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The urban informal sector : an alternative analysis Das, Veechibala 1986

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THE URBAN  INFORMAL  SECTOR: AN ALTERNATIVE  ANALYSIS  by VEECHIBALA DAS B.A., M.A.,  P.G.  D i p . , U.R.P., New D e l h i 1977  A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR  OF PHILOSOPHY in  THE FACULTY OF GRADUATE School  STUDIES  Of Community And R e g i o n a l  We a c c e p t to  this  t h e s i s as  the required  ©  conforming  standard  THE UNIVERSITY OF BRITISH October  Planning  COLUMBIA  1986  V e e c h i b a l a Das, 1986  In p r e s e n t i n g requirements  this thesis  British  it  freely available  for  Columbia,  I agree  that  f o r reference  permission  scholarly  fulfilment of the  f o r an a d v a n c e d d e g r e e a t t h e U n i v e r s i t y  of  agree t h a t  in partial  the L i b r a r y  shall  and study.  I  f o rextensive  for  that  copying  f i n a n c i a l gain  or publication  shall  The U n i v e r s i t y o f B r i t i s h 2075 Wesbrook P l a c e Vancouver, Canada V6T 1W5  '  &chft<  of this  It is thesis  n o t be a l l o w e d w i t h o u t my  Department o f  A  thesis  p u r p o s e s may be g r a n t e d by t h e h e a d o f my  permission.  Date  further  copying o f t h i s  d e p a r t m e n t o r by h i s o r h e r r e p r e s e n t a t i v e s . understood  make  Columbia  written  i i  Abstract The  Urban  Informal  Sector:  An  Alternative  Analysis  The concept o f d u a l i s m was a p p l i e d t o t h e u r b a n e c o n o m i e s in the Third World in the mid-sixties. Two sectors were identified, the informal sector and the f o r m a l s e c t o r . The i n f o r m a l s e c t o r was r e c o g n i s e d t o be p r i m a r i l y t h e r e f u g e of t h e p o o r , t h e u n e m p l o y e d , and surplus labour from rural areas. C o n s e q u e n t l y , t h e o r i e s were a d v a n c e d t o e x p l a i n how t h e i n f o r m a l sector was created, and why i t p e r s i s t e d i n the T h i r d World develoment p r o c e s s . In t h e l a s t t e n years, however, research f i n d i n g s have shown t h a t t h e i n f o r m a l s e c t o r may n o t n e c e s s a r i l y be the sector o f t h e p o o r o r be c o n f i n e d t o t h e T h i r d W o r l d . These s t u d i e s i n d i c a t e t h a t the informal sector is sometimes quite thriving, and present in centrally planned s o c i a l i s t e c o n o m i e s as w e l l as W e s t e r n c a p i t a l i s t nations. It is time therefore for a comparative a n a l y s i s of t h e v a r i o u s t y p e s o f i n f o r m a l a c t i v i t i e s i n the d i f f e r e n t economies to a s c e r t a i n how and why t h e phenomenon e x i s t s i n the d i f f e r e n t c o n t e x t s . This research examines the course o f t h e d e b a t e on t h e informal sector from 1965-1985 and presents an alternative analysis on the informal sector. The alternative analysis r e d e f i n e s t h e ' i n f o r m a l s e c t o r ' as t h e ' p e t t y c a p i t a l i s t s e c t o r ' and p r o p o s e s t h a t t h i s s e c t o r i s c r e a t e d in response to the market f o r c e s i n t h e f o r m a l s e c t o r , i r r e s p e c t i v e o f t h e t y p e of economy. The ' p e t t y c a p i t a l i s t s e c t o r ' c a t e r s to the demands for goods and services that are unfulfilled by t h e f o r m a l s e c t o r , and t h e s e a r e n o t n e c e s s a r i l y c o n f i n e d t o c h e a p goods. The l a b o u r f o r p e t t y c a p i t a l i s t s e c t o r i s s i m i l a r l y n o t c o n f i n e d to t h e p o o r and t h e u n e m p l o y e d . T h e r e a r e a v a r i e t y o f demands from t h e p e t t y c a p i t a l i s t s e c t o r and d i f f e r e n t s o u r c e s o f l a b o u r for i t . It i s the potential for different combinations of labour s o u r c e s and t y p e s o f demand t h a t c r e a t e t h e wide v a r i e t y of p e t t y c a p i t a l i s t a c t i v i t i e s i n t h e d i f f e r e n t e c o n o m i e s . T h i s r e s e a r c h a l s o p r e s e n t s the p o t e n t i a l c o n t r i b u t i o n of the a l t e r n a t i v e a n a l y s i s to T h i r d World p l a n n i n g . Planning for the i n f o r m a l s e c t o r has been important in the Third World because i t has been tied t o p o v e r t y and unemployment. But, according to the alternative analysis, because the 'petty c a p i t a l i s t s e c t o r ' i n c l u d e s a r a n g e of a c t i v i t i e s w i t h d i f f e r e n t problems, i t w o u l d be i n a c c u r a t e t o say t h a t i t can be p l a n n e d f o r per se. At b e s t , a nation can deal with some specific problems of t h e p e t t y c a p i t a l i s t s e c t o r , and t h i s w o u l d depend on t h e d e v e l o p m e n t p r i o r i t i e s of e a c h n a t i o n .  Table of Contents Abstract L i s t of Tables L i s t of F i g u r e s Acknowledgement CHAPTER  i i vi v i i viii  1: A CASE FOR RESEARCH ON THE URBAN INFORMAL  SECTOR 1  1. INTRODUCTION  1  2. PROBLEM STATEMENT 4 1. 1965-1975, The P e r i o d Of C o n v e r g e n c e I n T h o u g h t s On The I n f o r m a l S e c t o r 4 2. 1975-1985, The P e r i o d Of D e p a r t u r e s In M a i n s t r e a m Thought . 5 3. OBJECTIVE  10  4. STRUCTURE OF THE RESEARCH  10  5. MATERIALS AND METHODS  .  12  6. SCOPE AND LIMITATIONS  14  7. POTENTIAL FOR FUTURE RESEARCH  15  CHAPTER 2: THE DEBATE ON THE INFORMAL WISDOM 1965-1975 1. INTRODUCTION TO THE INFORMAL  SECTOR: THE OLD  SECTOR/FORMAL  16 SECTOR DEBATE 16  2. DEFINITION AND DESCRIPTION OF THE INFORMAL SECTOR 2.1 O r i g i n s Of The D u a l i s m C o n c e p t 2.2 The S p a t i a l C o n t e x t Of U r b a n D u a l i s m 2.3 Urban D u a l i s m : The D e v e l o p m e n t Of T h e o r e t i c a l  19 19 21 Models 21  2.3.1 The C o n t r i b u t i o n s And L i m i t a t i o n s Of D u a l i s m Models 3. FORMATION OF THE INFORMAL SECTOR: CONTRIBUTIONS FROM LABOUR U T I L I T Y THEORY AND EMPIRICAL STUDIES 3.1 The Q u e s t i o n Of L a b o u r U t i l i t y 3.2 E m p i r i c a l S t u d i e s On The I n f o r m a l S e c t o r  29 35 35 37  4. THE ROLE OF DEVELOPMENT PROCESSES IN THE THIRD WORLD IN THE CREATION OF THE INFORMAL SECTOR 40 4.1 U n i l i n e a r D e v e l o p m e n t T h e o r y And The I n f o r m a l S e c t o r 44  4.2 Dependency T h e o r y And The I n f o r m a l S e c t o r 4.3 C o m p a r i s o n Of U n i l i n e a r And Dependency A p p r o a c h R e g a r d s To The I n f o r m a l S e c t o r 4.4 New D i r e c t i o n s I n T h i r d W o r l d D e v e l o p m e n t 5.  51 With 55 56  CONCLUSIONS  59  CHAPTER 3: CONTEMPORARY WISDOM ON THE INFORMAL 1975-1985  SECTOR: 62  1. THE EVOLUTION OF THE DEBATE ON THE INFORMAL SECTOR IN THE THIRD WORLD 1.1 Changes I n D e f i n i t i o n Of The I n f o r m a l S e c t o r 1.2 T h e C o n c e p t Of U r b a n D u a l i s m 1.3 The I n f o r m a l S e c t o r And T h i r d W o r l d D e v e l o p m e n t Process 1.4 The R e l a t i o n s h i p Between T h e I n f o r m a l And F o r m a l Sectors , 1.5 C o n c l u d i n g Remarks  64 64 70 72 76 77  2. THE INFORMAL  SECTOR IN SMALL TOWNS OF THE THIRD WORLD .78  3.  SECTOR IN WESTERN C A P I T A L I S T COUNTRIES ...85  THE INFORMAL  4. THE INFORMAL COUNTRIES 5.  SECTOR IN CENTRALLY PLANNED  A COMPARISION OF THE INFORMAL DOMINANT ECONOMIES  SOCIALIST 92  SECTOR IN THE THREE  CHAPTER 4: AN ALTERNATIVE ANALYSIS OF THE INFORMAL  98 SECTOR 108  1. AN ALTERNATIVE ANALYSIS: THE DEMAND AND SUPPLY FOR PETTY CAPITALISM 109 1 .1 D e f i n i t i o n 109 1.2 F o r m a t i o n Of P e t t y C a p i t a l i s m I n An Urban Economy 119 1.2.1 Demand F o r P e t t y C a p i t a l i s m : The R o l e Of P r o d u c t i o n And C o n s u m p t i o n P a t t e r n s 121 1.2.2 S u p p l y Of L a b o u r F o r P e t t y C a p i t a l i s m 130 1.2.3 C r e a t i o n Of P e t t y C a p i t a l i s m 134 2. APPLICATION OF THE ALTERNATIVE ANALYSIS TO PETTY CAPITALISM IN DIFFERENT ECONOMIES 136 2.1 P e t t y C a p i t a l i s m I n W e s t e r n C a p i t a l i s t E c o n o m i e s .136 2.1.1 The Demand P o t e n t i a l Of P e t t y C a p i t a l i s m I n Western C a p i t a l i s t N a t i o n s 138 2.1.2 The L a b o u r P o t e n t i a l F o r P e t t y C a p i t a l i s m I n Western C a p i t a l i s t N a t i o n s 139 2.2 P e t t y C a p i t a l i s m I n The C e n t r a l l y P l a n n e d S o c i a l i s t Economies ..141 2.2.1 The Demand P o t e n t i a l Of P e t t y C a p i t a l i s m I n  V  S o c i a l i s t Economies 142 2.2.2 The L a b o u r P o t e n t i a l F o r P e t t y C a p i t a l i s m I n S o c i a l i s t Economies 143 2.3 P e t t y C a p i t a l i s m I n T h i r d W o r l d E c o n o m i e s .145 2.3.1 The P o t e n t i a l Demand From P e t t y C a p i t a l i s m I n The T h i r d World 1 45 2.3.2 The L a b o u r P o t e n t i a l F o r P e t t y C a p i t a l i s m I n The T h i r d World 1 49 2.4 P e t t y C a p i t a l i s m A n d U r b a n S i z e 152 3.  CONCLUSION  154  CHAPTER 5: IMPLICATIONS OF THE ALTERNATIVE ANALYSIS TO PLANNING  157  1. REFRAMING  159  THE PROBLEM FOR PLANNING  2.  THE ROLE OF THE STATE IN THE PAST  165  3.  EFFECTIVENESS OF PAST PLANNING EFFORTS  174  4. PROPOSED 5.  ROLE OF THE STATE  179  SUGGESTIONS FOR PLANNING FOR THE POVERTY-BOUND PETTY C A P I T A L I S T SECTOR IN INDIA 181 5.1 The I n s t i t u t i o n a l Framework F o r P l a n n i n g I n I n d i a 183 5.2 S u g g e s t i o n s F o r P l a n n i n g A t The N a t i o n a l L e v e l ...185 5.3 S u g g e s t i o n s F o r P l a n n i n g A t The Town L e v e l 191 5.4 D i f f e r e n c e s Between P r o p o s e d S t r a t e g i e s And O t h e r s . 197  6. CONCLUSION  201  BIBLIOGRAPHY  203  APPENDIX A - THE TWO CIRCUITS OF THE URBAN ECONOMY: SANTOS 1977 231 APPENDIX B - DUALISM MODEL OF URBAN ECONOMY BASED ON INCOME OPPORTUNITIES: HART 1973 232 APPENDIX C - A S I M P L I S T I C CHART ON THE FLOW OF IDEAS ON ECONOMIC DUALISM AND DEVELOPMENT APPENDIX D - A STUDY OF SMALL TOWN DEVELOPMENT PUNJAB, INDIA APPENDIX E - A F I E L D STUDY ON THE INFORMAL RAIKOT, A SMALL TOWN IN PUNJAB, INDIA  233  STRATEGY IN 234  SECTOR IN  APPENDIX F - INSTITUTIONAL STRUCTURE OF PLANNING  239 IN INDIA 245  vi  List  of  Tables  Dichotomous models of nations  u r b a n economy  The I.L.O Sectors  between t h e  distinction  E s t i m a t e s of t h e i n f o r m a l developing nations  sector  in underdeveloped 22  i n f o r m a l and  formal 24  in selected 177  vii  List  of  Figures  1. The s t r u c t u r e o f t h e r e s e a r c h 2. S t r u c t u r e 1975  11  o f t h e d e b a t e on t h e i n f o r m a l  sector:  19651 7  3. D i s t r i b u t i o n o f t h e i n f o r m a l 1979  sector  by c i t y  size:  Santos 80  4. D i s t r i b u t i o n o f t h e i n f o r m a l Shakhs 1984  sector  by c i t y  size: E l 82  5. S i m p l i s t i c r e p r e s e n t a t i o n o f t h e m a j o r means a n d m o t i v e s of t h e i n f o r m a l s e c t o r i n d o m i n a n t e c o n o m i c s y s t e m s .106 6. The p o t e n t i a l demand f o r goods petty c a p i t a l i s t sector  and s e r v i c e s from t h e 122  7. The e f f e c t o f t h e t y p e s o f demand upon into the petty c a p i t a l i s t sector  entry  of  8. The most l i k e l y r e l a t i o n s h i p s between t y p e s o f and t y p e s o f demand i n p e t t y c a p i t a l i s m  labour 128 labour ...133  9. C o m b i n a t i o n s between t y p e s o f demand a n d t y p e s o f i n the c r e a t i o n of p e t t y c a p i t a l i s m  labour 135  10. H y p o t h e t i c a l r e l a t i o n s h i p o f income l e v e l s a n d expenditure in petty c a p i t a l i s t sector  150  11. H y p o t h e t i c a l d i s t r i b u t i o n T h i r d W o r l d by c i t y s i z e  153  of petty  c a p i t a l i s m i n the  12. S i m p l i s t i c r e p r e s e n t a t i o n o f l a b o u r p a r t i c i p a t i o n a n d t y p e o f demand i n p e t t y c a p i t a l i s m by e c o n o m i c s y s t e m s 155 13. T y p e s o f t a x e v a s i v e  activities  14. The i m p l i c a t i o n s o f t h e a l t e r n a t i v e a n a l y s i s t o  161 planning 201  viii  Acknowledgement  I would l i k e supervising their  to  express  committee,  h e l p and s u p p o r t  through  for his careful  grateful  friends  with  me,  particular d u r i n g my  the field  Finally, patience days,  late trip  I am  gratitude  the y e a r s .  In p a r t i c u l a r ,  the  I thank  f o r the f i n a l  draft.  and c o l l e a g u e s  who d i s c u s s e d  the research  to  the f i n a l  thank  Prof.  my  Bijit  I  am  product. colleagues  Ghosh,  in  for their  India,  in  assistance  to India.  t h a n k f u l t o my h u s b a n d , S c o t t ,  and k i n d n e s s  to  reading  f o r i t has improved  I would a l s o l i k e  sincerest  P r o f s . P e n d a k u r , Wiesman, a n d McGee, f o r  P r o f . Wiesman to  my  t o h e l p me  a n d t o my p a r e n t s  would n o t have been a b l e  without  f o r having  g e t t h r o u g h t h e more whose  t o pursue  this  inspiration degree.  the  difficult  and s u p p o r t  I  1  CHAPTER  1.  1t A CASE FOR RESEARCH ON THE URBAN INFORMAL  INTRODUCTION  The  informal  dualistic  urban  conceptualises model,  in  sector  i s mostly  economy.  an e c o n o m i c  which  the  dualism,  therefore,  system  in  parts  entities"  refers  the formal  sector,  and  protected.  The s e c o n d p a r t ,  is  the informal  and  at  a s one p a r t  any  terms  spatial  of  a  (Rogerson  i s state  of importance  this  is  commonly  about  the  Richardson, sector  informal  sector  1984). - A l t h o u g h  h a s been a p r o b l e m  application  of a multitude  the is the  since  current quite  confused  definition  the beginning  of d e f i n i t i o n s  y e a r s h a s made a n a l y s i s more  state  of  research,  known  as  the  (Richardson,  1977; Mazumdar a n d Mazumdar, that  Urban  nurtured,  in this  1977; B o s e , agree  dichotomous  regulated,  1984;  scholars  scale,  1985:10).  economy o f t h e p o o r a n d t h e u n e m p l o y e d  Many  a  o f t h e model a r e " e s s e n t i a l l y  unregulated Sabot,  of  t o a d i c h o t o m o u s u r b a n economy, i n  w h i c h one p a r t ,  sector,  recognised  Dualism,  two  s e p a r a t e a n d autonomous  the  SECTOR  of  1975). knowledge  ( M o s e r , 1984; the  informal  of t h e debate, the  to empirical  work o v e r  difficult.  "The i n f o r m a l s e c t o r i s s t i l l t o o b r o a d t o be m e a n i n g f u l ; a t one e n d i s a p o o l o f s u r p l u s l a b o u r , a t t h e o t h e r a s k i l l e d h i g h income e a r n i n g e n t r e p r e n e u r ; a t one end a p r o l i f e r a t i o n o f r e s i d u a l e n t e r p r i s e s  I n v o l u t i o n d e s c r i b e s a c t i v i t i e s or e n t e r p r i s e s that a r e unable to generate growth, but o n l y reproduce the e x i s t i n g c o n d i t i o n s of s c a l e o f o p e r a t i o n s o f t e n a t t h e e x p e n s e o f t h e c o s t o f labour and s t a n d a r d of l i v i n g .  2  involutionary i n n a t u r e , a t t h e o t h e r end of t h e dynamic e v o l u t i o n a r y e n t e r p r i s e s . " Moser 1984, p  spectrum 160.  1  Until  recently,  debated predominantly not  a l l Third  patterns, First  they  common of  the  1985; this  in  the  Simon  i t , for  1.  The  topic  2.  We  the  two  P e r h a p s we  sizable  i s important  of  (Sethuraman, informal  socio-economic, which  grew p a r t l y  of  the  or  we  warrant  prosperous  Since  the  the  informal  the  (Mattera,  But  t h e n why as  would not we  this topic  late  sector  do  we  in  more  complexity  1985;  Peattie  scholarly  f o r academic  in  Third the  Aslund, proceed  in  (1984:180)  so for  muddled. i t involves  World  Interest  mostly  of  the other  nations, i n the  because  a  economies  highlights  developing  attention. but  on.  correlation  unemployment  p r o b l e m s of  reasons,  be  i s evident  Furthermore,  physical  keep  w o u l d not  force  w i t h p o v e r t y and and  from the  increased  persist,  i t or  labour  1981).  sector  development  reasons:  importance part  their  was  While,  2  e c o n o m i e s have become  sector  1982).  in  of  sector  Third World.  World.  t h i s has  informal  Witte,  the  informal  separated  Second  and  the  alike  however, s t u d i e s  have m i s - s p e c i f i e d  The  2  socialist  all?  put  are  of  Western c a p i t a l i s t  and  study at  context  distinctly  literature  d e b a t e on  has  of  the  and  i n the  be  seventies,  socialist  phenomenon o f  nations  can  W o r l d and  nineteen the  World  the  it  all  topic was  The T h i r d W o r l d i s a v e r y g e n e r a l t e r m a p p l i e d i n t h i s research t o n a t i o n s t h a t a r e c h a r a c t e r i s e d by a slow p a c e of d e v e l o p m e n t ; high growth of the labour force, p o v e r t y , l a r g e income and r e g i o n a l growth d i s p a r i t i e s e t c .  3  perceived tackled  by  1978). of  a s a d e v e l o p m e n t a l and an u r b a n p r o b l e m Third  The  World  informal  sector  the urban p o p u l a t i o n  (Mazumdar nation,  1975),  and  as  governments  was an  was  of  (Rogerson,  cities  burden  on  While a p o s i t i v e view  contribution  to  the  proposed  some  I.L.O., in  1972)  the  unhygienic strain  economy  studies,  of  Third  conditions  on t h e u r b a n  impact  urban  of the was  (Pendakur,  on p o l i c i e s  of  World the  cities,  squatter  1977;  20-60%  Third  World  informal  i n the  sector's  Sethuraman,  informal the  1974;  activities  congested  settlements,  McGee,  and  increasingly  i n f r a s t r u c t u r e and a m e n i t i e s ,  (McGee a n d Yeung,  from  services  being  1975;  t o be  Bromley,  malfunction  urban  the haphazard d i s t r i b u t i o n of  streets  the  v i e w e d a s an e c o n o m i c  infrastructure.  in  of  had  1985;  estimated to include  major  unwelcome  that  and  and  had a 1972;  the  greater Poethig,  1971). It to  i s f o r these reasons that  sieve  through  synthesis more  contribute  a  purely  to  sector.  research  information . in  and d i r e c t i o n .  than  informal  the  this  I t i s hoped  scholarly  that  exercise  t h e d e b a t e on p u b l i c  order  is  undertaken,  to provide  the endeavour and  that  will  it  p o l i c y and p l a n n i n g  some be  will  f o r the  4  2.  PROBLEM STATEMENT 1.  1965-1975, The  Informal  In  the  dualism,  which  of  has  attempt  informal  The  study  realm  of  study  the  of  dualism  and be  efforts  the  urban  economy.  also  l e d to  the  concept  In  formulation  t o e m p i r i c a l work.  as  appeared  in  characteristics production,  sector  one  Even  at  early  ability  l e d to a great not  of  only  se,  that  Third  In  The  outside over  the the  of  on  the  the  and  so  basis  on,  described the  debate,  phenomenon the  additional  the  of  the  modes  of  and  were  informal  poor. there (Moser,  informal  empirical  later  phenomenon  activity,  i n the  provided  1  sectors  stage  in  wisdom .  two  of  surge  of  the  identified  models  identify  study  applying  refuge  to  types  m o d e l s , w h i c h were  formal  the  Third  fact,  the  of  fell  in  some s c h o l a r l y a t t e n t i o n  World;  and  'old  dominated  itself.  models  the  of c e r t a i n  the  economy,  dualism  The  mostly  definition  the  per  of  of  1910,  T h i s p e r i o d of  classification  was  this  i n the  models,  findings  that  presence  t h i s decade,  informal  descriptive.  Nonetheless, the  the  income  as  problems  of  the  were made t o d e l i n e a t e  applied  essentially  The  concept  orig.  urban a r e a s  r e f e r r e d t o as  regulated  dualism  (Boeke,  enterprises.  activities  government  concept  it  In T h o u g h t s On  (1965-75), the  history  to understand  these  the  debate  long  sector w i l l of  the  a p p l i e d to the  economic a c t i v i t i e s  the  of  a  1975), was  i n an  Convergence  Sector  e a r l y years  Brookfield, World  P e r i o d Of  were some 1984).  sector  using  research.  The  information  on  the  5  informal  sector,  provided  by  informal and  the  sector  migrants  and  from  rural  Thus,  the  i n the  sector tied  the  of  2.  example, of  (Sabot,  the  i t was  the  found  poor,  1977;  description  the  Bose,  that  m o d e l s but  the  1977;  t h e s e d i d not  majority  of  the  the  unemployed Mazumdar  c o n t r a d i c t i o n s a p p e a r e d between  early years,  was  intricately process  the  support  assume  findings  the any were  models.  a convergence of  informal  few  because  of  For  areas A  f i n d i n g s and  supportive  seemed t o  composed m o s t l y  1975).  significance  saw  i t also  models.  was  Mazumdar,  empirical  but  ideas.  the  Although  contested,  to poverty  T h i r d World  1975-1985, The  d e b a t e on  few  and  the  the  informal  definition  disagreed  that  unemployment,  the  that  sector of  sector  resulted  the was from  development.  Period  Of  Departures  In  Mainstream  Thought While sound and is  it  is  logical  i n the  also d i f f i c u l t  early  difficult  in  contradictory  evidence  1.  of  and  socialist  85) De  and  that  the  1984;  studies  Tanzi, of  T h i r d World  gained  introduced  the  the  of  to  the since  the  an  e a r l y wisdom  the  was  i t s time, i t  position  overwhelming  of  amount  the of  mid-seventies: sector  increased  debate  1982).  the  e v i d e n c e of  accept  informal  the  that  the  face  e c o n o m i e s have  have e n t e r e d  Grazia,  context  to continue  research  Studies  t o deny  It  informal  Western  i n the  last  significantly is also sector  momentum a l t h o u g h  i d e a much e a r l i e r  in  (Kull,  decade  in smaller  1984;  (1975-  (Mingione,  in this  Santos  capitalist  (1973;  last  1985; decade  towns of  the  1979)  had  Hilhorst,  1984).  6  Both these earlier  research  implied  feature  d e v e l o p m e n t s make i t d i f f i c u l t  view t h a t  the informal  sector  is  t o accept the exclusively  common t o t h e l a r g e s t towns o f t h e u n d e r d e v e l o p e d  World economies  (Richardson,  1984; M a t h u r a n d M o s e r ,  a  Third  1984; Das,  1982). 2. World  As  setting  informal than  studies to  There  and  was  that  Steel,  generating,  unskilled  labour,  skilled  technology (Mattera, 3.  Greater  Jourdain, that  does  not  Moser, informal  the  in  of  a  of r u r a l  always  include  recent  Furthermore,  the  sometimes  high  level  (Fowler,  of  1978;  (Richardson,  sector  been  significant  the informal  a  can Nihan  I t has a l s o  show  the There  sector  h a s no  studies be  of  services  observed.  migrants  even  (Richardson,  informal  because  recent  on  1982).  was  population  sector  based  characteristics  sector in  making  as w e l l as  of p r o f e s s i o n a l  1977; Webb, 1974).  the informal  can  use  the  World.  i n Western n a t i o n s , f o r  nor unemployed  with  sector  1982)  of  variations  may be p r o f i t  of technology  i n the barter  poor  nature  of the T h i r d  Nihan,  activities  and  1978; A r y e e ,  1984).  greater  1982; Simon a n d W i t t e ,  the migration  correlation  sector  the  i t i s not n e c e s s a r i l y  participants  s o m e t i m e s be n e i t h e r  to include  and  i n the informal  that  economies,  a low l e v e l  variation  engaged  evidence  found  Demol  labour  f r o m an e x c l u s i v e l y T h i r d  i n the context  and that  using  1985; T a n z i ,  of  the informal  i s not unusual  population  and  even  In the case of b a r t e r  example,  is  types  1984;  employment  1984).  progressed  observed  earlier,  i s evidence  (Page  other  activity  identified  have  that  sector 1984; the  of choice  7  (Mazumdar, Fowler,  1981;  1979;  Sinclair,  1978;  difficult  of these  to accept  recent  to  the  developments  urban,  the r e l a t i o n s h i p  the  national,  of  and  World development Obviously, evolution  there  of these  inquiry be  1.  A Non-Comparative  informal informal  international  sector  to  Third  and recent  why  or  sector how  findings  i n v e s t i g a t i o n of the i n the T h i r d  i t  forms.  d e p e n d s on t h e  of t h e r e s e a r c h .  Two  World  But, the nature  of  approaches  taken.  Studies  process  W o r l d , may  o r may  argued that  the  argument different Similarly,  of  sector  i n economies that  development, not comparable  n o t be c o n s t r u e d  are  in  a  to the T h i r d  as a c o n t r a d i c t i o n .  It  may  t h e s e a r e s e p a r a t e phenomena, p e r h a p s s i m i l a r b u t  necessarily  explain  approach:  on t h e i n f o r m a l  different  not  for further  of the i n f o r m a l  and the o b j e c t i v e  can  be  i s a case  economies,  significance  i ti s  processes.  and f e a t u r e s  other  the  the  economy, a n d t h e r e l a t i o n s h i p o f t h e i n f o r m a l  the  1978;  i n the research  t h e ' o l d wisdom' on t h e r o l e o f t h e  i n t h e u r b a n economy,  sector  and  Moir,  1978).  Because  sector  Sabot,  the  same.  differences.  there  is  economies other  every  As s u c h  there  Certainly likelihood  should  not  differences  can  be be  on  w o u l d be no need t o the  that  basis  the  this  phenomenon i n  considered dismissed  of  related. i f studied in  isolation. However, contradictions  i t i s evident i n the study  at this  time  that  of the i n f o r m a l  there  sector.  a r e t o o many The  range  8  of  differences discovered  the  d i f f e r e n c e s between t h e  One  response  to the  to disaggregate addition the  of  But,  many  accomodate the t h e y do  not  poverty,  approach  sector  the  different  commonalities has  i s due  on  within  the  older  basis  a  informal  and to  so  on.  create  just  of  a  to  because  comparative  one  She  in  states  which  dissimilarities, the  Third  of  i t appears that the  comparitive  phenomenon f o u n d  informal  However, t h e s e the  consider  on  of  within  the  1981).  context  views  the  outside  the  Thus,  eg.  underdevelopment,  lack  generally  to  of  not  1978)  discovered  the  attempt  definitions  do  the  framework  necessary  being  some lie  and  Jourdain,  been  by  "modern"  T h i r d World  is  a p p r o a c h would be  that  the  done  to a n a l y t i c p r e j u d i c e .  e c o n o m i e s and  activities,  within  are  economies.  the  between  World.  approach:  been  (Sethuraman,  dualistic  be  that  approach  t y p e s of  been  as  migration?  states  i s separated  other  it  parameters of  issue  A Comparative  There  will  great  T h i r d W o r l d has  has  the  N i h a n and  v a r i a t i o n s that  current  phenomenon  The  1979,  (1984)  the  i s as  other  ( S t e e l , 1977), t h e  sectors  to the  and  This  within  unemployment, and  Peattie  that  phenomenon.  f i t the  T h i r d World  differences within  (Nihan e t a l . how  the  T h i r d World  subcategories  "intermediate"  sector  2.  the  within  urban  the the  include  the  sector,  by  sector  on  contexts.  wide v a r i e t y  bounderies  of  of  earlier  redefining  it  r e d e f i n i t i o n s h a v e been made  sector  the  as  an  Third  in other  r e d e f i n i t i o n s attempt  informal  based  in d i f f e r e n t  e c o n o m i e s of  informal  one,  aspect  to  World,  economies. retain  of T h i r d  the World  9  underdevelopment. This study  of  research the  a l s o undertakes a comparative  informal  comparison  of  the  economies.  This  sector  debate  analyse  the  for  two  reasons:  1.  The  recent  sector  informal  research of  the  converging  sector  last and  needs a s y n t h e s i s  of  differences  better  is  i s b a s e d on 18-20  the  developments  are  but  one in  of  s t u d y of  so  that  understood  as  the  a of  informal  It attempts  the a  types  the  issues  the  includes  three  a study years.  i n the  knowledge,  which  the  conflicting  approach to  to  re-  i n the  debate  informal  sector  similarities basis  for  and  further  research. 2.  To  provide  informal  sector  planning  study  direction  to  i t can  1.  informal  understanding  better  .  assist  of  the  s t u d y of will  The  the  have  s t r u c t u r e of  a  in this  the  urban  formulation  research  a p p r o a c h to the  This  a n a l y s i s , i n an  the  sector  a different  i s needed  effort  endeavours. f igure  complete  that  the  that  sector  alternative  this  so  of  conclusion  informal an  more  of  policies.  The the  a  results  i n the  effort  to provide  informal  sector.  positive the  impact  research  is  leads  to  a n a l y s i s of  the  presentation  of  synthesis  and  I t i s hoped  that  upon  planning  represented  in  10  3.  OBJECTIVE In  the  the  thesis  context  of the problem  i s to i d e n t i f y  statement,  the processes  that  the o b j e c t i v e of  create  the informal  sector. To  do t h i s ,  i t  information  on  weaknesses.  This,  because the  many  informal  What  is  this  subject  in  sector  recent  wisdom'.  and  generalisations general  informal  to  an  1985; M o s e r ,  studies  1984; McGee,  have been made. about  This  the informal  facilitate  the  The  research  the  nations  sector  sector exist,  will  comparative  'old in few  provide  i n these  types  some of  analysis  of  the  sector  in  the  has p r o c e e d e d as f o l l o w s :  Review o f t h e s t u d i e s on t h e  informal  T h i r d W o r l d , and t h o s e on t h e r e l a t i o n s h i p o f t h i s World  development The f i r s t  parts.  to  m i d - s e v e n t i e s when t h e r e the research  part  process.  two  to  and  the  sector.  STRUCTURE OF THE RESEARCH  Third  of  sector  research  1976).  study  of t h e i n f o r m a l  capitalist  task  been done on t h e  informal  the  and t h e  overwhelming  on  4.  1.  not  available  i t s strengths  i s a comparative  Western  conclusions  economies,  is  the  however,  A l t h o u g h many c a s e  socialist  evaluate  s t u d i e s have a l r e a d y  (Rogerson,  research  to  and a s s e s s  itself,  evaluative  i s more d i f f i c u l t ,  more  necessary  on t h e  covers  This  the period  was a c l e a r l y  informal  review  sector.  sector  i s divided  of the  this  into  mid-sixties  established At  to the  direction time,  the  11  1 - The s t r u c t u r e o f t h e r e s e a r c h  Figure  THEORY ON URBAN D U A L I S M , AND I T S R E L A T I O N S H I P TO DEVELOPMENT (1960-1975 approx.)  IMPACT OF THEORY ON URBAN AND REGIONAL PLANNING IN THE THIRD WORLD  RECENT DEVELOPMENTS • I N THE DEBATE ON -*URBAN DUALISM (POST 1 9 7 5 - - )  • AN  E F F E C T I V E N E S S OF PLANNING S T R A T E G I E S IN THE THIRD WORLD  ALTERNATIVESANALYSIS  IMPLICATIONS FOR EXISTING THEORY  phenomenon  was  identified  underdevelopment. on  the  subject.  not  only  because  persisted in  the  chapter 2.  I M P L I C A T I O N S FQR PLANNING  as  a  feature  T h i s c a n be r e f e r r e d The r e v i e w  of t h i s  i t was p i o n e e r i n g  i n planning  policy  following years.  of  Third  t o as the  'old  " o l d wisdom"  is  World wisdom'  important  work, b u t a l s o b e c a u s e  in spite  This  review  second  phase  of changes  in  i t has  the  debate  o f t h e " o l d wisdom"  forms  two. Review of  the  in  the  debate  on  the  1 2  informal  sector,  as  'contemporary  the  includes  3. and  explain  the  informal  This the  within  the  covered  in chapter  4.  for  the  Third  This  informal  to  sector.  It  informal  t h i n k i n g to i n the  substance of  the  in  will  the be  leading  World  study  also  chapter  three.  will  of  address  the  crux  of  to  the  creation  in other  and  study  the  informal  "old  the  the  a l t e r n a t i v e a n a l y s i s , an  but  the  debate,  to  a l t e r n a t i v e a n a l y s i s that  d i f f e r e n c e s i n the  urban  thesis of  as the  explanation  sector  not  economies.  only  This  is  four.  A p p l i c a t i o n of  purposes.  i s the  factors  f o r the  is referred  a l t e r n a t i v e approach  chapter  Using  the  This  a r e a s of c o n f l i c t  This an  on  a r e a s of c o n f l i c t  sector.  is provided  1975-1985.  contemporary  f o r an  of  sector.  identifies  the of  sector.  Proposal  informal it  of  of a c a s e  informal  from  wisdom'  identification  presentation the  period  a comparision  wisdom",  of  the  the  alternative  section discusses sector,and  how  analysis  to  whether p l a n n i n g  to proceed.  This  planning  i s necessary  forms  chapter  five. 5.  MATERIALS AND  METHODS  Documentary  material  information  for this  have  prolific  been  has  research.  been Studies  particularly  Although a comparison  of  due  in d e f i n i t i o n ,  can  to be It  differences  the  the  studies  on  the  since is  primary  the  source  informal early  trends  sector  seventies.  sometimes  strong  of  problematic i n the  debate  identified. was  not  f e a s i b l e to undertake extensive  field  work  on  1  the  informal  alternative the  author  the  sector,  particularly  analysis. for this  information  Punjab, office  sector  India, during  research.  in  survey  October  of  undertaken from  i n 1982. Punjab  University  of  government  agencies.  were c a r r i e d large  towns  the  in  informal goods nations  however  i s mostly  towns o f  the  scant  the  Third  the informal  for this  a  study  Chandigarh; Town  study  sector  also  office,  was  the  and  collected  Agricultural  Country  Planning  Chandigarh;  and o t h e r  i n 1977, q u e s t i o n n a i r e  i n Rourkela  and  The sample  squatter  provide  colonies,  Sambalpur,  two  respectively.  h a s been u s e d  here.  of the informal  a middle basis.  study  surveys  s i z e s of the s t u d i e s  interest,  a daily  through  for  the  towns i n P u n j a b ,  small  from t h e s u r v e y s  and s e r v i c e s on a l m o s t  support  on  a s an a c a d e m i c  sector a c t i v i t i e s  municipal  the  h a s a l s o had e x p e r i e n c e  I n d i a , not only  to  town i n  of  Previously,  i n Orissa, India.  The  the  in  Census  o u t by t h e a u t h o r  author  i n small  in  a  included  Ludhiana;  selected information The  in  policy  Information  were 250 a n d 187 p e r s o n s Only  sector  research,  small  1982.  compensates  was a l s o  Punjab,  a  study  University,  Chandigarh;  Raikot,  1981-February  augment  employed  f o r comparison with  development  the  office,  Raikot  persons  in  to  For t h i s  documents  field  and was n e c e s s a r y  impact  o f 57  was u n d e r t a k e n by  municipal  on t h e i n f o r m a l  l a r g e towns.  t h e f i n d i n g s of the  previously  sector.  undertaken  provided  This  information World  was  of Raikot  as w e l l as  the informal  participant-observation informal  to test  However, some f i e l d w o r k  research  on  3  sector  but a l s o because the class  Indian  with  Knowledge o f o t h e r  of the l i t e r a t u r e .  14  6.  SCOPE AND 1.  This  literature the  proposal  the  has  types  2.  World,  contexts.  this  the are  the  of  to  not  sector  the  debate  informal  and  the  in s o c i a l i s t as  are  in a  of  sector  in  subsequent  alternative  analysis but  field  and  Western  that  of  the  Third  anaysis  of  the  three  informal  economies  urban d u a l i s m  use  constraints.  extensive  of  the  from e m p i r i c a l d a t a ,  comparative  studies  capitalist  The  financial  as  to  the  economies  informal  affects  Although  Western  entered  of  nations  and  a n a l y s i s of  support  p o s s i b l e due  Studies  capitalist  confined  alternative analysis.  have b e n e f i t t e d by not  been  comparative  dominant  of  work was  and  research  i n the  three  would  LIMITATIONS  sector  not  new,  in  socialist  t h e y have  significant  way  only  since  the  mid-seventies. 3. the  Information  T h i r d World  c o m p e n s a t e d by The  is the  on  the  not  substantial  author's  literature  on  of  the  debate  read  every  s u r v e y of  the  a l t h o u g h e v e r y major p o i n t review  informal  on  possible  to  none t h e  l e s s comprehensive  of  sector but  v i e w has  the  document  been  f o r the  the  was  towns  earlier.  i s extensive,  considered  sector,  i t has  subject.  The  purposes of  this  of  partially  mentioned  sector  informal on  this  Raikot,  informal  in small  and  in  the  not  been  review research.  is  15  7.  POTENTIAL FOR FUTURE RESEARCH There  result  are  of t h i s  analysis  on  different,  will  many d i f f e r e n t thesis.  the  The  urban  no doubt  This, the  again,  this  scope  can provide  analysis.  planning  the  Finally,  i s only  sector,  an  that  of the a n a l y s i s .  and b e c a u s e for  feedback  i t  t h a t c a n be  as a  alternative is  new  and  lead to  Furthermore, the  proposes  empirical testing  universal  i s enormous.  used  to  improve  t h e use of the a l t e r n a t i v e a n a l y s i s f o r  p u r p o s e s c a n be t h e s u b j e c t  aspect  of  research  g e n e r a t e d i s c u s s i o n and perhaps  i s as y e t untested  applicability,  presentation  informal  r e f i n e m e n t s and m o d i f i c a t i o n s analysis  avenues f o r f u t u r e  broached  in this  for considerable thesis.  research,  16  CHAPTER  2: THE DEBATE ON THE INFORMAL WISDOM  1.  spite  literature  of twenty  disagreement a.  What  b.  How  c.  What  d.  What  formal  five  years  i s the informal  sector  the  (1976:1871)  sector  has  these  reworked".  there  was  sector  was a n d how  restricted is  the  informal  that  rise  economy?  sector  to the  the  discussion  Moser  of  than  (1984) h a s  entitled the  of  "The  debate,  the  i t has  reviewed informal however,  o r c o n s e n s u s , on what t h e i n f o r m a l  i t f o r m e d , p r i m a r i l y b e c a u s e t h e a n a l y s i s was  of  sector  (Mathur a n d  definition  were  and  present  Nevertheless,  the  Moser,  was no c o n f u s i o n  the T h i r d World context, Since  i n an u r b a n  t o more q u e s t i o n s  of the underdevelopment  1979).  considerable  F o r example:  informal  i n her a r t i c l e  clarity,  not t o say there  relationship  debate.  of  view,  t o the T h i r d World  Indeed, problems  within  sector  In the e a r l y years  greater,  is  economy?  "given  questions  sector  there  However, i n  formed?  a p p e a r s t o be s u b s t a n t i a t e d .  