featured pervasive casualization of labour and ‘putting out’ tasks to home workers, processes which drove down costs, permitting these activities to survive in a high-cost metropolis. This gave a particular character to the pattern of economic activities and livelihoods in the East End and some other parts of London which your account does not capture.

Your more recent comment on this theme is thought-provoking; while your taxonomy of alternative ways to understand productive processes (command or market, communist or ‘gift’) appears over-simplified, your application of the informality construct to each of these situations is very intriguing indeed. I try, for example, to find out whatever I can about the informal economy as it operates currently in North Korea and Cuba and I still lack a frame of reference to give the data coherence. Similarly, your anthropological insights into the highly personalized world of small business are very helpful. You apply them mostly to your customers, whereas I think of ‘customer relations’ in the informal sector in developing countries (as, for example, Geertz’s ‘bazaar’ economy) as being relatively impersonal while the richness of relationships is more likely to be found on the ‘supply’ side.

For Philip: thanks for weighing in. Your piece on Mayhew as ethnographer has been very helpful to me. The account of your current employment in a London market shows the historical continuity of street life in a vital metropolis. Despite the level of regulation, I’m sure that much of the activity around you has informal characteristics – updated to fit the circumstances of a changed world. (I always thought that ‘Arfur’ Daley, that dodgy character in the long-ago TV series “Minder”, was a direct descendant of an upwardly-mobile ‘rag and bottle’ man). I was web-searching Scarlett Epstein recently and found that when she arrived as a refugee in London immediately after WWII she worked for a time in an East End garment factory (the schmutters) and this reinforced the notion of historical continuity. As for your comments on economic analysis, there’s a world of difference between the ‘up and down’ economists on TV (‘interest rates may go up and employment will go down’) and the careful and humane attempt to apply simple economic principles to understanding the behavior of poor people.

Thank you, Nathan, for your comments on the subject of ‘equivalence’. As I understand it, you were referring to Salisbury’s exercise of calculating the cash equivalent of transactions conducted by the Tolai using traditional shell money. This was possible because identical produce was traded in Rabaul market by Tolai to Tolai (for shell money) and to non-Tolai (other New Guineans, Europeans, Chinese) for cash. Well, Salisbury was a rather literal formalist (at least at that time). As an economist it seems to me a reasonable enough procedure as a means of coming to an aggregated cash valuation of the trade conducted within that market which represented an interface between the traditional and introduced economic systems. Salisbury went further and calculated equivalences between the shell money incomes of Tolai who provided traditional goods (say, canoes) and services (say, dance routines for ceremonies) and showed these incomes to be much higher (in cash equivalent) than the cash income a Tolai could earn as (say) a plantation labourer . No doubt that went further than many anthropologists would think legitimate, but it enabled Salisbury to weave together an argument about the growing importance of services in the ‘transition from subsistence’ (the latter a concept of which Keith, to whom I will reply below, is very wary).



John McCreery said:

First, an apologetic bit of editing. Sorry that the opening line of the quote from George Lukac got mangled by inept typing and a “helpful” computer.

If we follow the path then [sic]  by labour in it[sic] development from the handicraft via cooperation and manufacture to machine industry we can see a continuous trend towards greater rationalization, the progressive elimination of the qualitative, human and individual attributes of the worker. 

should read

If we follow the path taken by labour in its development from the handicraft via cooperation and manufacture to machine industry we can see a continuous trend towards greater rationalization, the progressive elimination of the qualitative, human and individual attributes of the worker. 

Then, since Keith sees some relevance in the enterprise, allow me to run on a bit more about models. Consider a series of classical possibilities.

  1. Command rationalization — the development that Lukac describes. The world becomes an assembly line or bureaucratic organization in which workers perform routinized tasks prescribed by their superiors.
  2. Market fundamentalism — The stuff we learn when supply and demand are introduced in Economics 101. Utterly autonomous rational actors pursue their interests in a market where both information and the power to act upon it are uniformly distributed. All the variance is in the interests, which must be diverse enough to motivate arms-length transactions, what you want for what I want, then we’re quits.
  3. Communist ideal — “From each according to their abilities, to each according to their needs.” Farmers, herders, housewives, and craftsmen share what each does best, taking pride in their contributions to theh communities in which they live.
  4. Anthropological gifts — the Communist ideal tempered by the realization (1) that exchange based on social categories may lie athwart—orthogonal to—communally oriented sharing based on ability and need and (2) that humans are a competitive species, so pecking orders are part of the game. 

