The Rise of the Underground – A New Discovery?

Believe it or not, experts at the World Bank and the IMF are disovering the virtues of something we at Kafila have been, off and on, debating: the so-called ‘underground economy’, the ‘informal sector’ or what has also been called the sphere of ‘noncorporate capital’.

“Economists have long thought the underground economy — the vast, unregulated market encompassing everything from street vendors to unlicensed cab drivers — was bad news for the world economy. Now it’s taking on a new role as one of the last safe havens in a darkening financial climate, forcing analysts to rethink their views”, states a recent Wall Street Journal report from Ahmedabad.

Says the report: “With the spread of industrialization and wealth, they [economists] thought, underground endeavors would be replaced by factory and office jobs. Rickshaw drivers would get replaced by big transport companies, while street-cart vendors would give way to restaurants that paid taxes and observed health codes.”

“That isn’t always happening. One-half or more of the developing world’s nonagricultural workers are employed in the underground informal sector, according to the International Labour Organization. In India, 83% of workers are informal, while in sub-Saharan Africa, about 72% are.”

And the good news, at the end of the day is that people involved in the underground economy are immune to the destructive impact of the recession. Largly because this is an economy which functions on a different logic and lies ‘outside’ the domain of the formal capitalist economy. We reserve a more detailed comment on this for a future occasion, but in the meanwhile, some food for thought.

7 thoughts on “The Rise of the Underground – A New Discovery?

  1. Raghavendra Srinivas

    Good article. The anarchy of this alternate economy is a very good counter to the ill effects of globalization.

  2. atreyee

    Would it also be useful to think about linkages between domains of corporate and non-corporate capital that are crucial to strengthening and maintaining of the cloak of ”corporate”ness. I am thinking of the not-so-corporate world of small-factory-owners, middle-economy-capitalists, transport-operators, raw-material-suppliers who continuously run the grey space between the peasant/labourer/small-capital-person and the world of big industry. Sharad Chari, in his book, Fraternal Capital, describes the capitalist communitarianism (or communitarian capitalism) of Tirupur textile-factory owners, who actively use caste-loyalties to garner a ready workforce for themselves. These are non-corporate capitalists, but they feed in and feed out of the capitalist realms of the metropole continuously. They further subvert the conventional Marxian prediction of how surplus value arises and circulates, as they rely on ‘pre-modern’ allegiances and loyalties to negotiate their relations with labour and resources, and concurrently, play the networks of world markets.

    So, it may be possible to argue that non-corporate forms of capital have always been in conversation with and have aided the constitution and strengthening of capitalist structures in the domains of big, corporate capital.

  3. Aditya Nigam

    I entirely agree with you Atreyee that corporate and non-coporate forms of capital have ‘always been in conversation’ – even though in all the extremely complicated ways that you say. Indeed more. During 2006-07when, under supreme court orders, ‘sealings’ of non-conforming units was undertaken on a large and unprecedented scale, one of the things that was apparent to many (but especially to the small owner in say Patparganj, where I live, was that ‘yeh sab mall walon ke liye ho raha hai’ (that all this is being done for the benefit of mall owners). Small shopkeepers, fruti and vegetable vendors and the like were being cleared away so that Reliance Fresh and the new swank malls could get a proper clientele. And as a consumer, i can tell you that in the two years or so that followed, many of us had to travel many many kilometres more (how ecological sound that is, is of course another matter) to Khan market or Connaught place even for things we would normally just stepped out to buy. No shopkeeper or vendor was fooled about the ‘ongoing conversations’ (I don’t think you want to use this word literally though) with corporate capital that they routinely have. Yes, sometimes someone from this world will move on into the other one but that is another matter.
    There is one more matter worth our consideration here. This is not just the conversation between these two (I would in fact go so far as to call this noncapital rather than non-corporate capital) kinds of ‘capital’ but also of the relationship to a certain organicity of life in our present. My favourite example is that of this old couple in Janakpuri, who live on the third floor of a DDA flat. They can hardly go out every now and then to the market. So, the vegetable vendor comes hawking his stuff and the old lady shouts out from above all the items she needs and what amounts. He weighs them and brings them up takes his cash and goes – day after day. Once he is gone and there is only Reliance Fresh, can we even begin to imagine what will happen? Most other local shops have a free home delivery system also in operation which takes care of other sundry needs. Their purpose is certainly ‘profit’ but it is not ‘accumulation’ in the sense which governs capital. It is a certain notion of livelihood combined with an organic link with lived social relations. I suppose you don’t disagree with most of what I say, but I thought I should spell out some things which are unsaid in the post.
    So while I see the point – and agree completely – with both Sharad Chari’s work and also your comments, I do want to underline that this movement between the two must not blind us to the very different logics that govern these two kinds of entrepreneurship. At the very least, let me say, that in the course of the last few decades, I have learnt to value these social forms much more, and would like to continue do to so, precisely because I know how integral they are to the rhythms of nonbourgeois life even in our metropolises in India.

  4. Rajesh

    How like the Wall Street Journal to discover the virtues of a social safety net in the informal sector! “The recession is not as bad as it appears, comrades” is the message. But then, balanced journalist that he is, Patrick Barta also informs us that recession is increasing competition in the informal sector (authentic Marathi vada pav and bashing up bhaiyas is Raj Thackeray’s answer to that one) and that prices of scrap have halved.

    How much informality is informal? How `formal’ was Kavitaben Parmar when she was earning Rs. 115 a day? How informal is organic? Has the young Surat diamond polisher become literally closer to his roots when he exchanges his sweaty shed for an NREGA worksite in the sun?

  5. Pingback: Demonetization, ‘Financial Inclusion’ and the Great ‘Unbanked’ | Kafila

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