of  Gerry,  study  of the s u b j e c t .  relationship  Breman's  that  i s extensive.  i s the r o l e of the i n f o r m a l is  SECTOR DEBATE  sector?  i n an u r b a n  some  of  on c e r t a i n a s p e c t s  sector  solved"  SECTOR/FORMAL  on u r b a n d u a l i s m  i s the informal  informal  the  1965-1975  INTRODUCTION TO THE INFORMAL The  SECTOR: THE OLD  these  process  views  1980;  Moser,  years. on  the  this  1978;  p o s i t i o n s were  set boundaries  however,  But,  t o the c r e a t i o n of  different  and t h i s  mid-seventies,  i n the e a r l y  differing  (Kahn,  1984).  to  the  "context" f o r  17  Figure  2 -  Structure  of  the debate 1965-1975  on  the  LABOUR UTILITY STUDIES  OBSERVATION I WHERE IS THE INFORMAL SECTOR FOUND?  OBSERVATION  URBAN DUALISM MODELS  MIGRATION PATTERN IN THIRD WORLD  WHAT IS URBAN DUALISM?  EMPIRICAL  informal  sector:  ORIGIN OF DUALISM CONCEPT  DATA  HOW D^ES INFORMAL SECTOR FORM?  DEVELOPMENT THEORY WHY DOES INFORMAL . SECTOR FORM?  LIBERAL ECONOMICS EXPLANATION  the  debate  sector  in  debate  in a  i s no other  longer  NEO-MARXIST EXPLANATION  sufficient.  economies,  significant  way  although  (Mattera,  Studies not  on  new,  1985;  the  have  Aslund,  informal  entered 1985;  the  Tanzi,  1982). It  i s the  purpose  of  this  chapter  to  review  the  knowledge  18  of  the informal  "old  sector  wisdom". that  World.  There w i l l  and  first  how  converged  part  tried  the to  major  forms.  theories  understand  development  process  the  I t i s necessary  because  i t  informal the has  influential  sector  present changed  of  the  informal  was  these aspects, "old  what  the  part  or  the  on  will  indirectly  Third  World  c r e a t i o n of the informal  t h e " o l d wisdom"  planning This  separately  s t u d i e s and a l s o policy  for  influence continues the informal  the to  sector  years.  of the dualism  sector  the  i n guiding  i n the " o l d  concept  sector  found  itself  wisdom"  in a logical  and "what" i t was.  as the s t r u c t u r e  wisdom" on t h e i n f o r m a l  stems  and e m p i r i c a l  i n T h i r d World c i t i e s .  "hows" o f t h e i s s u e were b a s e d , the  third  of  e v e n t h o u g h t h e knowledge a b o u t i n recent  of  review the ideas  the  peculiarities  i n the T h i r d World.  Much o f t h e argument origins  will  i s d i s t i n g u i s h a b l e from t h e r e c e n t  i t was  discussion.  have d i r e c t l y  to discuss  streams of  o f some o f t h e d e f i n i t i o n s  Finally,  to  the  i n the T h i r d  to this  understanding  that  leading  sector.  because  sections  to the  t h e major  t h e phenomenon  The s e c o n d p a r t  sector  i n the e a r l y years,  identify  i n c l u d e a review  was.  the informal  discuss  major  contributed  sector  will  to understand  be t h r e e  will  models t h a t  informal  was d o m i n a n t  The . c h a p t e r  thought  The  that  from  observations  The "whys" a n d  manner, on Figure  2  "where"  represents  f o r f o l l o w i n g d i s c u s s i o n of  sector.  the  the  19  2.  DEFINITION AND  DESCRIPTION OF  2.1  O r i g i n s Of  Dualism  The concept  The  study of  dualism  is  a  observed  and  then  contexts  over  economy  (orig.  dualism  dichotomous  translations  Boeke  1910,  in  English of  that  between  two  elements  i n the c o l o n i a l  colonial  economy  according  to  of  The  Not  a  much  ie.  of  a drudgery  i f i t i s used  on  contact  distinguishable  were  based  westernised  and  the  on  the  element  rational, and  and  unyielding  self-employment"  Chayanov's relations  is insufficient noted  with  in contrast, i s precapitalist,  e c h o e d Boeke's b e l i e f s  Chayanov had  the  westernised  exploitative  production,  forms.  was  f o r a debate  "materialist,  1975)  economy  the  the  The  is  prevalence  dual  concept along  economy,  observations  Brookfield  capitalist  on  stage  s y s t e m s l e a d s t o two  Indonesia.  later,  and  been  spatial  the n o t i o n of a  (1939)  colonial  e a s t e r n element,  by  has  today.  economy His  that  The  The  Economic  different  1975).  set the  the epitome of  characterised 1975:54).  Furnival  a  history.  in  with  by  Brookfield  individualist capitalism.  explained  works,  i n a vacuum.  formation  Brookfield,  in  arise  long  is credited  socio-economic  elements.  a  economic  that continues  Boeke o b s e r v e d  easternised  has  in  Boeke's  economic d u a l i s m  d i d not  d e s c r i b e d and  time.  INFORMAL SECTOR  Concept  of u r b a n d u a l i s m  economic  introduced  THE  discussion  between  (1966,  in  labour e f f o r t  and  t h a t the concept  of a  to e x p l a i n d i f f e r e n t  that labour  to produce  (Brookfield  input  beyond  into the  single economic  production i s needs  of  the  20  people. Almost  This  concept  three  Brookfield, production western  i s similar  decades 1975)  f o r gain  after  distinguised  Marx  (orig.  i s , however,  a  country  is  economy  Marx  argues  Boeke  and  t o be n o n - e v o l u t i o n a r y  that  a  Chayanov  in character.  That  of development.  may r e s u l t Later,  from the c o u r s e  explain  dualism that  this  dichotomies, essentially  definition urban  find yet  one be  that  used  theory.  'industrial'  has l e d  different  and to  confusion  o f t h e two s e c t o r s a n d t h i s  economies,  t h a t came  later.  could  B r o o k f i e l d (1975)  of d i f f e r e n t  and western  while  the dual  that  nomenclature,  'agricultural'. some  t o any c h a n g e s  sets but  Brookfield  of were  elements  F o r example, H i g g i n s  and ' r u r a l '  dual  i s , the dual  theory  "value-free".  t o Boeke's e a s t e r n  dualism  economy  the  to understand  economic  l e d to the i d e n t i f i c a t i o n  'industrial'  terminology  to  and  similar  classic terms  reference  n o r m a t i v e m o d e l s were d e v i s e d  economy, p r i m a r i l y  dual  portray  that  terms  and  o f a common e v o l u t i o n o f e a c h  without  the  f o r use and  t o Boeke's e a s t e r n  economy h a s a t i m e l e s s q u a l i t y ,  the  in  a major d i f f e r e n c e i n the w r i t i n g s o f  the r e s u l t  By c o m p a r i s i o n ,  states  1935,  between p r o d u c t i o n  which a r e comparable  Boeke, Chayanov a n d Marx.  form.  Boeke,  element"  elements r e s p e c t i v e l y .  There  within  t o Boeke's " e a s t e r n  in  (1968) u s e d uses  the  The u s e o f d i f f e r e n t in  finding  an  exact  permeates the a n a l y s i s of  21  2.2  The  S p a t i a l C o n t e x t Of  In  the  sixties,  World c i t i e s economy  that  into  (1984) s t a t e s this  sector  usually  that  to the  given  to  early  research.  "firm  centered  element  of  centred been  fit  and  classic  dualism  Geertz's  Boeke can while  visualised  be the  only  eastern  in  "bazaar"  a  study  of  d u a l i s m moved t o  Urban D u a l i s m : The  It  is  and  context.  But,  difficult  for  sectors.  The  approaches to terminology picture  of  even  scholars urban the (see  the  in  has  for  "bazaar"  is  furthering  the  sector The  that  had  Theoretical  t h i s phenomenon.  western  was  now  then,  the  Models  context  dichotomy  that  of  as  the  Third  the  in  definition  models  provide  the  sectors,  and  two  therefore  of  a  well  as  World.  many d e s c r i p t i v e  t h i s s p a t i a l context  t o a g r e e on  1),  the  previously  Since  u r b a n d u a l i s m were p r o p o s e d  Table  from  urban-industrial/firm-  feature  therefore,  d e f i n i t i o n of  added  credit  sector).  classic  been a  dualism  an  cities.  the  within  of  model w h i c h  cities.  urban/industrial  surprising,  e x p l a n a t o r y m o d e l s of  in  Third  Richardson  However,  element  D e v e l o p m e n t Of  urban c o n t e x t  not  first  the  in  r u r a l - a g r i c u l t u r a l context  sector  dualism,  rural/agricultural  to  sector  sectors.  (1963) a n a l y s i s a  a  distinction  theory.  compared  the  the  the  (urban-industrial  to  within  classic  Reynolds provided  sector"  Economic  the  urban-industrial  compared  2.3  identified  Geertz d i s t i n g u i s h e d  sector,  of  Dualism  some s c h o l a r s  d i d not  rural  Urban  and  the  same  i t was  still  of  the  two  many  different  use  different  present  an  unclear  22  Table  1. 2. 3. 4. 5. 6.  I - D i c h o t o m o u s m o d e l s of u r b a n economy i n underdeveloped nations  Geertz McGee Hart Emme r j i Mazumdar Santos  Source:  1963 1 971 1973 1 974 1976 1976  Adapted  To  add  the models  B a z a a r economy - F i r m - c e n t e r e d economy Peasant production - C a p i t a l i s t production Informal - Formal Unstructured - Structured Unprotected - Protected Upper c i r c u i t - Lower c i r c u i t  from G e r r y  to t h i s , to  Moser  empirical  1979,  cited  i n Rogerson,  1984,  p . 14  (1978) s t a t e s t h a t t h e a p p l i c a t i o n research  has  resulted  in  of  complete  confusion.  " F o r i n s t a n c e i t h a s , a t d i f f e r e n t t i m e s , been r e g a r d e d a s synonymous w i t h t h e u r b a n p o o r o r w i t h p e o p l e l i v i n g i n s l u m s and s q u a t t e r s e t t l e m e n t s , o r w i t h immigrant p o p u l a t i o n s of c i t i e s . In a d d i t i o n , c e r t a i n k i n d s of o c c u p a t i o n s have been t r e a t e d as b e l o n g i n g to the i n f o r m a l s e c t o r . " (Moser 1978:1051)  The for  " P i s c e s " study,  t h e Agency of  by  the Georgia  Institute  I n t e r n a t i o n a l Development  of  (1981)  Technology,  states:  "A c o m p i l a t i o n o f more t h a n f i f t y d e f i n i t i o n s o f t h i s e l u s i v e c o n c e p t show w i d e d i s c r e p a n c i e s i n t h e i r a s s u m p t i o n s o f maximum number of e m p l o y e e s , c a p i t a l r e q u i r e d , p r o d u c t i v i t y , m o d e r n i t y and i n t e g r a t i o n i n t o t h e economy." This  compilation  of  Institute  of Technology  the  sectors  two  the  are,  present  some of  concept  of urban d u a l i s m  definitions i n 1975. i n the  major  was  In o r d e r  made to  urban c o n t e x t ,  views  t h a t can  or be  models  by  the  Georgia  understand  what  this  chapter  and  the  d e r i v e d from  them..  will  general  23  Based  partly  categories  of  of  sectors  McGee's  d u a l i s m models are  m o d e l s b a s e d on modes  on  to the  models  models t h a t  1.  D u a l i s m m o d e l s b a s e d on With  seek  be  delineate of  in this  of  one  any  sector  He  town, and  d i s t i n g u i s e d between a  similar  to the  from  economic  drew  in  sector".  the  r e l a t i o n s h i p of  the  on  income  Reynolds  "bazaar"  sectors: in t h i s  other Geertz  attention  category  without  the  (1963) was  to  the  the  dualism  of M o d j o k u t o , a  Javanese  "bazaar"  (1966)  sector  the  the  structure  opportunity  categories.  models  interrelationships.  category.  the  the  models  include; on  i n t o these  Santos,  These  five  based  a d e s c r i p t i o n of  observed  centred  sector,  b a s e d on  placed  exception  consideration pioneer  cannot  the  to  the  government, models based  and  classification,  presented here.  a d e s c r i p t i o n of  production,  (1978)  sector  described  identified  and  a  a  sector  "firm that  is  as:  "the p e t t y t r a d e r s , s t r e e t v e n d o r s , c o o l i e s and p o r t e r s , s m a l l a r t i s a n s m e s s e n g e r s , b a r b e r s , shoe s h i n e b o y s and p e r s o n a l s e r v a n t s . . . . m o s t o f them r e q u i r e l i t t l e or no s k i l l and a l s o l i t t l e o r no c a p i t a l " ( R e y n o l d s , 1966).  Richardson neglect  of  classified  (1984) i s c r i t i c a l  the  full  i n the  be  the  c h a r a c t e r i s t i c s of  except  correct.  by  fairness, the  work of  other  sector  of and  B o t h R e y n o l d s and  skill, i t has  spectrum  "bazaar"  to  of  the  capital  t o be  input, they  work  activities  G e e r t z d i d not  and laid  in  the  poverty. the  for  that  in retrospect  participants  said that  scholars.  Reynolds  he  can  But,  be  appears  elaborate two  his  on  sectors in a l l  foundation  for  24  Studies  of  Organisation earlier the  had  new  p.8).  concept  I.L.O.  distinguish  between  these  used  Table  are  that  with  rapid  world  a  list  I.L.O.  the  list  in  the  Bank,  was  acceptance  of  (Rogerson,  1985,  characteristics s e c t o r s , which  policy of  making.  to were  It i s for  characteristics  is  here: II  - The  I.L.O  d i s t i n c t i o n between t h e formal Sectors  informal  The 1. 2. 3. 4. 5. 6. 7.  Informal Sector: Ease of e n t r y i n t o the l a b o u r f o r c e R e l i a n c e on i n d e g e n o u s r e s o u r c e s F a m i l y ownership of the e n t e r p r i s e Small s c a l e o p e r a t i o n L a b o u r i n t e n s i v e and use o f a d a p t e d t e c h n o l o g y S k i l l s a c q u i r e d o u t s i d e the formal s c h o o l system U n r e g u l a t e d and c o m p e t i t i v e m a r k e t s  The 1. 2. 3. 4. 5. 6.  Formal Sector D i f f i c u l t entry i n t o labour force F r e q u e n t r e l i a n c e on o v e r s e a s resources Corporate ownership Large s c a l e of o p e r a t i o n C a p i t a l i n t e n s i v e , o f t e n u s i n g imported technology Formally acquired s k i l l s , often expatriate  7.  P r o t e c t e d markets,  Source:  these  significant,  World  wide  of  formal  on  decisions  literature"  i n f o r m a l and  the  expanded  theoretically  along  provided  I n t e r n a t i o n a l labour  upon p o l i c y  development  the  the  1979)  i n e m p i r i c a l s t u d i e s and  reasons  presented  impact  I.L.O.,  i n the  (1973,  both  i n " s e c u r i n g the  The  widely  although  The  s e c t o r by  Santos  a greater  World.  instrumental this  informal  (1972) and  works, and  I.L.O.  Third  the  I.L.O.,  The because of  I.L.O. this  1972,  through t a r i f f s  q u o t a s and  and  trade l i c e n c e s  p.6.  study  infuenced  comprehensive  policy  list.  They  makers also  not  merely  proposed  a  25  different  approach.  complemented  the  development. should the  be  They  formal  sector,  They p r o p o s e d , retained.  informal  g r o w t h and  argued  sector  development  and  was  an  the  as  informal  necessary that  the  a reformist  construed of  was  therefore,  This  was  that  economic  informal  idea  a negative  underdeveloped  for  sector  at  a  sector  t i m e when  aspect  of  the  economy.  " t h e i n f o r m a l s e c t o r i s a s e c t o r of t h r i v i n g e c o n o m i c a c t i v i t y and a s o u r c e o f K e n y a ' s f u t u r e w e a l t h " ( I . L . O . , Kenya r e p o r t , 1971)  Santos' detailed more  than  the  circuits  of  (see  studies  the  to of  A  integrate urban  were not  and  Mathur,  the  work of  in  category  sectors.  activities  concept  use  the  by  of  size  1984;  Souza and  has  The  lower  His  model  population.  circuits  into  the  Santos'  the  informal  1984;  Mathur,  (1976) c a n  informal  even  t h e y h a v e become i n  (El-Shakhs, 1984;  are  respectively,  of  as  that  circuits  two  d u a l i s m m o d e l s b a s e d on  simple  used.  the  grown  Tokman  more  interlocking  r e l a t i o n s h i p of  Hilhorst,  the  and  model).  even  i s a model  sectors  when p u b l i s h e d  They d e s c r i b e  that  Although  of  informal  i n t e r e s t i n the  Kull,  work  u p p e r and  Santos'  the  useful  The  is  widely  interacting  and  the  as  Santos'  be  settlements  as  1984;  The  two  of  urban h e i r a r c h y  1982). this  i t i s not  to  formal for  eighties since  sector  characteristics  economic a c t i v i t y .  appendix  heirarchy  of  I.L.O's but  sectors  to  attempted  list  contribution  two  equivalent  and  the  important  shows  the  (1973)  Kundu  1983;  also  be  Das, placed  a d e s c r i p t i o n of sector  as  the  unorganised  technology.  descriptions  used  by  the  scholars  in  this  26  category  differed,  was  scale,  small  characteristics of  resources  it  can  be  g e n e r a l l y the such  as  the  deduced t h a t the economy of  level  for production  of  c o u l d be  the  informal sector  p o o r and  technology  used,  placed  the  in  a l l other the  source  context  of  poverty. 2.  Dualism  m o d e l s b a s e d on Modes of  According this  category  to can  between  three  socialist  and  a  commodity  McGee be  traced  systems peasant.  to  be  type,  entrepreneur  that  labour the  In t h e  this  sense,  eastern  element  is,  informal sector like  Brookfield, based  his  1975),  between  Friedmann  it  may  labour and  be  of  the  Sullivan urban  a  structure.  Their  was  and  enterprise  the  In t h e  McGee  peasant of  his  (1973) s t a t e s  peasant  system  of  informal sector i s dualism.  like  (1925,  Franklin on  That  traditional/  Chayanov  economy  is  a  in  (1965),  study  of  production.  Sullivan  not  by  sector, i s a  recalled, dual  (1972) model a l s o d i s t i n g u i s h e s  with  introduced a third economy  labour  of Boeke's c l a s s i c  1975).  the  systems,  utilisation  the  rural  distinction  capitalist,  etc..  t h e r e f o r e , the  the  between modes o f p r o d u c t i o n , and  two  t o the  to  (Brookfield  distinction  relationship The  sector  the  dismissed  conforms  to the  precapitalist  and  first  the models i n  (1965)  t h a t of h i s f a m i l y .  similar the  Franklin's  i s committed  informal sector In  approach of  c o n d i t i o n s , technology  supply,  production.  the  production:  hired  t o market  total  to  of  the  according the  (1973)  Production  a slight  variation.  mode o f p r o d u c t i o n seen  tri-sectoral  as  model  a  and  strictly  combines  Friedmann therefore dualistic  labour  force  27  characteristics cities  and  with  identifies:  open u n e m p l o y e d ) , The  an  informal  family  sector  individual  and  institutional  of  i n d i v i d u a l entrepreneurs  t o t h i s model  family  enterprises.  a  indicates  the  dualistic  i s further expressed  by  Sethuraman  framework t h a t  (1978) a n d o t h e r s ,  Steel  because  a  In  (1977),  i t fails  World  ( i n c l u d i n g the  includes  F r i e d m a n n a n d S u l l i v a n model  (1981),  Third  e n t e r p r i s e s , and t h e c o r p o r a t e  according  the  model  sector. both  the  sense,  the  dissatisfaction  and  to cover  in later  N i h a n and  with years  Jourdain  t h e gamut o f  urban  activities. 3.  Dualism models based  the  state;  i.e.  factors external  Mazumdar of  force  protected labour gain  had  their  the  (1975)  sector,  private  enterprises,  This policy  to  and i s  nurtured  by  no s u c h r e c o g n i t i o n  makers  a process  according  category  trade  unprotected labour  and  on t h e b a s i s a part  working  unions.  but found  conditions  The r e m a i n i n g  i tdifficult  of e l i m i n a t i o n  to  not labour,  b u t he r e f e r s t o  by t h e  state.  The  Weeks c o n s i s t s o f government and  officially the  recognised,  state.  regulated,  The i n f o r m a l  sector  or support.  of models a l s o had a c o n s i d e r a b l e  f o r i t was e a s y  of the  force.  makes a s i m i l a r d i s t i n c t i o n  formal  receives  or  of the a c t i v i t y ,  and  i n which only  levels  government  i n t o the p r o t e c t e d  protection  protected,  market,  wage  f o r c e was n o t o n l y  entry  t o the e n t e r p r i s e  d i s t i n g u i s e d t h e two s e c t o r s  i n the labour  by  Weeks the  (1976)  a dichotomy  labour  on t h e r e l a t i o n s h i p o f t h e s e c t o r s t o  to identify  the informal  of the e n t e r p r i s e s  receiving  impact sector  on by  government  28  recognition (Popola, it  was  as  or  1979;  support  Poethig,  through  1971).  registration,  While  common t o v i e w u n r e g i s t e r e d  the  equivalent  Sethuraman the  to  the  sector  as  is highly  activities  informal  (1976, p.126) i n an  informal  this  licences debatable,  i n the  sector.  early article "all  and  Third  For  on  World  instance,  Jakarta,  unregistered  defines  commercial  enterprises" . 4.  D u a l i s m M o d e l s b a s e d on Hart's  (1973) work on  more s i g n i f i c a n t a  different  with  used  perspective the  terms  i n the  that  lacking  wage employment.  this  almost  non-wage  self-employment retains  the  appendix  B  model  for  the  of  to  study  is also that  of  focussed the  are  his  framework  wide r a n g e o f  classification  of  the  most  economy  sector  Although b a s e d on  f a r more f l e x i b l e  a  quite  as  attention  informal  model  the  classified  wage, employment. his  of  credited  Accra's  f o r c e was  defines  one  i t offers  He  formal  labour  framework,  includes  Hart  and  therefore, He  t o be  d e b a t e as  His  the  He,  opposed  said  urban d u a l i s m .  sector.  makes t h e  The  i s often  to the  debate.  55%  dualistic  opportunities models.  as  on  Opportunity;  terms i n f o r m a l  showed  on  Ghana  contributions  introducing  widely  Income  as he  income  than  other  activities  (see  activities  i n the  two  a wide r a n g e  i n the  size  sectors). Hart's and  scale  models  of  that  recognition informal  work showed t h a t activities based t h e i r by  sector  the  that  there could  not  distinctions  government.  based  was  on  be on  His  encompassed  modes o f  production,  classification  income o p p o r t u n i t i e s  by  of  showed t h a t  the or the the  29  informal  sector  is  composed  of  activities.  Illegality,  then,  the  the  but  n a t u r e of  official that  activity  recognition.  both  illegal  i s not  and  u s u a l l y a consequence  a consequence  of  the  Hart's p o s i t i o n therefore  o f Mazumdar, Weeks and  legitimate  Sethuraman  cited  of  l a c k of  any  conflicts  with  in  the  previous  category. Both  the  Hart  and  indications  of  concern  framework,  as  being  in  economy.  an  5.  urban  Other  the  about  Friedmann the  unrepresentative  that  do  sector  has  been  (Sethuraman,  rate  a  study  on  was was were  The  defined  the  are  the  dualistic  r a n g e of  activities  a  sector  the  be  no  informal  to define  basis  definitions  comprising of  scale  low  doubt sector  and wage"  that  , i.e. sectors  Contributions  And  Limitations  The  most  that without  important  they  provided  precedent.  threefold:  contribution  this  of  the  of  Of  the  some e x p l a n a t i o n  The  than  implications  of  informal workers  (Joshi the  1974)  is  and  so  e a r l y decade of  the  urban  was  no  lack  economy.  Dualism  Models  urban d u a l i s m of  and  minimum  where l a b o u r  1965-75, t h e r e  two  contributions  lower  (Sethuraman,  during  informal  The  activity  enterprises  the  The  the  casual  of  where wages a r e  1976),  of  above c a t e g o r i e s .  as:  the  "relatively  T h e r e can  2.3.1  f i t i n t o the  (Schaefer,  on.  effort  not  1976), on  1976), as  employed a t  of  of  of  models  definitions  sector  wage  Sullivan  rigidity  T h e r e have been numerous o t h e r  Joshi,  and  models  urban d u a l i s m  these  early  that  models  30  1. target for  The  conceptual  groups  policy  target  groups  more d i r e c t planned  for.  sectors highly the the In  lack  t h i s aspect,  target  agreement  The  2.  therefore,  informal  While  strongly  1984;  Bromley, Labour  result  I.L.O.  of  the  informal  sector  contributions  of  its  understand  the  mean  the  and  target the  so  on  of of  a  the  two  groups  was  urban  poor,  activities,  (Moser,  the  be  research  of  in i l l e g a l  of  1984).  m o d e l s was  the  two  multiple  concepts  national  The  Organisation study  is  (1972),  more  positive  participants  on  a  sectors  definitions  the  development  policy  1978).  became  Konigsberger, The  incorporate  national  International  of  definition use  the  potentially  definition  contribution  the  on  research.  i n u r b a n and  influenced  colonies  the  study,  models  sector  the  as  of  models f a c i l i t a t e d  participants  the  well  research  could  group c o u l d  squatter  comparative  Some  the  as  i n p o l i c y m a k i n g had  groups  on  from  identify  understanding  groups  the  used to  research  our  composition  target  of  for  be  findings  target  the  empirical  restricted  3.  the  The  of  blessing.  promoted  1978;  improve  r u r a l migrants,  inhabitants  Moser,  to  of  that  variable.  mixed  the  However, a l t h o u g h  meant  poor  use  impact.  planning,  While  served  the  could  urban p o p u l a t i o n  making.  phenomenon,  and  i n the  framework  making  r o l e of and  a  thereby  (Rogerson,  contribution case  of  in point.  policies towards  (Sethuraman,  regarding the 1976;  the  needs  1985; the As  a  the and  Popola,  1976).  concept  some o t h e r  of issues  urban  dualism  i n development  could  be  used  f o r which there  to was  31  inadequate p r i o r utility. Third not  Migration  World,  seem t o  1974).  of  the  face  the use  (McGee,  gross  the  population excessive  of  an  models  following  i s s u e of  but  the  informal  the  urban a r e a s  did  and  sector  Empirical to  of  used  work b o r n this  1975). this  Martin,  was  support  Mookerjee,  sub-section  labour in  (Beinefield  seemed  1976;  the  into large c i t i e s  rural migrants.  Sethuraman,  i n the  instance,  unemployment  dualism  1977;  This  to out  logic will  be  chapter.  limitations  perhaps  the  definition  many  of  the  critical informal  1984).  and  the  contrast  practical  can  informal similar  It  be  seen  the  skill,  small  self-employment. for  definitions  as  dualism lack  (Rogerson,  is difficult  from  has  two  a precise  the  been  peasant  of  models,  1985;  sectors,  but  agreement  on  Moser,  to g e n e r a l i s e ,  or  a  1984; compare  f o r academic  and  definition.  discussion  defined: mode  of  activities;  formal  scale  acceptable  i s the  a c t i v i t i e s i n the  illegal/unregistered capital,  one  the  definition  sector to  to  sector  purposes, without  Problems of It  limitations  most  Richardson,  of  rural  known t o be  f a t e of  There are  1.  of  For  identification  of  elaborated  The  was  The  explain  explanation.  training  activities None they  informal  of  as  thus a  mode of  production; a  and  labour  a  force  the  production sector that  of lacks  sector  government p r o t e c t i o n ,  definitions  are  exclude a c t i v i t i e s recognised activities.  that  t e c h n i c a l knowhow; a  without these  far  Nor  does  it  and  completely under  other  suffice  to  32  amalgamate the resolved. contains that  For  i t was  to  the  fails  illegal  i n the  activities  and  Papanek, entry'  1975  Reynolds  to the  (1966) i s  informal  sector  production  of  informal  sector  invalid.  Thus,  definitions  relies  but  be  that  i n the  Gerry  on  some  not  of  1975;  the  'ease  I.L.O.  found  of  (1972)  that  the  in  the  that  the  materials  resources  are  that  Mazumdar,  assumption  only  the  sector  For  the  (1974)  the  homogeniety  1976).  that by  based  sufficient  a  1977;  indigenous  seen t h a t  believed  often  Hart,  imported  therefore only  sector  description  informal  1976;  sector  used  is  ascribes  Yeung,  informal  the  without  indicate  false.  and  i t can  and  1985;  sometimes  goods  This  (Breman,  McGee  i n Rogerson,  attributed  activities  enterprises  1978;  Sethuraman  assumptions  1978).  to approximate r e a l i t y McGee,  informal  d e f i n i t i o n s i s that  simplified (McGee,  but  the  be  acitivities.  p a r t i c i p a t e in informal and  c o n t r a d i c t i o n cannot  to Hart,  activities of  evidence  example,  and  legal  problem  ambiguous  empirical  and  according  composed o n l y  t h o s e who  on  instance,  illegal  Another of  d e f i n i t i o n s because t h e i r  is also  there  too  many  definitions  are  also  contradictory. For  both, a n a l y t i c a l  comparative  studies  Mazumdar,  1976;  problems  in  role  i n the  Tokman and  developing  in every  Problems with  and  difficult Souza, the  u r b a n economy.  repercussions 2.  are  studies  other  to  1976).  concept  Thus,  application  the  of  achieve This  to  (Breman, creates  urban dualism,  definitional  aspect  of  the  debate.  conceptualisation  of  the  models;  policy, 1976; other and  problem  its has  33  All  of  the  urban  dualism  c a t e g o r i e s are e s s e n t i a l l y the  descriptions  can  be  used  low  of  functions  of  the p r o d u c t i o n  two  s e c t o r s (Gerry,  dualism  f o c u s on  production, Ley,  two  is lost  1979; do  national  (1976)  the  future.  not or  But,  terms  of  i n time  and  powers  Santos to  interrelate totality  dualism  exclusive characteristics 1976,  relate  1979).  to  international  any  that  (1973) i s  t h e u n i t y and  i n most of t h e  McGee,  concept and  of d u a l i s m  others  find  models of  the  Futhermore, other  (McGee,  be  argue  division  that  excludes  the  divided  some a c t i v i t i e s  under e i t h e r to  one.  overcome  this  have been p r o p o s e d , as  sector  the  (Nihan  review  Clearly  of  then  dualistic  the  that  the  circuits  1978;  of  Bose,  1974;  under a t t a c k . .  Breman  such  as  Jourdain,  tight  economy  to  sector  the h e s i t a n c y of  a degree,  these i n the  some e a r l y  contributes  They  classified Hart  (1973)  by making other  of a  1977), o r will  be  their  solutions  'third' the  sector modern  covered  in  following chapter.  s t u d i e s to  further  urban  sectors often  (1972) and  (Steel,  1978), but  two  strictly  introduction  post-1975 l i t e r a t u r e  framework  be  the mid-seventies, the  t h a t the  compartments. into  Sullivan  problem, Since  to accept  cannot  and  intermediate and  is also  into  of  Friedmann  m o d e l s more f l e x i b l e .  such  itself  it difficult  l a b o u r market can  the  static  various  1974). The  try  the  explanatory  sectors.  the m u t u a l l y  models  although  or  m a k i n g on  system  their  i n the  f o r h i s model does a t t e m p t  the  by  cited  These models a r e  predictive  in decision  perhaps the e x c e p t i o n the  descriptive,  differ.  have, c o n s e q u e n t l y ,  models  to  the  accept problems  the of  34  definition 3.  o f t h e two s e c t o r s .  Problems w i t h The  focus  sociological  dimensions  and  the  social  informal 1976;  classes  a  India  close  poverty  ( D a s , 1978),  Lubell,  critical  1974).  between  instance,  i n that  caste,  squatter  suggested  the r e l i g i o u s  that  social  o s t r a c i s a t i o n of t h i s  for  them  level.  to  This  work  suggests  as important  informal  patterns  there  and r u r a l  that  the s o c i a l  than  an i m p o r t a n t  its  location  role  in  within  a s a mechanism  an  pattern  i n squatter  i n the s i z e urban  of the  f o r recruitment  the rickshaw p u l l e r s  menial  understanding  may its  (1974) have  i n terms o f k i n s h i p colonies  implies that  area,  the  apparent  h i s t o r y o f a community  social  play  to  t h e most  i s a strong  This  survey  g r o u p , made i t d i f f i c u l t  history  links,  there  In a  i t was  e t a l (1974) a n d Payne  urban  that  r e s i d e n t s of the c i t y .  Andrew P a u l  New D e l h i , r e s p e c t i v e l y .  instance,  caste  colony i n  118 b e l o n g e d  any c a p a c i t y o t h e r  and  function  sector.  h i s t o r y of the c i t y ,  as i t s economic  sector.  that  in  time  been  u n t o u c h a b l e c a s t e and  colony,  a n d were l o n g  classes  has not  o f one s q u a t t e r  the  the  (Skinner'  For  sector but t h i s  many  to  as economics  the evidence  Considering  For  as  of the p a r t i c i p a n t s i n t h e i n f o r m a l  187 h o u s e h o l d s  found  be  In the study  relationship  'untouchable'  be  of the issue n e g l e c t s  sector  i n the informal  researched.  Sambalpur, was  may  economy.  may o r may n o t be a r e l a t i o n s h i p between e c o n o m i c  adequately  of  of  that  Das, 1978; Breman,  there  on t h e e c o n o m i c s o f a d u a l  on t h e e c o n o m i c a s p e c t  understanding 1980;  the focus  social  informal  because  in  networks  sector  they  and  sometimes  into the labour  i n C a l c u t t a tend  Zambia  force.  t o be f r o m  35  the  state  of  experience, of  are the  and  Such  Bombay  necessary role  (Lubell,  i t i s found  Orissa.  1973)  Bihar  of  that  trends  the are  (Zachariah, before  social  1974)  factors,  based  cooks tend a l s o found  1968)  firm  and  dualism  that  can  personal  from t h e  in Delhi  Granted  conclusions  t o be  on  (N.C.A.E.R.,  further  be  state  drawn  studies  concerning  m o d e l s have n e v e r t h e l e s s  had  a b i a s towards economic v a r i a b l e s . In  summary,  remain  unanswered  relationship national can,  of  and  sector  be  by  the  two  said  that  the  dualism  sectors  international  nevertheless,  informal  the  i t can  sector  be  drawn  is.  The  i s the author's  e a r l y years  of  the  although  to  many  models,  each  economy e t c .  other  questions  such  as  the  and  to  the  some g e n e r a l i s a t i o n s  from the models r e g a r d i n g f o l l o w i n g d e s c r i p t i o n of  summary o f  the  ideas that  what  the  were  the  informal part  of  debate:  The i n f o r m a l s e c t o r c a n be d e s c r i b e d a s a p r e c a p i t a l i s t mode o f production c o n s i s t i n g of individual operators or small enterprises, operating on low c a p i t a l , s k i l l and technology, relying largely on local resources, existing primarily for employment o f t h e p o o r . I t i n c l u d e s a l a r g e range of a c t i v i t i e s most o f w h i c h a r e u n r e g u l a t e d by t h e g o v e r n m e n t . 3.  FORMATION OF  THE  U T I L I T Y THEORY AND 3.1  The  Question  production of  found  the  Utility  fifties,  underdeveloped  labour.  in nature  in rural  Labour  in  i n the  available  agrarian  EMPIRICAL STUDIES  Of  Economists  INFORMAL SECTOR: CONTRIBUTIONS FROM LABOUR  Since  much o f  areas.  the  I t was  tried  to  find  e c o n o m i e s by  the  underdeveloped population,  a common  ways t o  and  belief,  increase  effective  use  economies labour at  were  force, that  was  time,  36  that  industrial  from  production  investment,  economies  and  to  thus  i t w o u l d be  industrialise.  concentrated  i n urban a r e a s  measure  labour  use  the  in productive  Lewis,  away from t h e areas  concern  soon  rural  areas.  the  states  in that  the  the  the use  of L a t i n  there was  Some e x p l a i n e d  has  sought  was  ways  to  (Nurkse,  areas  1979;  some f o r m o f  be  put  of  labour  to productive  1955;  this  proposing  Hart,  1974).  found  that  (Hart,  there  a l l forms of  job  p.5)  expanded  who  migrated  to  labour accounts  activities.  unemployment from the  rural  More  either. areas?  employment  underemployment,  non-wage  sharing.  a  not  economic  1976); o r d i s g u i s e d unemployment  unrecognised  of  1974;  ( 1985,  were few  between of  was  1976,  (Weeks,  people  the  there  weight  attention  much v i s i b l e  concept  pried  Africa.  productive  conformity the  use"  Rogerson  their  to the migrants  l a c k of  the  escalated  be  leaving  t h e modern s e c t o r had  in  not  was  "under  enormous s t r e a m o f  and  need not  ( Z e l i n s k y , 1971), and  Martin,  labour  happening  f o r c e by  labour  A m e r i c a , A s i a , and  was  been d e s c r i b e d a s  (Gerry,  production  urban  that  therefore, shifted  of m i g r a n t  What, t h e n ,  labour  underdeveloped  t r a n s f e r r e d for  fact,  pace  and  urban a r e a s ,  importantly,  In  activities  Economists,  of  returns  t h a t c o u l d be  o f u r b a n unemployment  enough t o a b s o r b t h e  in  greater  for  economists  T h i r d World would s u f f e r  Beinefeld  to the c i t i e s  use  in  realised  alarming  t h a t c o u l d not  Estimates  Singer,  fast  i t was  a t an  that  population p.5).  the  areas  activities  better  Industrial  and  in rural  and  1954).  However  rural  l e d to q u i c k e r  For  and which  activity which i s  instance, Kritz  and  37  Ramos  (1976)  unemployment cities  in  proposed  f i g u r e s i n Managua, S a n t o Latin  under-employment lead  anywhere  Martin,  of  of  dualism  urban  models  analysis  o f how  of the T h i r d World. rural  therefore tested  areas  find  records  C for a chart, dualism  evidence  came  as  utility.  Asuncion,  d i d not  ( B e i n e f i e l d and  consequently  a welcome r e l i e f  the  to the  These models p r o v i d e d  a  was b e i n g  used  i n t h e urban  I t was h y p o t h e s i s e d  that  the migrants  their  labour  and  way  into  evidence  the  informal  remained  low.  supported  1984; D a s , 1978; S e t h u r a m a n , b a s e d on t h e a u t h o r ' s  sector When t h i s  the  1976).  and was  hypothesis (See a p p e n d i x  view of the flow  of  ideas  and d e v e l o p m e n t ) .  3.2 E m p i r i c a l S t u d i e s Dualism  models  On The I n f o r m a l contributed  Sector  g r e a t l y to the f e a s i b i l i t y of  empirical  research  empirical  work h a d a t h r e e - f o l d e f f e c t :  1.  tested  They  and  form o f s t u d y  dualism  o f unemployment  empirically,  (Richardson,  on  but t h i s  a n d was b a s e d on l i t t l e  d i s c u s s i o n s on l a b o u r  descriptive  from  Domingo,  f o r t h e low  C o n s e q u e n t l y , measurements o f l a b o u r  were a t t e m p t e d  observation  creation  areas  America.  as a reason  1974).  The  sterile  under-employment  on t h e i n f o r m a l s e c t o r .  the  hypothesis  provided  The  by  findings  labour  from  utility  theoreticians. 2.  They c o r r o b o r a t e d  or i n v a l i d a t e d  some  of  the  assumptions  made by t h e d u a l i s m  models.  3.  a d d i t i o n a l i n f o r m a t i o n on u r b a n d u a l i s m  They  provided  that  38  helped role  to  of  r e f i n e the  the  informal  Studies supported It  was  the 1976;  found  use  I.L.O.,  the  the  of'family  labour  of  Vendors  the  clear  that  the  growing is  labour  contribute  to  studies  such  the  informal the  general  formed. informal  It  was was  was  of  the  what t h e  informal  of  last  1976)  of  it the  a  i n the  Third  rapidly  of  and  e a r l y years  that which  But  some  contrary,  migration  r e s o r t " f o r the  by  was  economy  the  was  or  squatter  f i n d i n g s d i d not sector  and  Lucknow  sector.  