The “informal” in “informal economies” looks different depending on which of these four models we begin with. 

  1. From a command rationalization perspective “informal” is getting out of line, bending the rules, doing favors where favors are corruption.
  2. From a market fundamentalist perspective, the same sorts of behavior are distortions in the market place, introduced by special favors and asymmetric information, another form of corruption.
  3. From a Communist ideal perspective, anything which blocks the the smooth matching of ability and need is exploitation, yet another form of corruption.
  4. From an anthropological gifts perspective, custom channels the distribution of goods in ways that are neither command rational, market fundamentalist, or Communist ideal. Now the question re corruption is whether those playing the games people play play fairly by the rules, which they themselves embrace. Since the rules are culture-specific, there is no general criterion by which corruption can be judged. 

How then do all these ideas look from the perspective of a moderately successful small business person in the service sector? I refer to myself. 

Having worked in and around advertising, a “creative” culture industry, I see command rationalization as the diabolical antithesis of how I make my living. Our business exists precisely because there are no routine, repetitive actions to take when the product in question is intended to communicate “new, exciting, desirable.” Command rationalization is the death of creativity from which new value springs.

Neither, however, is what I do a good fit with the market fundamentalist model. I succeed precisely because of market-distorting asymmetries in information, talent and skill, because I know a lot of miscellaneous stuff in odd combinations unique to myself that sometimes come together to produce something interesting. I know, too, that our business survives because of relationships built up over the years, not only by being good at what we do, but also by being willing to do favors to help clients in a pinch, being there for them at 3:00 a.m in the morning of a critical pitch or knocking a bit off a bill to fit their budget. A friend once told me that until forty we live off our talent. Then we live off our networks. Has certainly worked for me.

The Communist ideal? David Graeber is right. It works real well for family and workplace, wherever I find myself in the same boat as other people, sharing a predicament and working together to get something done. Elsewhere, not so well. Large-scale organization requires leadership and leaders accrue privileges not available to the rest of us. 

What, then, of anthropological gifts? What I think I know for a fact is that these make the world go round. It is no accident that successful people are constantly meeting over dinner, organizing ceremonies that celebrate success, taking trips to interesting places, passing on bits of information, doing each other the favors that maintain the relationships on which repeat business depends. Only a fool would try to give orders to customers, treat each transaction as an arms-length, instantly cleared exchange of equal value, resulting in no relationship or, conversely, as selfless sharing. Scratch my back, I’ll scratch yours can be taken too far — but the primates that survive and thrive have been doing this for eons. 

How, then, should I think about Mayhew’s costermongers or Harts’ urban hustlers? I see them as people like me, trapped in tougher circumstances. They lead harder, riskier lives than I now do; but those who had the time and inclination to think about it would have, I suspect, have come to similar conclusions as those sketched above. Is this not true in the PNG today?


John, thank you very much, indeed, for a very stimulating discussion. Yes, my models are simplified. That, in itself, doesn't bother me much, since simplification is inherent in all model-making. As the statistician, George Box put it, "All models are essentially wrong. But some are useful." It is the latter, the good-to-think utility that framing things starkly sometimes creates at which I aim in this sort of comparison. 

Re consumption versus production: Your proposition that the richness of relationships is more likely to be found on the production side is intriguing. I can see a certain plausibility arising out of the notion that in the "traditional" state both production and consumption involve the same people, the members of the community in which both take place. When a surplus is sold to strangers, the relationship involved is a thinner one. Against this plausibility, however, I note that in local markets, where shopkeeper and customer live in the same neighborhood, we may find a thickening of relationships over time. I, for example, now buy my vegetables from a vendor on the shopping street below my office and get my hair cut and my dry cleaning done at other establishments on the same street. Why these particular firms instead of more recently established competitors?  These businesses were all here when we first came to Japan. The people who run them knew my daughter when she was in a local kindergarten and then at the elementary school, which is located on the same street. They ask after her while we are doing business together. The more I think about this, the more interesting it becomes. For what I appear to be talking about is an intermediate zone between the intimacy assumed in little-community models of tradition and the impersonality of the textbook economics model of the market. I find myself thinking, too, of Theodore Bestor's ethnography of Tsukiji: The Fish Market at the Center of the World. Tsukiji is the world's largest aggregation of seafood wholesalers, supplying fish and other seafood, to Tokyo. From a global perspective it sits at the center of networks where widely separated individuals, the fisherman in New England and the fishmonger in Tokyo may not know each other at all; but a network of relatively thick connections binds the pairs of individuals who form the chain between them. 

