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.