rural  the  (Hawkers  both  to  the  occupations  1974),  an  by  on  i.e.  created  was  1976).  1977,  face  informal  such  or  Joshi,  type  of  Schaefer,  symptom o f  the  models.  studied  McGee  a  of  accepted  "sector  by  World  sector  (Street  some e v i d e n c e  1976), but  largely a  in  correlation  (Breman,  opinion  sector  of  was  unemployment,  of  also provided  and  Payne,  These c o n d i t i o n s and  1977;  individually  or  1974;  the  composed  the  participants  sector  formation  lack  sector  the  poverty  Third  Jeepneys: Pendakur  development,  the  empirical as  Manila of  that  location,  cities:  s u c h as  dualism  Bose,  sector  Asian  Andrew P a u l ,  force. by  informal  the  Joshi  1984)  informal  characterised  1976;  the  largely  1977;  Birbeck  areas  W o r l d ' s slow p a c e o f  was  operated  at a given  1965,  1978;  of  found  (Sethuraman,  Gould  (Das,  also  sector  economy.  parts  sector  enterprises  east  residential  colonies  I t was  and  South  Rickshawallas:  urban  various  whether the  Bromley in  i n the  informal  a s s u m p t i o n s made by  its activities  Cali:  the  u n s k i l l e d (Sabot,  small  basis  of  informal  1972).  of  in  the  by  Irrespective  of  of  that  and  dominated  sector  conducted  many  poor  theories  to  the  weaken how  it  that  the  poor  and  39  the  unemployed  that  (Mathur and  The  empirical  research  the  informal  sector  supporting utility  the  For  Paraguay,  in Jakarta also  Mazumdar,  1975.  migration  and  not  composed sector  mean  of  is a  migrants  source  who  was  believed  to  the  the  sixties  later in 1976;  i n the  of  the  1984;  the  "marginalised"  the  1974;  Sunkel,  rural  the  nations. informal  development.  Mazumdar  and  one  sector  to  1975;  the  primary  f o r economic  and  that  the  the  for  labour  a  informal rural  force.  "stepping  and  that  The  Todaro,  the rural  1970).  informal  sector  migrants  marginalised  in  i s dependent  upon t h e  d o m i n a n t model o f  in In was  (Perlman,  marginalisation  o r a n o t h e r , most  It  stone"  grew w i t h H a r r i s - T o d a r o  economy o f 1974).  be  not  predominantly  that  sector  reason  does  sustenance  may  Harris  way  is  high  survival,  This  sector  formal  migrants are  In  See  does suggest  T h i r d World development, which  capitalist  1978).  (1977),  neo-marxists, proposed  the  (Das,  sector  a concept  did  in Rourkela  employment  informal  70%  to  were  opportunities.  the  migrants  rates  informal  enter  labour  The  f o r employment  it  the  sector;  Mookerjee,  t o Bose  evidence migrants,  by  recent  informal 1984).  1977;  but  (Richardson,  that  of  the  sector,  Quijano,  states  tied  that  formal  fact  82%  economic  cannot  years,  example,  1976), and  migrants,  recent  proposed  search  that  of  was  According  better  overwhelming  that  McGee,  i s to  to  necessarily  of  1978?  composed  (Richardson,  (Sethuraman,  Singh,  was  worked  same i n S a n t o Domingo  1984).  also provided  hypothesis  studies.  Asuncion,  for  Moser,  the  concept process Western  scholars migration  have and  40  In  these  stone',  the  created  concepts  of  underlying  when t h e l a b o u r  opportunities  in  message force  the formal  requirements of the formal literacy, As  result  research  based  to  creation  study  help  i s either sector  or unable i.e.  the labour  utility  'stepping  the informal  i n excess of  sector,  of  on t h e d u a l i s m m o d e l s , of the informal  d u a l i s m models, e m p i r i c a l not  i s that  and  sector i s employment  t o meet t h e e n t r y  in  terms  of  skill,  capital etc. a  the  'marginalisation'  the informal  us t o u n d e r s t a n d  provide  any  informal  sector  processes  sector  of  into and  why  persist.  was c r e a t e d  But,  s t u d i e s do  context.  They  t i m e , b u t do n o t  factors  that  create the  However,  the  development  the T h i r d World can p r o v i d e  how t h e c l i m a t e  utility  historical  the  leading  were i d e n t i f i e d .  and l a b o u r a  and e m p i r i c a l  factors  t h e phenomenon a t a g i v e n  insight exist  in  some k e y  sector,  research  studies  some u n d e r s t a n d i n g o f  f o r the formation  of  the  informal  sector.  4.  THE ROLE OF DEVELOPMENT  CREATION OF THE INFORMAL Empirical lack  evidence  o f employment  formation Moser,  of  the  in  PROCESSES IN THE THIRD WORLD IN THE  SECTOR suggests the  informal  that  formal sector  1984; McGee, 1977; S e t h u r a m a n ,  clearly,  i t c a n be s a i d  that  migration,  sector  contribute  (Rogerson, 1976).  the informal  p o v e r t y and the  1985; Mathur and  To p u t  sector  to  this  i s created  more as a  result of: 1.  A  high  rate  of growth of the labour  force  through  natural  41  i n c r e a s e and m i g r a t i o n , a l t h o u g h the m i g r a t i o n poor  into  increase  urban areas i s o f t e n (Richardson,  2.  A  slow  pace  the  formal  sector  Even  though  higher  of the  than the r a t e  of  rural  natural  1984).  of development, and  rate  therefore  that  leads  t o : slow growth of  low employment  opportunities  in  it.  World vary, factors some two  the  to create  generalisation  these  The  were  development  informal  and  sector  In it  was  a l t h o u g h i t may  a  the l i t e r a t u r e .  informal  sector  the o t h e r poverty  hand, and  phase.  Santos  could  have  unemployment  here.  the  preceding World  purposes  The  examined  here  is  the  informal this  of t h i s  development  development  in  to  pros-and-cons  i n d e p e n d a n c e p h a s e and for  is  planning not  the  two  1950,  in a'generalised observed  how  way. in  the  i n the T h i r d World i n  this  i s a debated believes  i n the c o l o n i a l  accept  that  point  that  phase.  there  was  an On no  urban a r e a s i n the  colonial  of  are  sector  evaluation,  was  two  Therefore,  understand  the was  argument noticed  phase of development  d i d provide  Third  n e c e s s a r y t o look a t the  existed  formed  i t is difficult  However, t h e  relevant  order  ( 1 9 7 9 ) , f o r example,  n o t have  the  the p r e s e n c e of the  phenomenon  the p r e - i n d e p e n d e n c e phase, b e f o r e in  sector.  be made r e g a r d i n g  created  within  some c o m b i n a t i o n o f t h e s e  p r o c e s s e s of the T h i r d World  informal  sixties  can  the  i n the T h i r d World.  features  development  of  i t c a n be assumed t h a t  must e x i s t  factors  levels  the  should  k e e p i n g i n mind base  upon  implemented.  historical  i n the  courses  of  post-  suffice that  which What  not  the  Third  i s t o be  development  42  externally  imposed  controlled three  development  general  policy  aspects  i n the l a s t  n a t i o n , but t h e  thirty-five  that developing  internally  years.  There are  n a t i o n s have c o n s i d e r e d i n  making:  1.  The  specific  2.  The  financial  setting  of g o a l s .  3.  on a T h i r d W o r l d  The  theory  needs  of the  resources  used  to  country.  available  guide  for  development  development  in order  and  to  the  achieve  goals. Of  these  patterns of  three aspects  financial  had  a  resources  development  lasting  needs  but  theory over  approaches w i l l In  effect.  of n a t i o n s h e l p  and c a n s t r e t c h  development  independent  long  goals  implemention  Specific  affected  the  development  l e a d i n g t o t h e c r e a t i o n o f t h e i n f o r m a l s e c t o r , t h e use  theory  that  that.have  general  developing  it  to is  Specific  identify  n a t i o n s were  be  to  guide  i n severe  that  detail.  the  economic  the  reason  in greater  said  and  immediate  It i s for this  be d i s c u s s e d can  the  necessary  years.  needs  newly  crisis. r  Their  traditional  colonial  rule  and  colonisers  was  (Mookerjee,  1981).  a pattern  of  resources. (Santos,  no  economic the  been  superimposed  longer In most  economic  base had  entirely  economy  T h e r e were t h r e e o p t i o n s  left  functional  instances there  develoment  d i s r u p t e d by y e a r s  with these  was  of  by  the  to their  needs  a need t o c r e a t e  internal  control  nations could  of  follow  1979):  1.  Revert  to the p r e - c o l o n i a l ,  2.  Evolve  a new  but  indigenous  traditional response  path to  of  the  development. problems  of  43  development. 3.  Adopt  tried  a  non-indigenous c o u r s e of development  i n other  was  a  t o each of these o p t i o n s .  major  approach"  struggle  and  well  as  have  many o t h e r  The main  because  independence powers.  wars  Thus,  investment to  f o r example,  investment by  and  a non-indigenous, pro-  use  1976;  Vepa,  countries  the o n l y  Financial  the  "traditional  1975).  advance, was  that  achieved by  following  accepting  quickly  had  with  high  t h e w e s t e r n model  priorities  been  was  drained by  f o r development  the  that  returns of  Western  f o r development  concentrate  net r e s u l t  seemed t o  model.  extractions  r e c o u r s e was.to  India  i s modernisation  resources  wealth  In  the n o n - i n d i g e n o u s  that  this  earlier  The  there  to  technological  national  pros-  Gandhi's  reason f o r  funds a v a i l a b l e .  be  been  Mahatma  the western model,  resources:  were l i m i t e d ,  and  In I n d i a ,  developing  and  f o r t h e r e were  s t o o d as a t e s t a m e n t t o t h e s u c c e s s o f t h a t  Financial  was  (Dhar,  industrialsation  more a p p e a l .  nations  desire  approach  approaches, p r i m a r i l y through  between  Nehru's  industrialisation as  had  nations.  T h i s p r o v e d t o be a s o u r c e of c o n f l i c t and-cons  that  by  colonial limited  development f r o m minimum  industrialisation that  were  entirely  emulate  the  western  economic. Having experience persisted known Its  decided of  in  sixties,  development,  with t h i s  option  as the u n i l i n e a r  basic  the  most  since  to Third  then.  They  or the s i m i l a r - P a t h  premise i s that  World  underdevelopment  nations  adopted development  and  what  have was  theory.  development  are  44  on a c o n t i n u u m , t h a t move  from  capitalist examine  sector  4.1  underdevelopment model  this  understand  development  industrialisation.  theory  how  of  Third  unilinear of  contemporary  World  T h e o r y And  Western should  development  development concepts  nations  theory  trends  to  i n order  the  of economic  Informal  to  informal  stemmed  Sector  f r o m an  i n the developed growth.  l e d to the b e l i e f  of economic  development  identification  of  w h i c h were assumed  theory off"  necessary  is  The  and  that  five to  T h i r d World n a t i o n s  be  limited  from  industrialisation  i n d u s t r y and  of  The  o f economic  the  technology historical  nations also led  imitable.  growth  to  (Rostow,  According  to  this  l a c k e d the p r e - c o n d i t i o n s f o r "take-  towards development, and had  allocating  and  development  i n Western  stages  historical  world  be t h e b a s i s f o r T h i r d W o r l d d e v e l o p m e n t .  analysis  1961)  the  development  The  E u r o p e and c o n s e q u e n t m o d e r n i s a t i o n  the  It  could  following  the c o n d i t i o n s f o r the c r e a t i o n of  U n i l i n e a r Development  analysis  But  of  to  so t h a t n a t i o n s  evolved.  The  of  i s a one-way p r o c e s s ,  financial  to c r e a t e these  resources  conditions  by  towards t h i s o b j e c t i v e .  how? Contemporary  particularly  those  development. and p r o v i d e d theory,  economic  The  dealing  concepts  were  with  dynamics  growth c e n t r e concept  t h e means f o r a p p l y i n g  i.e.  the  creating  growth c e n t r e concept  was  the  evolved  the  conditions  basically  helpful of  during  unilinear for  a concept  to  here regional  this  time  development  "take-off". induce  The  growth  45  in  lagging  Although dates  regions the  until  Here  the  important. lagging  i t was  by  believed by  in  the  While  pole  studied  World nations agreement  be  growth  the  the  (Gould,  amongst  for T h i r d World These t h e o r i e s  patterns 1970;  scholars  of  Soja, that  to  the  a period  surrounding of  increasing  trickle-down and  the  of  others  made  space  using  a p p l i c a t i o n of  development  This  occurs."  settlements.  modernisation  1968).  and  the  heirarchy  regions,  Myrdal  regional  on  in  because b e n e f i t s of  (1973), to  induced  and  before  applicable  are  stimulate i t ,  to for  (1957)  "take-off"  initially,  on  that  conditions  created  be  According  trickle-down  in lagging  spatial  could  achieved  idea  considerable  Myrdal  factors  (1975), Lasuen  idea  area).  space.  (1958) and  planners concentrated  concept  the  regional  the  that  (1966) work  regional  growth pole  path  will  ( 1 9 6 9 ) , Hansen  Christaller's  will  accepted  disparity  growth  to  be  urban  went t h r o u g h  industry.  would u l t i m a t e l y  Darwent  concept  would c r e a t e  ( u s u a l l y an  r e g i o n a l development, the  that  development  I t was  to  creating  investment  a pole  Hirschman  this  spatial  4  by  Hirschman,  regions.  3  new The  3  investment  concentrated  of  applied  work  Both  use  was  ( 1 949).  regions  primarily  the  concept  to Perroux  evolution  by  geographers i n some T h i r d  l e d to a  modernisation  the  was  a  general desirable  development. assured  that  the  T h i r d World n a t i o n s  had  the  See Weaver C.1979, D e v e l o p m e n t t h e o r y and t h e r e g i o n a l q u e s t i o n , f o r o r i g i n s of e c o n o m i c g r o w t h t h e o r i e s i n t h e W e s t e r n w o r l d . Terms used by Hirschman and Myrdal f o r t h e c e n t r i f u g a l and centripetal forces of growth are trickle-down/backwash and spread/polarisation respectively.  46  means t o e m u l a t e  the Western development  obtain  b e n e f i t s from  by  maximum  concentrated  Safier,  in Gilbert  were p r e p a r e d that  investment  to  were e x p e c t e d  b e n e f i t s and  of  from r u r a l  this  neglected.  It  who  agricultural the  recalled  at  a  faster  in  e x c e s s of was  dualism  economy  (Moser,  the  1984).  the  rural  population,  that  sector  bear  this  was  assume  that  be  this  and  landless  a  sagging  in  to urban  out,  and  i n the  it  areas  this  be  sixties  rural  labour  productive  will  early  l e a v i n g the  Since  the  to  economy w o u l d  survive  d i s c u s s i o n that labour  path  plight.  areas  influx  was  urban a c t i v i t i e s  what would happened t o  t h u s came t o  unemployed,  a  displacement  i t until  urban  proposed.  i n the  recognised  created  to  of  amongst  the  Migration  to t h e i r  indeed  s p e c u l a t i o n on  and  cities  logical  requirements of  informal  rural  and  a  because  the  pace than a n t i c i p a t e d .  poor  also  did  previous  m o d e l s were  The  was  alternative  noticed  in regions  to  nations  future trickle-down  expected  able  and  development  c o n s i s t of poor p e a s a n t s , least  resources  these  in  inequalities,  that  w o u l d be  from the  e c o n o m i s t s had  was  therefore  trends  inequalities  initial  could  (Appalaraju  assumed t h a t  development  meant  would  only  Migration  there  was  labour  labourers  w o u l d be  areas  be  and  financial  poles  anticipating  phase of  development  displaced  initial  e q u a l i s a t i o n of  In  unilinear  the  limited  growth  I t can  to occur  people. labour  in  1976).  face  their  experience  the  process  that  the  holding  be  identified  ground  of u n i l i n e a r influx  of  s o c i e t y i n w h i c h some had  f o r the  with  displaced  development.  rural  population  permanent  the  access  It into to  47  the  goods  needs  and  services  available  but were u n a b l e t o  qualitative 1979)  and q u a n t i t a t i v e  and  Empirical between  support  this  migration  However,  and  it  u r b a n a r e a s was  created  indicated  the  similar  society  i n consumption  had  a  (Santos,  informal  sector.  corroborated  the  links  l a b o u r d i s p l a c e m e n t and  unemployed  t o be a t e m p o r a r y  had  sector.  assumed t h a t  of the  This  earlier,  the i n f o r m a l  was  consequent m i g r a t i o n  them.  difference  necessarily  e v i d e n c e , as  and o t h e r s who  rural  population  the into  phase.  " i n the p r o c e s s of m o d e r n i s a t i o n the migrant workers w o u l d become a b s o r b e d i n t o t h e c i t y . . . . t h e y w o u l d s h i f t from t h e i r ' m a r g i n a l ' p o s i t i o n towards 'integration' such problems as s q u a t t e r s e t t l e m e n t s a n d unemployment were s e e n a s t e m p o r a r y p r e s s u r e s w h i c h w o u l d p a s s w i t h t i m e " (Moser 1978, p.1042).  In  the  modernise  early  was  settlements, temporary,  development, informal  growth of  I.L.O.  waiting  sector,  1976). for  were  of the i n f o r m a l 1972)  complementing  expectation  that  the d e s i r e  though  were  the  intolerable  to  to  remove  or  sector and  grew, a t t i t u d e s  the i n f o r m a l  negative  prevent  the  seventies, changed  sector perhaps  soon be g a i n f u l l y  Their  modernised  However, by t h e e a r l y  t h e modern s e c t o r ,  would  of  be  blockage  of t h i s  achievment  to  squatter  assumed  As a r e s u l t  made  from f o r m i n g .  labour  even  c o n s i d e r e d as an  positively,  planning  r e m i n d e r s o f non-modern g r o w t h .  (McGee,  study,  that  informal  attempts  sector  as knowledge the  the  therefore,  instead  of development  desperate  t h e y were a l s o  economic  view,  so and  p r e s e n c e was, to  years  was  viewed  with  employed.  (eg.  the  48  As  t i m e went by,  be moving  any c l o s e r  this,  the high  was  the T h i r d World n a t i o n s d i d not appear towards  rate  of p o p u l a t i o n  countries  since  employment  , g e n e r a t e d by  the  growth  application  the f i f t i e s  in  labour.  unilinear/growth  Kongstad, and  pole  Other  1974).  indeed  By  the  questionable,  poles  1975;  entire  1984).  reasons  and  particularly  were;  problems  and  by  faulty  with  i n favour  the  of urban  Weaver,  approach  i n the l i g h t  World  increases in  1979;  t h e use o f g r o w t h  unilinear  for  outstripped  cited  a bias  seventies  reason  Thus,  g r o w t h , was  Friedmann  t h e mid  One  i n many T h i r d  strategy,  concept,  (Corragio,  growth  (Moser,  industrial  of the growth  development  modernisation.  to  was  poles highly  of the o i l c r i s i s  of the  seventies. Several this  scholars  approach?  inequalities capitalism supported Myrdal  Myrdal  may  (1957)  not l e a d  by F r i e d m a n n ' s  to  counteract of  development  approach  unheeded  the  of the impending  cautioned  to trickle-down  to perpetuate further  criticisms  (1969)  the  growth  due  A view  Chilean  interference  forces  the  of  , i n t h e view o f t h i s  initial  that  i n the  and  was  development. development  capitalism.  strategy  of  to the tendency of  inequalities.  study of  pole  that  failure  the  These unilinear  author, probably  went  because:  1.  The  testament  centres  warned  had a d v o c a t e d government  process  2.  had  a p p r o a c h seemed c r e d i b l e .  t o development The  approach  the U n i l i n e a r  through was  Western  stood  as  industrialisation.  prescriptive.  development  nations  By t h e use o f  a p p r o a c h was  growth  easy to a p p l y .  49  3.  No  a l t e r n a t i v e a p p r o a c h was  such c l e a r l y 4.  The  decision favour  of  the  westernised  the  that  of  strategy the  the  that  defense.  was  the  Richardson,  adopted  inducing the  of  to  the  the  the  the  in lagging failed  to  World  take and  criticism to  trickle-down placed  and  occur  that  to  the  the  Western n a t i o n s  soon,  the  i s meritorious,  i n t o account  its  occur, strategy  (Boiser,  although  the  to  the  of  was  alone.  rushed  came t o o  ineffectiveness  regions  rethinking  inequality in  f r a g m e n t e d manner  Unfortunately,  when  capitalism  criticisms  were i m p r o p e r l y  But,  some  proponents  for  used  expected  were i n c r e a s i n g  been a l l o w e d  time?  was  of  in  widely  onwards.  important  that  forces  strategy,  Was  Third  most  and  decisions  a p p r o a c h was  sixties  benefits  s a i d that  1978).  growth  the  The  i n a p i e c e m e a l and  T h i r d World  between  the  t i m e had  merely a matter  to  if left  growth c e n t r e s  applied  in  approaches.  a p p r o a c h began,  necessary.  was  time,  politicians  their  indigenous  nineteen  of  many  biased  growth c e n t r e  growth c e n t r e s  It  insufficient  than  growth c e n t r e  happen,  Although, nations  the  from the  was  of  T h i r d World  trickle-down  w o u l d not  that  the  education  rather  basis,  T h i r d World  criticisms of  expatriate  this  that  t e r m s t o compete w i t h i t .  makers i n t h e  On in  defined  proposed at  1980;  strategy idea  of  i t s transfer differences  (Kuznets,  1968,  introduced  this  1 979): a)  The  economic  strategy b)  The  much  was  level  generally  at  which the  much  T h i r d World  lower.  r e l a t i o n s h i p between p o p u l a t i o n more  unfavourable  and  the  and  resources  population  was  usually  growth trends  more  50  dynamic  and dangerous  c ) The T h i r d capital  i n the T h i r d  W o r l d d i d n o t have a t i t s d i s p o s a l  market  d) The T h i r d  nor o u t l e t s  islands  which c o u l d  be e x p l o i t e d  sources  colony  of  importance.  needs"  (Ghai  (Meadows  Ideas  as  nations  goods  p u r p o s e even  such  as  1979; S i n g e r ,  a l , of  1972).  and  keep a  between  i t s report  thought  attention. radical  approach.  the informal radical  philosophy.  and t h e o t h e r  on t h e " L i m i t s concerns  approach  these  about  development  p r e c e d e d changes  brought life".  Two  major  process  gained  ideas.  strategy or  modification  Chronologically,  of  the e x i s t i n g the  the  of  t h e o r y / bottom-up was t h e  basic  t o Growth"  growth and " q u a l i t y  Both of these a l t e r e d  sector.  beautiful",  the l i t e r a t u r e .  i t s development  One was t h e dependency  philosophy,  unilinear  regarding  is  for  ascended  1973), a n d "minimum  Environmental  economic  a s a means  1977) e n t e r e d  The T h i r d W o r l d was n o t u n t o u c h e d by of  "small  t h e e c o s y s t e m by i n d u s t r i a l  the c o n f l i c t s  streams  strategy  v i e w s on d e v e l o p m e n t  t e c h n o l o g y " (Schumacher, et a l . ,  et  destruction  the  advance  f o r manufactured  and f o r t h i s  grew, o t h e r  C l u b o f Rome p r e s e n t e d  about  to  w o r l d of backward  o f t h e growth c e n t r e  development  "intermediate  out  as markets  international  emigration.  the opportunity  a surrounding  raw m a t e r i a l s ,  scepticism  achieving  The  in  scale  an  i n bondage.  As  in  for large  W o r l d d i d n o t have  industrial  as  World.  wisdom  evolution  i n the l i b e r a l  the  of  economic  51  4.2  Dependency T h e o r y And Exploitation  not  a  new  of l i b e r a l  in  Brookfield  the  idea.  field  the  economic Later,  late  a  evolved  from the m a r x i s t  critique theory  in  in now  political  critique  faith  Latin  and  relations  growth  known as t h e  In e s s e n c e , of  cited  reinforced  dominated  not  n o t i o n s of  (See a p p e n d i x  C  of the flow of ideas  on  rose  in  in  importance  centre with  from,  strategy.  Neo-  the o r i g i n s  of the  dependency/underdevelopment  1974; the  the  i t was  w i t h , and p e r h a p s b e n e f i t t i n g  the  Amin,  1902,  w o r l d and  approaches  America are c r e d i t e d  generally  1965).  in  i n the  of contemporary  This c r i t i q u e  coinciding  (Emmanuel  Cardozo,  philosophy  is  period"  interpretations  b a s e d on t h e a u t h o r ' s v i e w  sixties  pursuits  (Hobson  i n the Western  that  the d e c l i n e marxists  marxist  economic  thought  d u a l i s m and d e v e l o p m e n t ) . the  philosophy  1950's  a chart,  Sector  I t d a t e s to the " e t h i c a l  However, l i b e r a l  development for  1975).  of development  until  Informal  o f t h e T h i r d W o r l d by c a p i t a l i s t  discovery.  development  The  S u n k e l , 1973;  theory  analyses  Frank, the  1967; socio-  underdevelopment:  "A s i t u a t i o n i n w h i c h t h e economy o f c e r t a i n c o u n t r i e s i s c o n d i t i o n e d by t h e d e v e l o p m e n t and e x p a n s i o n o f a n o t h e r economy t o w h i c h t h e f o r m e r i s s u b j e c t e d . The r e l a t i o n o f i n t e r d e p e n d e n c e between t h e two o r more e c o n o m i e s a n d between t h e s e and W o r l d t r a d e assumes t h e f o r m o f d e p e n d e n c e when some c o u n t r i e s ( t h e d o m i n a n t o n e s ) c a n expand and be s e l f - s u s t a i n i n g w h i l e o t h e r c o u n t r i e s ( t h e d e p e n d e n t o n e s ) c a n o n l y do t h i s a s a r e f l e c t i o n o f t h a t e x p a n s i o n w h i c h c a n have a p o s i t i v e o r a n e g a t i v e e f f e c t on t h e i r i m m e d i a t e d e v e l o p m e n t " (Dos S a n t o s , 1968, P.6 i n C h i l c o t e , 1977).  This  neo-marxist  view  did  not  just  arise  i n a vacuum.  52  T h e r e was that done  increasing  the  analysis  in isolation  of  of  division  of labour  monetary  exchange  interlinkages  the p r o d u c i n g  on  value  et a l ,  1981)  of labour  Western  1974;  mentioned  that  Sunkel,  succintly go  into  the  medium  in Chilcote's  only  a  international therefore  the  retained  The  Third  i t was k e p t  process  1973;  of  The  article  multinational  and  underdevelopment  capitalist  Frank,  ones.  of  expansion  1967).  It  should  includes  many d i f f e r e n t  controlled  dependency  variations  are  (1977).  be  to  summarised  I t i s not n e c e s s a r y  such d e t a i l s i n t h i s s t u d y , as t h e dependency  presented  as  1979).  development  from e x t e r n a l l y  manipulated  an  exploited.  t h e c o n c e p t of dependency  forms of dependency,  also,  was n o t n e c e s s a r i l y  the  was a r g u e d t h a t ,  (Quijano  internally  through  of  n o t be  w o r l d by t h e s p r e a d o f i n t e r n a t i o n a l  ( K a s s a l o w , 1979; Snow,  manifestations  could  was  and  suggesting  w o r l d and i t was a r g u e d t h a t  corporations  are  There  economy,  partly  i t  o f one c o u n t r y  c o u n t r y a n d was e a s i l y  the  economy,  the  capitalism,  Thus  world  1975).  in  (Froebel  W o r l d was t h e d e p e n d e n t dependent  a  development  (Wallerstein,  result  in  evidence of  to  theory i s  a s an a s c e n d i n g a n d o p p o s i n g v i e w o f T h i r d  World  development. While  the  development, persisted does  not  a p p r o a c h i s an i m p o r t a n t c r i t i q u e o f  i t merely e x p l a i n s  why  the  i n t h e p o s t - i n d e p e n d a n c e phase propose, i n precise  development. research,  dependency  has  of the T h i r d World, and  t e r m s , an a l t e r n a t i v e a p p r o a c h t o  In t h e same v e i n ,  i t merely explains  underdevelopment  why  a n d o f more the informal  relevance sector  to  this  persists in  53  the T h i r d World, be  assumed  sector  and  n o t what  then  that  f o r c e and  Therefore,  the p o i n t  unilinear  development  sector  main  focus  persists,  for i t s creation  of  departure approach  sector  i n the  centres" into  that  I t was  migration  urban a r e a s ,  informal  sector  has p e r s i s t e d ,  and  labour  (Moser, i t may  areas,  contrast,  but t h i s 1984).  have  capitalist  become  was  t o be  according  satellites  convinced  had  (1966) a l s o theory  that  t h e "growth c e n t r e s "  o f t h e T h i r d W o r l d by  of c a p i t a l  recognised  i n the  this  development  outwards  create  regional consequent  this  theory  was  sector theory  the urban  international  stated  the T h i r d  Corragio  actually  implanting  dependent  when he in  radiate  of the c o n c e n t r a t e d investment  was  appropriation  "growth  in  1979).  development  as  to  m o d e r n i s a t i o n ( F r i e d m a n n a n d Weaver,  the  unilinear  temporary, as  in  that  the  achieved.  or  e x p a n s i o n , as a r e s u l t  informal  development  a r e a s , and  t o the dependency  enclaves  theory i s ;  the  act  initially  the  i s i t created'.  why  would  of  However, t h e i n f o r m a l  be a r g u e d  according  'how on  rural  b e c a u s e m o d e r n i s a t i o n has n o t been In  arguments  i m p u l s e s would  in  informal  i s t o be a c c e p t e d .  e x p e c t e d under  T h i s p r o c e s s would  surplus  into  not  I t can  a h i g h growth of  the dependency  areas  from which development  the r e g i o n .  the  of t h e  of urban a r e a s i n the  urban  inequalities,  the  and  persist'  i s the r o l e  theory  in  disagreement  p r o c e s s of the T h i r d World. development  i t forms.  ie.  slow pace of development  does t h e i n f o r m a l The  and how  the p r e v i o u s d e f i n i t i o n s  the c o n d i t i o n s  the labour  'why  i t i s o r why  thwarted  places  economy.  (1972)  f o r the  Friedmann  in h i s core-periphery  W o r l d needed  t o be made  54  more  'residentiary'.  cities  are  alienated the in  However, t h e r e a l i s a t i o n  grafted  onto  from t h e i r  marxist  western  hinterland  that  development,  i s n o t new.  b a n n e r , Mahatma G a n d h i ,  Third and  World  therefore  A l t h o u g h not  speaking of I n d i a ,  under  had  said  1921:  "The c i t i e s are not India. The city people are brokers and commission agents f o r the b i g houses of E u r o p e , A m e r i c a and J a p a n . The c i t i e s have c o o p e r a t e d w i t h t h e l a t t e r i n t h e b l e e d i n g p r o c e s s t h a t has gone on f o r the l a s t two h u n d r e d y e a r s " ( G a n d h i , 1921 i n G a n g u l i , 1978:184).  Thus,  i t i s argued that  exploitation t o one  in spite  economic as  as  contribute  economic  of  prevent  of  under  this  theory,  pace  of  room f o r for  of the n a t i o n c o n t i n u e  progress  in in  these c o n s t r a i n t s ,  of  the  to  much  of  development.  development  and t h i s  McGee  peripheral  sector)  between t h e two  (1978)  T h i r d World c i t i e s  the i n t e r n a t i o n a l  informal  relationship  no  of  control  suspended,  retrogression  i n t h e u r b a n economy, t h e r e  (the  left  t h e n a t i o n must p u t  argument,  form of p r o d u c t i o n ;  into  to p o l i t i c a l  i s , i n a sense,  pursuits  form  is  explains  underdevelopment.  structure  integrated  the  to  impossible  light  distinct  capitalist  t o the dependency  the p e r s i s t e n c e In  Development  the  related  independence, that  to western development,  virtually  mode  of p o l i t i c a l  resources  According  that,  a n o t h e r , f r o m one  recovery.  long  its  to  t h e T h i r d W o r l d moved f r o m one  analysed  and d e s c r i b e d  capitalism.  is a capitalist economy and  in  sectors  which  the  a  He sector  a  argued deeply  non-capitalist articulation  is primarily  e x p a n s i o n i n the dominant  the  a response  capitalist  sector.  of to The  55  non-capitalist to  the  mode d o e s n o t d i s s o l v e  dominant  preservation concept McGee  capitalist  tendencies.  was  a  informal nation  This  introduced  nutshell, sector  creates  informal  its  strong  self  "conservation-dissolution"  is:  the  dependency  the  state  (1972) and e l a b o r a t e d  sector  that  has  underdevelopment  persists.  dependent,  To The  unable  by  theories  Both  a p r e s c r i p t i v e theory  theory.  factors  will  labour  World  such  that  the  result  of  this  long  as  as  development  remain p e r p e t u a l l y  Dependency Approach With  the  main  the informal  are  concerned  ideas sector,  The  with  of  is slow.  Regards  the  two  to h i g h l i g h t  f o r economic  process the  i s not theory  and p o v e r t y ,  creating  development  theory  is a critique  development  contained does  sector. on  the  and as  the i n f o r m a l directly  explain  both of which  the informal  the  u n i l i n e a r development  o f t h e r e l a t i o n s h i p between  However,  dependency  because  in a Third  the  and d i s a g r e e m e n t s . theories  development  a  dissolve  And  regarding  p r o c e s s of the T h i r d World.  explanation  as  regarding  Sector  agreements  surplus  to  i s n e c e s s a r y t o summarise  development  1.  formed  Of U n i l i n e a r And  Informal  It  of dependency  the pace of development  Comparison  argument  and p e r p e t u a t e s u n d e r d e v e l o p m e n t  is  the  and  by B e t t l e h e i m  underdevelopment  their  sector  advantages  (1978). In  4.3  because of i t s  have  state  the  sector  and the  presence of  been  of  is  such  within  the  In c o n t r a s t  theory  cited  as  to t h i s ,  the  Third  World  56  underdevelopment. economy of  developing  permanent  as  long  d e p e n d e n t on  the  is  the  amongst  dependent 2. a  According nations  as  labour  features  cause  f o r the  To  force  be  in  the  poor  unskilled,  and  it  i s forced  on  how  the  city  formal  into  stepping  3.  Both  for  the  the  informal  sector  theories  are  Directions  In  development from  the It  was  dependency  approach,  the  informal  formal  sector  sector.  forced  but  will  the  quite to  be  sector  persist  into  in  sector  the  the  The the  adds  capacity migrant  employment  large  to of  the  labour  labour  is  requirements,  theories  informal  in  as  differ  sector,  concepts;  only i.e.  and  on  persists. concerned view  the  d i d not  with  informal or  slow p a c e of  sector  t o be  a  Third  symptom  Development  i t s e l f provide  that  combination 'small  the  dependency.  underdeveloped  a  is indicated  labour  "marginalisation"  arguments  promoted.  labour  beyond  T h i r d World  of  rural  Since  stone" versus  Dependency t h e o r y  surmise  in  informal  economy t h a t  sector.  T h i r d World underdevelopment New  The  migrant  far  informal  W o r l d d e v e l o p m e n t , -and  the  of  exact,  these migrants are  the  temporary  world.  p r e s e n c e of  more  by  why  not  features  development p r o c e s s c o n t i n u e s  Western c a p i t a l i s t  absorption  4.4  are  In b o t h t h e o r i e s , m i g r a n t  urban a r e a s .  of  the  i t s arguments,  development.  major  "the  to  is  nations autonomous of  ideas  a prescription but  to  development  was  that  the  beautiful',  technology, eco-develoment, a g r o p o l i t a n  i t i s easy  for  include  intermediate  development, t e r r i t o r i a l  57  approach  etc.  (Friedmann Sunkel,  development  p.16).  away  There  so  them  two  major  introduced  rural  endeavours  to at  and  regional  reverse the  the  grass  from the  Singer,  1977;  not  'food  George,  the o l d e r  it  work', and  strategies.  either  this,  Not  1973,  either  or a g r a d u a l  Some  Third  a  weaning  a l l nations  into  World  nations  their  planning  and  started  approach, including  t h e unemployed,  socio-economic the  strategies  Johnson,  1970).  development  f o r compensation 'minimum b a s i c  were That  b e i n g combined  undertaken  In I n d i a , f o r  started by  population (Mabogunje,  but the  poor  programmes  needs'  such  (Srivastava  as  growth  or merely c o - e x i s t e d .  centres  services according  lower  end  without  and  relinquishing  i s top-down and b o t t o m - u p  became p o p u l a r t o c o n c e p t u a l i s e  varying  That i s ,  (Brookfield,  1979).  top-down  rural  targeted  these e f f o r t s  settlements  the  was  World.  the  1977).  But,  were  for  and  1973;  and most o f t h e n a t i o n s d i d  level  F u n n e l , 1976;  only  were p a r t i c u l a r l y as  ground"  development  roots  that  d i d not b e n e f i t  Third  pro-urban  the poor  Schumacher,  ways o f a c h i e v i n g  manner.  decisions  proposed to reverse  a n d Weaver,  programmes t o a s s i s t  instance,  1979;  the  c o u r s e of development, testing  development  relationships  (Friedmann  in a gradual,  1980;  of  t h e o r y from the  from dependent  their  planning  Weaver,  process  were  break  from  changed  1979;  T h i r d World  A b o t t o m - u p a p p r o a c h was  most o f our  drastic  affected  and Weaver,  1973).  top-down "build  that  the e n t i r e  of v a r y i n g  system  instance, of  human  intensity, performing  to settlement s i z e .  of the s e t t l e m e n t h e i r a r c h y  For  approaches  Furthermore  the small  at  towns were  58  t o be f u n c t i o n a l l y  integrated  urban  their  areas  and  relationship 1972;  if  (Mabogunje,  i s a cautious  accepted,  processes down  should  route  led  bottom-up  approaches  would  n o t want t o t a k e a t t h i s  terms, be  and  t h e bottom-up for  trials  bottom-up  rural  urban  relations local  from r e s p o n s i b i l i t i e s  of  bottom-up the  (Boiser, The in  growth  pole  w e a l t h as  poor  nations efforts.  in clear-cut  insufficient  autonomy; t h a t  there  society  (Weaver,  to  were  the dynamics of  a n d r u l e r s were f a l s e l y  criticised,  time  1982; Weaver,  that  industrialised  continued  to  the c r i t i c i s m s of  I t was s a i d  were b e i n g  strategy  the  that  t h e p r e c i s e methods  of underdevelopment  strategies  probably d i d evident  1983; K i t c h i n g ,  in  society  this  development  Thirdly,  1978)).  