Sorry for joining the conversation so late, but I have been offline for the last week. I have had an ongoing conversation with Keith on ‘informality’ from the time when he supervised my Phd work in the mid 1990s, and I had been looking very much forward to this seminar. There are several topics already being discussed, but could I address one issue that I see in the paper and that many of you have commented on?

In much writing on informality there is a tension between treating ‘the informal’ as a specific domain of social life, and, on the other hand, realising that informality is negatively defined as the conceptual opposite of some kind of form (in this and most other cases state bureaucracies). As several of you have pointed out, this latter point makes it difficult to arrive at useful definitions of ‘the informal sector’.

But this also carves out a specific topic of study: the relationship between forms, interventions based on forms, and those realities that are not captured by these forms. Keith addressed this topic in one of his replies when he listed possible relationships between the formal and the informal. I have in mind such examples as you mention on page 21 of your paper, John, where census data (based on a form) does not capture that which it seeks to capture – modes of practices of economic activity that are more fluid (imperfect specialization/fluidity).

One of my research interests has been to study what happens when interventions, such as development plans, which are necessarily based on forms, meet a messy reality such as you describe. I’m aware that this moves the focus away from ‘informal sectors’ toward informal politics, but I would still be interested to hear whether this resonates with your experience of writing development plans. When development plans seek to incorporate informality they necessarily, to an extent, formalise ‘the informal’ at a conceptual as well as policy level, and this often leads to contradictions. 

Keith, thanks for a searching set of questions. These go to the heart of my problems in drawing my larger argument together, and in imposing coherence on the ideas. I’ll try to respond to some of the issues you have raised (though some readers might think Melanesian issues are getting rather too much attention).

First, #6, concerning the imposition of moral judgments: I touch on this area in my paper when comparing Mayhew’s attitude (as a nineteenth century ‘social improver’) with your own neutral stance, simply charting the occupational landscape of Nima, whether ‘legitimate’ or not. But if moral condemnation is sometimes an impediment to social analysis, I think an even bigger issue is its role as a barrier to good policy. The moralistic stance of policymakers in contemporary developing countries leads to attitudes of shame or embarrassment whenever the topic of the informal economy is broached to them. The ‘modernization’ paradigm lives on, if not in intellectual circles then as part of the instinctive mental equipment of many developing country officials. I have seen this repeatedly in international forums (for example, APEC – the Asia Pacific Economic Cooperation process) where I have been active in the past. There, efforts to encourage more enlightened policies for the ‘micro-enterprise’ sector have been met with a mixture of incomprehension and dismissal, even sabotage.