regional  the former t o p -  d i d not d e f i n e  strategy,  ( G o r e , 1984; F r i e d m a n n ,  i g n o r e d ; and t h a t  the  time i n t h e i r  theory,  development  national  a p p r o a c h came t o o s o o n , l e a v i n g  to  of  i t was  increase  the expected r e t u r n s .  dangers  and  Firstly,  approach  1981; G o d f r e y , 1980; Palma, political  reversal  I t was a r i s k  such as the growth p o l e  used  a  not  as i n d u s t r i a l i s a t i o n .  the  to  i n t h e view of t h e a u t h o r , reasons.  Secondly,  1975; M i s r a ,  The d e p e n d e n c y  approaches replaced  for several  did  the  i n a harmonious  1975; T a y l o r ,  t o change.  not happen  quickly  so t h a t  1970).  have  But,  region  were v i e w e d  1980; P i o r o ,  i n w h i c h bottom-up  ones.  the r u r a l  hinterland  Roy, 1972; J o h n s o n , This  with  were  absolved  1981).  While  the proponents  sell  i t s merits  1980). effect  of the dependency  t h e T h i r d W o r l d has been  one o f  theory  on d e v e l o p m e n t  reversing  the  policy  inequalities  59  created  by  distinct  alternative  judge, change  whether  pole  course  s t r a t e g y b u t n o t one t o c r e a t e a  of development.  the intermediate  Statistically  the s i z e  there  of the i n f o r m a l  measures or  the  soon  c u r r e n t l y i n use, w i l l size  of  the  informal  d o e s n o t a p p e a r t o be much  sector  in  to  the  last  change  decade  (see  CONCLUSIONS This  dualism  chapter  has  articulated  and development  seventies.  Although  the general  confusion  on some a s p e c t s  c o n c e n s u s on most  the  conventional  1.  The g e o g r a p h i c a l  2.  The d e f i n i t i o n  and d e s c r i p t i o n of urban  3.  The  factors  context  sector  recapitulate was o b s e r v e d  context agreement general  of  of urban  that  highlighted  to  noted,  indicate  dualism dualism  c o n t r i b u t e t o the formation of  explanation  i n the T h i r d World  To  h a s been  early  i n the T h i r d World  The t h e o r e t i c a l  factors  i s s u e s h a s been  and  wisdom o n :  specific  urban d u a l i s m  i d e a s on u r b a n  that p r e v a i l e d i n the s i x t i e s  the  4.  I t i s too  5).  chapter  5.  growth  t h e pace of development  sector. in  the  the  and  Third  operating  under  capital,  low  that single  the  later  studied  World.  technology,  briefly:  and  Although  of  these  family and  is  i n the a l a c k of  sector, there economy, s m a l l  ownership, skill.  the informal  explained  there  of the i n f o r m a l  i t i s a peasant-type or  existence  nations.  the d i s c u s s i o n very  on t h e d e f i n i t i o n belief  for  There  based i s an  on  is  a  scale, little  unresolved  60  d e b a t e , on formal  whether  sector,  sector  i.e.  is  formal  sector  survives  self  on  Empirical  and  theoretical studies  composed  of  poor,  rural  and  empirical  the  informal  migration  data  the  are:  natural  pace  opportunities  i n the  formal  World  by  approach  T h i r d World critique the  The place for an  sector.  sector  is  the  from  cities  and;  influenced  can  the  be  Third the  course  which  is  theories  increased agree,  of  a  here;  theory  symptom  by  employment  p r o c e s s of  The  of  force  critical  f o r an  be  theory  labour  factors  the  former.  to  formation  of  Both t h e o r i e s a  sector  the  of a  differ  pace  of  however,  Third  World  process.  " o l d wisdom" on  the  e n t i r e d e b a t e on  that  World p l a n n e r s the  the  possibilities  formal  informal  to the  In  are  dependency  a l l further progress  prior  of  and under  the  T h e s e two  development,  the  to  large  greatly  of  i n the  issue  sector.  i t is  u n s k i l l e d people,  development  theories  development  development  of  the  has  p o t e n t i a l o f and  the  in  the  opportunities.  derived  r a p i d g r o w t h of  that  of  development that  Two  be  of  whether  informal  generally  theoretical evaluation  development.  unilinear  on  a  and  increase  slow  explained  show t h e  factors leading a  corresponding  or  employment  L o g i c a l l y , i t can  that  sector  and  for  illiterate  migrants.  independent  contained,  dependent  mostly  the  this  had  not  sixties i n the  been and  informal the  i n the  formulation  next c h a p t e r ,  the  has  phenomenon. debate,  studied i t has  sector  in  a  affected  important  It sets  i t has  brought  comprehensive the  i n the  the  stage  to  light  manner,  a t t i t u d e s of  of development  progress  an  Third  strategies.  debate  i n the  last  61  decade  (1975-85) w i l l  d e v e l o p m e n t s have t h e i r that  be  reviewed,  importance,  were a l r e a d y p r e s e n t  and they  i n the study  of  although have a d d e d the  the the  informal  recent problems  sector.  62  CHAPTER 3:  CONTEMPORARY WISDOM ON  THE  INFORMAL  SECTOR:  1975-1985 The but  d e b a t e on  the  informal  advances d u r i n g  the  last  situation.  There  discussion 1. of  of  Advances the  2.  decade  four  d e b a t e on  has  have  areas  contemporary  i n the  Third  The  the  are  sector  to  a l w a y s been  complex,  contributed  to  this  be  in  this  covered  wisdom. the  informal  sector  i n the  context  World.  study  of  study  of  the  informal  sector  in small  towns o f  the  Third  World. 3.  The  the  informal  sector  in  Western  capitalist  economies. 4.  The  study  socialist The  first  in  the  many r e v i e w s o f  be  third,  and  in  centrally  between  elude  to  1985  this  here  as  debate  planned  in recent  are  the  i n the  context  of  of  years  Thus  the  version. of  a more  informal  or Western c a p i t a l i s t the  recent  sector  economies dualism  in is  debate  p.3).  Third the  (1984) have p r e s e n t e d  of  amount  1984).  is a briefer  study  to note that  the  the  voluminous  Richardson,  The  socialist  Mingione  a  fourth sections  "rediscovered"  and  done  1984;  presented  is interesting  Scholars  sector  f o r d i s c u s s i o n has  debate.  planned  (Redclift  Moser  will  new,but  It  informal  Moser,  second,  centrally  been  1985;  that  origin  not  area  There are  (Rogerson,  The  the  economies.  research.  review  of  comparative  W o r l d and  task an  no  of  agenda  the  the  studies  other  future.  for future  have  economies. Mathur  research  and which  63  includes  the  different "the  comparative  types  comparative  industrial academic  of economies. situation  literature  of  the  in  Braudel, in  orig.  It World  and  decade."  the  Europe,  has  in  in that  posti n the  5  with  time,  sector  only  working  economy  'growth p o l e '  come  informal  have  sector  (1985 p.65) s t a t e s  informal  will  the  on  because  i n s o c i a l i s t or  recently  entered  the  class  population,  for  existed  (Benson,  1985;  1977) b u t t h e s e were n o t u t i l i s e d  o f urban d u a l i s m .  This  critical  i s an a d d e d d i m e n s i o n  in  t o the understanding of the  of  t o compare t h e i n f o r m a l  Western  Comparitive  socialist  o r Western  (Mattera,  studies not  of  1967, t r a n s .  is difficult  to that  begun  informal  sector.  economies. the  the  studies  debate and, t h e r e f o r e ,  informal  1985;  capitalist studies  capitalist Aslund,  been  made  about  f o r the T h i r d World.  have  be  to  This  drawn  in  will  According t o Rogerson d u a l i s m i s 1983-1993.  economies  socialist  sector  has  within just  1985).  Most  generalisations  have  i n these  the review presented  review  or  De G r a z i a ,  and  i n the T h i r d  only  Generalisations  t h e c o m p a r i s o n s made chapter  economies,  1985;  t h e phenomenon  been done  sector  of the i n f o r m a l  are d e s c r i p t i v e or a n a l y t i c a l  facilitate  5  Engand  the context  the  of  countries  Information  instance  the  Rogerson  of the second  studies  Western c a p i t a l i s t debate.  of  s o c i e t y appears s e t as a f u r t h e r  Perhaps comparative many  study  economies as has will,  in this  however, chapter to  i n the c o n c l u s i o n .  the e v o l u t i o n  of the debate  about  t h e s e c o n d d e c a d e o f t h e d e b a t e on u r b a n  64  the  informal  economies. converging three 1.  sector The  THE  the  conclusion  and  dominant  in  diverging t y p e s of  EVOLUTION OF  Third will  ideas  World  as  as  other  to  identify  the  informal  sector  attempt on  the  well  in  the  economies.  THE  DEBATE ON  THE  INFORMAL SECTOR IN  THE  THIRD WORLD  The sector  recent  i n the  developments  T h i r d World can  1.  The  definition  2.  The  concept  3.  The  of  of  the  the  be  debate  divided  informal  on  the  i n t o four  informal  areas.  sector.  dualism.  relationship  development  in  processes  of  the  i.e.  informal  the  sector  factors that  to T h i r d  create  the  World  informal  sector. 4.  The  i n an 1.1  r e l a t i o n s h i p of  urban  informal  Changes In D e f i n i t i o n Of  influenced sector? World  the by  debate one  Although economies  beginning  1976;  Hart,  decade,  this  activities informal  and  sector  to the  formal  sector  economy.  Much of  the  the  the  not  formal  Sector decade  i n q u i r y : what  concept  has  appears i s the  been a p p l i e d  and  grown. neatly  sectors.  with  its  I t has  been  i n t o the  Third from  (Breman,  Over  realised  be  informal  have  rigidity  S u l l i v a n , 1972).  to  to  m i d - s i x t i e s , some s c h o l a r s  Friedmann  fall  last  of  uncomfortable  c o n c e r n has do  Informal  the  dualism  since  1972;  of  major a r e a  the  been  The  the  that  classification  last many  of  the  65  One  can  sector,  recall  from the  in general,  previous  chapter  that  the  informal  presented  "a gloomy v i s i o n of the u r b a n economy d o m i n a t e d by two r e l a t e d p a r a d i g m s : a p r o s p e r o u s , modern component o f u r b a n employment c h a r a c t e r i s e d by new t e c h n o l o g y and c a p i t a l , existing alongside t r a d i t i o n a l subsistence a c t i v i t y and a c h r o n i c e x c e s s of l a b o u r s u p p l y ( r u r a l ) r e l a t i v e t o l i m i t e d u r b a n demand" ( B r a c k e t i n o r i g i n a l ) (Kannappan, 1984, p.55)  Although that  the  led  to  the Of  belief  p o o r , and course  the  the  there  low  the  compare  some of  i t was  sector, a  'sector  identified  poor. the  that In  the  f i n d i n g s of  in opinion i.e. and  of  the  on.  of  last  from  But,  this  doubt  early  last  how  i s no  years,  resort' rural  the  informal  i t was sector  older  decade t h a t  for  areas.  employment,  informal  light the  on  self so  there  i n the  unemployed, u s u a l l y m i g r a n t s  wage a c t i v i t i e s  the  i s general,  informal  early definitions, of  illegal implicit was  view,  the  let  us  contradict  6  1. sector  I t has i s not  (1978) and be  the  that  be  refuge  it.  of  here  were d i f f e r e n c e s  should  activities, in  comment  definition the  sector  the  a  found  in recent  necessarily a  Sabot  sector  informal  been  sector  of  (1979) have choice. can  be  "sector  of  found  that  Sabot a  studies  that  last  resort".  the  informal  the  Sinclair sector  (1979, p.67-68) s t a t e s  stable  economy  informal  "providing  that  can the  stable  The reviews presented in this chapter will emphasise the c o n t r a d i c t i o n s i n the d e b a t e on t h e i n f o r m a l s e c t o r o f t h e last decade. H o w e v e r , i t must be s t a t e d t h a t t h e r e were a l s o s t u d i e s t h a t s t r e n g t h e n e d the o l d wisdom.  66  employment retired labour  and  'adequate'  wage  employees,  force entrants  productive, In  preferred  to  86  be  informal  sample  study  of  alternative  sector  1985)  where  to the  a h a l f w a y house  informal  of  Freetown  i n Rogerson, Africa,  the  the  self-employed.  i n the  South  of  percent  workers  (1982;  than  are  sector  and  for  new  negligibly  informal  preferred  also  in Jakarta, sector  Similarly,  (Fowler,  the  low  prime  low."  a . sample s t u d y that  rather  in their  i n which a l l p a r t i c i p a n t s  incomes a r e  (1978) f o u n d  incomes f o r w o r k e r s  find  informal  wages i n t h e  workers  percent  of  self-employment  1978). this  75  true  sector  formal  a  sector  a  Beavon  in  was  the  in  R o g e r s o n and  t o be  Moir  Soweto, preferred  o f f e r e d to  the  blacks. In from in  the  this  He  i t appears  formal  regard  in their  shift  into A  Kenyan not  to  African protest Kahn  road be  That  King  employed  Onlesen  Understandably  often  sector in  Cohen  (1980) s t a t e s  wages.  This  form view  informal  to  workers  prefer  can  fierce  i n Rogerson,  i f the  (1981).  be  the  was  a  work  to  life.  that  is  shift  A notable  there  (1976;  then,  in  a  a  Mazumdar  informal  sector  low  to  attraction  late  (1975) s t a t e s  to  by  earners  category  again.  lead  sector.  i s an  i s , wage  informal  resistance  can  in Malaysia,  side manufacturers,  van  informal  f o r work i n t h e  reasons.  (1980) and 2.  the  self-employed  workers the or  preferences  owned b u s i n e s s  career.  preference  several  to  been done  family  the  that  sector  has  shows t h a t  late  on  fact,  based  case  of  determination that of  a  for  the  labour  i s supported  by  1985).  sector  can  be  a  67  sector  of c h o i c e , i t must  necessarily studies  as  low  show  paying  that  paying  in  informal sector.  workers not  in  necessarily  sector.  (1975)  93 than  25  percent  more  K u m a s i , Ghana 1974), and 3. migration the  'stepping  they  the  In T a n z a n i a , percent rate  twice  not  formal  formal  of  1983), S i e r r a  Leone  of  the  survey  in  the  formal  higher and  made  in  been  (Fowler,  informal sector with  contradiction.  migrants or  where  (Nihan  1974), C a l c u t t a  of t h e d e c a d e t h a t t h e  concept  earned  A  1978), (Bose,  1976).  the  without  earned  Beinefield  s e c t o r wages  (King,  are  t h e minimum wage.  also  1977), Kenya  for recent  stone'  unskilled  self-employed  have  (Sethuraman,  years  haven  skilled  Nihan,  (Aryee,  i s also  60  observations  correlation  early  temporary  and  Jakarta  The  than  in  informal sector entrepreneurs  Such  (Demol  the  the  incomes,  wages  1974).  even e a r n e d  or e q u i v a l e n t to the  Yaounde  have low  be  i n incomes  i s reported f o r Noukachott, M a u r i t a n i a  the  1978).  Recent a whole may  although  the u n s k i l l e d  (Webb,  percent  of  s e c t o r as  above t h e minimum wage  experience  Jourdai.n,  in  workers  earned  and  Furthermore,  than  that  i n f o r m a l s e c t o r i s not  i s a c o n s i d e r a b l e range  s m a l l p r o p r i e t o r s and  reports  sector, similar  lower  factory  respondents  formal  i n f o r m a l s e c t o r may  In P e r u ,  more t h a n  the  i n wages, t h e r e  the  t h a t the  as p r e v i o u s l y c o n c e i v e d .  while  higher the  imply  the  perceived,  i n f o r m a l s e c t o r was  (i.e.  Sunkel,  I t was  rural-urban  the  a  Harris-Todaro  Quijano m a r g i n a l i s a t i o n  concept). Recent  studies  show  necessarily  a typical  source  that  the  of employment  i n f o r m a l s e c t o r i s not f o r the newly  arrived  68  migrants  in a c i t y .  In  m i g r a n t s were i n t h e for  education.  had  been  three  in  informal  fact,  the  be  in  the  formal  step-migration. stepping  directly  the  i n t o the  and formal  this  percent  i n the  that  migrants  large the  and  study  he  cities  migrants sector.  hypothesised  were  able  to  tended many  ones i . e .  not  find  last  1979).  that  smaller was  sector  f o r the  in Malaysia,  sector  new  migration  (Sabot,  v i a the  informal  the  informal  same a c t i v i t y  the  new  of  excludes  time of  Therefore,  stone  6  p a r t i c i p a n t s i n the  sector  the  only  sector,  and  (1981) d i s c o v e r e d  m i g r a n t s have e n t e r e d  a  the  sector  y e a r s o r more a t  Mazumdar to  In  Tanzania,  used  as  employment  Thus,  "the b a l a n c e of the e v i d e n c e s u g g e s t s t h a t m i g r a n t s a r e as l i k e l y t o work i n t h e f o r m a l s e c t o r as l o n g t i m e r e s i d e n t s . . . t h e i n f o r m a l s e c t o r c a n be as a t t r a c t i v e a s t h e f o r m a l s e c t o r , b o t h f o r m i g r a n t s and non-migrants. A l t h o u g h t h e r e a r e some low l e v e l i n f o r m a l s e c t o r a c t i v i t i e s to which, i n c e r t a i n c o u n t r i e s and i n c e r t a i n c i r c u m s t a n c e s , new m i g r a n t s may g r a v i t a t e , t h i s i s a t y p i c a l r a t h e r t h a n t y p i c a l " (Richardson, 1984, p.18). Moser  (1984, p . x i )  affirms  this  point:  "The ILO s p o n s o r e d s t u d i e s have a l s o g e n e r a t e d s u f f i c i e n t m a t e r i a l t o show t h a t i t i s not n e c e s s a r i l y a r e s i d u a l o c c u p a t i o n f o r n e w l y a r r i v e d m i g r a n t s but c a n , i n p a r t , be a d y n a m i c s e c t o r c o n t r i b u t i n g income and o u t p u t and c a p a b l e of a t t r a c t i n g and s u s t a i n i n g l a b o u r i n i t s own right.  4.  The  sector. that  informal  There the  generation,  is  informal but  sector much  sector  a dynamic  i s not  evidence i s not thriving  necessarily a i n the  only  an  sector  precapitalist  literature economy as  well.  for  to  suggest  employment  According  to  69  Sethuraman  (1981)  the  characteristics  (1972) "do n o t a d d up t o  a  redefinition  informal  enterprises based  on  of  the  engaged one  organisation;  definition  more  of  and s c a l e of  the  of  the  sector  i n the production  or  of  is  of  Kenya  sector".  a  goods  mission His  continuum and  of  services,  t h e f o l l o w i n g : mode o f  production;  operation.  "The i n f o r m a l s e c t o r e n t e r p r i s e s c a n be i n t e r p r e t e d a s b e l o n g i n g t o t h e lower end o f t h e urban continuum o f e n t e r p r i s e s . . . t h e t e r m ' s m a l l e n t e r p r i s e s ' a s commonly u s e d c a n be i n t e r p r e t e d a s b e l o n g i n g t o t h e m i d d l e o f the continuum. I t u s e s a mode o f p r o d u c t i o n a n d o r g a n i s a t i o n s i m i l a r t o the formal sector e n t e r p r i s e but on a r e l a t i v e l y s m a l l s c a l e . . . the d i s t i n g u i s i n g f e a t u r e between t h e i n f o r m a l s e c t o r u n i t a n d t h e s m a l l e n t e r p r i s e i s t h e i r o r i e n t a t i o n ; whereas t h e f o r m e r i s m o t i v a t e d p r i m a r i l y by employment c r e a t i o n , t h e l a t t e r i s concerned p r i m a r i l y with p r o f i t maximisation" ( S e t h u r a m a n , 1981, p . 1 7 ) .  Sethuraman's s u b - c a t e g o r i s a t i o n range of a c t i v i t i e s identified (Page  and  1982;  House,  Steel,  1978).  informal  sector  sector  was a l s o  1977).  Steel  (1977)  introduces units  are  manufacturing sector  that  but  fell  appear  and  based  on  Jourdain  a  sector  sector  by  to small  to the  Others  have  indifferent  1982; J o u r d a i n ,  (1978)  identify  a  A  'modern'  f o r Lome  (Nihan  et a l ,  study  Kumasi,  of  to include  modern.  into this  h a s a l s o been d e f i n e d  activities  i n the informal  identified  small  units  sector.  i n Noukachott, M a u r i t a n i a .  an ' i n t e r m e d i a t e '  that  response  1984; Demol a n d N i h a n ,  Nihan  informal  one  i n the informal  t h e dynamic a r e a s  ways  'modern'  present  is  Ghana,  the manufacturing  Forty  percent  category.  A petty  commodity  account  f o r the  scholars  to  b u t modern a n d t h r i v i n g  of  the  (Forbes,  70  1981; in  Gerry,  1979;  the s e c t i o n 5.  McGee,  1979).  These  ideas w i l l  on  the  'concept of d u a l i s m ' .  Finally,  the  informal  a homogeneous e n t i t y . heterogeneous  The  group of  sector  term  c a n no  is  individuals  be  longer  used  discussed  be v i e w e d  to  describe  informal  sector  certainly be  (1984) s t a t e s i s not always  includes  informally Thus,  as  This discovery highlights  is  not  other  1.2  Concept  workers,  of even  the  survey that  the  illiterate  and  though  the s k i l l s  urban  the range of a c t i v i t i e s  i s far greater  merely  Of U r b a n  In t h e e a r l y the  composed  that  problems  of d u a l i s m .  that  appear  informal  concept The  in his literature  or  a  in  than e a r l i e r  problem the  of  that  definition.  debate.  For  y e a r s o f t h e d e b a t e , Breman economy was  fragmented  (1976) had  rather  than  at  time.  flexibility of  into  activities.  retained.  d i d not change Hart  (1972)  that  introduced  stated  dualistic.  informal  and  the  Dualism  i n the a n a l y s i s  (1972)  It  instance,  framework  sector  can  perceived.  However, t h e use o f a d u a l i s t i c  Sullivan  may  acquired.  i t would  be c l a s s i f i e d  skilled  a  and o c c u p a t i o n s .  " T h e r e i s no e v i d e n c e e i t h e r o f t h i s s e c t o r b e i n g d o m i n a t e d by s p e c i f i c c h a r a c t e r i s t i c s o f s e x , age, s o c i a l s t a t u s " (Mathur and M o s e r , 1984, p . x i ) .  Richardson  as  of  Friedmann  the and  some measure o f  their  d u a l i s m models to i n c l u d e a  But  t h e c o n c e p t o f d u a l i s m was,  wider  range  by and  large,  71  In the  recent  r a n g e of  sector,  years,  low  makes  dualism.  it  In  although  "among  of  this,  framework t h e y do  informal i s an  provide  a  incorporate  a broader  the the  1978  the  range  internal  to  Bromley  (1979)  and  Gerry  s t a b l e wage work,  self-employment.  the  work a r e  parts  Other favour  of  the  studies,  of a d i f f e r e n t  introduces  an  A  of  unlike  1978)  activities  informal  sector.  however,  reject  and  Lome  to  and  a l l other  dualistic  include this  forms  for the  is a  in  instance,  small  scale,  trisectoral  i n Noukachott  ( N i h a n e t a l , 1977)  of  framework  S u l l i v a n ' s (1972) i n  identified  and  s t a b l e wage work  (1977)  Essentially  Friedmann sector,  the  Steel  sector  units.  and  work  i s yet  concept.  (Nihan  and  another  form  perhaps  the  sub-categorisation. The  'petty  most d i s c u s s e d and  the  'modern' i n f o r m a l  Jourdain,  sector  'intermediate'  modern, m a n u f a c t u r i n g model not  continuum,  approach.  in  quoted  true  formal  sector,  (1981) r e d e f i n i t i o n ,  dependent  the  the  activities  t e r m wage work, d i s g u i s e d wage work,  constitutes  use  informal  short  this  of  p.1061)  of  o f work s i t u a t i o n s i . e .  In  concept  manufacturing,  continue of  and  informal  of  i n the  (Moser  analysis  Similarly,  using  degree  scholars  Sethuraman's  example.  continuum  continue  sectors"  the  within  enterprises  some  in  sector.  earlier,  to  petty  'modern' a c t i v i t i e s  activities  considerable  transportation  spite  dualistic  the  difficult is  differentiation and  r e c o g n i t i o n of  to w e l l paying  There  services,  the  Gerry,  commodity  production'  in literature  1979;  McGee,  (Forbes, 1979;  approach, 1981;  is  Gerry,  L e B r u n and  1979;  Gerry,  Bromley  1975).  The  72  'petty  commodity  production  margins of the c a p i t a l i s t (LeBrun  and  Gerry,  approach analyses of  their  scale  enterprises  differentiates  approaches.  'petty  commodity  other in  the  sector'  a complete economic of  approach  informal  sector  in  assertion  with  Forbes,  little  The including activities rethinking  Sector  observed what  been  (Demol a n d N i h a n , on  studied  of  small  linkages.  This  approach  processes.  from  the  as  form  a  of  production refers to a  (LeBrun and G e r r y , Although the  of  debate  assertion  1975)  the 'petty  i t h a s n o t been  on  the  free  from  and  counter  ( R o g e r s o n , 1985,  7  informal  referred  to  sector as  Process activities,  'modern'  dynamic  1982; S t e e l , 1977), n e c e s s i t a t e s  the r e l a t i o n s h i p of the informal  World development  and  the  And T h i r d W o r l d D e v e l o p m e n t  diversity has  of production  i f any e m p i r i c a l b a c k i n g " 1980).  basis  t o c o n c e p t u a l i s e the  dominated  years,  production'  prefer  (1979).  "the l e v e l  1981; M o s e r ,  1.3 The I n f o r m a l  have  the  by i t  u n i t s on t h e  linkages  system  has  recent  f o r example,  commodity  because t h e l a t t e r  Davies  l i e at  subordinated  production  scholars  production  to  from e x t e r n a l  commodity  sector'  p.32;  external  isolation  commodity  criticisms,  'petty  approaches  Most  exception  said  scale production  o f a mode o f p r o d u c t i o n ,  "totality", with  The  to  the petty  other  instead  7  the small  Most  is  mode o f p r o d u c t i o n ,  1975).  relationship  distribution.  sector'  Not much work  has  sector been  See R o g e r s o n 1985, f o r a d e t a i l e d r e v i e w o f t h e p e t t y production approach.  a  to Third done  in  commodity  73  this  regard  because  been a h i s t o r i c a l . the  informal  sector  sector  the  economies.  This  informal this  entered the  8  was  the  writings  America  to  four the  known as  In  1976;  approach, proposed  that  to  the  capitalism.  for  example,  needs  substitute rural  explain  concept  This  that  sector.  p r e s e n t e d by  result  states  of  the  this states  the  the  of  necessary  the  a  capitalist But,  'functionalist'  approach  particularly economy  through in Latin  Sunkel,  1973).  sector  evolves  in  (1980,  labour  sector  response 1985)  represents  c l a s s to and  This  i n Rogerson,  a  replace  production  elaborated  sector  i s unable  by  McGee  the  in  the  capitalism.  in detail  was  (1979)  t o d i s s o l v e , as Basically,  n o n - c a p i t a l i s t mode, i . e .  described  as  'conservation-dissolution'  (1972) and  informal  was  explain  capitalist  of  it  to  the  of  1980).  1974;  Lister  costs  informal  evolve  World  marginalised  informal  f u n c t i o n a l need o f  a p p r o a c h was  i t was  the  the  e v o l u t i o n i s t approach.  by  concept  that  study  debate,  would  informal  Bettleheim  why  sector  the  bore the  The  (Kahn,  that  discovered  sector  formal  of  thought  of T h i r d  Quijano, the  of  mid-seventies,  d e p e n d e n c y and  (Perlman,  of  sector  response,  i n the  studies  informal  development  if  the  the  trends  p e r s i s t e d and  debate, on  with  informal  is  to s t a t e  to  have  However,  i n the  so.  approach  sector  T h i r d World development p r o c e s s . combined  sector  informal  informal  the  form  the  a historical  e a r l y y e a r s of  transitional  of  the  rise  that  studies  i t is difficult  theory  perceived  8  sector,  have g i v e n  In  why  Without  i s a f f e c t e d by  development  the  most  in chapter  the  two.  to a  this  informal  74  sector, the  i s p r e v e n t e d from c o m p l e t e  f u n c t i o n a l needs  therefore,  o f t h e dominant  capitalist  'evolutionist'  nor  the  approaches  are  free  from  approach  is  criticised  important  one  i s the  sector  capitalist for  form"  seventies  1980,  for  instance,  capitalist  and  is,  i t was  The  was  as  pure c r e a t i o n  marginalisation  t h e most  transitional  (1980) s t a t e s a  that  predominant b u t has  production  was  is  the  form i n  "remained  so  i n c o r r e c t to  a  transitional  to  1977;  it  the  accepted reasons  i n the for  But  fails  the  i t also  to s p e c i f y  Gerry  (1979),  Nihan  "even  rise  was  sector.  indicated  e t a l , 1977).  though  of c a p i t a l i s m " . gave  the i n f o r m a l  that  t h r i v i n g i n some i n s t a n c e s  for capitalism this  that  widely  i n the T h i r d World.  chapter  p.36),  functions  but perhaps  It i s therefore  subordinating  in fact  Steel,  (1985,  'evolutionist'  low wages c a n be a s s u r e d by means o t h e r  of t h i s  1982;  The  i s f u n c t i o n a l to c a p i t a l .  shows t h a t  sector  'functionalist'  ' f u n c t i o n a l i s t ' approach  sector  sections  the  p.8).  s i m p l y c r e a t i n g and  perform a  of t i m e .  of underdevelopment  the informal  Rogerson  emerge  closely tied  how  and N i h a n ,  mode  universal  Kahn  because  shortcomings.  informal  a  approach  has  earlier  of  functionalist  persistence  than  many g r o u n d s ,  of the T h i r d World,  periods  the p e t t y  (Kahn, The  not  development  assume t h a t  on  development.  does  considerable  criticisms.  assumption  i n T h i r d World  informal  i t serves  conserved.  Neither  process  d i s s o l u t i o n because  The  to the  the  does  sector  n o t mean t h a t  the  (Demol  According  informal  In  to may  it  was  c o n c e p t s of dependency  and  'functionalist'  approach  75  are  criticised  exploitation, in  the face  had  the l a s t  first  ,1982).  economy  capitalist (1978) takes  those  two o t h e r  ideas  and over  t o emerge w i t h i n branches  sector  finds  Beinefield 'high  unprofitable.  i t i s an  people  economy"  (1979) f e e l s  that  of  Although  there  of  that  that  the  dominated  t h e dominant  1980).  Roberts  the informal  economy  a r e no s p e c i f i c  explanation  light.  the informal  capitalist  (Kahn,  i n the l i t e r a t u r e  incomplete  approach,  production  unprofitable  areas  h a v e come t o  T h i s a p p r o a c h has not  the  (1975) s u g g e s t  risk'  d e f a u l t ' approach  that  i n the world  Gerry  i s t h e 'by d e f a u l t ' a p p r o a c h .  in  of the  generalised.  few y e a r s  i s perceived  i s s u e s of dependence,  helplessness  a s much a t t e n t i o n a s o t h e r s . . I n t h i s  sector  'by  i s over  with  forces operating  1985, p.26; S c h m i t z  t h i s approach  The  "obsession  and p r o j e c t i n g a t o t a l  of (external)  (Rogerson,  In  for their  viewed criticism  some a u t h o r s (Rogerson,  sector to  be  of the  have  stated  1985;  Kahn,  1980). The it  is  f o u r t h approach easy  to  see  underdevelopment, states  that  9  how  i t  exploitation  the informal  proletarianization  i n the debate  9  sector  associated  evolved and  i s of recent from  in  capitalist  T h i r d World, and i n the appearance of s u r p l u s  is  a  of world  forms o f c a p i t a l  Kahn  the  the  consequence  studies  dependency.  i s created with  the  o r i g i n , but of  (1980)  process  of  p e n e t r a t i o n of labour  accumulation.  which The  Proletarianization refers t o t h e p r o c e s s by w h i c h r u r a l l a b o u r i s f r e e d f r o m i t s means o f p r o d u c t i o n i . e . land, c r e a t i n g the p r o l e t a r i a t w h i c h i s a l a b o u r f o r c e f r e e f o r wage employment.  76  idea  of  surplus  indicated  the  in A f r i c a  (see  Fay  labour  the.  new.  Amin  also Riddel, are  1981;  similarly  growth  of  the  sectors  into  1.4  Relationship  of  the  urban  the  tied  World,  sectors  i n an  is  a  as  of  an  benign  the  a transitional  informal  form  promoted  sector,  the  assumption  informal  dualism  and  development.  the  by  d e p e n d e n t d e v e l o p m e n t and  "what  is  i s in fact  the  rural  subsistence  Formal  Sectors  sector.  is created  formal  study  mode  (1972)  of  By  the  portrayed  two  the  with  it  the  view of  between  the  formal  and  informal  emergence of  e x p l o i t a t i o n where t h e through  an  its  sector  informal the  v i e w s on  radical  the  two  urban  ideas  entered  on the  exploitative relationship The  informal  informal  the  Although  economy  sectors. the  to  informal  more r a d i c a l  marginalised  and  sectors.  approach  i s , the  mid-seventies,  the  informal  r e l a t i o n s h i p between  those with  in  production  between t h e  That  and  development p r o c e s s .  and  sector  sector  'evolutionist'  debate  formal  And  I.L.O.  of a b e n i g n  criticised  the  and  r e f o r m i s t p u b l i c p o l i c y f o r the  was  the  Informal  The  i n the  sectors  view of  Stuckey  that  sector  of-the  relationship  informal  study  to  opinion  independent  to  I.L.O.  approach  of p r o l e t a r i a n i z a t i o n  r e l a t i o n s h i p between t h e  view c o r r e s p o n d s  existence  the  u r b a n economy. sector  hypothesised  Between The t o how  i s the  informal  This  example,  towns."  Closely Third  for  f o r West A f r i c a ) .  movement-the r e l o c a t i o n - t h e m i g r a t i o n  The  (1973)  broad v a r i a t i o n i n p a t t e r n s  (1981, p.11)  called  i s not  sector  sector  impact  on  'functionalist' promotes  "is  to  this  service  wage s t r u c t u r e s  and  77  labour  supplies  The  that  1979, p . 9 0 ) .  proponents of the 'petty  although between  (Davies,  also  radical,  t h e two s e c t o r  the' two  do  commodity  not  believe that  i s exploitative.  sectors  co-exist  in  subordination,  t h e ' p e t t y commodity  the  mode.  capitalist More  recently,  Portes  (1978)  that  relationship. of  a world  phenomenon world  periphery"  the  those  highlighted decade  In not  views  on  the  ideas in  dominated  not  may  fora the  t h a t even t h e  be  correct.  enjoy  constitutes  a  He  "symbiotic"  reverse  informal  a  by  situation economy  is  of c a p i t a l i s m  missing  element  o f r e l a t i o n s h i p s between  in core  1978, p . 3 5 ) .  this  role,  there  informal  that  also  spite  achieved  stated  Remarks  that  definition,  being  of the operations  formulations  t h e 1975-85 d e c a d e ,  debate  only  and  may  of  is  a manner o f dominance a n d  a case  concept  (Portes,  1.5 C o n c l u d i n g In  "The  i t  has proposed  sectors  to the understanding  contemporary and  two  He even p r e s e n t s  dependency.  fundamental as  the  sector',  the r e l a t i o n s h i p  Rather,  sector'  view of dominance and s u b o r d i n a t i o n proposes  production  supported and f o r m a t i o n  greater  sector  conflict  review,  of t h i s  was c o n s i d e r a b l e  the  on what t h e i n f o r m a l  earlier  earlier  positions  the informal  There a r e  sector  i s , how  still  in  While  views  were many s t u d i e s  of the i n f o r m a l  progress,  clarity.  i n the T h i r d World.  with  there  progress  were in this  on  the  sector. s e c t o r debate has many  divergent  i t i s created,  why i t  78  persists  and  so  complicated  by  enterprises questions economy, of  on. the  within on  It  appears  discovery  the  the  also  of  informal  role  of  the  in  the  thriving,  sector.  understanding  small  still  large  cities, In  by  limited  and t h e v a l i d i t y  t h e urban  this  economy.  towns  which of  thecomplexities  t o be p r e s e n t e d include  the Third  World,  2.  three  to i t .  sections  of the informal in centrally  economies, and i n Western c a p i t a l i s t  its  o f t h e i s s u e a r e compounded  i n t h e next  the study  sector  particularly  a s i f t h e phenomenon were e x c l u s i v e light,  t h e review  chapter  t o the T h i r d World context,  many  i n t h e urban  However, t h e s e a p p r o a c h e s t o t h e a n a l y s i s o f t h e i n f o r m a l are  was  raises  sector  sector,  issue  modern  This  informal  i t s r e l a t i o n s h i p t o the formal  t h e dualism concept  that  sector  of t h i s  in  planned  small  socialist  economies.  THE INFORMAL SECTOR IN SMALL TOWNS OF THE THIRD WORLD  Richardson  has s t a t e d :  "Almost a l l t h e i n f o r m a l s e c t o r s u r v e y s a r e f o r primate c i t i e s or o c c a s i o n a l l y , other l a r g e c i t i e s and have n e v e r been u n d e r t a k e n f o r a l a r g e sample o f u r b a n areas i n a l l size classes within a s p e c i f i c country" (Richardson, 1984, p.23). T h e r e may be s e v e r a l 1.  The i n f o r m a l  rural a  migration  greater  employment 2.  The  infux  sector  for  this:  h a s been t i e d  t o t h e dominant  and urban development. of  migrants  was a s e r i o u s  contrast  accentuated  reasons  problem  between  i n large  the  and  Large  their  i n these formal  towns b e c a u s e more  towns  model  of  encountered  inability  to  find  towns. and i n f o r m a l of  the  sectors i s  formal  sector  79  production 3.  u n i t s are  Large  towns  strategies  4.  The  universities)  funding  towns.  important for  in  instance,  the in  development  the  top-down,  approach.  sector  informal  more  T h i r d World,  s o u r c e s of  informal  in these  were  i n the  growth p o l e  found  sources,  the  (i.e.  are  sector  funding  and/or p l a n n i n g  government,  mainly  in large  research  located  towns  f o r study  or  in  was  private the  more  planning  for  the  agencies,  large  towns.  accessible  to  The these  purposes.  " S m a l l and i n t e r m e d i a t e c i t i e s were i n g e n e r a l e x c l u d e d f r o m t h e i r ( I . L . O . ) c o v e r a g e p r e s u m a b l y on t h e g r o u n d t h a t : f i r s t t h e y d i d not e n c o u n t e r the s c a l e o f i n f l u x of r u r a l m i g r a n t s as l a r g e c i t i e s d i d , t h e r e b y a v o i d i n g the s e r i o u s problem of f i n d i n g employment o p p o r t u n i t i e s f o r t h e m i g r a n t s and s e c o n d t h e s e c i t i e s were not as i m p o r t a n t i n t h e d e v e l o p m e n t s t r a t e g i e s i n t h i r d World c o u n t r i e s " (bracket a u t h o r ' s ) (Mathur and M o s e r , 1984, p.xii).  Paul one  of  Bairoch the  development Since  likely a  earliest i n the  then  informal  there  sector that  corollory  purposes, According  (1976;  the  i n M a t h u r and  studies  T h i r d World. have  i n the study  been  more of  the  to  the  study  which  has  been  t o E l Shakhs  (1984,  1984)  presented  size  and  economic  on  city  But  i t was  few  studies  recent  small  promoted  "limited on  city  literature.  informal of  Moser,  sector  It  the  for  scope".  size  and  is  in small  towns since  in  the  quite  towns  was  development  mid-seventies.  p.81):  "The a r t i c u l a t i o n o f t h e s p a t i a l d e v e l o p m e n t o f l a r g e c i t i e s i n t o interdependent s e t t l e m e n t s y s t e m s of s m a l l - and m e d i u m - s i z e d c i t i e s c o u l d enhance t h e p r o d u c t i v e c o n t r i b u t i o n of the i n f o r m a l s e c t o r " .  