Issue #2 concerns the ‘transition’ from subsistence to exchange. This is essentially an economist’s construct and was a central theme for Peter Bauer, and has supported my own view of the development process for a long time. But if, as Gregory says, ‘the subsistence economy is a misconception’, and if (as you say) the ‘subsistence/market opposition’ is ‘insidious’, one ought at least reconsider. In your study of West African agriculture you contended that, historically, warfare and slavery had exerted pressure on social groups to exercise a degree of self-sufficiency greater than would occur in a peaceful world (for such groups had both desire and capacity to engage in trade if circumstances permitted). This African local self-sufficiency corresponded to some degree with that perceived in colonial New Guinea in the 1960s by some Australian economists, which was associated with the notions of ‘subsistence affluence’, and ‘pure subsistence’ in supposedly autarchic communities. The economist E K Fisk theorized the ‘transition to market exchange’ in a manner having much in common with Bauer (and which found some support in the writings of the modern classical economist Hla Myint, himself drawing on Adam Smith). These ideas were taken up by a number of anthropologists active in Melanesia, including Scarlett Epstein. Marshall Sahlins’ notion of ‘original affluence’ had some kinship with these ideas, though it proceeded from very different premises. If it’s not too shameless, I’ll repeat here my link to other work I’m doing in this area at the moment, at http://ips.cap.anu.edu.au/ssgm/events/seminar_details.php?searchter...  This is all closely related to your issue # 3, concerning ‘how the balance of economic pressures/benefits is perceived’ in explanations of rural-urban migration: whether the rural situation is seen as one of ‘affluence’ or of land shortage,  and whether urban income opportunities are sought out of desperation or from a more careful calculus of improvement. What I can say is that the population of PNG has trebled in the 50 years since Fisk wrote, and more than doubled since you were there, so that the ‘calculus’ is now conducted in a more desperate situation. This is the most relevant consideration to be taken into account for your issue # 1, dealing with contemporary concerns of PNG development.  

Your issue # 4 touches on the question of how far it is legitimate to extend the notion of the informal economy into rural areas. If informality is so closely connected with illegality or irregularity, then how does this apply in the countryside (as distinct from the town where its relevance is pretty clear). For the moment this is for me a work in progress. I see validity in the idea of rural informality when observing rural-urban interactions which clearly involve informality at the urban end of the transaction. I see also that many rural attempts to engage in ‘modern’ economic activity fall far short of what would be recommended by agricultural extension officers or business development advisors. There are strong elements of ‘hybridity’ in such embryonic business ventures but how this characteristic relates to ‘informality’ I’m not completely sure at present.

Finally, I’m gratified that my discussion of how the role of services in development has been theorized appears to have struck a responsive chord. The dismissal of the informal economy by many officials appears to be based on the notion that only agriculture or industry is ‘really’ productive, whereas the reality in modern advanced economies is very different. A thriving informal economy (including a substantial 'service' component) can contribute substantially to the international competitiveness of a developing economy by providing goods and services appropriate to the consumption baskets of urban formal workers, many of them engaged in the export sectors. You touch on this when you describe the informal economy as consisting of ‘self-generated urban markets covering a vast range of needs that the formal economy cannot reach’. I tend also to agree with your view that ‘the main point of the informal economy is as a holding operation allowing migrants to exist in cities when the latter have not developed more stable means of absorbing their work’. Gareth Stedman Jones wrote rather ruefully that, instead of generating a revolutionary dynamic, the wretched of London’s underclass were largely absorbed into the formal workforce by the 1920s, where they entered instead the constituency of the British Labour Party. This absorption of excess labour is what the W. Arthur Lewis model, ‘Economic Development with Unlimited Supplies of Labour’ might lead one to expect. Incidentally (and illustrating the versatility of the Lewis model) the Chinese economy appears recently to have passed the 'turning point' in the model where surplus labour is largely absorbed and wage levels start to rise, which is even now reducing the competitiveness of Chinese exports. The Chinese managed to do this without a very obvious urban informal sector through the expedient (not available in a democracy) of imposing rigorous controls on internal migration.



Keith Hart said:

John Mc's latest observation is highly relevant to the comparative task that John C set himself here, as was Justin's observation that we should question the apparent ability of the informal economy concept to link so many disparate historical and regional settings. If the seminar paper's length and complexity may deter some from entering into direct engagement with the paper itself, I would suggest two tactics that might help to animate our last few days and push the discussion towards a more focused conclusion.

The first would be to read the concluding short section 5 and comment on that (which I will below); the other might be to address the relvance of this paper to PNG to day and 40 years ago when John and I met there in the context of framing a development strategy for the country' s independence. Justin launched the seminar with reference to this particular context and perhaps we could return to it. In my turn I am happy to reflect more specifically on my own thinking then, but only in response to any interest shown by others. Richard Salisbury's work does provide an interesting bridge to the PNG context for discussion of informal economy and to the work of Gregory, Strathern and others. The question here would be whether or not John's compendious researches illuminate pressing contemporary concerns for PNG's development.

My own take on the concluding paragraphs is first that a model of development as being from subsistence agriculture to market and increasingly urban economy needs to be interrogated. Second, all four authors reviewed emphasise the importance of services in this process. Third, rural-urban migration is central to the informal economy literature and it matters how the balance of economic pressures/benefits is conceived (rural affluence, land shortage, urban livelhoods as a source of improvement or just desperate etc); my own work has always stressed the interdependence of city and countryside in West Africa, but the article that launched the formal/informal pair did not. Fourth, the idea of informality is linked to state laws and bureaucracy and is often illegal; it is questionable whether its extension to traditional rural economy is relevant. Fifth, as Mac pointed out, it is easy for ethnographic nuance to be reified as contrasted social objects, whether conceived of as classes, areas or stages of development (subproletariat, urban poor etc). Sixth, moral attitudes are often imposed on the social phenomena being discussed (the dangerous or not respectable classes, economic backwardness vs development).

When I mentioned earlier a tendency to discuss these questions in metaphysical terms, I meant that most participants usually bring to the discussion non-negotiable assumptions about a lot of this: whether informality is good or bad, progressive or retrogressive, whether PNG societies are generally just like any other or organized by wholly distinctive principles of their own, whether markets and money are universal or erupt as transforming forces in particular times and places. I am not immune to this, but I do hold that such assumptions should be exposed to theoretical and empirical discussion rather than being merely asserted, especially when interdisciplinary exchange is at stake. This isn't easy of course.

Of the six points I raised above, perhaps the most insidious is the subsistence/market opposition. I wrote a book once, The Political Economy of West African Agriculture, which I believe is better than anything Bauer wrote on the region's economy, but I would, wouldn't I? In it I replaced the idea of subsistence with a pressure towards local self-sufficiency which was never divorced from commerce. Mauss and Polanyi both held that local societies may aspire to self-sufficiency, but they never achieve it, so that markets and money (often taking forms quite unlike ours which in Mauss's case included the kula ring and valuables) are necessary to extend the reach of such societies for purposes of trade with foreigners. In this reading gift and market are closer than they are held to be by some Melanesianists (but not all), both in "archaic" and modern capitalist societies. This point could be disputed with textual and historical/ethnographic reference, but probably not here.

Services or cultural commodities like entertainment, education, media, information services etc are the fastest growing sector of world trade, not least as a result of the digital revoluton in communications. An older emphasis in development economics on agriculture and manufacturing must eventually take this into account. So the focus on services that is highlighted so prominently here is important for that reason alone. Once economies had as their object the reproduction of human beings, but this was replaced for a time by the production and circulation of things; maybe the focus of economy is becoming once more a matter of what we can do for each other and these cases throw some light on the issue. In any case once telling stories, singing songs or running races are seen to be economic in some sense, the focus on food production in rural economies is thrown into question.

The last two centuries have seen the land as a matrix for human production largely replaced by the city. I have long felt that the main point of the informal economy is as a holding operation allowing migrants to exist in cities when the latter have not developed more stable means of absorbing their work. But its contemporary application is much wider than that. If informality is by definition negative, what could the urban informal economy be said to be positively? I would say mainly self-generated urban markets covering a vast range of needs that the formal economy cannot reach. The issue then becomes, as John insists, what the relationship is between such activities and sustained economic development. This topic is vast...

I have touched on the fourth question earlier when discussing the dialectics of form. The fifth and sixth likewise underpin some of my earlier remarks. So I will quit here for the time being.

Replies to Knut, Busani and John (McCreery)

To Knut: thanks for your intervention. Not for the first time in this exchange, I feel like an overmatched prize-fighter who is furiously back-peddling around the ring while he works out what punch to throw next. I raised issues of development policy and planning in my last comment and you have placed emphasis on this area as well. You allude to the difficulty of defining the informal ‘sector’ in an operationally useful way for the purposes of planning and target-setting. Here it is necessary to realize that the informal ‘sector’ is not really a sector at all. We can have agricultural, manufacturing and service sectors. Each of these can have its various ‘subsectors’ (say, coffee, copra, cocoa, food crops – all within agriculture). But the informal ‘sector’ is not a sector in this statistical sense. Rather, there are informal elements within each of the economic sectors (agriculture, manufacturing, services, etc). That’s why the informal economy concept (a cross-sectoral concept) is a better one to use, especially when attempting to educate officials. It’s also fruitful to be able to conceptualize formal/informal interactions within an economic sector (say, agriculture), whether one’s interest is anthropological, economic or political.  