80  Santos on  (1979) work  1  urban d u a l i s m  indicates  a  increasing  city  by  empirical Figure  to  i s probably  introduce  declining size.  data  urban  proportion However  (Figure  the  one  of  size. of  the  the  earliest  His  model  informal  S a n t o s model was  studies clearly  sector not  with  backed  3).  3 - D i s t r i b u t i o n of the s i z e : Santos  informal 1979  sector  by  city  POPULATION SIZE COMPLETE METROPOLIS PARTIAL METROPOLIS INTERMEDIATE CITY LOCAL TOWN  Source:  Because on  the  this  informal  impressionistic Mabogunje say  that  i s a new  and  (El  Adapted from Santos.(1979)  area  sector  in  Shakhs,  Filani,  these views are  1981).  of the 1984;  enquiry, small  much o f towns  Berlinck  the tends  et  However, R i c h a r d s o n  supported  partially  by  evidence to  al,  be 1981;  (1984) d o e s  surveys.  " f i e l d t r i p s to i n t e r m e d i a t e c i t i e s i n a v a r i e t y of d e v e l o p i n g c o u n t r i e s r e v e a l a l a r g e number of i n f o r m a l s e c t o r e n t e r p r i s e s and a c t i v i t i e s and a s c a r c i t y , i n some c a s e s a v i r t u a l a b s e n c e , of f o r m a l sector  81  enterprises"  While is  that  the  the  information  "share  employment Moser,  (Richardson,  declines  1984,  informal  Richardson,  sector  1983;  Das,  1982;  Figure  With  the  small  fact, 1984;  scant,  the  dominant  sector  increasing  city  and  1981;  (1981),  towns s u f f e r f r o m a  studies  are  Richardson,  Kull,  Aryee,  exception  Filani  correlation  include  Filani,  in  be  informal  a negative  and  Mabogunje  the  with  Mabogunje 4.  may  p.23).  in  hypothesis  total  size"  urban  (Mathur  often  1984;  1981;  Saget,  1976  Kull  the  studies of  hypothetical  El  of  et a l ,  1981;  and  the  empirical  and 1984;  in Kull,  (1984)  size  Shakhs,  Berlinck  of  lack  between c i t y  1984. Das  See (1982)  informal  sector  support.  calculations  In  (Hilhorst,  1983).  "to i l l u s t r a t e , c o n s i d e r the f o l l o w i n g h y p o t h e t i c a l example. The p r i m a t e c i t y a c c o u n t s f o r 50 p e r c e n t of t h e n a t i o n a l u r b a n p o p u l a t i o n and t h e F S data reveal i t p r o v i d e s 6 0 - p e r c e n t o f FS j o b s . A national e s t i m a t e o f t h e I F S , p e r h a p s u s i n g v e r s i o n s of t h e s e l f e m p l o y e d , p l u s u n p a i d f a m i l y l a b o u r and t h e s m a l l establishment employment method, s u g g e s t s t h a t t h e IFS a c c o u n t s f o r 40 p e r c e n t o f t o t a l u r b a n employment. If employment i s p r o p o r t i o n a l t o p o p u l a t i o n , t h e n i t i s e a s y t o c a l c u l a t e t h a t t h e IFS a c c o u n t s f o r 28 p e r c e n t o f t o t a l employment i n t h e p r i m a t e c i t y and f o r 52 p e r c e n t of t o t a l employment i n t h e r e s t of t h e n a t i o n a l urban system. A l s o t h e same d a t a r e v e a l s t h a t t h e p r i m a t e c i t y a c c o u n t s f o r o n l y 35 p e r c e n t o f n a t i o n a l IFS employment" ( R i c h a r d s o n , 1983, p.40). 1 0  1 0  and  p.xiii)  Proponents of the  of  1984,  R i c h a r d s o n u s e s t h e a b b r e v i a t i o n s FS and IFS t o s t a n d f o r m a l s e c t o r and i n f o r m a l s e c t o r r e s p e c t i v e l y .  for  that  the  82  Empirical and  Filani,  studies 1981),  have been c a r r i e d Ivory  coast  (Kull,  (Berli.nck  e t a l , 1981), and  Raikot  suggests  that  of  declines  with  Figure  the  share  increasing city  out  (Mabogunje  1984), Campinas,  (Das,  the  i n Kano  1982).  informal  Kull  sector  Brazil (1984)  employment  size.  4 - D i s t r i b u t i o n of the i n f o r m a l s i z e : E l Shakhs 1984  sector  by  city  CITY POPULATION SIZE  ———•——» _____  Share o f  the  Informal  Share o f  the  essential  Informal  sector  Share o f the the I n f o r m a l  Source: To  augment  participant Raikot, are  a  the  small  attached  town in  sector  sector,  leaning  municipal  approximately  lack  observation  informal  the  El of  in  of  component  survey  of  was  in  undertaken  India.  this by  regard,  a  author  in  the  D e t a i l s of  this  The  survey  revealed  proportionately  higher  than  support  F.  the  1984  e m p i r i c a l data  i n Punjab,  corporation 600  a whole  component  nonessential sector  Shakhs.,  Appendix was  s e c t o r as  of  office  informal  Kull's of  findings.  Raikot  sector  states  that  commercial  that  the For  survey the  formal  instance, there  are  activities  83  (registered commercial and  and  unregistered)  activities.  service sectors  Similar  of  informal  (Mathur and  sector  Moser,  1.  Functional  and  have a  the  formal  dominate 2.  and  activities able 3.  by  formal  f o r the  sector  transport  s i z e present  the  three  main  size  of  arguments  Large c i t i e s the  labour  are  f u n c t i o n a l l y complex  force  Logically  then  the  in  manufacturing,  These are informal  a part  sector  of  must  towns. effect:  Larger  development, can formal  sector  cities,  assumed  s u b s t i t u t e the  activities.  to  be  informal  Small  at  a  sector  towns a r e  less  t o make t h e s e s u b s t i t u t i o n s . If the  towns, t h e other  formal  informal  informal Mathur,  expand. to the  is  1984).  v i e w was  an  sector  small  Their  towns,  better conditions are  a  concentrated  employment must by  of  sector  Santos  view  that  proportionate  view  have  Small c i t i e s  point  informal  increases  is  introduced  opposing  in  cities  l a c k of  employment  informal  between  sector  Large  creates  This  sector  correlation  sector  s h a r e of  towns. There  1.  of  f i n d i n g s occur  p r o f e s s i o n a l occupations.  in small  123  1984).  sector.  level  to  c o r r e l a t i o n , between  city  complexity:  Substitution  higher  and  l a r g e r s h a r e of  managerial,  opposed  Raikot.  A d v o c a t e s of a n e g a t i v e the  as  to c i t y  f o r the  autonomous demand.  a  size  three  sector  u n l i k e l y to c r e a t e  higher  study  size.  "autonomous"  informal  large in  (1979).  i n the  city  i s a l s o b a s e d on sizable  be  advocates  and  in  of  the  positive i.e.  the  (Kundu  and  arguments: demand to  which  subsist  and  such c o n d i t i o n s  due  84  2.  Large c i t i e s  to e f f e c t i v e l y the  formal  large  utilize  sector.  cities  and  technological The  average  in  large c i t i e s  suggests that  It small  not  in small  incomes as are  the  can  concerning  be  w o u l d be  seen  the of  well  generally  remains  size centres  that  ones on  as  are  informal  made  are  sector  redundant  likely  account  that  informal  higher  the  of  than  in  to a r i s e in  the  pace  public  in small  of  growth  informal  According  theoretical  an  of  sector  to Rogerson  r o l e in small  world are  This  towns.  the  and  amenities  towns.  emergence and  study of  sectors  of  i n these  empirical  developing  level  f o r the  speculative. that  the  the  higher  possibilities  activities  "it  technologies  f o r the  Such o p p o r t u n i t i e s  towns i s h i g h l y  p.64)  more o p p o r t u n i t y  transformation.  3.  informal  create  and  in  (1985, studies  intermediate  undeveloped  research  field". A l t h o u g h one unexplored  and  can  concede  needs  further  time, c e r t a i n c r i t i c a l the  informal  sector  1.  Is  the  informal  r a n g e of  activity,  or  Shakhs  2.  this  the  research, that  area there  a r i s e in  is  relatively  are,  at  the  the  context  same of  debate. sector to  ( 1 9 8 4 ) , Kundu and  address this  questions  that  issue  i n the  small  i t s counterpart Mathur  towns s i m i l a r , i n the  (1984), K u l l  to a c e r t a i n extent  as  large  in  type  towns?  ( 1 9 8 4 ) , Das  El  (1982)  indicated earlier  in  section. What  formal  i s the sector  relationship i n the  (1984) have d e a l t  with  small this  of  the  informal  town economy? aspect.  Only  Their  sector Kundu and study  to  the  Mathur  implies  a  85  benign  relationship,  vulnerable 3.  What  to c r i t i c i s m  i s the  towns t o t h e major and  many  of  a  position  i n contemporary  thinking.  T h i r d World i.e.  in small study  aspects  the  informal  sector  process?  explain  This  the  i s an  unexplored  sector  in small  of  the  informal  sector  t h a t must  sector  persistence,  i n urban a r e a s .  be  small  of  the  by-default, of  informal  area.  informal  informal  i n the  existence  the  formation,  may  Which  of  the  that  evolutionist, functionalist,  towns?  a n a l y s i s of the  is  development  p r o l e t a r i a n i z a t i o n can  The  this  r e l a t i o n s h i p of  approaches  sector  the  but  towns a d d s t o  and  The  be  the  considered  and  in  distribution  debate  gets  more  complex. 3.  THE  INFORMAL SECTOR IN WESTERN C A P I T A L I S T COUNTRIES  This  section,  understanding sector  the  that  the  informal  sector  describes  the  Although countries  has  Third may  no  informal the  following  sector.  not  term  discussing  countries.  "In  According  England  from  the  of  the  tenable.  of  the  extensive  sector'  phenomenon  as  has in  t o Simon and  i t is called  critical the  informal that  the  the  Witte  section  i n Western  Third  World,  study.  been u s e d the  the  nations.  sector  of  World  d e b a t e on This  to  informal  Third  i n Western c a p i t a l i s t  s u b s t a n t i a l amount of  'informal the  be  are  p r e s e n c e of  context  longer  sector  been as  The  one  different  World  analysis  i s nonetheless a The  in  informal  the  i n economies d i s t i n c t l y  implies  there  and  in a  limited  Western (1982,  'fiddling';  way  capitalist  p.xi):  in France,  86  ' t r a v a i l au n o i r ' ; Japan, 'the h i d d e n  i n Germany, economy'."  Simon a n d W i t t e u s e t h e t e r m one  o f t h e more common t e r m s  Mattera  (1985), T a n z i  others  in  Other  terms  irregular et  study  used  include:  a l , 1978);  the b l a c k  clandestine Dyson  part  second  employment (De G r a z i a  i s also  (Bawly,  (Contini  o f t h e economy  1982);  1982; F e r m a l  1982; G u t t m a n ,  and M o r r i s ,  1984).  world.  1977);  1982);  Only N i c h o l l s  and  and and  sectors.  of d e f i n i t i v e  nations.  (1982) and  of the Western  economy  u s e d by  ( 1 9 8 5 ) , and C o n n o l l y (1985) u s e t h e terms  i t c a n be s e e n t h a t ,  no l a c k  Western  various parts the  term  (1982), Tucker  ( M a t t e r a , 1985; D i l n o t  i n f o r m a l and f o r m a l  is  of  This  economy' w h i c h i s  ( R e u t e r , 1982; M i r u s a n d S m i t h ,  (1983), Mingione  . Thus  applied.  s u b t e r r a n e a n economy  economy  'underground  (1982), M o l e f s k y  the  economy  'swartzarbeit'; in 11  But  terms do  similar to  to the T h i r d  describe  the  these d e f i n i t i o n s  i n the case of Western  World,  there  phenomenon  describe  in  t h e same  nations?  "The s t r e e t v e n d o r s o f M a n h a t t a n , t h e i m p r o v i s e d boardwalk market s t a l l s of V e n i c e , C a l i f o r n i a and f r u i t s t a l l s outside the f e d e r a l b u i l d i n g s i n W a s h i n g t o n D.C. ( j u s t a s t h e y a r e i n B r a z i l i a and i n Bangkok) a r e e v i d e n c e enough t h a t t h e r e a r e market n i c h e s f o r t h e IFS e n t e r p r i s e s even i n t h e most a f f l u e n t of c o u n t r i e s " (bracket i n o r i g i n a l ) ( R i c h a r d s o n , 1984 p . 4 ) . In g e n e r a l ,  i t appears  that  the informal  sector  activities  are  The t e r m h i d d e n economy h a s a l s o been u s e d i n s t u d i e s o f t h e U.K. ( M a c a f e e 1982), Norway ( I s a c h s e n e t a l 1982), s e l e c t e d E u r o p e a n n a t i o n s ( F r e y e t a l 1982).  87  similar,  but  the  illegal,  tax  income.  Consider  emphasis  evasive,  is laid  and  are  some of  the  on  means  the  for  activities  acquiring  that  are  undeclared  d e f i n i t i o n s given.  "The u n d e r g r o u n d economy i s a t e r m u s e d t o d e s c r i b e t r a n s a c t i o n s t h a t i n v o l v e payment i n money or i n s i m i l a r g o o d s b u t a r e not r e c o r d e d i n o f f i c i a l e c o n o m i c s t a t i s t i c s ( s u c h as t a x a b l e income o r t h e unemployment r a t e ) . T h e s e t r a n s a c t i o n s may not be r e c o r d e d f o r a number of r e a s o n s . F o r example, t h e goods o r s e r v i c e s s o l d may be i l l e g a l , as a r e n a r c o t i c s and p r o s t i t u t i o n . On t h e o t h e r hand, t h e p r o v i d e r o f t h e s e goods may want t o a v o i d p a y i n g income, s a l e s o r s o c i a l s e c u r i t y t a x e s o r a v o i d o b e y i n g some f r u s t r a t i n g government r e g u l a t i o n s . C h i l d r e n who s e l l lemonade i n f r o n t of t h e i r homes, t e e n a g e r s who b a b y s i t f o r t h e i r n e i g h b o u r s , and a d u l t s who use g a r a g e s a l e s t o c l e a n out t h e i r a t t i c s a l l p a r t i c i p a t e i n t h e u n d e r g r o u n d economy i f t h e y do n o t r e p o r t t h e i r income" (Simon and W i t t e , 1982, p.xi).  According cover  two  t o De  Grazia  (1984, p . 8 ) ,  the  informal  sector  can  areas.  "The f i r s t c o v e r s a l l forms o f t a x a v o i d a n c e and a r e t o some e x t e n t i l l i c i t and i l l e g a l , b a r t e r ( e x c h a n g e o f goods and s e r v i c e s i n o r d e r t o evade t a x e s ) , and b l a c k m a r k e t i n g and o t h e r a c t i v i t i e s t h a t g e n e r a t e u n d e c l a r e d income. The s e c o n d c o v e r s a c t i v i t i e s t h a t a r e o f a f e l o n i o u s o r c r i m i n a l o r d e r s u c h as p r o s t i t u t i o n , d r u g - p e d d l i n g and i l l e g a l g a m b l i n g . "  Phillip informality untaxed  Mattera  and  unmeasured. from a  officially  persons). include:  p.4-14)  uses  i n W e s t e r n e c o n o m i e s , a l l of  moonlighting those  (1985,  The the  regular not  f o r m s of hidden  in  The job, the  the  economy  list  which are  officially force using  (unofficial  of  are  of  either  unemployed,  (students, the  forms  unregulated,  participants  labour  informality  a  above  f o r m s of  pr  disabled profile  income);  the  88  criminal  economy  (barter);  and  Richardson  (1984  moonlighting  (prostitution,  the household p.4)  and  similar.  evasion evasion eg.  a  i s not  the  the  (1977,  instrumental underground The not  focus  primary  tax  I t was  (Simon and  focus of  social  provided  these of  by  these  stands  to  tax tax  activities  and  Bawly,  tax  of  though  informal  1982;  scholars  amount  s t u d i e s even  lemonade  attention  "substantial  tradesmen".  the  some  Witte  housewives).  is  skilled  economy  so 1982)  evasion  in  on. was the  economy.  p r o b l e m of  With  of  and  drawing  there  estimating  children's  evasion  estimated  force participated  economy  that  intent  i n Simon  in  small.  labour  that  the  (work done by  descriptions  major  babysitting,  Guttman's  also states  I t appears  is  economy  m u l t i p l e j o b h o l d i n g by  Essentially, are  gambling);  Witte,  reference their  to  by  i n 1979  i n the 1982,  the  t h a t one  'lavoro nero',  economy  third the  is  of.Italy's underground  p.xi)  the U n i t e d  book, Simon and  underground  Witte  S t a t e s of America, (1982, p.xv)  the  main  state;  "The $19 t o $26 b i l l i o n o f l o s t f e d e r a l income t a x r e v e n u e d e s c r i b e d by t h e IRS 1979 s t u d y w o u l d a l m o s t have been enough t o wipe o u t t h e $27 b i l l i o n d e f i c i t i n t h e 1979 f e d e r a l b u d g e t t h e u n d e r g r o u n d economy i s an i m p o r t a n t phenomenon i n t h e U n i t e d S t a t e s . We can no l o n g e r a f f o r d t o i g n o r e i t . "  Estimates as  high.  of  Italy  the  u n d e r g r o u n d economy  i s one  1985;  Mattera,  1985;  1982)  and  estimates  the  De  of  t h e most  Grazia,  1984;  presented  for other  researched Frey vary.  nations  areas  e t a l , 1982; According  are  (Mingione, Contini, to  Frey  89  (1982) I t a l y ' s Contini The  (1982)  of  1982).  the  total  Belgium,  of  percent;  because  According  will  i t is  hidden.  tend  (De  to  Frey,  always  of  be  the  concentrate  on  of p r o f e s s i o n a l and  2.  Operation  ownership  of  eg.  lawyer,  tailoring,  p o t t e r y and  3.  labour  Use  of  so  Smith, of  percent;  of  these  figures  i t i s obvious to  evasion  i n the and  They  of  are  by  the  that  the  measure  simply  developed  barter,  the  include:  s e r v i c e s on  production  these  obtained  repairmen  8-12  1 2  accuracy of  the  nations, in  Germany,  an  individual  etc.  s m a l l u n r e g i s t e r e d f i r m s under household  and  5-20  percent;  informal sector  plumber,  at  3-6  difficult  skilled  force.  10 p e r c e n t  were n o t  tax  while  France,  sector are q u i t e v a r i e d .  doctor,  (Mirus  for other  the  However,  work  roughly  1984).  most  g u e s s e s and  1.  eg.  Grazia,  against  i n the  Barter  13-14  t h e GNP,  the  i n 1976  estimates  Sweden,  activities  basis  1 2  studies  of  estimated  include:  d e f i n e d methods.  economy  percent  ectivity  The  to  or educated  Although world  percent;  cautions  well  was  force,  (1982)  speculations  hidden  1982).  percent  statistics.  20  of  i n f o r m a l s e c t o r was  Norway, 40  Frey  of  the  labour  20-30  i t at  economic  (Tucker,  percentage  i s 30-40 p e r c e n t  i n Canada  In A u s t r a l i a ,  i n 1979  use  economy  estimates  informal sector  percent  GDP  hidden  single  or  greeting  family cards,  on.  illegally  f o r c a s u a l work,  for  instance  the  See De G r a z i a 1984, C l a n d e s t i n e Employment, for data on the size, and t h e g e n e r a l c h a r a c t e r i s t i c s o f t h e h i d d e n economy i n European n a t i o n s .  90  use  of Mexican  4.  Self-employment  cleaning bottle resale 5.  labour  that  i s unreported,  s e r v i c e s , garage collecting,  sales,  street  collecting  While  activities illegal  there  house  entertainment,  empty  ' s c a l p e r s ' by  the  Isachsen,  focus  states  that  estimation  1982;  techniques  Morris,  eg.  1982). survey  other  forms  of  bribes. drug  peddling,  illegal  gambling.  measurement o f t a x e v a s i o n  measurement  tips,  job or  a r e many t y p e s o f i n f o r m a l  Western n a t i o n s  done  babysitting,  and vendors,  to regular  u n r e c o r d e d money e g .  prostitution,  and  street  hawkers  in addition  Criminal  1982;  eg.  of t i c k e t s .  Moonlighting  6.  i n U.S.A..  of  the  (Tanzi,  Mirus (Frey  In  sector  studies  tends  1982; Bawly,  and  Smith,  methods  of t h i s  have  o f t h e h i d d e n economy  not  to  be  on  1982; K e n a d j i a n ,  1982) o r on  e t a l , 1982; R e u t e r ,  spite  activities in  refining  1982;  Dilnot  emphasis, T a n z i  (1982)  been  applied  to  the  i n N o r t h A m e r i c a a s i t h a s been  i n Europe. Some  other  characteristics Redclift illegal  and  aspects  of the s e c t o r Mingione,  immigrant  and  Forte,  Del  Boca  the  informal  are also  1985;  or s u r p l u s  1982; C o n t i n i ,  (1978;  of  De  labour  1982).  sector  studied  Grazia,  (Mattera, 1984);  (De G r a z i a ,  Refering  i n D e l Boca and F o r t e ,  such as the  the use of  1984;  to Italy,  1985;  Del  Boca  C o n t i n i and  1982, p.182) s a y :  " t h e s u r p l u s l a b o u r s u p p l y i s no l o n g e r o p e n l y m a n i f e s t a s i t was i n t h e b e g i n n i n g o f t h e I t a l i a n m i r a c l e b u t i s on t h e c o n t r a r y h i d d e n " .  91  Finally  the  aspect  of  studies  on t h e i n f o r m a l  control  of tax evasion  The  question  economy  form  economy  in  in  public sector  arises,  relatively  but " r e d i s c o v e r e d "  One  speculate  increased it  is  important  Gerry  is  Rogerson  changing  into  ( 1 9 7 9 ) , and P a h l  reference  new,  years  i t  the  t i m e s have  informal  sector.  (1985) p o i n t  from  informal  sector,  in  s t u d y o f t h e U.S.A., a n d H a n s s o n  their  Sweden. of  D e l Boca a n d F o r t e  view.  They  individuals, preferences case  study  informal the  who  that  wage  levels (1985)  informal  is  sector.  Frey  inflates  the  (1982)  (1982) i n h i s s t u d y o f  (1982) p r e s e n t higher  to the informal  i s a response  of depersonalised  that  inadequate  i s s h a r e d by Simon a n d W i t t e  an i n t e r e s t i n g p o i n t  education  sector.  o f Canada, N i c h o l l s a n d Dyson  levels  Speaking  (1983) p r o p o s e  to the l i m i t s  induce  of  their the  that the  of monetisation i . e .  a n d d i s t a n t human r e l a t i o n s h i p s i n  soc i e t y .  "On t h e o t h e r  that  have some work t i m e a v a i l a b l e , t o s h i f t  f o r jobs  sector  limits  state  such  to the fact  the burden of t a x a t i o n  that  1985).  Gershuny  the  a view  hidden  i s "as o l d a s  depressing  necessitating  often  s o r t o f an  i n some way e i t h e r  by t h e s t a t e  (1982) s u g g e s t s t h a t  the  1982).  The  i t s character  that  and Wallace  services  to  (Mingione,  sometimes t h e p r o v i s i o n o f s e r v i c e s the  this  of the  Some r e a s o n s have been p r o p o s e d by  (1985) s t a t e s  individuals  in  nations.  not  i n recent  to study.  also a part  i s why s h o u l d  t h e h i d d e n economy o r c h a n g e d  scholars. force  that  is  1982; Bawly,  prosperous  nations,  taxation" can  but mostly  (Simon and W i t t e ,  that  Western  policy  hand, t o t h e e x t e n t  that  informal  92  economic a c t i v i t i e s i n c r e a s e d e - m o n e t i s a t i o n (nonmoney t r a n s a c t i o n s ) , i t i s n e c e s s a r y f o r p e o p l e t o i n c r e a s e t h e number a n d q u a l i t y o f t h e i r i n t e r p e r s o n a l r e l a t i o n s h i p s " ( N i c h o l l s a n d D y s o n , 1983, p . 2 5 ) .  It in  i s evident  from t h i s d i s c u s s i o n  Western c a p i t a l i s t  economies t h a t  done, c e r t a i n l y s u f f i c i e n t sector.  But, as yet,  the  T h i r d World s i t u a t i o n .  4.  THE INFORMAL Studies  of  socialist  economies  are  sometimes  difficult  to obtain  in the  accuracy  existence  there  is  with  SOCIALIST COUNTRIES  in  easily  study  centrally  planned,  accessible.  It is  d o c u m e n t s , some o f w h i c h a r e n o t  the  De G r a z i a ,  1977).  economies.  used  capitalist to  economy.  self-employment,  Private or small  and  World  feature i n  1985; P i n g  Yu, 1984;  1984; S i t , 1983; Newsweek 1978;  Gormsen  to the informal  t o d i s t i n g u i s h these sector  the  sector i s  Third  a common  1982; W h i t e ,  term a p p l i e d  enterprises'  be  1985).  indicate  f o r the informal  1985; A s l u n d ,  1983; G r o s s m a n ,  The g e n e r a l  sector  controlled  in socialist  appears  (Mattera,  (Aslund,  to  Western  i t  suspect  information  1984; Time m a g a z i n e , A p r i l ,  magazine, March,  'private  in  economies, economies  sector  terminology  as v a r i e d as that  socialist  i s often  enough  of the i n f o r m a l  capitalist  of  as  of the information  Although  al,  not  sector  of the  E n g l i s h , a n d when t h e s e a r e made a v a i l a b l e by t h e g o v e r n m e n t ,  Nonetheless,  not  work h a s been  h a s been no c o m p a r i t i v e  informal  sector  a tentative profile  SECTOR IN CENTRALLY PLANNED the  informal  considerable  to provide  there  of the  enterprises  group ventures.  sector i s  from t h e s t a t e  are mostly The  et  forms  presence  of  93  private within will  enterprises the  not  review  is  a  c e n t r a l l y planned  be is  political/ideological socialist  discussed  in this  only  establish  characteristics  to of  the  the  informal  s y s t e m s but  review. the  informal  contradiction  The  1 3  purpose  presence sector  this  and  in  aspect of  this  predominant  the  socialist  economies. Studies that  i t is  of  sometimes  encouraged.  It  as  of  a holdover  since the  some  sector  China  (Ping  Germany 1985;  of of  New  nations  Yu,  1984; 1985;  Mattera  in s o c i a l i s t but  is  the  hardly  have acknowledged  part  of  even  state  informal  sector  acceptable the  now  presence  of in  L i n e t a l , 1980), P o l a n d , H u n g a r y ,  East  were p a r t  socialist  show  system, eg.  Lin  the  economies  sometimes  to dismiss  this  Mattera,  1982).  enterprises  China.  easy  c a p i t a l i s m but  inherent  Grossman,  the  u s e d t o be  an  (Aslund,  private  underground,  socialist as  sector  1985), and  (1980) f o r of  the  instance  (Mattera,  states  that  "unified socialist  (1985, p . 1 1 ) , q u o t i n g  York T i m e s s t a t e s  U.S.S.R.  a Moscow  the  market"  correspondent  that  " p a r a l l e l t o t h e o f f i c i a l economy t h e r e e x i s t s an e n t i r e t h r i v i n g c o u n t e r e c o n o m y . . . ( w h i c h ) has become an i n t e g r a l p a r t of t h e S o v i e t s y s t e m a b u i l t i n permanent f e a t u r e of S o v i e t s o c i e t y " .  The  informal  employment"  1 3  sector  in eastern  comprises  European  "atleast  nations  a  (Aslund,  few 1985,  percent  of  p.2),  and  See Aslund A n d e r s 1985, P r i v a t e E n t e r p r i s e i n E a s t e r n f o r an i n s i g h t i n t o t h e i d e o l o g i c a l c o n t r a d i c t i o n of t h e e n t e r p r i s e s e c t o r i n the s o c i a l i s t economies.  Europe, private  94  in  most  instances  (Aslund,  1985; De G r a z i a ,  The  size  varies, the  these a r e o f f i c i a l l y  of the  depending  illegal,  usually  or both  present.  enterprises  whether forms  Aslund  the  (1977),  Grossman  (1982), M a t t e r a  studied  U.S.S.R.;  the  the  the  in  informal  (1985) s t u d i e d Germany.  private  legal  activity. only  (1980)  are  private  Shen P i n g  enterprises  and  the l e g a l , Both  in  China  Yu and  i n U.S.S.R. on  s i d e of the i n f o r m a l  Poland  economies  the l e g a l  Similarly,  (1985), and C a i  U.S.S.R.,  include  enterprises  private  illegal  socialist  the estimates  of  legal  Gormsen  hand,  sector  i n Poland and E a s t  (1984) s t u d i e d  by government  1984).  informal  on  recognised  Hungary;  the  other  sector  i nthe  and  China  respectively. Estimates illegal in  f o r t h e U.S.S.R.  informal  1970 ( K a i s e r ,  Mattera  sector  indicate that  was 20 p e r c e n t  1976; i n  Frey  et  the l e g a l  and t h e  of the o f f i c i a l  economy  a l , 1982).  According  to  (1985 p . 1 1 5 ) ,  " A n d r e i S a k h a r o v h a s been q u o t e d a s e s t i m a t i n g t h e s e c o n d economy a t a b o u t 10 p e r c e n t o f t h e o f f i c i a l one, b u t he a p p a r e n t l y b a s e d t h a t f i g u r e on n o t h i n g more t h a n impressions".  Estimates that  t o g e t , b u t i t i s i n d i c a t e d by  the p r i v a t e e n t e r p r i s e  Hungary, 1984). sector on  are hard  sector  Yugoslavia  (Aslund,  The e x c e p t i o n ,  Aslund  i n East  corruption.  Germany, w h i c h De G r a z i a  is  1985;  quite  Mattera,  (1985) p o i n t s i s small  (1984) s t a t e s  large  in  1985; De  Poland, Grazia,  out, i s the informal  due t o a s t r i c t e r that  scholars  in  control  Yugoslavia  the  95  proportion sector with  of  was a  Hungary  wage  at least  shortage was  40 p e r c e n t  For  China, Cai  of  rising  skilled a t one  (1980)  hawkers  although  this  in  third  during  sector  exists  "on  Eastern  Europe"  (Grossman,  does not d i f f e r  not r e a l l y  but t h e r e  Descriptively,  income  a  large  the  1985).  about  the c u l t u r a l  that  10,000  revolution,  i n d i c a t e the t o t a l  scale  1982,  production  (Mattera,  were  agreement  areas  s e c o n d economy o f  i n 1981 there  informal in  country's  s c h o l a r s admit  i s an  i n the  percent,  The  of the  Shanghai  Most  25  labour.  that  sector.  be a c c u r a t e ,  to  estimated  f i g u r e does  informal  r e g u l a r l y engaged  of the p e r s o n a l  illegal  not  10 p e r c e n t  estimated  and  the  earners,  size  of  the f i g u r e s  may  that  the  i n the S o v i e t  informal  U n i o n and i n  p.245).  informal  sector  much f r o m t h e i n f o r m a l  in  socialist  sector  economies  in other  nations.  "The e x c h a n g e o f goods and s e r v i c e s ( i . e . various forms o f b a r t e r c a r r i e d o u t m a i n l y f o r t a x e v a s i o n p u r p o s e s i n most i n d u s t r i a l i s e d market economy c o u n t r i e s ) , which i s o f t e n c o n s i d e r e d as a b r a n c h of t h e u n d e r g r o u n d economy i s a l s o v i e w e d a s an i m p o r t a n t f e a t u r e o f t h e s e c o n d a r y economy i n s o c i a l i s t c o u n t r i e s " (De G r a z i a , 1984, p . 1 ) .  De  Grazia  (1984)  e n t e r p r i s e s a r e as socialist forms o f  economies illegal  "and  appear  1982,  p.248).  1.  to  and  a  be  from  building  part  as W e s t e r n  activities  These  Moonlighting  repair  much  indicates  limited  of  tax  the  only  as  evasive  informal  capitalist  exist  activities  that  economies.  well,  are  private  sector But  highly  by human i n g e n u i t y "  in  other varied  (Grossman,  include:  regular  jobs,  typically  services  (Mattera,  1985;  for De  household  Grazia,  1984;  96  Grossmann, 2.  Small  usually  1982). scale  within  collective Sale  4.  Stealing  Other  7.  Criminal  sale  et for  the  of  the  state  existence  as  of  f a c a d e of  a  1982).  sale  by  truck  drivers  1982).  diversion  of  finished  but  trades. of  cites  of  of  and  well  as  goods  private  bribes. prostitution  U.S.S.R.  in China  activity  Grossman  of  for private these  (Ping  Yu,  than on  tutors,  enterprises  enterprises  in  that the  the  The state  imposed the  professions and  in a  few  that  even  in  transactions  ' s t e a l i n g on  the 1982;  (1982),  in c e r t a i n  illegal  of  i n the  profits  (1982) e m p h a s i s e s  studies  one  the  1984).  t o Grossman  teachers,  activity,  be  for  (Grossman,  higher  According  stalls  seems t o  to a c e i l i n g  dentists,  examples  from  and  government  i n the  subject  private  sales  vegetables  some p r i v a t e  resources  appears  use  1977).  But  income, e g .  narcotic  t h e s e goods a r e  physicians,  He  It  eg.  the  etc.  jeans.  (Grossman,  activity  (Gormsen,  legal side  using  sale  permits  and  place.  blue  Vodka  1982).  the  fruits  economy*  government  crafts  Grossman,  s u c h as  Grossman,  a l , 1977)  state  as  behind  c o l l e c t i n g undeclared  informal  controlled  such  eg.  b l a c k market  state,  legal side  most common  the  eg.  activities  1985;  the  Gormsen  job,  from the  forms o f  (Mattera,  private  the  footwear,  1982).  6.  by  1985;  in t h e i r custody  (Grossman,  prices  garments,  premises  (Mattera,  on  Stealing  On  of  of. s m u g g l e d g o o d s , e g .  frieght  5.  legal  farm  3.  of  production  do  job',  take  bribes,  etc.. reasons socialist  for  the  economies  97  include,  tax  in  consumer  the  haven  the  evasion,  making e x t r a  goods.  The  money, and  illegal  informal  for prosperous entrpreneurs.  risks  of  illegal  ventures  are  meeting  sector  shortages  appears  This  seems  too  high  to  logical f o r the  be for  poorer  individual. " t h e i l l e g a l s i d e o f t h e S o v i e t s e c o n d economy a d d s c o n s i d e r a b l y t o t h e c o n s u m e r s w e l l b e i n g , b o t h by e n h a n c i n g t h e f l o w of goods and s e r v i c e s a v a i l a b l e t o him, q u a l i t a t i v e l y as much as q u a n t i t a t i v e l y , a n d p r o v i d e s him w i t h e x t r a income" (Grossman, 1982, p.259).  Most  scholars  tend  to d e s c r i b e  a  dynamic  informal  sector  for  instance; "A new t y p e o f e n t r e p r e n u e r has a p p e a r e d , f o r m e d by s o c i a l i s m and c u t o f f from t h e o l d b u s i n e s s t r a d i t i o n . He i s g e n e r a l l y v e r y a b l e and i n n o v a t i v e . . . d e s i r i n g q u i c k and l a r g e p r o f i t s , he i s more m a r k e t t h a n p r o d u c t i o n o r i e n t e d " ( A s l u n d , 1985, p.209).  However, not China  and  a l l the  P o l a n d p o v e r t y can  (Aslund,  1985;  private  enterpriser  fairly but  law  is a In  "By  1980).  of  sector due  f o r the  in to  the  has  enterprises r e l a t e d to  contrast, Germany  not  been  this  section  Western tax  i n the  Aslund  (Aslund,  i t can  there  economies.  filling  the  properous. informal  states  be  by  1985, said  was  that  by  and  p.169). that  is quite  gaps l e f t  the  socialism  while  generally  Consider  In  sector  i s "old, conservative,  economies  evasion,  are  transformed  old society"  socialist  permanently  be  By  in East  abiding...he  concluding  negatively response  Cai,  remnant  informal  private  this  the  the  the  viewed opposite  remark:  98  r e g u l a r e c o n o m i c i n s t i t u t i o n s , t h e s e c o n d economy becomes an i n s t i t u t i o n i t s e l f and p r o b a b l y even s e r v e s as a p o l i t i c a l s t a b i l i s e r . Rather than being a s u b v e r s i v e f o r c e , i t may be t h e t h i n g t h a t k e e p s t h e ' s o c i a l i s t ' s y s t e m from c o l l a p s i n g " ( M a t t e r a , 1985, p.121 ) .  5.  A COMPARISION OF  THE  INFORMAL SECTOR IN  THE  THREE DOMINANT  ECONOMIES From t h e Western  of  capitalist  countries, three  review  i t may  the  countries  appear  contexts.  On  informal  that  closer  and the  sector  i n the  Third  c e n t r a l l y planned  phenomenon  World,  socialist  i s d i f f e r e n t in  s c r u t i n y however, one  can  find  the many  commonalities. Firstly,  a c o m p a r i s i o n can  d e s c r i p t i o n s of  the  informal  definition  employment  (hawkers, v e n d o r s ) ,  (food (drug of  small stalls,  small  peddling,  employment  unreported  is  also  this  list  the  case  sector  wage s e c t o r  are  low  or  units)  be  of  varied  low  can  to the In  a means t o a c q u i r e  nature  d e f i n i t i o n s and  the  marketing).  countries.  However, w h i l e the  the  well  self-  (casual  paying  These a c t i v i t i e s evasive  Third  from  to c r i m i n a l  tax  the  if  in  hired  profits  activities are  a  form  they  are  illegal.  Compare socialist  that  income but  In  informal  manufacturing  black  and  or  and  the  enterprises  made of  sector.  World, the  help),  of  be  of  this the  aspect  these nations undeclared  may  activity  activities  be  i n Western the  i s not  informal  income and  emphasised very  capitalist  i n the  evade  sector taxes.  literature,  d i f f e r e n t from t h a t  of  99  the  T h i r d World.  China  Most a c t i v i t i e s  ( C a i , 1980), o r b a b y s i t t e r s  1982)  or the barter  are  forms  of  activities, the  gardening illegal state  self  earned  etc.  small  these  sector Third  (De G r a z i a ,  low p a y i n g  (Mattera,  activities  from house c l e a n i n g ,  1985;  such as p r o s t i t u t i o n , as  well  socialist  baby  paying  such  sitting,  i t was i n d i c a t e d  Grossman,  often  1982).  as  that  using the Criminal  and s m u g g l i n g were p r e s e n t  (Tanzi,  1982; B a w l y ,  i s an i m p o r t a n t  economies  in  1984),  W h i l e most may be w e l l  and t h e U.S.S.R,  o f f o r e i g n goods  in  services  vendors  (Simon a n d W i t t e ,  manufacturing units are prevalent,  economies  smuggling  illegally  In C h i n a  resources  activities,  employment.  these are  i n U.S.A.  of p r o f e s s i o n a l  i t does n o t e x c l u d e  income  part  (Grossman,  1982). of the  In  in fact,  informal  1982) a s w e l l  as the  World. Conversely,  and  whether  i t appears that  self-employment  a r e so w e l l  the  tax evasion  aspect  as  thoroughly  examined.  black  marketing  studied sector Wisser,  i t debate  a  and even  time  (Mattera,  enterprises,  i n the T h i r d World  sector  though  i t has o n l y  been  tax evasion  economists  entered  1985; K a b r a ,  that  may n o t have  In t h e c a s e o f I n d i a ,  large  long  recently  studied  of the i n f o r m a l  i s very  for  because t h e s m a l l  1982;  by  have  the informal Ray,  1981;  1981).  "The c o m b i n a t i o n o f u n d e r - r e p o r t e d r e g u l a r income and b l a c k m a r k e t p r o f i t s h a s r e a c h e d so h i g h a l e v e l t h a t t h e London e c o n o m i s t s h a s d e c l a r e d t h a t I n d i a i s awash w i t h ' b l a c k money'" ( M a t t e r a , 1985. p . 1 0 7 ) .  Mattera  (1985)  and  Caballero  (1982)  also  discuss  tax  1 00  evasive  activities  "underground in  of  economies  common w i t h  Western the  i n Colombia,  the  Europe  than with  T h i r d World" from p e r s o n a l  that  India profit  the  indicators be  studies  on  informal or the as  of  India  1985,  out and  India  i n other  are  nations.  sitting  or  not  informal  There  of  What sectors appear  the  These  comparision  i s that  barter  to  of  cannot  a  be  used  work.  the  Western  large  petty  the  evasive  capitalist studies  activities  i t w o u l d not  such a c t i v i t i e s be  as  this  What  tax  many  i n the  say  as  nations,  that  may  to  taxes.  is  the  of  small  numbers  be  in such fair  within in  the  employed.  the  t y p e and  size  c e r t a i n t y p e s of other  forms  in  of  the  informal  informal activities  particular  nations,  economy.  second part  transaction  large  parts  evidence.  of  to predominate over  The  well  World  indicate  activities  statistical  indicates  t y p e s of  Third  proportion  money t r a n s f e r r e d but  the  Colombia  on  and  in other  as  S i m i l a r l y , b e c a u s e not  on  sector.  is l i t t l e  market  exclusive  U.S.A.  more a c c u r a t e  w h i c h evade or  the  However, s p e a k i n g  empty b o t t l e c o l l e c t i o n ,  the  amount  i n the  e i t h e r , pending e m p i r i c a l  C o l o m b i a do  ectivities  p.9).  