Where attempts are made to incorporate the informal economy into economic planning, there is the danger (you are quite right) of attempting to ‘formalize the informal’ in a counterproductive way. Suppose a government is convinced, finally and despite the pervasive prejudice of the political and bureaucratic classes, to take action to support the informal economy. The goal may be framed in terms of ‘raising the productivity of informal sector activities'. The Planning Ministry looks around to see who should be given carriage of this new (and possibly rather uncomfortable) initiative. Should it be the Department of Community Affairs, or possibly the Department of Small and Medium Enterprise (itself often a subset of the Ministry of Industry)? Here (and this is going to get me into trouble) the choice is between an agency likely to ‘genderize’ the issues, and another likely to ‘formalize’ them. In either case there is likely to be a top-heavy program of seminars, trainings and interventions based on inadequate understanding of the nature and dynamics of the informal economy.

Busani: Thank you for reminding us that the historical record in many places gives us examples of popular economic activity which we recognize, only in retrospect, as having characteristics of the informal. You speak of ‘bureaucracy’s attempts to trivialize the growth of the sector’ and appear to suggest that the non-enumeration of such activity by colonial officials (as described by Bauer) or contemporary officials (as perhaps in the case of Zimbabwe) was/is deliberate. Bauer put it down to the decision to record only one ‘principal’ occupation for individuals, with the result that almost everyone was recorded as a ‘farmer’. This may have been made necessary by technical or financial constraints – the census was probably hand-tabulated in 1948, or at best data would have been sorted on an 80 column card – though of course the official perception of which activities were worth counting also played a part. In the case of modern Zimbabwe (I’m really guessing here) the decline of the formal economy must have multiplied the numbers hustling in the informal economy and no doubt the Mugabe regime had concerns about ‘the mob’ congregating on the streets – perhaps leading to repression of urban informal activity. If so, this would be an example of the ‘ambiguities associated with those who operate outside state-approved enterprises’.

Finally, John (Mc Cleery): I did suggest that (as you put it) ‘the richness of relationships is more likely to be found on the production side’, but I’m not emphatic about it. It’s just that, in crowded places where the informal economy may operate, the nature of exchange is often quite impersonal and so the informal operator may have more important relationships to maintain with suppliers, supporters, rivals and protectors than with the general public. I do take your point about the often frequent and cordial nature of the relationships a resident may have with neighbourhood shopkeepers (and don’t forget the barkeepers). I do take your point however about the ‘relatively thick connections’ occurring within even so large and complicated a nodal point as Tsukiji market. But let's not forget that Tsukiji is a wholesale market, so we're not talking about 'thickly connected' relationships with local shopkeepers, but with fellow professionals, for the most part.



Knut G Nustad said:

Sorry for joining the conversation so late, but I have been offline for the last week. I have had an ongoing conversation with Keith on ‘informality’ from the time when he supervised my Phd work in the mid 1990s, and I had been looking very much forward to this seminar. There are several topics already being discussed, but could I address one issue that I see in the paper and that many of you have commented on?

In much writing on informality there is a tension between treating ‘the informal’ as a specific domain of social life, and, on the other hand, realising that informality is negatively defined as the conceptual opposite of some kind of form (in this and most other cases state bureaucracies). As several of you have pointed out, this latter point makes it difficult to arrive at useful definitions of ‘the informal sector’.

But this also carves out a specific topic of study: the relationship between forms, interventions based on forms, and those realities that are not captured by these forms. Keith addressed this topic in one of his replies when he listed possible relationships between the formal and the informal. I have in mind such examples as you mention on page 21 of your paper, John, where census data (based on a form) does not capture that which it seeks to capture – modes of practices of economic activity that are more fluid (imperfect specialization/fluidity).

One of my research interests has been to study what happens when interventions, such as development plans, which are necessarily based on forms, meet a messy reality such as you describe. I’m aware that this moves the focus away from ‘informal sectors’ toward informal politics, but I would still be interested to hear whether this resonates with your experience of writing development plans. When development plans seek to incorporate informality they necessarily, to an extent, formalise ‘the informal’ at a conceptual as well as policy level, and this often leads to contradictions. 