that  seem t o have more  production  black  both of  states  India  i t w o u l d be  W e s t e r n w o r l d have c o n c e n t r a t e d baby  and  informal  large  of  evasion  draw c o n c l u s i o n s  the  a  sector,  to  and  the  experience  ruled  socialist  the  experience,  both  tax  Colombia  (Mattera,  informal  While  cannot  has  Mattera  off-the-books a c t i v i t i e s  India  low  of  and  used of  of  the  comparison  i s b a s e d on  i n the  informal  sector.  goods and  services  or  The  the  choice  money t r a n s f e r .  form  of  i s between It  appears  101  from  the  review  of  the  three  dominant  money t r a n s f e r may be more i m p o r t a n t socialist the  economies  informal  Bawly, the  1982.; T a n z i ,  1982).  informal  large,  fair  although  are  investigated.  is  Certainly  (Mattera,  the  large  amounts  of  service  1982).  between  food.  garments f o r a c l i e n t h i s family.  frequently  be  money  But t h e r e  those employed  For instance,  i n exchange  in  in  such  This  i s not a  Western  nations  to  that  World.  transaction  evasion  another  India,  they  say  in Third  i n the l i t e r a t u r e , In  important  persons  barter  tax is  be  nations.  are recognised  sector  for  1984;  simply  line  unfair  income g r o u p s e x i s t s u s u a l l y for  in  involves  i s less significant.  barter  t h e upper  sector  of  money may a l s o be  t h e government.  market  of  may  of  and  aspect  may be  The b o t t o m  to the informal  i s not apparent  money v a l u e  tranfer  i t would a l s o  the black  1985; K a b r a ,  and  for  i t cost  World  i n these  b u t number  forms o f a c t i v i t i e s  unimportant  that  constant  hand,  i n India  involving  barter  directly  other  On t h e o t h e r barter  who  direct  Grazia,  conception  by t h e u s e o f b a r t e r  of the informal  because  (De  of the s t u d i e s  h a s n o t been s t u d i e d .  representation  less  this  involved  i s how much d o e s  Third  may be a i m p o r t a n t  money  sector  but t h i s  studies  focus  the  nations  Again,  of tax evasion  terms o f t h e t o t a l  the  barter  i n the Western  r e s u l t of the current  Estimation in  sector  while  in  economies t h a t  purposes level  perhaps for  because example,  i n the informal involving  of  sector  the  t h e laundry-man w i l l  trade iron  f o r a meal o r a r a t i o n of r i c e  Hawkers o f new s t a i n l e s s  t o the doors of the w e l l - t o - d o  steel  utensils  to barter  their  come wares  1 02  for  old clothes, One  the  can  nature  are mostly 1985;  infer of  they r e s e l l  illegal  in a l l three  1982;  includes  t o the  poor.  from t h e s e c o m p a r i s o n s ,  the t r a n s a c t i o n ,  Grossman  This  which  the  the  that  informal  types  of  as  well  of  sector  activities  economies  (Mattera,  Simon and W i t t e , 1982; criminal  irrespective  Sethuraman,  as  the  1981).  non-criminal  activities. The the  third  informal  part  of the comparison  sector  forms  types of economies. informal  sector  unemployment,  i.e.  reviewed  earlier,  default,  and  that  by and  large,  economies  sector  the approaches  sector  the  tied  the  be  is  an  obvious  tranferred  stretched  were  in  These  the  in a similar  u n l e s s perhaps i s either  types  of  development  here. why  If  the  can  these  i t is  because  they  a case  for modifying  one. perhaps  only  the  'by  to cover the presence of the  i n t h e o t h e r economic  Third  approaches,  other  contradiction  by  Essentially,  i n o t h e r economies,  a new  approaches,  approaches  1980).  the  the and  functionalist,  sector. to  of  poverty  conditions  they a r e not  present  informal  the  transferred  or f i n d i n g  c a n be  .the  informal  to  why  different  the e x i s t e n c e  Four  (Kahn, the  i n which case t h e r e  the four  approach,  closely  evolutionist,  because is  n o t be  unsound  approach  World  have e x p l a i n e d  simply  informal  Of  Third  underdevelopment.  cannot  There  are  been  necessitate  process.  approaches  the  proletarianization  these approaches World  i n the t h r e e v e r y d i s t i n c t l y  In  has  d e a l s with the reasons  systems.  sector  is  Under created  the  'by  default' informal default'  in areas that  the  103  dominant c a p i t a l i s t 1980;  Roberts,  mode  1978).  f i n d s u n p r o f i t a b l e or high If  the  'dominant c a p i t a l i s t  c h a n g e d t o 'any d o m i n a n t mode' t h e n any  case,  i t  is  difficult  risk  to  the concept  may  view the i n f o r m a l  (Kahn, mode' i s  apply.  In  sector  as a  symptom o f u n d e r d e v e l o p m e n t .  " t h e I F S i s a symptom o f u n d e r d e v e l o p m e n t i s a l s o e x p o s e d by o b s e r v i n g how w e l l i t t h r i v e s i n h i g h l y developed c o u n t r i e s " (Richardson, 1984, p . 4 ) .  In cited  the case of the s o c i a l i s t for  the  shortages of Western it  nations,  evolved  and  the  services  informal (Grossman,  as a r e s u l t  (Gershuny,  goods  this  category  transfer this  Apart partly  1985; P a h l  and c e r t a i n l y from  this  closely  capitalist  1985;  1982).  In  the informal  sector  reasons  the  f i t into  However, speculative  that  fourth part  create  the  sector  at  c o r r e l a t i o n s apparent,  informal  sector  countries  approaches  of the comparison  the informal  the  research.  socialist  e x a m i n e d a n d no c o h e r e n t  The s h o r t a g e s  1982).  i s purely  a r e no o t h e r for  1985).  have  i n the  have n o t been as  yet  formed. The  the  identifiable,  o f d r u g s would  Bawly,  n e e d s more  there  and  i s meeting  s e r v i c e s s u c h a s baby  and Wallace,  but s m u g g l i n g  (Mattera  because the  Western  even p e t t y  o f t h e 'by d e f a u l t ' a p p r o a c h  point  reasons  of the inadequate p r o v i s i o n of s e r v i c e s  includes  i s less studied  that  the  sector  although the shortages are less  t h e s t a t e , and t h i s  sitting of  goods  of  h a s been s u g g e s t e d by some s c h o l a r s  has by  creation  e c o n o m i e s one o f  exist  i s why t h e c o n d i t i o n s i n the three  t y p e s of  been  1 04  economies. surplus Bose,  In  labour  (Simon  wage  of  however, t h a t  levels sector  other  the  black  greater  socialist  reasons  may  in  India  informal  economies.  sector  because  ( K a b r a , 1982; Ray,  sector  in  Poverty i s a r e l a t i v e  How  low  other  World economic  are p r i m a r i l y  participate  point  for  (Demol a n d  have  i n the l e d to  of t a x a t i o n i s  i n the  capitalist  and  term and t o say t h a t  i n the informal  sector  scale  should  mean  participate.  i s , d e c i d e s p e r h a p s how d e s p e r a t e t h e n e e d  i n informal i t  account  1981).  Western  p e o p l e a t t h e l o w e r end o f t h e income  Third  well.  l a b o u r a r e n o t exempt  that  employment  dominate  as  activities  t h e burden  poor u s u a l l y  for  1982)  a source f o r the c r e a t i o n  the  this  of t a x a t i o n  exist  o f t a x a t i o n may s i m i l a r l y  p o v e r t y and s u r p l u s  the  burden  1978; N i h a n e t a l , 1977; K i n g , 1974))  markets  of  1985),  1977;  two e c o n o m i e s ,  w h i l e some r e a s o n s may  informal  on a p o o r p o p u l a t i o n  creation  (Sabot,  i n w e s t e r n n a t i o n s may a l s o  The b u r d e n  Similarly,  factors  s h o r t a g e s (Grossman,  for instance,  'modern' a n d t h r i v i n g 1982; House,  the presence of  cited.  economy  wage  T h i r d World.  T h i r d World  (Rogerson,  1 4  1982), and m e e t i n g  appears,  the informal  Nihan,  1 4  levels  a particular  the  the  1975), w h i l e i n t h e o t h e r  some o f t h e r e a s o n s  Depressing  of  and p o v e r t y a r e two c a u s a l  and W i t t e ,  It in  case  1977; M o o k e r j e e ,  depressing  are  the  sector  may b e .  i s a matter of s u r v i v a l  systems,  informal  In t h e  of  the  but i t appears t h a t i n  activities  a means o f a u g m e n t i n g  case  such as m o o n l i g h t i n g  income.  D e p r e s s i n g wage l e v e l s r e f e r s t o t h e d e c l i n i n g incomes a s a r e s u l t o f i n f l a t i o n  value  of  fixed  105  The  aspect  of  informal  sector  socialist  nations.  surplus  is  also  labour  present  F o r example,  i n China  were e n c o u r a g e d  sector  would d e v e l o p  Italy,  surplus  labour  hidden  economy  ( D e l Boca a n d F o r t e ,  of labour  of  surplus  labour  exploitation.  When  coincides  with  mean t h a t  labour  illegal nations eg.  that  i s a part  immigrants  nations  France,  states  that  to  100,000.  little  many  (1984)  e x p l o i t a t i o n of labour  However h a v i n g  said  similarities,  i t  differences instance, cases  Banerjee  in  the  Third  i t s p a r t i c i p a n t s only  West  World  i t  De  often  does not of  U.S.A,  1982) a s  and  other  Grazia  serious  and  (1984, "various  a t between  that  that  than  the informal income,  25,000 there i s  economies.  section said  its  i n Western  however, t h a t  rather  source of  also  the immigrants a r e  residents  be a l s o  the use  in  Germany  very  this  i n the  The u s e  exists  Often  states,  which a r e p r o p o r t i o n a l  but  sector  i n the s o c i a l i s t  should  force  (Simon a n d W i t t e ,  is  throughout  In  nations.  In S w i t z e r l a n d ,  e s t i m a t e s p u t t h e number o f i l l e g a l  1984).  But t h i s  force  1984).  problem  this  nation,  of the i n f o r m a l  (De G r a z i a ,  the  a  i n other  Belgium,  i n t o be e x p l o i t e d .  here,  i s exploited.  from Mexico  rural  so t h a t  i t i s not only  in  labour  the  While d i s c u s s i n g the  issue  i s surplus  and e x p l o i t a t i o n o f t h i s  Eupropean  p.16)  labour  at  i s not e x p l o i t e d  i n Switzerland,  brought  is  from  Yu,  to the labour  that  of  c a p i t a l i s t and  sector  (Ping  1982).  be m e n t i o n e d  the labour  immigrants  illegal  well  has c o n t r i b u t e d  that  creation  migrants  the informal  i n a p l a n n e d manner  i t should  the  i n the Western  areas  use  to enter  in  there  there  a r e many  absolute. sector  are  For  i s i n most  whereas  i n the  1 06  Figure 5 - S i m p l i s t i c r e p r e s e n t a t i o n o f t h e m a j o r means and m o t i v e s o f t h e i n f o r m a l s e c t o r i n d o m i n a n t economic s y s t e m s  MEANS USED TO ACHIEVE MOTIVE  MOTIVE FOR PARTICIPATION IN PETTY CAPITALISM TYPE  INCREASE PROFITS  EMPLOYMENT OR SURVIVAL  TAX EVASION  SALE OF GOODS AND SERVICES  XXX  XX  X  XX  XX  SOCIALIST  X  XX  X  X  XX  THIRD WORLD  X  XX  XXX  XX  XX  OF DECREASE COSTS  ECONOMY  WESTERN CAPITALISM  <  Western  capitalist  supplements in  income  the Third  sector,  LEAST T 0 MOST COMMON  X- XXX:  while  nations,  from o t h e r  World  i soften  i n the other  the  sources.  nations  T h i r d World and the s o c i a l i s t  a  greater  distribution this formal  o f goods  of  of services  because,  t h e consumer  there  bartered,  economies  i s dominant market  a n d even  in  there  i n the informal In  a p p e a r s t o be  services. o f goods  i n the informal  sector  and  Perhaps from t h e  economies,  the  perhaps  o r s e r v i c e s a r e more  i s exchanged cash  Thus,  force  the production  capitalist  i s saturated  i f money  i s no t a n g i b l e e v i d e n c e .  the labour  of shortages  But i n t h e Western  usually  i s a matter of c h o i c e .  than i n t h e p r o v i s i o n  provision  easily  i t  activities  i s , i n some way, t h e r e s u l t sector.  Thus,  sector  c o m p e l l e d t o work  the  number  informal  tax evasion  i s used and  i s easy.  It  107  appears  that  professional barter  of  there  skills these  significant  is  in  a  the  services  greater  means  that  nations,  perhaps  can  used  evade t a x e s  be  also of  the  This  informal  that  factors  is  this that  commonalties as w e l l distribution  of  be  more  admittedly sector  could  the  informal  the  and  because in a  activities  differences sector  i n the motives  5.  but i t does  a r e found  show  in a l l  proportions.  for a  It  re-examination  sector. in  dominant  in figure  in varying  the informal  proportional  three  general,  be t h e b a s i s  create  as  in  i n a s i m p l e way  of economies, although  suggests  to  sector  i s represented  types of i n f o r m a l  types  the  to  because of the d i f f e r e n c e s  comparision  most  three  occur  of  economies. This  technical  way.  absolute,  and  of  Western  These d i f f e r e n c e s , which appear than  use  the  activities  Perhaps the proportional  has  a  common  explanation. The the far.  following chapter  urban  informal  p r o p o s e s an a l t e r n a t i v e  sector  taking  i n t o account  analysis  the debate  on thus  108  CHAPTER 4: AN ALTERNATIVE ANALYSIS OF THE INFORMAL  SECTOR  "Hawkers and v e n d o r s have n o t d i s a p p e a r e d from the s t r e e t s o f L o n d o n , New Y o r k , a n d P a r i s . If this i s not i n some s e n s e t h e same t h i n g a s what i s b e i n g c a l l e d t h e i n f o r m a l s e c t o r i n B o g o t a and Hongkong, one w o u l d l i k e t o know why n o t " ( P e a t t i e , 1984 p . 1 7 9 ) "  This The  chapter  study  recent  on t h e u r b a n  years  different How  exists  not  similarity  the  three  the  systems  i n the s o c i a l i s t than  that,  different is  survey  specifically  This  chapter  i s divided  to  be  defined,  found,  to  i t  considerable countries?  sector  form i n  Obviously,  i t must  if a  be c a p a b l e o f  explanatory  i s empirically derived,  test  the  The f i r s t In  the s i m i l a r i t i e s socialist  i n chapter  the  a  analysis.  contains the second,  this  and d i f f e r e n c e s i n  nations  four.  by  t o undertake  alternative  analysis.  T h i r d World,  analysis  i s b a s e d on t h e c u r r e n t  i n t o two p a r t s .  described  questions since  capitalist  systems?  The argument  to explain  sector  nations  certain  in  and t h e d i f f e r e n c e s .  arguments of t h e a l t e r n a t i v e  capitalist  be  so much i n  activities  B u t , i t h a s n o t been p o s s i b l e  field  informal  of  how d o e s t h e i n f o r m a l  economic  sector.  review.  i s used  to  and Western  o f k n o w l e d g e , much o f w h i c h  argument  range  therefore,  sector  dilemma.  has expanded  p r o p o s e s an a l t e r n a t i v e  informal  literature  the  wide  and,  the commonalities chapter  a  sector  this  i n the T h i r d World but a l s o with  explanation  This  state  i t includes  only  quite  explaining  informal  i s the informal  critical  common  of  that  economic  arise.  More  i s i n p u r s u i t o f an answer t o  and  Western  109  1.  AN  ALTERNATIVE ANALYSIS: THE  DEMAND AND  SUPPLY FOR  PETTY  CAPITALISM 1.1  Definition  The there  are  Moser, a  problem with too  many o f  1978).  Most  particular  cannot  be  exceptions  a  low  socialist  'modern , 1  systems  Nihan et  a l , 1 977) .  2.  The  employment paying, economies 3.  making  informal  1973), as  labour  (Sethuraman,  4.  sector  The  well  1984; sector as  sector  1982;  has  While  it  be  is  defined be  one also  in  seen  so  that  selected  has  as  a  for  traditional  skill  i n the  I.L.O.,  also exists 1982;  been d e f i n e d Third  also exists  Aryee,  small  1985;  Tanzi,  i n the  sector  se,  criteria  been d e f i n e d  (Aslund,  sector  1984;  phenomenon i n  place.  can  t e c h n o l o g y and  informal  (Grossman,  (Hart,  of  it the  i s that  sector:  has  economies  (Richardson, The  f o r some of  level  generating  the  per  below  sector  Richardson,  phenomenon c a n  list  sector  informal  profit  one  informal  thriving  economic  1985;  definitions  the  found  informal  informal  or a t a p a r t i c u l a r  these  the  the  these adequately define  In  be of  using  W o r l d and a  can  The  sector  of  ways.  definition 1.  of  of  (Rogerson,  t o comprehend how  many d i f f e r e n t  the  them  circumstance,  critical  difficult  definition  1977;  enterprises  1972),  as  a  low but  in a l l three Beinefield, as  using  but  in a l l three Steel,  World,  been d e f i n e d  Third  1977;  paying, a  well  types  of  1975).  self-employment family  or  wage  1976).  informal  sector  has  sometimes been c o n c e i v e d  as  a  110  refuge and in  f o r the  p o o r and  Sullivan, a l l three  Fowler,  1972)  but  economic  The  such  correlation  In  group  the  people,  definition  i s t o be  p r o v i d e an  explanation  regard,  to the  use  view a  has  informal the  of  last  then  Moir,  at  found  1978;  other 1978;  related  times  to  t o have  McGee,  boundary  a  highly  If  an  1977;  the  should  not  and two  the  i n the  search  is  to provide a to  sector. twenty  paradigm. for  boundary  been a p r o b l e m  identify After  a  some  sectors.  In  this  s i n c e the  of  should  to  s y s t e m s he  has  of  as  beginning  be  the  here,  the  some  of  formal  debate.  approach  definitions  to  because  i n f o r m a l and of  to  identified  in  t h e more s t a b l e c h a r a c t e r i s t i c s the  an  I t i s perhaps b e t t e r  the  definition,  Referring  physical limit  definition  between  reviewing  years,  at  conceived  system boundary  of c o n t r o l l i n g  indirectly  yet a r r i v e  in s o c i a l be  heterogenous  or  (1968) i s i m p o r t a n t . boundaries  i n so many  all-encompassing  directly  diversity  between  Polyani  been d e f i n e d  of  i t must  for this  defining  precise  In o r d e r research  been  Das,  activities.  found  Instead,  concept  finding sector  1981;  membrane w h i c h d e f i n e s some s o r t  system.  this  and  work of  t h a t the  enveloping  and  1984;  composed  distinguish  problems  the  Friedmann  a p r e f e r r e d employment  times  i n f o r m a l s e c t o r has  i t a p p e a r s t o be  boundary  at  surplus labour  (Richardson,  of  by  t o be  1978;  1976).  fact,  ways t h a t  the  (Moser,  (Mazumdar,  i n f o r m a l s e c t o r has  Sethuraman,  stated  a l s o found systems  rural-urban migration,  the  unemployed  1978).  5.  no  the  provided  t h e more s t a b l e o r  this of  the over  dominant  111  characteristics are: Firstly, informal mostly  sector  small  instance, barter  of  repair  services  of these  much l a r g e r  activity from  alone  the  activity  in  the  socialist  small-scale  sector  or  nations  to  For  capitalist  (Mattera,  1985;  However,  the  i n some c a s e s ,  work.  The s i z e  distinguish  the  1977),  moonlighting  operations.  operations,  because  activity.  Western  1982)  the  that i s  (McGee and Yeung,  such as i n sub-contracted  formal  latter  the  may  of the informal  has s m a l l  scale  as w e l l .  distinguished capital  1.  in  systems  activity  i n the  1982; T a n z i ,  i s not s u f f i c i e n t  Secondly,  be  services  1982) a r e a l l s m a l l - s c a l e  organisation be  i n T h i r d World c i t i e s  professional  economic  to include  i n t e r m s o f numbers engaged  (Simon a n d W i t t e ,  Grossman,  i n a l l three  h a s been p o r t r a y e d  hawkers  economies of  i t appears that  activities from t h e i r  input  large.  formal  i n t o the informal  C a p i t a l input  A lack  in  of c a p i t a l ,  the  informal  sector  sector,  counterparts  activities  can  be  by t h e l o w e r  although p r o f i t s  a p p e a r s t o be r e l a t i v e l y  as i s the case  f o r t h e poor  the  is  small  may  due t o :  i n the  Third  World. 2.  By  choice,  capital seasonal 3.  would  be  activity  unprofitable,  when t h e a c t i v i t y  t y p e s of economies because  organise  temporary (eg.  and g r e a t e r  hawkers  selling  produce).  By c h o i c e ,  three  in  input  when  and  socialist  disguise countries).  is illegal. small  from d e t e c t i o n There  are  This  e x i s t s i n the  enterprises  are easier to  (eg.  repair  some  small  exceptions  stalls  in  this  1 1 2  category. capital  Illegal  input  i n t o the  Thirdly, distinguised legal  informal  from t h e  sector  the  minimum  the  sector  activities  the  levels,  dispute  labour  or  few  other  of  goods.  activity  is  often  it  can  be  characteristics  sector,  such  profits  gained,  so  on,  as  degree  of  some  governing control  of  working  proper to by  unable  Third the  the  quantity  are  i s merely a permit  are  and  level  s c a l e of  subject  the  on  the  small  common but  to other  labour the  same  to  take pay  World  to  nations  government  but  t o work, t h e r e  very  same c h a r a c t e r i s t i c s , in petty  above d i s c u s s i o n attributed  of  a  great  hand,  exceptions that  to  technology  operation,  capital  more  stable  the  previously  are  more  be  over appropriate  l i c e n s e d by  seen by  the  the  characteristics, activity,  In  can  in are  benefits.  Thus, the  of  quality  licensing  regulations  But,  recourse  instances,  high  violate  o v e r t i m e pay.  legal  such  often  payment  activities  informal  a  government  appropriate  token, p a r t i c i p a n t s in informal cases  the  of  enforcement  and  by  degree  i n c l u d e q u a l i t y and  sold,  in  has  activities  activities  the  enforcement of  wage  instance,  f e d e r a l r u l e s and  These  merchandise and  and  Informal  p r o v i n c i a l or  conditions by  formal  received  economic a c t i v i t y . of  for  activity.  followed.  municipal,  peddling,  i t appears that  protection  regulation  drug  type  input  are  either  c a p i t a l i s m , are  of  labour  the  small informal  level used  a l s o present  of and  Some  scale  of  activity  Furthermore, highly  of  informal  variations.  i n t o the  also exist.  the  used, the  many  such as  t h a t most  these  variable i n the  or  formal  113  sector  activities.  characteristics It  This  therefore,  economy a r e on a c o n t i n u u m  low,  profit  i t difficult  two  sectors.  do  not  overlap  form  by P o l y a n i  informal  activity  more  the  (1968), by  common  profits.  a precise  i n t h e urban  large  of  to small,  technology  over  labour  states,  "systems  b u t commonly  complex  of  functional from t h e  and  regulation  and  of  because  of  the lack  working  i n the informal  but  conditions  As a r e s u l t o f t h i s ,  the informal  may n o t be  the a c t i v i t i e s  of  activities  at  the other  there  informal  i s likely  sector  sector  exclusive more  i n the s e c t o r . formal  technology or larger  where a t one e n d l i e t h e f o r m a l end t h e  or  sector.  they a r e r e l a t i v e l y  such as t h e use o f h i g h  the  of l e g a l  c e r t a i n c h a r a c t e r i s t i c s a r e more common t o t h e  activities  This  b o u n d a r y between t h e  hierarchy  government,  characteristics  sector  to  perhaps the c o n t r o l l i n g paradigm  i s the lack  the  the  'nested h i e r a r c h i e s ' .  formal  t h e s e c a n be u s e d t o d e f i n e  sector  level  such as the s c a l e of o p e r a t i o n ,  informal  Similarly  from  exceedingly  is  o f goods a n d s e r v i c e s  activities  common  form  this  f o r disputes  The  to  to  and  described  quality  i n scale  (1971, pp 191)  simple  use  However, what d o e s d i s t i n g u i s h t h e i n f o r m a l  sector,  recourse  the a c t i v i t i e s  (1971) c a l l s  a  to  boundary.  a high  to identify  i n many ways  formal  ranging  However, a s Dunn  always  patterns".  that  t o low, u s i n g  c r e a t i n g what Dunn  makes  i t difficult  t o a r r i v e a t an e x a c t  appears,  from h i g h  makes  t o be a c o n t i n u u m sector  activities  activities, more  easily  identifiable  by t h e d o m i n a n t c h a r a c t e r i s t i c s , a n d i n between an  intermediate  zone  where  the  activities  cannot  be  easily  11 4  identified  as  government to  those An  regulations  involved  because  these  transaction  wage l a w s . operation in  In  the scale  control  recourse  available  an  a r e t h e common  small sector sector  federal  laws  maintenance  of  Furthermore,  if  by t h e minimum  similar  small  scale  such a s t h e "dhabas" o r t e a s t a l l s  a b i d e by g o v e r n m e n t  regulation  n o r be  system.  sector  identified  and  goods,  a  may be  of the formal  purposes e t c .  sector,  labour  neither  of  corner  informal  i t w o u l d be p r o t e c t e d  informal  by t h e l e g a l  on  degree of  of operation  the a l t e r n a t i v e a n a l y s i s , therefore,  features  the  "family-owned  provincial  for taxation  family  would  informal  based  by  are a c t u a l l y a part  quality  the  the  common, r e s e m b l i n g  h a d been u s e d  using  protected  but  While  stores  to  In  India,  the  situation i s  labour  records  labour  except  and t h e l e g a l  t h e y a b i d e by m u n i c i p a l ,  respect  hired  followed  i n Vancouver.  activity,  informal  i n the a c t i v i t y .  use of f a m i l y  with  or  example o f t h i s  stores" and  formal  is  proposed,  a r e not e x c l u s i v e features,  government  and t h a t  regulation  a  redefinition  keeping  in  to  informal  the  t h e boundary  and  legal  of  mind t h a t t h e sector,  i s a t h i n one  protection  of the  activity. To  begin with  capitalist the  sector  sector  capitalist) sector petty  are  the informal  not because p e t t y  ( i nfact but  formal  because  mostly  capitalist  sector  activities  small  sector  sector  scale  i s redefined  as the petty  capitalism  is  activities  c a n a l s o be p e t t y  in  the  capitalist  c a n be d e s c r i b e d a s :  exclusive  petty  to  capitalist  enterprises.  This  11 5  Small scale c a p i t a l i s t e n t e r p r i s e s , unregulated by government laws on q u a l i t y and q u a n t i t y o f goods s o l d , t h e wages p a i d and the working c o n d i t i o n s p r o v i d e d . It is a subordinate market economy that c o - e x i s t s with any type of dominant market economy. The c o - e x i s t e n c e of t h e two sectors i s mostly an interactive one, and this interaction can sometimes be exploitative. It is a market form of exchange that is comparable t o the dominant market e c o n o m i e s and between w h i c h the relationship is symbiotic. Both labour, capital and resources flow between the two s e c t o r s . However b e c a u s e t h e market c o n d i t i o n s i n the p e t t y c a p i t a l i s t s e c t o r i s a response to the market conditions in t h e d o m i n a n t economy, t h e p e t t y c a p i t a l i s t s e c t o r i s put i n the s u b o r d i n a t e p o s i t i o n . That is, the s u b o r d i n a t e s e c t o r responds to the f l u c t u a t i o n s i n the l e v e l o f p r o d u c t i o n and l a b o u r f o r c e demand i n t h e d o m i n a n t s e c t o r and this makes the subordinate s e c t o r u n s t a b l e and unorganised. T r a n s a c t i o n s with c l i e n t s are i n f o r m a l l y set and interactions are p e r s o n a l . 1 5  1 6  1 7  In  the  sector'  balance  will  connection  be with  of  used the  'informal  sector' w i l l  work.  this  stage  not  all  At  analysis  However, a s d e t a i l s logic the  behind details  definition  this chapter, to  identify  alternative be  in  used the  aspects of  can differs  the  this  will  be p r e s e n t e d other  'petty  capitalist  informal  analysis,  presentation  the a n a l y s i s  from  term  in connection  of  this definition  the  sector  while  the  in term  with a l l preceeding of  the  definition  alternative  will  be  clear.  u n f o l d , i t i s hoped t h a t  become a p p a r e n t .  i t i s necessary definitions  But,  before  t o show how of  the  the  this  informal  sector.  1 5  1 6  1 7  A c c o r d i n g t o D. H a r v e y 1973, a m a r k e t economy i s a system of exchange that occurs through the operation of p r i c e f i x i n g markets. In t h e d o m i n a n t economy t h e p r i c e f i x i n g m a r k e t i s s u p p o r t e d by specific legal and political institutions, while in the s u b o r d i n a t e economy i t i s n o t . A l t h o u g h t h i s idea i s i n d e p e n d e n t l y c o n c e i v e d , i t i s found t h a t P o r t e s , 1978, has a p p l i e d t h e same term to the relationship between the petty commodity p r o d u c t i o n s e c t o r and t h e f o r m a l sector.  1 16  Firstly, not  the  the  same  as  International in  the  seventies  by  I.L.O.  sustaining hand, group.  In  employed the who  is  the  market  list  poor  petty  employed  be  profit  composition  of  from  alternative  petty  in  in  complements  the  complements thrives in a  any  on  sector  why  petty  the to  the  that  the  sector  can  be  Thus,  depending and  can  this  what  do  so  can  I.L.O.  depends  affect  the the  sector.  approach,  capitalist  interactively  on  their  influence  capitalist  petty  other  sector.  they w i l l  Poverty  self-  the  group  capitalist and  the  p a r t i c u l a r income  paying  in  formal  Pendakur,  capitalist  and  a n a l y s i s proposes  1976;  income  economy  -contrast  the  supported  low  conditions. an  by  is  widely  sector,  any  petty  How  activities  Furthermore,  i t and  making or  are.  p r e v a i l i n g market conditions  of  that  a c o r r e l a t i o n with  i n the  f o r employment  conceived  sector,  i n o r consume f r o m t h e  here,  of c h a r a c t e r i s t i c s p r e s e n t e d  capitalist  individuals  can  defined  ( 1 9 7 2 ) , and  i s independent The  as  Konigsberger,  The  a  imply  fact,  activities  motives on  not  1978;  sector  sector  Organisation  1974).  but  manner.  does  informal  describe  sector  capitalist  (Popola,  Sethuraman,  formal  the  Labour  1975; the  petty  the  sector  rather  than  independantly. Secondly,  the  petty  definition  of  traditional,  peasant-type  mode  Bettleheim,  1972).  McGee, to the sector  1979;  the  capitalist informal  ' e v o l u t i o n i s t ' approach (Kahn,  1980),  i.e.  sector  sector of  to the  differs  as  a  production  The  latter  the  c r e a t i o n of  informal  from  the  precapitalist, (Lister,  view can  sector  the  be  1980; related  informal  i s seen as  a  11 7  transitional an  essentially In  is  feature  one way  contrast,  the  sector.  sector,  to  forth  not  sector  may  urban  economy a c c o r d i n g  that  the  petty  because  i t s presence sector  in  will  i s , while  an  e c o n o m i e s even processes  Mingione,  1985; R i c h a r d s o n ,  process  of  development  sector  1984;  capitalist  sectors  a view  are  Kahn's  (1980)  suggestion  Thirdly,  the petty  the formal  i s ample  and  Western  commodity p r o d u c t i o n  with  the formal  This  sector  sector'  distinctly  sector  the  sector  the  There  1984).  informal  capitalist  in  1985; M a t t e r a ,  i s not u n l i k e  that  means  economies,  Yu,  (1968).  i n an  specific  forces  1985;  The  same  n o t a t two d i f f e r e n t  that  (1968) and S t a v e n h a g e n  i n areas that  to a  socialist  of  petty  This  Ping  part  and  Peattie  default"  market  (Aslund,  i n a back  and d e c r e a s e  not t i e d  in  will  The  of the T h i r d World  of development  development, process,  sector  conditions. is  sector  the formal  though these a r e undergoing  different  both  in  co-exists  sector  o f t h e t y p e o f economy.  informal  of the p e t t y  into  process.  increase  has more t o do w i t h  capitalist  that  way  sector  such as t h a t  of  indicates  one  i t  capitalist  i n the formal  t o t h e market  regardless  capitalist  not evolve  repeatedly  evidence  existence  a  capitalist  c o u r s e of development  'petty  That  market c o n d i t i o n s  process,  capitalist  formal  i t  the petty  The f l u c t u a t i o n s i n t h e p e t t y  correspond and  that  in character.  formal  process  process.  i t i s argued  non-evolutionary  with  i n the T h i r d World development  co-  sector  historical stages  of a  that presented  i s also  similar  activities  exist  by to "by  finds unprofitable. i s n o t t h e same a s t h e  (Forbes,  1981; McGee,  1979;  118  Bromley  and  recent when  Gerry,  v i e w p r o p o s e d by scholars  World  was  that  always  an  profit-making,  concept  of a petty  define  the  L e B r u n and G e r r y ,  neo-marxists.  noticed  not  sometimes  under  1979;  the  the informal  informal  employment and  commodity  activities  This  'modern'  could  or the formal  definition sector  The  but  1977). was  n o t be s t r i c t l y  sector.  arose  sector  (Steel, sector  isa  i n the T h i r d  generating  production  that  1975), w h i c h  The  used  to  classified  petty  commodity  i  production  sector  capitalist  mode,  and  Gerry,  production profit  1975).  The  approach  is  that  may  shown, t h a t  the  informal  of  professional  nations  both. the  that  as w e l l  making Petty  making  sector  c r e a t i o n of  capitalist sector,  sector  nor  is  does i t  the presence of making  i n t h e economy.  Recent  studies  nations  activities  eg.  sector  either  exist  necessarily  upon t h e f o r m a l  only always  to  the  forces  in  or s e r v i c e s .  a n a l y s i s proposes that  conditions  1982).  or s e r v i c e s or  a demand f o r goods  market  World  includes  goods  of  the barter  1985; G r o s s m a n ,  respond t o market  dependent  part  i n some o f t h e T h i r d  capitalist  not  commodity  profit  providing  favourable  (LeBrun  and n o t t h e  but a l s o  petty  i s only  petty  explains  i n Western  the a l t e r n a t i v e  way  s e r v i c e s c a n be a l a r g e  u r b a n economy w h i c h c r e a t e  capitalist  the  1985; M i n g i o n e ,  activities  capitalist  i t only  present  (Mattera, the  with  production  services,  o f t h e dominant  by i t i n a d e p e n d e n t  problem  s e c t o r , not only  Furthermore,  the  be  profit  In c o n t r a s t , profit  t o l i e a t the margins  subordinated  o r i e n t e d commodity  services have  was s a i d  but serve  the  petty  sector for the  petty  the formal  exploited.  The  1 19  relationship sector flow  between t h e f o r m a l  i s mostly  symbiotic,  addition  the  petty  to the informal  presented  where l a b o u r ,  a third  sector  capitalist and f o r m a l called  sector  to include a c t i v i t i e s  formal  or i n f o r m a l  1977;  capitalist formal  all  other  not  only  capital  capitalist  and  resources  t o the s e c t o r .  of  system d e t e r m i n e s whether  There  economy  the a c t i v i t y  'intermediate',  1978;  boundary is  Nihan  et  sector  i s , therefore in  t o the state  this  on and  used, a r e but a l s o  a continuum of continuum  regulatory  i t belongs to the formal  the  based  activity  of technology  capitalist  but  i n the  between one  p r o t e c t i o n of the  the petty  have  the a l t e r n a t i v e petty  sector  such as l e v e l  within  urban  Some s c h o l a r s  n o t be c l a s s i f i e d  the  capitalist  characteristics,  relationship  capitalist  that  r e g u l a t i o n and l e g a l  i n the  could  In' c o n t r a s t ,  petty  variable  sectors.  i s not a sector i n  (Nihan and J o u r d a i n ,  1977).  the  sector  t h e 'modern', o r  that  approach maintains  exclusive  activities  sectors  Steel  and  government  not  and t h e p e t t y  back a n d f o r t h between t h e two s e c t o r s . Finally,  al,  sector  the  and l e g a l  or the  petty  sector.  1.2 F o r m a t i o n Of P e t t y  Capitalism  I n An U r b a n  Economy  "The p r i n c i p a l e r r o r o f many ' d u a l i s t s ' i s t h e i r p a r t i a l approach t o the study of the t h i r d world economy and s o c i e t y , f o c u s s i n g a l m o s t e x c l u s i v e l y on p r o d u c t i o n " ( S a n t o s , 1979, p . 2 6 ) .  Santos'  observation  i s important  i n the presentation  of the  1 20  argument  for  Santos, of  the  alternative  i t i s proposed  the issue  economy.  analysis.  here that  are  two  agreement  the production  i n the c r e a t i o n of the p e t t y  There  In  aspects  to  i s only  with  a  part  c a p i t a l i s m i n an u r b a n the  formation  of p e t t y  capitalism: 1.  The p r o d u c t i o n  distribution sector. the  whether  production  s e c t o r s h a s met  there  indicates  the labour  size  the  2.  The c o n s u m p t i o n  and  services that  pattern:  be  met  i n an u r b a n economy. by t h e f o r m a l  The s i z e  type  of  specific economy.  The  size  petty pattern This  such as p e t t y  sector  also  Some  of  this  and t h e r e f o r e  capitalism,  T h e s e two a s p e c t s ,  can  potentially  i n combination growth  an  of  with the  each petty  i n the T h i r d World, the Western c a p i t a l i s t  socialist  patterns.  sector  pattern  and  f o r goods  can i n d i c a t e the p o t e n t i a l f o r the  create  population  r e f e r s t o t y p e s o f demand  other  processes  from  force.  demand.  the  formal  therefore  this  as  spatial  and  meet  well  and  The p r o d u c t i o n  source,  sector  the  i n the formal  labour  can e x i s t  not  in i t .  of  alternative  capitalist  supply  i n d i c a t e s i f the supply  t h e demands  employed  of the unemployed  may  pattern  a r e any gaps  the  demand  refers to  o f t h e g o o d s and s e r v i c e s a v a i l a b l e f r o m t h e  This  formal  pattern:  economies.  variations 1 8  capitalist  activities  of production is  i n the production  of the petty  capitalist  perhaps  Different  will  the  reason  r e f e r s t o t h e numbers employed  development  and c o n s u m p t i o n sector  and  be c o n d i t i o n e d  and consumption why  as  in  the  the  by t h e  dominant  so many t y p e s o f  in petty  capitalism.  121  informal also  activities  between d i f f e r e n t  chapter  1.2.1  Demand  In  For Petty  the current  the formal  informal labour  by  types  of  within  s i m i l a r e c o n o m i e s , but  economies,  as  Capitalism:  The R o l e Of P r o d u c t i o n  sector  labour  sector. in  t h e o r i e s of the i n f o r m a l is  used  to  f o r c e and t h e r e f o r e This  equates  the informal  the  informal  sector  i.e.  the  (Moser,  labour  1984).  sector  present  an i n c o m p l e t e  production the  and consumption  p o t e n t i a l -demand  capitalism, of demands discussed In and  understanding  sector.  