Hi John,

I guess its time for wrapping up rather than to introduce new points. Let me just say again that I really enjoyed your paper and its empirical and historical richness. 

Thanks also for the clarification on how you see the relationship between ‘the informal sector’ and other ‘sectors’ such as the ‘service sector’, ‘manufacturing sectors’ etc. You say that these are different because they can be defined in a statistical sense. But does not the conceptualisation of these sectors equally constitute forms that leave ‘informal residues’, i.e. parts of social life that they do not grasp? I completely agree that the ‘informal sector’ does not exist as such, but if we agree that all conceptual carving up of social life leave a residue, I would have thought that the ‘service sector’ would be as real/unreal as ‘the informal sector’? This is what I alluded to by pointing to your case on pg 21, where definitions fail to capture economic activities in specific sectors. 



John Conroy said:

Replies to Knut, Busani and John (McCreery)

To Knut: thanks for your intervention. Not for the first time in this exchange, I feel like an overmatched prize-fighter who is furiously back-peddling around the ring while he works out what punch to throw next. I raised issues of development policy and planning in my last comment and you have placed emphasis on this area as well. You allude to the difficulty of defining the informal ‘sector’ in an operationally useful way for the purposes of planning and target-setting. Here it is necessary to realize that the informal ‘sector’ is not really a sector at all. We can have agricultural, manufacturing and service sectors. Each of these can have its various ‘subsectors’ (say, coffee, copra, cocoa, food crops – all within agriculture). But the informal ‘sector’ is not a sector in this statistical sense. Rather, there are informal elements within each of the economic sectors (agriculture, manufacturing, services, etc). That’s why the informal economy concept (a cross-sectoral concept) is a better one to use, especially when attempting to educate officials. It’s also fruitful to be able to conceptualize formal/informal interactions within an economic sector (say, agriculture), whether one’s interest is anthropological, economic or political.  

Where attempts are made to incorporate the informal economy into economic planning, there is the danger (you are quite right) of attempting to ‘formalize the informal’ in a counterproductive way. Suppose a government is convinced, finally and despite the pervasive prejudice of the political and bureaucratic classes, to take action to support the informal economy. The goal may be framed in terms of ‘raising the productivity of informal sector activities'. The Planning Ministry looks around to see who should be given carriage of this new (and possibly rather uncomfortable) initiative. Should it be the Department of Community Affairs, or possibly the Department of Small and Medium Enterprise (itself often a subset of the Ministry of Industry)? Here (and this is going to get me into trouble) the choice is between an agency likely to ‘genderize’ the issues, and another likely to ‘formalize’ them. In either case there is likely to be a top-heavy program of seminars, trainings and interventions based on inadequate understanding of the nature and dynamics of the informal economy.

Busani: Thank you for reminding us that the historical record in many places gives us examples of popular economic activity which we recognize, only in retrospect, as having characteristics of the informal. You speak of ‘bureaucracy’s attempts to trivialize the growth of the sector’ and appear to suggest that the non-enumeration of such activity by colonial officials (as described by Bauer) or contemporary officials (as perhaps in the case of Zimbabwe) was/is deliberate. Bauer put it down to the decision to record only one ‘principal’ occupation for individuals, with the result that almost everyone was recorded as a ‘farmer’. This may have been made necessary by technical or financial constraints – the census was probably hand-tabulated in 1948, or at best data would have been sorted on an 80 column card – though of course the official perception of which activities were worth counting also played a part. In the case of modern Zimbabwe (I’m really guessing here) the decline of the formal economy must have multiplied the numbers hustling in the informal economy and no doubt the Mugabe regime had concerns about ‘the mob’ congregating on the streets – perhaps leading to repression of urban informal activity. If so, this would be an example of the ‘ambiguities associated with those who operate outside state-approved enterprises’.

Finally, John (Mc Cleery): I did suggest that (as you put it) ‘the richness of relationships is more likely to be found on the production side’, but I’m not emphatic about it. It’s just that, in crowded places where the informal economy may operate, the nature of exchange is often quite impersonal and so the informal operator may have more important relationships to maintain with suppliers, supporters, rivals and protectors than with the general public. I do take your point about the often frequent and cordial nature of the relationships a resident may have with neighbourhood shopkeepers (and don’t forget the barkeepers). I do take your point however about the ‘relatively thick connections’ occurring within even so large and complicated a nodal point as Tsukiji market. But let's not forget that Tsukiji is a wholesale market, so we're not talking about 'thickly connected' relationships with local shopkeepers, but with fellow professionals, for the most part.



Knut G Nustad said:

Sorry for joining the conversation so late, but I have been offline for the last week. I have had an ongoing conversation with Keith on ‘informality’ from the time when he supervised my Phd work in the mid 1990s, and I had been looking very much forward to this seminar. There are several topics already being discussed, but could I address one issue that I see in the paper and that many of you have commented on?

In much writing on informality there is a tension between treating ‘the informal’ as a specific domain of social life, and, on the other hand, realising that informality is negatively defined as the conceptual opposite of some kind of form (in this and most other cases state bureaucracies). As several of you have pointed out, this latter point makes it difficult to arrive at useful definitions of ‘the informal sector’.

But this also carves out a specific topic of study: the relationship between forms, interventions based on forms, and those realities that are not captured by these forms. Keith addressed this topic in one of his replies when he listed possible relationships between the formal and the informal. I have in mind such examples as you mention on page 21 of your paper, John, where census data (based on a form) does not capture that which it seeks to capture – modes of practices of economic activity that are more fluid (imperfect specialization/fluidity).

One of my research interests has been to study what happens when interventions, such as development plans, which are necessarily based on forms, meet a messy reality such as you describe. I’m aware that this moves the focus away from ‘informal sectors’ toward informal politics, but I would still be interested to hear whether this resonates with your experience of writing development plans. When development plans seek to incorporate informality they necessarily, to an extent, formalise ‘the informal’ at a conceptual as well as policy level, and this often leads to contradictions. 

I am embarrassed that I am joining in just as the seminar is closing, but I see that what I had to say has been well discussed by others from which I benefit enormously, and I hope there will be an opportunity to continue this conversation elsewhere.

I particularly wanted to echo Knut’s point about the developmental contexts of social informalities. To begin with, I agree with you Knut, as Justin and others have also said earlier, that the idea of ‘informality’ often lives through a tension of being defined against ‘the formal.’ On John C.’s response to your calling it an ‘informal sector,’ I did not think you were actually referring to sectors in terms of national economic accounting but as a social segregation of people who are barred from the world that is called ‘formal’ but which could also be called ‘privileged,’ ‘safe,’ or even ‘honourable’ in bourgeois eyes.

Returning to my earlier point about developmental contexts, I wondered whether a clear policy reference may be advisable, even needed, for studying informality today.  What was striking for me about both Keith’s ethnography of the Frafra and Mayhew’s discussion of the English was that they were the depictions of a certain era in history, linked to a certain local politics and a certain global order of things. Add to this what John McCreery said, that who are the ‘informal workers’ in the West now is different from what it was before, e.g., we see clear racial and ethnic dimension emerging, then we are reminded that temporality and context cannot be ignored in studying anything, including informality.

A good example is perhaps Jan Breman’s work -- ‘footlose labour’ of India. He studied the rapidly growing ‘informal sector’ in the peripheries of the textile towns of Ahmedabad, and showed how informalised workers suddenly began to tap on to caste- or religion-based networks and charities for sheer survival in the 1970s and 1980s, because they got pushed off the edge in the name of industrial modernisation that made massive lay off of factory workers a palatable aspect of Hindu nation-building. This era of new informalisation, if I may call it so, can very well be seen as an end of the preceding Nehruvian era, which had defined Indian independence to be about ‘roti, kapda aur makan’ (bread, cloth and housing) for ‘aam’ (common) Indians, to be achieved through state support (ie mass employment programmes). I don’t think Indian society – at least its understanding of ancient institutions like caste and religion – had changed that much just in few decades. What had changed abruptly were the government policies on industrial development, which ended up redefining the lives of the people in the margins, and with it, the construction of what could be called the world of ‘informality’….

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