force  can  patterns  to  play  this  a role  to  capitalism.  Both  of  the  approach served (Kahn,  approaches form t h e  a n a l y s i s , both i n the  f o r t h e goods a n d s e r v i c e s some e s t i m a t e  the  of the  be  both  these  creation  from  of the s i z e  petty  and t y p e s  aspects  are  below. a p a r t i c u l a r economy, t h e c o m b i n a t i o n  consumption  pattern  the  i s such t h a t  population  not  of the  a l l the  demands  of  sector.  The e q u i l i b r i u m between demand a n d s u p p l y  a  of  of the f a c t o r s that  According  and a l s o p r o v i d e from p e t t y  size  the e x p l o i t a t i o n approach  The a l t e r n a t i v e a n a l y s i s s u g g e s t s t h a t  capitalist  production  Another  that  1980).  of  in  And  the p o t e n t i a l s i z e  the surplus  sector  sector,  identify  t o l o c a t e t h e needs of t h e f o r m a l  petty  discussed  Patterns  unemployed  is  not only  three.  Consumption  in  exist  a r e met by p r o d u c t i o n  production consumption  i n the  formal  o f a good  in  homogenous m a r k e t c a n be d e t e r m i n e d by p r i c e , b u t n o t a l l c a n  afford  the p r i c e .  There  is  therefore  a  demand  for  cheaper  1 22  6 - The p o t e n t i a l demand f o r g o o d s a n d from the p e t t y c a p i t a l i s t s e c t o r  Figure  services  QUANTITY  and  alternatives the  f o r that  between providing  Demand (D) and S u p p l y (S^) i s based on p r i c e  B:  E q u i l i b r i u m p o i n t between demand (D) and Supply (S^) i s h i g h e r . This- o c c u r s when the government r e s t r i c t s t h e supply o f goods. C o s t s o f p r o d u c t i o n r i s e and o n l y the r i c h can a f f o r d t h e r e s t r i c t e d goods ( f o r example, smuggled items)  C : 2  below  production  demand  A:  supply that  of  equilibrium  I n d i c a t e s the demands t h a t a r e not f u l f i l l e d by the market. Cheaper s u b s t i t u t e s a r e required. *  the market p r i c e a good  good may  (Figure  i s restricted  exist  at  a  6).  Furthermore,i f  by t h e g o v e r n m e n t , t h e  higher  price  equilibrium  a n d demand, b e c a u s e e c o n o m i c a n d s o c i a l restricted  good  will  be  higher  and  c o s t s of only  the  1 23  richer of  population  supply  can a f f o r d  f o r cheaper  i t .  sector.  supply  i n balance  The  imbalance  because to  totally will  unsound, a n d when  curb  in  i t .  their  prices  in such  farming  the  fields  Overproduction when  reduce  their  While uncommon,  a  activities)  fallow  to  demand  suddenly  as  in  the  demands  to  changes  such  purchasing  a  and i t i s not be  often  are paid to in  production  the  issue,  keep  market. i t  may  because buyers .decide t o  in relation find  a  ever  ,  always  as  if  desirable to  is do  deemed so.  result  to  these do  of  t a s t e , and  It is difficult  limit  economically, In  reasons.  for  changes as so  as  the  some o f t h e demands a r e  s e c t o r may d e l i b e r a t e l y i t  a  i n consumer  desirable  Secondly,  equilibrium  for several  changing  changes  t o t h e demand i s  perfect  or composition.  transient.  that the formal supply  this  steps a r e taken t o  s e c t o r p r o d u c t i o n t o keep p a c e w i t h  may  returns  economically  (and  glut  and p r o d u c t i o n  power,  in population size  politically  arises  plunges  uncommon  consumer demands a r e  changes  a  o f a good  Firstly,  occur  is  i n t h e U.S.A.,  prevent  consumer  they  lower  purchases.  i t is  formal  sector  deliberate  i s not n e c e s s a r i l y  overproduction  the  but s h o r t l i v e d .  and c o n s e q u e n t l y  situation  between  changes  slim  the s i d e of overproduction  formal  For i n s t a n c e , farmers  happen  on  be  t h e c h a n c e s o f demand and  i s not o n l y  be  good c a n  i n the production s e c t o r .  Overproduction  happens  Finally,  rarely  i t l e a d s t o lower  investment  i n s t a n c e s the source  s u b s t i t u t e s or the r e s t r i c t e d  the p e t t y c a p i t a l i s t being  In both  this  or  control  socially  category  one  or may  124  include state  c e r t a i n luxury  (Grossman,  enough  1980;  may  formal  of  such These  or  even a t a h i g h demand  there  will  urban p o p u l a t i o n be  two t y p e s  are  because  that  of  there  goods  will  and  demands  a personal  be  of  the  the  the petty  tied  to the purchasing  are  created  formal  not  a  constitute  sector.  The s i z e  is  petty  therefore capitalist  particular  capitalist  types  sector,  of  unless  o f t h e t y p e s o f demand t h a t t h e  petty  E s s e n t i a l l y , there can capitalist  Demands  in  this  and  population.  category  are strongly  when t h e p r i c e s o f t h e goods a n d s e r v i c e s  from the  are  too  become  The  power o f t h e p e o p l e .  sector  demands  choice.  inelastic.  cheaper  Cost-based  sector  alternatives  the  are left  for  t h e s e demands  upon t h e s e c t o r .  demands;  from  f o r a good o r s e r v i c e  capitalist  explain  o f demands from t h e  Cost-based  (Kahn,  discrepancy  services  may  choice  capacity  understanding  places  large  the c o s t s of  be a  demand, i f i t c a n be a s s e s s e d ,  not  not  a r e some demands t h a t  In e i t h e r c a s e ,  will  socialist  insufficient  t h e s e c a n be r e l a t e d t o t h e income l e v e l s o f t h e 1.  in a  1976).  unfulfilled  form w i t h i n  i s a further  demands  production  there  production  But, t h i s  activities  some  p o t e n t i a l of t h e p e t t y  potential  sector.  that  price.  are r e s t r i c t e d  and the b e n e f i t s  likely  reflect  the u n f u l f i l l e d  the  sector  f o r and s u p p l y  unfulfilled.  the  i s quite  sector  substitutes  formal  1978; B e i n e f i e l d ,  i t  t h e demand  Finally,  be t o o h i g h  Roberts, Thus,  in  1982).  t o warrant  production  items that  high  a necessity  Cost-based poor  for  for this  demands  belong  the  are  to this  consumer.  Cheaper  group of i n d i v i d u a l s , ,  therefore,  c a t e g o r y and t h e i r  mostly cost-  125  based  demands from  the e s s e n t i a l  the p e t t y c a p i t a l i s t  needs o f f o o d a n d c l o t h i n g .  in  India  but  once t h e s e needs a r e s u p p l i e d ,  able  need a c h e a p s o u r c e  to afford This  fancier  link  to essential  buy  items  are  essential as  capitalist  in  indicated  in  quickly  results over  that  demands'. cater  and  As  While  and  In  'static'  The l a b o u r e n g a g e d  establishes size  a  of  commodities  over  labour  unless  to  for  maintains  a  period  enter  this  into  reason  decreases  suddenly  demands.  In a s e n s e ,  therefore,  the  the  and t h e r e b y  more  the p e t t y be  rigid  unless there i s a  the  population  are  steady  supply  of time.  It  poverty-bound  activities  is  economies  fixed  difficult capitalism  increases  increases or decreases  to  in  o f t h e same  petty  size  as  labour  often  that  or  cost-based  t h e c o s t - b a s e d demands a r e p o v e r t y common  both  result,  petty capitalism  population  poor  therefore  in petty capitalist  an e x t e n d e d  some  fixed  t h e e x t e n t o f c o s t - b a s e d demands o f a  and  be  are  growth p o t e n t i a l ,  7.  to to  the next,  t o t h e s e demands w i l l  level  clothing,  in relatively  time.  survival  o r t h e income  figure  population  and,  needs,  for  vegetables.  a n d t h e demand f o r i t s g o o d s a n d s e r v i c e s  equilibrium.  for  size  i n the s i z e  supply  or expensive  their  cost-based  activities  'static'  change  they a r e not l i k e l y  unchanging  to  mainly  F o r example, t h e poor  c h e a p v e g e t a b l e s one day a n d c h e a p f i s h  classified  or  are  of v e g e t a b l e s and b a s i c  clothing  c o s t - b a s e d demands, i . e . may  sector  related  are  as yet  developing. 2. that  O p t i o n a l demands: O p t i o n a l demands are  non-essential to the persons  are  demands  survival.  for  goods  T h e s e demands  1 26  are by  made f r o m t h e p e t t y c a p i t a l i s t t h e consumer.  the  formal  preference can  i s , t h e consumer c o u l d  sector, for similar  of  choice  have consumed  from  goods o r s u b s t i t u t e s , b u t h a s a This  choice  be b a s e d on c o s t , q u a l i t y , u n i q u e n e s s o r c o n v e n i e n c e .  I ti s  important above can not  That  s e c t o r as a matter  f o r an a l t e r n a t i v e s o u r c e  to d i s t i n g u i s h cost-based  from  cheap  Optional  vegetables  purchased  by  demands good b u t  s e c t o r were u n a f f o r d a b l e .  from  the  petty  capitalist  an e s s e n t i a l need o f t h e p o o r b u t t h e  vegetable  discussed  f o r a c e r t a i n p r i c e of petty c a p i t a l i s t  because p r i c e s i n the formal  fulfill  demands t h a t were  t h e o p t i o n a l demands b a s e d on c o s t .  be c r e a t e d  example,  of production.  the  rich  with  a  is  only  very  For sector  same  a way o f  cheap  reducing  expenditure. Optional elastic  because  income a n d fashions, well  demands, choices  purchasing fads,  indicate  capitalist  power,  sector  in  "copy  consumer  one  by  example,  in  provided  with  by  petty c a p i t a l i s t  the  early  a cheaper  are  highly  the items  and the next year  from t h e f o r m a l have  the  of  advertising,  such as i n c r e a s i n g savings  For instance,  year,  tastes  c a t " products the  influence  f o r hand made p o t t e r y  manufactured p o r c e l a i n items fads  the  choices  decisions.  a preference  exceptions,  c a n c h a n g e c o n s t a n t l y due t o c h a n g i n g  financial  as i r r a t i o n a l  few  consumer  prefer  sector.  seventies,  capitalist  t h e mass  In  " I n t i m a c y " was p a c k a g e d t o r e s e m b l e  India, o f many  sector.  t h e lower middle c l a s s ,  v e r s i o n of Revlon's perfume, sector.  For was  "Intimate"  T h i s perfume c a l l e d the authentic  can  from t h e p e t t y  lead to the production petty  as  good.  similarly But, as  127  the  fad disappeared,  capitalist must of  activities  respond great  force  that  "Intimacy".  Petty  a r e b a s e d on s u c h o p t i o n a l  demands  t o these changes and t h i s  fluctuations  in  of  makes t h e s e c t o r  type of a c t i v i t y  capable  and s i z e o f  labour  ( Figure 7). Optional  any  so d i d t h e b o t t l e s  income  have v e r y cost  demands c a n come f r o m group but i t i s l o g i c a l  few c h o i c e s .  based  capitalist  the population  Thus  the  is a reflection  to  the poor can a f f o r d t o  S i m i l a r l y , t h e poor  demands. sector  that  belonging  tend  to  have  more  t y p e o f demand f r o m t h e p e t t y o f t h e income  levels  of  the  population. It  is  difficult  f o r a government  demands made f r o m t h e p e t t y whether merely met  they  are  forces by  capitalist  optional  or c o s t  petty  capitalist  control  t h e demand  provides  for i t .  Failing  this,  in  petty  when government strict  the  disappearing The  policies informal  (Cai,  sector.  sector  the  went  (1979).  But  presented  here.  of  care  the  unless  i t  develop  i t was f o u n d  informal  that  sector  underground,  be  were  instead  of  1980).  work i n t h i s  his  instance,  babysitting will  in  the  has had l i m i t e d c o n s i d e r a t i o n  significant  For  In C h i n a ,  regarding  irrespective  C o n t r o l l i n g demands  for child  illegal  s t u d y o f consumer demands  capitalism most  capitalist  c o n t r o l the  i n t h e economy, o r t o  sector.  government cannot  the  sector,  based.  t h e demand t o l i e l a t e n t  the  to directly  work  is  regard  quite  creation  i n the l i t e r a t u r e .  i s perhaps that  different  Santos, d i s t i n g u i s h e s  of  from  petty The  of Santos the  ideas  two t y p e s o f c o n s u m p t i o n :  1 28  Figure  7 - The e f f e c t o f t h e t y p e s o f demand upon e n t r y o f labour i n t o the petty c a p i t a l i s t sector  LABOUR SUPPLY IN PETTY CAPITALISM  ENTRY OF LABOUR  ENTRY OF LABOUR-  TIME DEMANDS A.  OPTIONAL TIME  DEMANDS FROM  LABOUR SUPPLY IN PETTY CAPITALISM  ENTRY  OF  A FIXED  POPULATION,  OVER  LABOUR  TIME DEMANDS B.  COST TIME  NOTE:  the  so t h a t  POPULATION,  lower  OVER  CHANGES IN POPULATION S I Z E WILL DISTURB THE E Q U I L I BRIUM OF LABOUR SUPPLY AND DEMAND IN BOTH C A S E S . HOWEVER, COST BASED DEMANDS AND LABOUR WILL SOON R E - E S T A B L I S H A BALANCE  the higher  t h e 'modern t y p e '  modernisation the  DEMANDS FROM A F I X E D  modern a n d t h e non-modern t y p e .  groups of  BASED  He r e l a t e s t h e s e  income g r o u p s h a v e a l a r g e r  consumption,  and t e c h n o l o g i c a l  reflecting progress  income g r o u p s have a l a r g e r  the  t o income proportion  influence  of  i n t h e T h i r d W o r l d and  proportion  of  the  non-  129  modern t y p e  consumption.  Santos' arguments  study of  application. which  the  equates  between  informal  sector  Finally,  equating  sector  nations.  the  Other less  Third  model.  demands  and consumption ideas  as "that  supply  these  and  forces create  large  distinguish presented  towns  between in  the  analysis.  with the  in  informal  Western c a p i t a l i s t and  production  the  that  in  years informal  a r e n o t encompassed  give  rise  to  holds  modern-type  on t h e c o n s u m p t i o n (1981) d e f i n e d to labour,  aspect are  the informal  whether o r n o t forces  of  Kundu  and  i t  demand  B u t , he d o e s n o t e x p l a i n sector.  by  sector.  t o "autonomous" demands t h a t  types  the  recent  Squire  informal  as a f o r c e  of  the a l t e r n a t i v e a n a l y s i s  can  1981, p . 8 1 ) . the  not  indications in  three,  i n which t h e r e t u r n  (1984) make r e f e r e n c e s in  and  i n the l i t e r a t u r e  (Squire,  does  s e r v i c e s , o r smuggled c l o t h e s a n d  i n t h e form o f wages i s d e t e r m i n e d by t h e  and  sector  alternative  i n the informal  Santos'.  consumption  o f 'modern' goods and s e r v i c e s  In c o n t r a s t ,  optional  universal  type'  informal  the  T h e r e a r e many  d e t a i l e d than  sector  by  World  i n chapter  have  but the  a n d c o s t - b a s e d demands  consumption  consumption  described  production  be  the  modern-type  that  'non-modern the  of p r o f e s s i o n a l  socialist  Santos  analysis  non-modern t y p e c o n s u m p t i o n  in  the  with  identified  watches,  sector,  the  the o p t i o n a l  does n o t c o v e r  such as b a r t e r  of  alternative  Furthermore,  Santos  distinguish  i s l i m i t e d t o the T h i r d World context  how  Mathur  c a n be f o u n d  t o a t t r a c t m i g r a n t s b u t t h e y do n o t of  demand  in  alternative analysis.  the  large  E l Shakhs  town  as  (1984) d o e s  130  differentiate needs  from  The  identification  employed  path  and  the  labour  the  two  petty  i n the  i n the  1.2.2  S u p p l y Of of  terms o f  potential size  the  i n d i c a t e the  sector.  These can,  optional  to  demands  the  The  or  types of  numbers t h a t  a c t u a l numbers  demand will  a v a i l a b l e to p a r t i c i p a t e i n  Figure  8  i n d i c t e s the of  three  petty  categories  demand t h a t must c o m b i n e  sector. the  be  employed,  labour  categories  Although  informal  sector  alternative analysis  Labour For the  the  to  aspect  is a well brings  of  trodden  additional  the  informal  p e r s o n s employed,  the  size  economies  Grazia,  (De  indicates  force.  or  does  ie. may  view  1984; the  the  work  in  of  Richardson, formal  these  not  sector  suggests.  the  1984;  not  However,  Some  in of  capitalist the  i n the  it is  employ  that,  ranges  Mazumdar,  whether  participate  petty  indicate  sector  economies t h e r e  unemployed. the  sector  l e s s e r numbers  T h i r d World, does  In a l l o f  that  production,  T h i r d W o r l d and  that  Western c a p i t a l i s t  population  Capitalism  of  i n the  population  Petty  studies  20-60 p e r c e n t  existing  and  essential  bear.  Most  labour  of  capitalist  debate,  to  ones.  cost-based  c r e a t i o n of  ideas  This  non-essential  b a s e d on  to the  in this  activities.  labour  activities  here.  depend a l s o on  create  on  c a p i t a l i s m does not  capitalist  in  equated  proposed  actually  of  be  sector  based  are  from p e t t y  will  informal  those  some e x t e n t , that  the  from other  1975).  socialist, the  total  i s , therefore, formal this  sector  unemployed  sector,  alternative  a  as  the  analysis  131  proposes that contributes categories  this to  of  i s not  the  the  petty  labour  that  only  category  capitalist can  of  sector.  potentially  labour  that  There a r e three engage  in  petty  capitalism. 1.  Unemployed  by c o m p u l s i o n :  Individuals formal it.  sector This  categoried poverty, (race, and  can  be  production  inability  lack  caste,  (children  sector  a l i e n a t e d , employment  f o r employment  choice  circumstances  but  change  disadvantages, relatively  the labour  easy  to  employment  reserved  employment petty  is  as  force  a  These  include  social  stigmas  mental  handicaps,  from p a r t i c i p a t i n g  capitalist  by  from  this  But  sector.  capitalist  affect  in  the  socioi n the  20%  groups.  completely  this  who  i s not  Unless  the  socio-economic  circumstances  India  those  sector  category  The s u p p l y  from  For  compulsion.  f o r low c a s t e  sector,  choice:  sector.  to  p e r s o n s a r e no l o n g e r  i n the formal  Unemployed  rather  instance,  ident i f i a b l e . 2.  skills,  to  that are  Not a l l p e r s o n s w i t h  i n that  identify.  For  low c a s t e  access  factors  p h y s i c a l and  i n the petty  so  considerably.  the  many  i n the  b u t t h e s e d i s a d v a n t a g e s do make i t d i f f i c u l t f o r  are  of  to  of appropriate  are alienated  t o compete  act  participation  disadvantages.  elderly).  them  an  due  creed),  and  economic d i s a d v a n t a g e s formal  be  here as socio-economic  religion,  from  when t h e y a r e u n a b l e t o g a i n  can  illiteracy,  age  prevented  should  be  can change  of  government  This  means t h a t  disadvantaged f o r  of labour category  f o r the is  easily  1 32  Some i n d i v i d u a l s may v o l u n t a r i l y in  the formal  it  i n d i c a t e s an e x e r c i s e o f c h o i c e .  that so  the  sector.  This  even  though  may p r e f e r abstain  from  social,  claim  do  If  that  sector those  of p e r s o n a l choice  satisfaction. criminal  to  alternative  in  the  they  must  less  in  not an  the  formal  voluntarily  high,  3.  The o p p o r t u n i s t s :  sector has  due t o  some  people  " t o break the been  made  f o r petty the  returns  to  greater  sector, or other no  sense  i t provided  to  forms  make  a  some n o n - m o n e t a r y  may be f a r r a n g i n g ,  This category  i n the poorer  are  t o make a  p a r t i c i p a t e i n the petty  I t w o u l d make  in  individual  sector  seek e i t h e r m o n e t a r y  Thus t h e a c t i v i t i e s  employment  required  sector.  income u n l e s s  of labour  source,  a n d some may a b s t a i n  category,  making.  therefore,  Some may  formal  a v a i l a b l e from t h e formal  w o u l d be uncommon  is  For instance,  statement  in this  pottery  source  sector  instances, a choice  satisfaction.  t o earn  implies,  or savings.  i n the formal  individuals  capitalist  steady  work  In such  f r o m work  i s l i m i t e d but  F o r example,, i n N o r t h A m e r i c a ,  not  establishment".  than  or moral  or c h o i c e .  they  abstain  o f f assets  participation  a r e met from some o t h e r  i n the formal  participating  political  lethargy  This  i t may be a v a i l a b l e .  to l i v e  from  form o f unemployment,  n e c e s s i t i e s of l i v i n g  t h a t a c t i v e employment  abstain  from  the  does not p r o v i d e  c a p i t a l i s m because  a  i t can f i n d  formal  sector.  This  category  nations  where unemployment  rates  a n d income l e v e l s l o w .  Finally participate  there i n both  is  a  category  that  includes persons  s e c t o r s as a matter of choice  and  the  that main  133  motive Figure  is  to  increase  monetary  returns.  8 - The most l i k e l y r e l a t i o n s h i p s between t y p e s o f l a b o u r a n d t y p e s o f demand i n p e t t y c a p i t a l i s m  Petty  Capitalism  "ype o f Demand  Type o f , Labour 1.  Voluntary abstinence from formal sector employment  #  2.  Dual participation i n f o r m a l and informal sector  Opti onal : based on q u a l i t y , quantity, uniqueness or c o s t Cost b a s e d : based s o l e l y on p r i ce  Involuntarily a l i enated from formal sector employment  Most  people can p a r t i c i p a t e i n the formal in  petty  It  is  capitalism not  easy  participation underground work  (e.g.  sectors  However, b e c a u s e t h e  or  and  monitor  petty illegal.,  typing, can  i s not a n e c e s s i t y to  in  sector,  repair  work  this  A  relationship  t h e need  to  engage  and c a n c h a n g e o v e r  category  capitalism  likely  is  of workers often  time.  because  transient,  w o r k e r c a n engage i n one t y p e o f  services)  and p a r t i c i p a t e i n t h e  i n two d i f f e r e n t t y p e s o f work  two  i n t h e two  1 34  sectors. barter of  The  activities  can  be  labour  can  be  found  greatest  category  i s not  i n the  in  a  the  steady  three  combination,  to  engage  as  opposed  therefore  source  i s the  in petty  welfare  t o demand, i n t h e labour  can  be  sector  to  t h o s e who  so  that  there  employment  the  and  form.  third,  The  problems of  least  effective  1.2.3  Creation Both,  a  unemployed  by  opportunists,  can  seek  are  capitalist  sector  capitalist  activities  is available  labour  and  for  in  the  some form  of  for a source  of  activities  as  t h e y do  third  For  supply  employment  but  masks t h e  element,  governments.  provide  the  or  capitalism  capitalist  while  this  deal  approach  with  is  the  problem.  Capitalism demand  exist  Variations  tangible  d e s p a r a t e need  i t only  labour  capitalism.  i s the  more c o s t l y  is  separately  i t , second, p r o v i d e  petty  but  activities.  that  reduce the  no  the  category  from  supply  by  composed  supply,  compulsion,  must  present,  manipulated  labour,  potential a  capitalist  petty  is  method as  Petty  Labour  ways: f i r s t ,  two  surplus  b a s e d demands, and  labour  This  Labour  c r e a t i o n of  restrict  first  Of  of  capitalism.  c a p i t a l i s m in three  formal  for petty  through  economies  world.  p o t e n t i a l labour  example, government p o l i c i e s  they  s u c h as  t y p e s of  developed  What a l l t h e s e c a t e g o r i e s  petty  evasive,  of p r o f e s s i o n a l s e r v i c e s , o r m o o n l i g h t i n g .  perhaps  in  tax  composed  unemployed  i n an  economy  i n the  numbers  and are  the  the  o p t i o n a l and of  labour  by  f o r the  in  is  or  the  c r e a t i o n of in types  particular  cost-  that  choice,  employed  differences  c a u s e d by  of  petty  the  petty  of  petty  combinations  135  of  labour  most  supply  likely  turn  is  market  r e l a t i o n s h i p s between l a b o u r  the  forces  capitalist Figure  a n d consumer demand.  result  o f market f o r c e s  f l u c t u a t e i n the formal  Figure and  8 i n d i c a t e s the  demand.  This  i n an economy.  sector,  so w i l l  in  Thus, as the  petty  sector. 9 - C o m b i n a t i o n s between t y p e s o f demand a n d t y p e s of labour i n the c r e a t i o n of p e t t y c a p i t a l i s m  TYPE  TYPE OF LABOUR PARTICIPATION IN PETTY CAPITALISM  OF DEMAND  OPTIONAL (FOR NON-ESSENTIALS)  COST-BASED (FOR ESSENTIALS)  The  different  capitalist, combinations  socialist of labour  BY CHOICE  BY COMPULSION  DYNAMIC  DYNAMIC  —  development  STATIC  patterns  in  t h e Western  and T h i r d World economies c r e a t e a n d consumer demands  in petty  different capitalism  1 36  (figure  9).  A  particular  combination  demands f r o m p e t t y  c a p i t a l i s m may  the  underdevelopment  economy  creation  of  but petty  capitalism.  underdevelopment  as  nations.  9  labour  Figure supply  essentially and  the  the  and  two  s e c t i o n on  the  static  influence  t y p e s of  demands.  of  the  clearer  the  in  capitalism  2. IN  has  is  more  creation  found  of  without  some  capitalism sectors;  socialist between  can  create  the  dynamic of  petty  been d i s c u s s e d  under  t o n o t e , however,  that  already  two  the  types  r e l a t e d to underdevelopment.  the  upon  petty  section  applied to  exists  and  of  for  combinations  these  patterns  following  order  the  i s necessary  consumer  necessary  capitalism  capitalist  labour  and  underdevelopment  not  petty  of  It  a n a l y s i s are  economies,  for  labour  capitalist  effect  development  consequently  alternative  of  is  that  petty  The  sector  in  Western  demand  upon e n t r y  reflect  Petty  indicates  static.  capitalism  in  of  to  market  capitalist where t h e  the  three  u n d e r s t a n d , the  The  forces sector  and  will  a r g u m e n t s of  dominant features  types of  be the of  petty  in. each.  APPLICATION OF  THE  ALTERNATIVE ANALYSIS TO  PETTY CAPITALISM  DIFFERENT ECONOMIES  2.1  Petty In  Capitalism  the  In W e s t e r n C a p i t a l i s t  Western c a p i t a l i s t  the  informal  than  the  sector  formal  uses  barter  as  1982;  Simon and  i s mostly  sector a  i n the  form of  Witte,  economies e v i d e n c e illegal numbers  transaction  1982).  Economies  Its size  eg.  tax  employed, (De is  suggests  evasion, and  Grazia,  smaller typically  1984;  debatable,  that  Tanzi, because  1 37  estimates such  as  have  garage  alternative  tended sales,  can  capitalism available,  choice,  and  common will  a  exist  which  the  modifies the  usually  who  the by  have not takes  therefore a  no  now  welfare  the  labour demand  the  the  pool  form  capable  people  and  potential  of b e i n g  payments  for  impacts  the  upon b o t h  that  capitalism  goods  could  policies  of  have within  temporarily  those  the  for and and out  d i s a b l e d as  for  the  purchasing  western  a  elderly  productive  demand p o t e n t i a l  i n the  as and  capitalism  economically  for petty capitalism  Western  payments t o t h e p o o r  pension  the  is  petty  f o r m of c o m p e n s a t i o n  for  raise  by  unemployment  welfare  f o r workers  a c c i d e n t ; o l d age  of  for petty capitalism  gains  compensation  types  However,  sector  transfer  insurance  workers  These t r a n s f e r this  of  from  of wealth  for petty c a p i t a l i s t  the  the  demands f o r goods  sector.  is a  and  unemployed  i n t r o d u c t i o n of w e l f a r e  unemployment  longer  the  and  s t a t e s and  Welfare  the  nations.  labour  supply  to  demands  and  poverty  petty c a p i t a l i s t  so on.  labour  of  compulsion,  i n Western  b e n e f i t t e d by  work-related  are  by  create  state.  employment;  result  can  potential  Thus,  unemployed; of  and  both  i s reduced  who  types  optional)  the p e t t y c a p i t a l i s t  capitalist  those  evasive a c t i v i t i e s  to the and  activity  according  economy, uneven d i s t r i b u t i o n  nations are  services. formed  tax  But,  forms of  s e c t o r as w e l l as c r e a t e c o s t - b a s e d  capitalist  as  related  (unemployed  1981)  s e r v i c e s of  well  the  opportunists)  (Weaver,  strongly  be  the minor  baby s i t t i n g .  both  capitalist  capitalist and  the  exclude  (cost-based  labour  In  and  analysis,  minor a c t i v i t i e s , petty  to  and  powers and  economy.  the  1 38  2.1.1  The  Demand P o t e n t i a l Of  Capitalist The  by  thereby  is,  the  afford  welfare enables  more, a s  shelter  (eg.  are  welfare  create  services,  are  on  labour  which e q u i v a l e n t s  The many  availability the  That  i s able  transfer  the  stamps,  the  demands,  (eg.  would  to  payments.  for  what  and  elderly, for  have  food  existed  of  for  the  cost,  are of  bartering  quality,  stores, night  result  money,  of  p o t e n t i a l demand  formal  petty  the  capitalist  nations,  changes of  sector  c l u b s and  described  influence  and  of  such cheap  professional services, for  a v a i l a b l e i n the  as  and  a v a i l a b l e from  i n the Western  of  nations  goods  s a l e s , s t r e e t e n t e r t a i n e r s , use  and  a  capitalist  its  types  have been o b s e r v e d  are  petty  alternatives  explains  s e c o n d hand  as  i n Western c a p i t a l i s t  for  o p t i o n a l demands a r e ,  changes  Therefore,  demands  though  This  that  centres,  population  Homes  than  sector.  banks, food  cost-based  less  power  i s a l s o a v a i l a b l e to  food  Army,  preference  b a b y s i t t i n g , garage  care  with  urban p o p u l a t i o n  even  sector.  immigrant  formal  is  s t a t e measures.  based  activities  the  government  provided  optional  convenience, formal  of  T h i s means t h a t  basic clothing),  does  Western  r a i s e s purchasing  disadvantaged  Salvation  However, t h e  as  result  from  non-monetary c o m p e n s a t i o n  needy who  orphanages).  Welfare  consumption  a  poor or  without  In  s e r v i c e s from p e t t y c a p i t a l i s m  measures.  socio-economically  Additionally,  or  Capitalism  Nations  demand f o r goods and  affected and  Petty  for petty  earlier,  in  the  so  (eg. on). subject  consumer  media and  day  the  capitalism in  to  tastes, like. Western  1 39  nations  can  instance,  tax  reduced;  or  be  quite  evasive  baby  2.1.2  The  a d e q u a t e day  effect  measures on  the  labour  for  depresses  the  urgency of  essential  needs.  for  level.  of  not  care  Petty  i f the be  tax  For  burden  is  if  the  required  centres. Capitalism  available  poor,  That  In  Western  in  reduces the  for  economies a l s o petty  unemployed  i s , economic  under w e l f a r e  effect,  the  f i n d i n g other  some p e o p l e may  In  thereby  the  participation  mostly assured living  reduce  fluctuating.  i n Western c a p i t a l i s t  Compensation  of  and  Nations  Welfare  reason  may  s e r v i c e s may  Labour P o t e n t i a l For  Capitalist  an  activities  sitting  government p r o v i d e d  inconsistent  necessity  petty  capitalism.  and  s o u r c e s of  the  disabled  income t o meet  i s not  the  capitalism.  welfare  below  the  removes the  numbers t h a t  could  standard  accepted  economic  have  major  Survival is  c a p i t a l i s m even t h o u g h t h e fall  have  poverty  necessity  engaged  in  and  petty  capitalism. Those will in  do the  Only a the  so  who by  will  unemployed  needs  can  Employment living. nations,  be  there  by  sector  i n the  petty  or  the  met  and/or  by  the  the  state  studies  of  the  i s ample e v i d e n c e o f  of  employment sectors.  choice.  welfare  raises their informal  this  sector  Even  because t h e i r e s s e n t i a l  through  c a p i t a l i s m merely  case  from  p a r t i c i p a t i n g i n both  p o o r have a c h o i c e by  capitalist  voluntarily abstaining  need t o p a r t i c i p a t e f o r l a c k  in petty In  participate  choice,  formal few  do  standard  sector  (Mattera,  payments. of  i n Western  1985;  Simon  .1 40  and  Witte,  that  the  1982).  informal  through  the  (Tucker,  1982;  assure  an  the  something be  one  net  i s not  b o t h of  sector  social The  increased  increasing gains,  It  can  goods and  labour  has  therefore,  no  capitalist is  no  the  petty  urgency as  an  economic  capitalism.  population  need t h e  from  income  activities,  or  at  s e r v i c e s of group  can  and/or  evasion,  capitalist  petty  capitalist  There  Furthermore,  population the  not  group.  is, petty there  demands that  labour  necessarily  For  is  supply from  a  example, a l l income  babysitter, in  that  labour  B o t h demands and  engage  optional,  or consume f r o m t h e  s e r v i c e s and  a  barter  income.  employment.  necessity.  the  illegal  by  Demand i s m o s t l y  in  in  increased  c a p i t a l i s m allows  of  can  opportunities  forms:  for  with  This  demand f o r p e t t y  l a r g e and  social  participant  sector.  two  supply  work  in  economic  These  undeclared  temporary.  goods and  groups can any  of  labour  to  life  r e l a t i o n s h i p between t h e  petty  moonlighting  satisfaction  through tax  both the  capitalist  come f r o m t h e specific  and  largely  sector  either  by  the  formal  in  Petty  mostly  that  of be  alternative choices  specific  employed  savings.  seen  are  may  accumulation  services  activities and  be  must p r o v i d e  aspects  latter  ways of  the  evasive  gain.  following: personal  or  s e r v i c e s and  chapter  tax  1982).  a v a i l a b l e i n the  income  of  previous  i s made, i t must mean t h a t p a r t i c i p a t i o n  the  religious, gain.  from t h e  mostly  Tanzi,  economic  capitalist  economic  were  1982;  i f a choice  or  recalled  of p r o f e s s i o n a l s e r v i c e s o r  Bawly,  that  creative, for  barter  petty  be  activities  increased  Thus, in  I t can  barter  or eg.  individuals barter  of  141  services In  between a plumber summary,  supply  and  such that 1. work  i t c a n be s a i d  demand  for  the a c t i v i t i e s  To i n c r e a s e in  the sector  effort  to  increase  barter  of  To p r o v i d e  satisfied  by  labour  gains  exist primarily:  of those costs  who have  or i n c r e a s i n g  net incomes.  Illegal  income p r o f i t a b l e ,  income, t a x a b l e  chosen  to  earnings,  means  make  b e c a u s e t a x c a n be  income c a n be  reduced  by than  sector. f o r t h e demands o f t h e p o p u l a t i o n the formal  convenience eg. 2.2 P e t t y  of  s e r v i c e s , a n d wages a n d p r i c e s c a n be s e t l o w e r  the formal  2.  that are created  increased  on u n d e c l a r e d  the combination  c a p i t a l i s m i n Western n a t i o n s i s  by d e c r e a s i n g  avoided  in  that  petty  t h e economic  both of which c r e a t e this  and a d e n t i s t .  sector  that  are  not  f o r reasons of c o s t , q u a l i t y or  some hand made g o o d s , a n d c h i l d  C a p i t a l i s m In The C e n t r a l l y P l a n n e d  care.  Socialist  Economies In  socialist  Eastern  European  represents  nations,  a conflict  In  the  for  private profit  form  e c o n o m i e s s u c h a s t h e U.S.S.R.,  centrally  with  the  the p r e v a i l i n g  planned  socialist  are extremely  of c a p i t a l i s m (and t h i s  undesirable  presence  i n the s o c i a l i s t  would  economy, b o t h  legal  (Ping  Lin,  the  Grossman,  1984,  1980),  1982), a n d E a s t e r n  European  the  ideology.  economy, t h e o p p o r t u n i t i e s Theoretically,  include petty  economy.  or  petty capitalism  political  limited.  a petty c a p i t a l i s t Yu,  of  China,  But, t h e r e and  nations  capitalism) i s i s evidence  illegal,  U.S.S.R.  any  of  in  China  (Mattera,  1985;  (Aslund,  1985;  De  1 42  Grazia,  1984), w h i c h  goods and s e r v i c e s exist.  It  is  suggests  that  and a l a b o u r  the  in  alternative  2.2.1  the  supply  for petty  for petty  purpose of t h i s s e c t i o n  demand p o t e n t i a l and t h e l a b o u r economy,  a demand  light  of  c a p i t a l i s m must  t o i n v e s t i g a t e the  potential within  the  capitalist  theoretical  the  socialist  arguments of the  analysis.  The Demand P o t e n t i a l Of P e t t y  Capitalism  In S o c i a l i s t  Economies In  the s o c i a l i s t  shelter,  basic  sector,  unemployment cost-based t o be  but  market  restrained  Grossman, demand superior  (Grossman,  necessity  capitalist Poland  cheaper  Both p o v e r t y and  1985; B a n e r j e e ,  and  Cai,  for  1984).  sector  the  informal  t o t h e needs o f t h e p o o r  1980).  Furthermore,  i n v a r i e t y , q u a l i t y and q u a n t i t y There  goods t h a t  jeans, 1982).  i s , therefore,  a  sector (Aslund,  because  services  (Mattera,  strong  the  1985;  potential  a r e d i f f e r e n t , more e a s i l y a c c e s s i b l e o r  For instance, i s an i m p o r t a n t Petty  that  t h e demand part  capitalism  t h e s e c o s t - b a s e d and o p t i o n a l One c a n s u s p e c t  also  Thus,  are l i k e l y  i s c o n t r o l l e d , t h e s u p p l y o f goods a n d  in quality.  such as blue  (Aslund,  such as food,  through the formal  i s not e n t i r e l y t r u e .  linked  1985;  1982).  for  economic  China,  been  needs,  be a f f o r d a b l e  from t h e p e t t y  In  have  Mattera,  socialist  this  are present  present.  1985;  should  dire  demands  activities  is  clothing,  avoiding  alternatives,  s y s t e m , minimum b a s i c  demands  for foriegn  of the i n f o r m a l can  form  i f labour  b e c a u s e t h e dominant  goods sector  i n response to  i s available. consumer  market  143  is an  not  i n u n d a t e d w i t h g o o d s and  a l t e r n a t i v e s o u r c e may  example,  the  petty  opportunity,  and  1980).  latently  capitalist  capitalist  sector  The  economy  economies, t h e r e f o r e ,  2.2.2  Labour  P o t e n t i a l For  can Petty  demands  for  In C h i n a ,  for  increased  was  be  the  high.  at  every  were s t r i c t  sizable  demand p o t e n t i a l f o r p e t t y  socialist The  quite  e v e n when government p o l i c i e s  underground p e t t y (Cai,  be  services, that  in  the  Shanghai  capitalism  in  the  considerable.  Capitalism  In  Socialist  Economies In  socialist  improve  the  supply  f o r the  economies,  standard  of  petty  living  come f r o m any  the  for  economic may  because  necessarily  enterprises  t h i s are  stiff  activities earned. work  must It  i n the  either  and  the  those  also  formal  i n the  to a lack  of  i s to  risk  U.S.S.R. eg.  it  labour can,  i t appears  that  is  partly  insignificant  increase by  to  supply  partly like  being  its  as i t  western  i n c o m e s and  the The  engaged risk  state,  not most  penalties in by  it  more eg.  (Grossman, in  likely  the  that  moonlighting  1982), o r China  money  of  to  labour repair  participates (Cai  for  illegal  w o r k e r s w o u l d c h o o s e not  sectors,  vendors  the  capitalism  want t o o u t w i e g h t h e  so  desire  to  labour  illegally.  u n l i k e l y that  sector  choice,  petty  operate  p a r t i c i p a t e s i n both  services  The  Unless allowed  who  the  However,  i s only  motive  must  logically  is  in  This  t o evade t a x e s .  private  sector.  m o s t l y economic g a i n ,  i n some c a s e s .  counterpart  and  both c o n t r i b u t e  income g r o u p .  participation  s u r v i v a l but  appear  can  capitalist  therefore, motive  unemployment  1980),  due and  1 44  Hungary studies in  (Aslund,  of the informal  chapter  sector  three.  in  alternative In  the  sector  economies,  statements  the s o c i a l i s t  sector  "unified  capitalist,  as  socialist been  (Mattera,  and  ideology  i s vulnerable  capitalist  socialist  those  sector  have  sector  for  For  Similar  and t h e E a s t e r n  1985).  petty  accept  t o be a p a r t  1980).  In  Western  c a p i t a l i s m i s only a  The v i o l a t i o n  to greater  to  of the system.  (Lin,  a  system of the  i s recognised  Aslund,  system.  will  part  have  represents  started  t h e U.S.S.R.  1985;  who  criticism  be more s t r i c t l y  of a  political  and, t h e r e f o r e , the c o n t r o l l e d i n the  nations.  i s the great  capitalist restricts demand  not j u s t  personal  activities  risks  present  As a r e s u l t , openly  conducive  to  capitalist  sector.  entry  petty  there  in participationin state surveillance  c a p i t a l i s m even is  labour  exit  instability, of  labour  to  underground however,  in  e v i d e n c e h a s shown t h a t  l e d to a p r o l i f e r a t i o n  though  willing  capitalism i s often This  and  Empirical  restrictions  of petty  and  illegal.  easy  involved  as w e l l as s t r i c t  the p r o l i f e r a t i o n is  participate.  state  capitalist  capitalism  nations  T h i r d World nations  of t h e economic  of  petty  market"  made  violation  and  f o r the petty from  an ' i n t e g r a l  the informal  have  European n a t i o n s  the  comes  the case presented  of t h e economic as w e l l as t h e p o l i t i c a l  of  that  the labour  in  economies  a s w e l l a s t h o s e who do n o t .  i n China  petty  in socialist  employment  instance  It  illustrated  nations  informal  petty  was  socialist  although  the  This  Thus,  socialist  violation nation,  1985).  of p e t t y  is  the petty relaxation capitalism  1 45  in  the  1984; 2.3  c a s e of Cai,  Petty  of  Capitalism  fast  sector this  leading  i s too  limited.  1985;  De  Grazia,  is applied and  the  to  labour  i s considered,  distribution  of  the  activity  the  to  is substantial  informal  f o r c e and  the  sector  slow growth  p o v e r t y and  i f the  the  great  becomes more  P o t e n t i a l Demand From P e t t y  formal  the  However,  p o t e n t i a l of  in  But  sector.  and  result  unemployment. for  T h i r d World  (Moser,  is a  explain,  supply  then  Economies  It cannot  t h r i v i n g informal  The  (Aslund,  T h i r d World  that  production,  analysis  2.3.1  stated  in labour  'modern'  sector  been  i n the  growth  view  demand  In T h i r d W o r l d  capitalism  I t has  the  Hungary, P o l a n d  1980)  Petty 1984).  China,  instance,  both the  alternative  the  petty  variations  consumer capitalist  in  type  and  comprehensible. Capitalism  In  The  Third  World In large.  the  Poverty  developing of  and  nations  after  extensive. army  the  city  and  India, such  sufficient streets.  such as  s  the  demands f r o m p e t t y  unemployment there  food  i s a problem  of  the  in  most  some  Some c h a r i t a b l e of  the  Ramakrishna  institutions because T h u s , not and  capitalism  i s l i m i t e d compensation  ( f i g u r e 10).  needs  other  not  poor,  the In  and  clearly  the  World  government w e l f a r e  look  on  Third  the  poor  are  present,  p o o r can  a l l the  s h e l t e r , are  still  basic met.  of  the  i n the  form  institutions  but  Mission,  are  this  the  minimum  not  Salvation  but be  is  these  seen  are  living  needs  of  146  The sector For  purchasing  poor,  cheaper  the formal  goods,  there  substitutes sector the  of  the  poor  i s so low t h a t  p r o d u c t s and s e r v i c e s a r e g e n e r a l l y  the  since  power  sector  is  an  does attempt  poor  by  cigarettes  array  sold  provide  of  For  some  in  techniques  i n d i v i d u a l l y ; small  to provide  at  government  the  poor t h a t  example,  not  perishable  petty  met  or  In  cheaper  due  to  attributable support  commerce,  positions,  The  of  the  of  wheat  large  poverty  sugar  sector,  for  Thus  cost-  demand  from  are s i g n i f i c a n t ,  group.  many j o b s  and  marketing).  This  is  are created in process ( i . e .  Secondly,  administrative  strategy  stores  and  formal  industrialisation  for  'biddi', a  i s not a l l .  income  Firstly,  eg.  a r e many n e e d s o f  the  i s a deliberate  formal  Ration  of the p o t e n t i a l  middle  i n t h e government,  combating  those  the  But t h i s  large  transport,  employment  for  part  t o two f a c t o r s . systems  the  c l o t h i n g , and u t e n s i l s .  sector.  the  cheap  products,  cloth.  t h e T h i r d W o r l d t h e income d i s p a r i t i e s  mostly  the  India,  But, there  through  foods,  capitalist  these  packages of soap;  controlled prices.  b a s e d demands c a n be a l a r g e the  of  e s s e n t i a l foods such as r i c e ,  are  n e c e s s i t y and  some consumer goods t o t h e r e a c h o f  t y p e o f c h e a p c i g a r e t t e ; and c o a r s e c o t t o n exist  reach.  c o s t - b a s e d demands f o r c h e a p e r  instance,  to bring  packaging  their  a l t e r n a t i v e s are a v i t a l can only  t o be met.  beyond  formal  providing  or  clerical  o f many T h i r d W o r l d  nations  unemployment. income r a n g e ,  from t h e  stricken, creates  cost-based  and  optional  upper  income  groups  a wide v a r i e t y o f demands categories,  from  the  to both  petty  47  1  capitalist  sector.  description  o f t h e t y p e s o f demands f r o m  sector  This  is  best  a c c o r d i n g t o income g r o u p s ,  understood the  by  a  petty  general  capitalist  as d i s c u s s e d i n t h e  following  paragraphs. The its  upper  leisure  time,  time  income g r o u p , time.  spent  acquire  leisure  instance,  time  the or  leisure  While  on  it  without  time g a i n e d can  f o r p e r s o n a l achievements,  the  time  spent  leisure petty  time  capitalist  has  also  help  production observed,  quite  In t h e  like  fruits,  for instance,  v e g e t a b l e s and  marginally  higher  that  J a n i e r o and of door  i c e , by  prices  t h e work  can  of  be  reduced  capacity.  is easily  eg.  benefits.  World  of cheap l a b o u r .  reduced  Thus,  income g r o u p s ,  laundrymen) or  formal s e c t o r .  1 9  the p e t t y  sale  t h e s e goods  who used  Santos  (1979)  help  income  sector.  i s compensated  is  groups  o f goods s u c h  capitalist  the  f o r use i n  t h e amount o f d o m e s t i c Upper  and  economies,  w i t h c h e a p l a b o u r t o be  to door  and  material gains,  microwave ovens,  Calcutta.  to For  reduced,  i n n o v a t i o n s have  p r o v i d e s the upper  goods o f t h e  the convenience  to reduce  or r e c r e a t i o n a l  (gardeners, cooks,  h i g h i n R i o de  increase  to further  chores.  formal sector,  of  to  labour surplus T h i r d  sector  i n the  domestic  the  social  i s a c q u i r e d by t h e use  a r e employed as  chores  be.used  likes  earning  technological  on d o m e s t i c  power lawn mowers.  living  affecting  on d o m e s t i c  nations,  society,  is difficult  o t h e r a s p e c t s of  spent  In t h e d e v e l o p e d  1 9  i n every  as The  f o r by  T h i s c a n be n a t i o n a l l y o r an i n t e r n a t i o n a l l y c o n t r o l l e d v e n t u r e depending on the integration of the nation into the i n t e r n a t i o n a l c a p i t a l i s t market.  1 48  the  savings  market.  i n t i m e , c o s t s , and  The  demands  based  on p r e f e r e n c e s  are  similar  economies.  to  of  t h e upper  those  in  form  from  the petty  predilection  by  to  do  so.  middle  sector  as cost-based  The  optional  Because a c h o i c e are  demands  income g r o u p .  their  desire  enhances t h e i r  versions sector  India from  petty  similar  are of  sector  not  living.  based  e x h i b i t s a great  in  petty  standard  of formal  instance,  middle  These  on  capacity  needs o f t h e  they  exercise  i s involved, and  help  to  replaced  capitalist  sector.  to those d e s c r i b e d class  of the r i c h  essential Products  Here  the  f o r the  demands  to  s u r v i v a l , but  from  the  petty  t o be c h e a p e r  petty  t o be i n n o v a t i v e  reflect  i n the use of  capitalist  and  flexible.  c h e a p lemonade s e t s made f r o m o l d b o t t l e s a r e s o l d  a s s u b s t i t u t e s f o r t h e b e t t e r q u a l i t y , more the formal  sector.  c l a s s f o r the s t a t u s capitalist  instance,  a  demands  likely  c a n be  s u c h demands, t e n d  goods.  socialist  b o t h o p t i o n a l demands a s  Much o f t h e m i d d l e  sector,  For  ones  or  which  gadgets.  t o emulate the l i f e s t y l e s  goods.  capitalist  are  a  a r e thus  quality,  optional  group c r e a t e s  demands f r o m t h e  upper  then  F o r example, d o m e s t i c  income  to  b u t i f t h e y consume i n any  t h e a c q u i s i t i o n o f modern h o u s e h o l d  consumer  and  capitalist  sector,  capitalist  time.  well  For  Western  c a p i t a l i s m by t h e r i c h over  The  going  Most o f t h e e s s e n t i a l a n d n o n - e s s e n t i a l  c a n be met by t h e f o r m a l  fluctuate  of  income p o p u l a t i o n  f o r convenience, cost,  rich  from p e t t y  inconvenience  sector  In I n d i a , of the r i c h  i s quick  this  expensive  fixation  of  the  b o r d e r s on humour.  The  t o take advantage of t h i s  f o r t h o s e who c a n n o t  afford  'Kwality'  ice  need. cream,  149  the  reputed  cheaper  and  are not only  optional while  The consume  The  richer  example,  poor  rented  1977).  food  items.  in  shacks  The  capitalist  sector  sector.  the squatter from o t h e r s  a small minority  a petty  2.3.2 The L a b o u r  are  For  colonies  capitalist  is  t h e r e f o r e almost  may  be a b l e  I n d i a , the  capitalist  sector  P o t e n t i a l For Petty  that  (Das,  the l a n d l o r d s on  the  petty  and  other  s e c t o r , by  the  cost-based.  optional  as s t a t e d e a r l i e r ,  to  petty  group  entirely  to afford  able  survival.  c l o t h i n g a n d even m e d i c a l  from t h e p e t t y  are,  for  t o n o t e was t h a t rely  based  group,  income  Others  gardener,  less  this  create  cost  i n Rourkela,  i n t h e same  point  f o r food,  group  demands  poor,  or  largely  many o f t h e n e e d s e s s e n t i a l  The demands  Cost-based  the  occupants of the l a n d .  income  create  formal  interesting  illegal  services.  essentials like  provides  For  cook,  create  bracket,  optional  middle c l a s s w i l l  will  the  a  s e c t o r , by t h e m i d d l e  on p o v e r t y  income  from  capitalism  and  capitalist  v a r i a b l e b u t on a c o n t i n u u m between  bordering  lower  sector provides  ' q u a l i t y ' i c e cream.  demands.  demands f o r b a r e ,  Only  capitalist  demands s u c h a s t h e s e r v i c e s o f a  those  lower  the petty  demands f r o m t h e p e t t y  cost-based  were  brand,  imitation called  The class  best  demands.  unchanging  i n time  i s 'static'.  Capitalism  In The T h i r d  World In  the  uncompensated economically  Third by  World, welfare  disadvantaged  the  unemployed  s t a t e measures. from e n t e r i n g  and  the  poor  are  Those who a r e s o c i o -  the labour  force  i n the  150  Figure  10 - H y p o t h e t i c a l r e l a t i o n s h i p of income l e v e l s and expenditure in p e t t y c a p i t a l i s t s e c t o r  MIG  MIG  LIG  LIG  EXPENDITURE IN PETTY CAPITALISM  EXPENDITURE IN PETTY CAPITALISM  EXPENDITURE BY AN INDIVIDUAL FAMILY BY INCOME.IN.THE THIRD WORLD  EXPENDITURE BY TOTAL POPULATION BY INCOME GROUP IN THE THIRD WORLD  LIG  EXPENDITURE IN PETTY CAPITALISM  EXPENDITURE IN PETTY CAPITALISM  EXPENDITURE BY AN INDIVIDUAL FAMILY BY INCOME IN A DEVELOPED NATION  EXPENDITURE BY TOTAL POPULATION BY INCOME GROUP IN A DEVELOPED NATION  LIG; MIG, HIG:  dominant mode are income. poor but formal  Petty it  is  sector.  comes p a r t l y  LOWER, MIDDLE AND HIGHER INCOME CROUP  in great need of capitalism  not  a source  offers  a means of  chosen in p r e f e r e n c e Labour  from the  supply for  poor and the  of  the  to  livelihood survival  employment  petty c a p i t a l i s t  unemployed  in  urban  and  for  the  in  the  sector areas  151  some  of  which  cater  to both the  cost-based the  i s through m i g r a t i o n cost-based  demands a r e  needs  of  capitalist  the  sector,  poor the  sector  India  the  e a r l y m o r n i n g h o u r s , as  of  collect fruits  poor. source  the  or  It  p o o r go  are  to the  discarded  vegetables  of  demand and  come f r o m t h e activity  noticed  1966;  T h i r d World  the  to  labour  This  1963)  and  and  the  petty  For  instance,  and  fruit  the  produce  Third  markets  poor.  i s too  for petty  high  price  for  the  that  the  capitalism  petty  o f the  can  capitalist  dualism  consequently  in  arrive, The  World  type of  was  However,  poor through the  sector  supply  poor  when  to the  the  The  thus  e a r l y years  labour  supply  poor a l o n e .  capitalist  sector  in preference  sector,  or  economic  survival  hold  i n response  dual but to  moonlighting  of  resemble  petty  the  and  years.  The  economic  the  for  debate  related  to  capitalist capitalist  to  t h a t have been scholars  eg.  found  have  are  explain  sought  to  not petty  the  formal is  not  more l i k e l y  other likely the  separate  which  economic t o be  modern  informal  to  cards,  activities, in  i n the  the  handmade  evasive  activities  is  motive  they are  activities  can  join in  Their  and  tax  This  may  employment  gain,  or  capitalism  well-to-do  o p t i o n a l demands  p e r h a p s modern.  While  petty  participation.  services,  Such p e t t y  making a c t i v i t i e s recent  poor  with  sell  formal  t o the  thriving  the  trucks  items to  restricted  systems.  poor.  underdevelopment/dependency.  However,  work  the  main v e g e t a b l e  i n the  Geertz,  rural  i s poverty-bound.  unique  the  by by  same income g r o u p .  was  (Reynolds,  met  i n the  i s , therefore,  the  o p t i o n a l demands.  also created  in  and  the  and  of  more  profit  sector these  in  from  1 52  the  others,  the a l t e r n a t i v e  different.  The  particular  range the  differences  combination  Thus,  of labour  i n the T h i r d world  from  the ' s t a t i c '  growth  greater  in  input  absorption  2.4 P e t t y  of other  and  supply  petty  the  petty true  must  the  migration  capitalist  stressed  petty  certainly  capitalist  demands  labour  and o t h e r  from  activities  In the s t a t i c  pool  petty  and  sector  are  concentrated  labour  t h e two.  the s i z e of  also  While i t i t  f o r the c r e a t i o n of Rural  increase  c a p i t a l i s m , but o t h e r  capitalist  that  has a  of the s e c t o r  i n an u r b a n economy.  present  the  cost-  c a t e g o r i e s of  from  other  s e c t o r can e x i s t i n recent  migrants  years  income  independent (Richardson,  1979).  T h i r d World development  concentration  to the s i z e  i t i s not necessary  1981; S a b o t ,  two, i s s u c h  between  i n the T h i r d World c i t i e s .  sector  scope  type for  found t o i n f l a t e  demands a r e a l r e a d y  chapter  allows  can  Size  a s h a s been o b s e r v e d  Mazumdar, The  that  and  a  type,  little  The dynamic  be.on a c o n t i n u u m  contributes  Thus, t h e p e t t y  migration  1984;  sector  of  T h e s e a r e , however, t h e p o l a r  h a s been  add t o t h e l a b o u r  based  groups.  will  a r e no  o f demand.  capitalist  groups  they  reflection  and t y p e  income.  gain.  C a p i t a l i s m And U r b a n  that migration  be  or  income  economic  Rural-urban  of  only  t o t h e 'dynamic'.  employment  ends and many a c t i v i t i e s  the  are  that  n e e d s o f t h e p o o r a r e met by t h e p o o r a l l o w i n g  for  is  analysis postulates  process,  production in  the  one s h o u l d  efforts  large  towns  of  recall the  leading  o f m i d d l e and u p p e r c l a s s e s t h a t a r e  from formal  t o the  employed  in  1 53  Figure  11 - H y p o t h e t i c a l d i s t r i b u t i o n o f p e t t y c a p i t a l i s m i n t h e T h i r d W o r l d by c i t y s i z e  PETTY  CAPITALISM  PETTY  CAPITALISM DOMINANT MODE  _ _  vCBO  NOTE:  TOWN  1.  2. 3.  and  consume  explained which enter  = OPTIONAL OEMAND « COST BASED OEMAND  S I Z E OF OPTIONAL DEMAND FROM PETTY C A P I T A L I S M AND UPPER INCOMES DECREASE PROPORTIONATELY WITH C I T Y S I Z E . S I Z E OF DOMINANT MODE AND UPPER INCOME GROUP OECREASE PROPORTIONATELY WITH CITY S I Z E . S I Z E OF COST BASED DEMANDS ANO LOW INCOMES INCREASE INVERSELY WITH CITY S I Z E .  from t h i s  sector.  The u p p e r  income g r o u p s ,  i n the a l t e r n a t i v e a n a l y s i s , create  are  unstable  over  the petty c a p i t a l i s t  therefore,  CBD  attractive  optional  time and c o n s e q u e n t l y sector  to migrants  easily. from  rural  allow  Large areas.  i t was demands  labour to  towns  are,  1 54  Small phases  towns, on  u n i t s , and  distribution  pattern  demands i n s m a l l supply  of  capitalist rigid.  sector  labour  the  unless  the  demands or In  smaller  b a s e d on  larger  (Kull,  3.  of  towns w i l l is  This  not  is  labour.  a  11).  balance the  in cost-based sector  only sector.  explains  i n development  p o o r and  informal Das, in  the  entry  optional  demands.  is lacking,  But,  sector  the  it  is  because i t and  some s t u d i e s  1982). the  labour  sector,  why  and  reached  present  i t is a static  capitalism  is  a  petty  bound  c r e a t i o n of  the  and  The  by  formal  1984;  time,  permit  formal  the  cost-based  easily  not  This of  in  s e r v i c e s of  disturbed  demands,  petty  to consider  population.  towns i s p o v e r t y  g r o w i n g once  E l Shakhs,  of  sector  (figure  in small  proportion  1984;  distribution aspect  forms  cost-based  found  no  early  formal  unchanging  poor  l a r g e r than the  to absorb  towns  the  sector  less able a  are  towns, b e c a u s e t h e  proportionately  or  poorer  substantial increase  capitalist  few  p r e s e n c e of m o s t l y  to the  f o r goods and  Small  a  with  leads  that  balance by  left  i n the  a  from  demand  supply.  are  towns, t h a t  labour  hand, were n e g l e c t e d  consequently  It i s incapable  between  is  other  of d e v e l o p m e n t and  production  petty  the  i n the This  is have  small  spatial  T h i r d World,  i s an  plans.  CONCLUSION This chapter  informal petty  sector  capitalist  W o r l d but  also  has that  presented not  activities its  an  only that  alternative analysis explains  the  various  have been o b s e r v e d  distribution  in  differents  on  the  types  of  i n the  Third  sized  urban  1 55  Figure  12 - S i m p l i s t i c r e p r e s e n t a t i o n o f l a b o u r p a r t i c i p a t i o n a n d t y p e o f demand i n p e t t y c a p i t a l i s m by e c o n o m i c s y s t e m s  TYPE OF DEMANDS  TYPE OF LABOUR PARTICIPATION IN PETTY CAPITALISM TYPE OF  UNEMPLOYED BY CHOICE  ECONOMY  WESTERN CAPITALIST  UNEMPLOYED BY COMPULSION  PARTICIPANTS IN BOTH SECTORS  OPTIONAL (FOR NONESSENTIAL NEEDS)  COST-BASED (FOR ESSENTIA! NEEDS)  X  XX  XXX  X  X  XX  XXX  X  XXX  XX  XX  XXX  X  SOCIALIST  THIRD WORLD  X  X-XXX:  centres.  It  explains  Western c a p i t a l i s t that  occur  Altogether, empirical view  of  in  the  presence  and s o c i a l i s t  the  petty  findings  that  analysis  could  informal  underdevelopment/dependency.  of  petty  economies and  capitalist  the a l t e r n a t i v e  the  LEAST TO MOST COMMON  sector has  the  as  differences  i n each  economy.  incorporated  n o t be e x p l a i n e d  sector  capitalism i n  a  under  recent the o l d  symptom  of  1 56  The petty  capitalist  consumer a in  labour i t .  supply activity is  a l t e r n a t i v e a n a l y s i s presents sector  that  the informal  responds  to  the  demands i n e a c h t y p e o f economy p r o v i d e d supply This  willing  allows  a n d consumer are present  thus a s e c t o r  (voluntarily  many d i f f e r e n t  sector  as a  unfulfilled that  there i s  o r i n v o l u n t a r i l y ) t o engage  combinations  between  labour  demand s u c h t h a t many v a r i a t i o n s i n t y p e o f (Figure  of a great  which a r e a r e f l e c t i o n  12).  The p e t t y  capitalist  v a r i e t y of a c t i v i t i e s ,  of poverty  and  unemployment.  only  sector some o f  1 57  CHAPTER 5:  IMPLICATIONS OF  THE  ALTERNATIVE ANALYSIS  TO  PLANNING The Third  informal World  because  unemployment. tackled  by  The  form of  problems  and  attracted  the  and  scale,  has  not  In  analysis  a planning of  this  will  be  There are the  petty  analysis, These 1.  the  the  and  of  i n the  planners.  the  These  last  the  efforts  by  I t i s the sector  problem at  the  p o s i t i o n , the  The  unsanitary  a l l  of  This  years  in  created  which  focus  n a t i o n a l and  thirty  were  urban areas  congestions,  at  and  level.  colonies  infrastructure, urban  the  poverty  national  traffic  in  unemployment  squatter  in planning,  informal  with  and  unemployment  chapter.  urban  although  planners  on  the  will  be  i n t e n t i o n here only  i n the  T h i r d . W o r l d has  n a t i o n a l and  urban  i m p l i c a t i o n s of  to  been  scale.  the a l t e r n a t i v e  discussed.  some d i f f e r e n c e s between t h e  capitalist  that  at  urban  has.  i n the  that  light  on  changed over  later  poverty  quality,  unemployment  reviewed  v i e w e d as  and  attention  approach  out  of  vendors,  strain  planning  point  poverty  to planners  association  planners  housing  conditions  poverty  of  been of c o n c e r n its  causes  hawkers,  of  has of  economic  manifestations the  sector  will  sector,  affect  the  proposed  current  informal  sector  in  alternative  the  position  of  and  planning.  are:  The  petty  capitalist  sector  includes  a  wider  range  of  activities. 2.  The  petty  capitalist  sector  i s not  restricted  to  3.  The  petty  capitalist  sector  i s not  restricted  to  the the  poor. Third  158  World. 4.  The  formation  determined sources 5.  A  by t h e  of labour demand  sector  the  presence  first  The  petty of  for  'problem'.  Between  identifying  chapter  planning;  decision  f o u r t h and f i f t h  the a l t e r n a t i v e sections  on  planning  the  planning  planned  strategy, that i s ,  light  of  the  i s necessary.  five  proposed  Most  re.framed  sections,  role  for i t ,  Therefore,  the  goal  the success of  the  of  of past  state;  sector.  of the d i s c u s s i o n i n these  of the poverty-bound petty  will  i n the last  be made t o t h e p a s t  References  economies and t o o t h e r  be  and The  s e c t i o n s a r e b a s e d upon t h e f i n d i n g s o f  i s i n the context  where n e c e s s a r y .  to  f o r the petty c a p i t a l i s t  analysis.  References  capitalist  the problem and p l a n n i n g  i n the T h i r d World but the focus  India.  will  in  into  the  f o r planning  Other  for i t s creation.  of the s t a t e i n the past;  efforts;  suggestions  sector  whether divided  the role  planning  first,  is  alone.  t h e 'problem'  differences affect proceed  this  labour  i s not  for i t s creation.  planning  the  sector  goods a n d s e r v i c e s f r o m t h e p e t t y  how s h o u l d  lies  surplus  d i f f e r e n c e reframes  other  capitalist  a r e a l s o necessary  i s a l s o necessary  The for.  of  section, i s  purposes.  efforts  i n other  c a t e g o r i e s of petty c a p i t a l i s t  o n l y be made f o r c o m p a r i t i v e  capitalist  planning  to petty capitalism  three  activities  1 59  1.  REFRAMING THE As a l r e a d y  mentioned,  to  be  the  more p r o f i t a b l e  the  largely  PROBLEM FOR  last  activities  belonging  have  are  Tax  are present  i n the  greater  importance  national  revenue.  have  treated  evasion  in  pervasive  'moonlighting' economies".  economy and  income  in  1978),  activities.  restricted  consider  the  to the  range  of  analysis  Four major  the underground  as  categories  or  In as  capitalist  activities  sector,  but  separate  Kabra  (1982  have  equivalent  i n tax  distribution  of the  a low  loss  of  activities  Speaking  of  tax  " I t i s a f a r more is  known  activities several  facets  consumption,  ( H e e r t j e and A h e r s  been  than  i n many d e v e l o p e d  i s that  i . e . , production,  Western  only  sector  what  evasive  be  accorded  tax e v a s i v e  states,  of  ' s e c o n d economy'  i s common  hidden  because  In  not been  problem.  p.1)  should  sector.  have  the T h i r d World, a  or the  black  i n the T h i r d World and  or d e v e l o p e d economies  are  While  recognised  the a l t e r n a t i v e  s u c h as b a b y - s i t t i n g ,  serious  What  T h i r d World  is  i n the study of the i n f o r m a l  India,  and  these  informal  activities  been  been  these  sector.  of the p e t t y  economies  included  paying  capitalist  evasive a c t i v i t i e s ,  as a p a r t  capitalist  light, by  viewed  are presented here.  economy a c t i v i t i e s recognised  In t h i s  been  N i h a n and J o u r d a i n ,  planning  proposed  to the petty  have  covered  of  has  i n the T h i r d World.  1977;  not  context  that  activities 1.  (Steel,  of the poor.  activities  of  years  the  sector  informal a c t i v i t i e s  efforts  Consequently  the i n f o r m a l  the r e f u g e of the poor  few  planning  PLANNING  1982).  as  market in  the  of the  employment,  1 60  Tax  evasive  economic barter the  activities  activities  to  include  acquire  of p r o f e s s i o n a l s e r v i c e s ,  use  of  illegal  activities  selling  o f goods a t p r i c e s h i g h e r  rate).  In I n d i a , hoarding  artificial prices that  shortage  trying  controlled quite  common  with  (Ray, 1982; K a b r a ,  1982).  on  weigh s c a l e s i n produce  a scooter-rickshaws.  similarity activities Western can  states  has  they  are  profiteering". of  (Mattera, category  1985).  time  earned  in  domestic  illegally.  p r i c e s by t h e u s e o f  i n recent between  the  with  Ray (1981) h a s p r o v i d e d  years, the  underground  The t y p e s  are extensive  " a l l working  tax evasive a c t i v i t i e s  (See  higher  recognised  i n t h e T h i r d World and  in this  ( e g . peons  s t o r e s , or i n a c c u r a t e meters  I t i s only  been  nations  exist  into paying  government  For instance,  sometimes a l s o work a s p a r t  C u s t o m e r s c a n be c h e a t e d  at exorbitant  Moonlighting i s  sector,  money  controlled  t o c r e a t e an  at  income g r o u p s o f I n d i a .  the  as  f o r t h e government  goods  low wages i n t h e f o r m a l  well  f a c t o r i e s , or  commodities  t h e commodity  ( e g . by  as  t h e government  i s a major problem  Bribes can c o n t r i b u t e t o  inaccurate  ( e g . underground than  legitimate  income,  essential  offices)  of  or moonlighting),  selling  provide  i n t h e lower  government  help.  to  prices.  individuals a  and then  use  undeclared  of e s s e n t i a l  i n t h e b l a c k market is  the  that  tax  any  evasive  economy  of a c t i v i t i e s  in that  b u t a s Ray (1981, p.33) a  common  objective,  some o f t h e major  t h a t c a n be f o u n d  i n the  Third  types World  f i g u r e 13). 2.  The s e c o n d c a t e g o r y  contracted  includes a c t i v i t i e s  to the petty c a p i t a l i s t  sector.  t h a t a r e sub-  Sub-contracting  is  161  Figure  13 - T y p e s o f t a x e v a s i v e  THE. BLACK JLZ CoSJECTIVESj' ["MONOPOLISATION!  MARKET CORSANISATIOSQ  | FINANcFI [PROFITEERING!  I PROFIT I tOPTIMISATIONl UNLAWFUL BILATERAL. AND MULTIPLE FINANCING  activities  J PROFIT 1 IMAXIMISATIONJ 1 SHADOW ACCOUNTS 8 PARALLEL BANKING  SLACK MONEY FINANCING  GHOST TRANSACTIONS  I BLACK MONEY TREASURES AND THEIR CONVERSIONS  1 HIGH MONEY FINANCING FOR SMUGG LING  (CORNERING) {HOARDING^  C  >y I  COMMODITlT\/ WCE BLACK JISPIRAL _ p  (  IMITATIONS, A FAKES AMD I SUSSTITUTIOM./  MARKETING ^/^MANOEUVRES./ (ADULTERATION) ' x  S o u r c e : Ray,  usually  associated  capitalist the  petty  formal  1981,  capitalist  sector  Snow, 1 9 7 9 ) .  It i s this  argument  exploitation  Schmitz the  provides  pT A X  1982).  also  EVASION)  sector.  of sub-contracted  and  petty  Essentially, to  that  the  multinational  1985; K a s s a l o w ,  sector  by c a p i t a l i s t  i s the high This  (Mattera,  informal  i n the  goods a n d s e r v i c e s  type of a c t i v i t y  the  feature  sector  is  by t h e f o r m a l  cheap p r i c e  that  T h i r d World,  nations  a  of the labour  A typical capitalist  -  i . e . T h i r d World e n t r e p r e n e u r s , at  1  f SLACK M A R K t T N I IN SCARCITY AND J FAMINE J  (SKiUCaLING')  44,  usually  corporations  the  UNLAWFUL "\ SPECULATION^  w i t h e x p l o i t a t i o n of the l a b o u r  sector,  sector  p.  (  1979;  contributed  persisted  due  to to  pursuits. activities  use of female  labour  i n the petty (Meis,  1982;  i s n o t , however, n e c e s s a r i l y a f e a t u r e o f  because well  t h e use of  female  documented  (Redclift  labour  in  Western  and Mingione  1985;  1 62  Mattera,  1985).  contract  work t o k n i t t e r s , m o s t l y  that  subcontracting  makes i t e a s y  India  (Schmitz,  1982).  is also  found  states  that  sector into  engage than  within  of  Berry, The  have  India  lace  makers  sector  Mattera  from t h e f o r m a l i.e.  activities  activities  that  o f goods t h a t  (Little  labour  "further  1985, p.104)  includes  sector.  focussed  in Brazil  sector.  activities  in  that  informal  are  small  are sold at  Most  were  studies  sector  s c a l e , and  lower  prices  of t h i s  'modern  on t h e A f r i c a n n a t i o n s 1982; S t e e l ,  sector".  (Page  and  1977) b u t , t h e r e a r e in  other  developing  e t a l . , 1984), L a t i n A m e r i c a  (Cortez  1983).  definition  inconsistent Bank s e c t o r  dependent  the  capitalist  o f a p r o f i t a b l e modern  eg.  often  Perhaps t h e f a c t  2 0  and e x p l o i t a t i o n of  the informal  1984; Demol a n d N i h a n ,  indications  World  are  the formal  sector'  nations,  eg.  i n t h e T h i r d W o r l d a s t h e "modern  that  Steel,  petty  (Mattera  category  these  i n Vancouver  1982), o r t h e hammock makers  the  i n the p r o v i s i o n  informal  labour  sub-contracting  within  The t h i r d  stores  housewives.  sometimes s u b - c o n t r a c t e d  Essentially  is  further  t i n y workshops'  identified  and  (Mies,  are dispersed  3.  the yarn  work c a n be c a r r i e d o u t i n t h e w o r k e r s home  t o use female  Naraspur,  However,  2 0  F o r example,  of the small  (Page  and  p o l i c y paper  scale, t h r i v i n g informal  Steel,  1984) b u t a c c o r d i n g  ( 1 9 7 8 ) , most  on middlemen o r money l e n d e r s  Information stores.  i s b a s e d on p e r s o n a l  sector to the  such e n t e r p r i s e s a r e  f o r working c a p i t a l  communication  with  and  knitting  1 63  personal are  emergencies  not aggressive  infrastructure roads  i s not o n l y  employment.  have  But, " t h e i r to protect  been  In r e c e n t  for  as  market  these  "having  socio-economic  the  use  niche  a  small  from  This  type  a preferred  rightful  development"  such  powerful  1978).  scale  of  access  to function without  p o l i c y paper,  years,  enterprises  a s power, w a t e r , a n d  ability  their  These and  l u c r a t i v e but i s o f t e n  identified  strategies  techniques,  such  ( W o r l d Bank s e c t o r  activity  of  of t h e banks.  marketing  services  is inferior.  competitors" of  in  and  s e r v i c e s may h e l p  instead  form  enterprises  place  (Page  i n the  and S t e e l ,  1984). 4. that of  The f o u r t h c a t e g o r y  a r e not h i g h l y p r o f i t a b l e .  self-employment  small  capital  activities informal years.  in  instance,  hawking  unemployment in  Similarly, sales  i n the s t r e e t s of D e l h i  is  just  i n Western n a t i o n s  four  i s that  category  debate  an  on  of  of the  i n the e a r l y  expression  may be t h e  of For  result  of  b u t t h e h a w k i n g o f s a n d w i c h e s a t wreck  although a c t i v i t i e s  not expressions  indicate  This  the  are not n e c e s s a r i l y  and p o v e r t y ,  What t h e s e  in  forms  low t e c h n o l o g y a n d  hawking of goods. attention  include  i n t h e T h i r d W o r l d t h i s may be t h e c a s e .  Vancouver  found  These a c t i v i t i e s  the T h i r d World, p a r t i c u l a r l y  These a c t i v i t i e s although  beach  eg.  h a s had t h e most sector  the types of a c t i v i t i e s  b a s e d on u n s k i l l e d l a b o u r ,  input  poverty,  are  includes  another  way t o make some money.  s u c h a s baby would  fall  sitting in this  and  garage  category  they  poverty.  categories  the petty  of p e t t y  capitalist  capitalist  sector  activities  i n the T h i r d  World  1 64  i s much more d i v e r s e focus but  on  poverty  there  and,  are  than c u r r e n t l y p e r c e i v e d .  and  unemployment  many o t h e r  t h e r e f o r e , many o t h e r  presents  a different  separately  capitalist diverse. include of  a  for  the  That  the  activity  both w i l l  strategy. planning nation.  petty  will  nation  and  some  nations  not  others.  has  been  activities W o r l d , but as  Therefore,  the  capitalist  sector  increasing  with  the  well  on has  as  and  be  analysed  activities  incomes and in other  a  own  mix  example, focus  small  sales  planning  are  separate are  petty a  T h i r d W o r l d w o u l d be employment ways, a t  the  urban  planning  of  the  i n some  low  profit  i n the  activities  lesser  to reduce or  Third such  concern.  poverty-bound  level.  for  capitalist  problem  opportunities  on  vendor,  priorities  similar  f o r the  needs  selected  scale,  of  can  planning  street  o f much p l a n n i n g nations  sector  include control  of  pose  becomes  example,  that  its  petty  planning  f o r the  a n a l y s i s and  may  also  the  For  development  garage  i n the  reflecting  the  For  o b j e c t i v e of  sector,  activity  the  capitalist  planning  activities  the  petty  i n I n d i a can  i n Western c a p i t a l i s t  baby-sitting  of  in  planning  activities.  capitalist  activities but  of  sector  as  depend  Each  should  activities for  f o r the  need a s e p a r a t e  The  each  category activities  Each c a t e g o r y  the  e a c h one  category  capitalist  of  "goals"  several p o l i c i e s ,  petty  one  purposes.  i s , planning  particular  only  current  capitalist  p r o b l e m and  diversity  sector,  smuggling but  the  with  petty  problems.  type of  for planning  Because of  by  types of  deals  The  to  petty  i t s size cope  1 65  2.  THE ROLE OF THE STATE IN THE  In  the  planning  past,  was n e c e s s a r y  according  to  the  poverty-bound this  reason,  petty  part  this  and  although  not type,  viewed  favourably  precapitalist It  strongly British towards  was a l s o under system  retained  this  in  the  was t h e  category  from a n e g a t i v e  a  of one,  more p o s i t i v e one o f  of  the  models  sector  were p r o p o s e d  were  just  to explain  urban  1963) t h e y were n o t  What  In t h i s  informal  sufficient  influenced  planning  i n the mid-  approach  towards  development  light,  the i n f o r m a l  i t was d e s c r i b e d  sector,  as a  was  peasant-  sector.  the  physical  to convey the  1965-70  because  a period  of  'poverty-bound  identifiable:  the pro-modernisation  T h i r d World n a t i o n s .  to  It i sfor  because t h a t  For  the  the p a r t i c i p a n t s .  1966; G e e r t z ,  planning.  and  which  only  sector.  is  has moved  activity,  studies  (Reynolds,  was  t o the s e c t o r .  phase:  time  influence  sixties  i n the past  major phases  negative  beginning dualism  efforts  the  activities,  i n t h i s chapter sector'  and r e h a b i l i t a t i n g  There are three  sector'  'informal  applied  discouraging  At  a r e used  the r o l e of the s t a t e  compensating  of  sector'  some s o r t o f  constitutes  capitalist  'informal  that  sector  analysis  the p e t t y  of planning  activities,  to  of  The t e r m  term o r i g i n a l l y  The  f o r the informal  the the terms  same s e c t o r . discussion  l a r g e l y determined  alternative  capitalist  i.e.  i t was  PAST  when T h i r d W o r l d  influence  physical design  urban  of urban d e s i g n  planning. solutions  was  c o n c e p t s and the  Planners to  planning  had  urban  a  bias  problems  1 66  (Wishwakarma, The  net  perceived but  1981). result  to  a l s o an  negative  be  was  an  eradication,  control,  of  this  sector  virtually  squatter  informal was  not  1974)  the  m e a s u r e s upon t h e  function  independently  informal the  the  formal  Rather  Planning and  f o r the  'cosmetic'  considered  in  informal  the  etc.  and  economy.  the  the  Some of  Closure  of  the  the  McGee, of  sector  1979;  sector  was  Bose,  negative taken  the  of  squatters  that  by  to  population  could  actions the  into  assumed  and  actions  the  economy,  these  t h e y were v i e w e d as  informal  sector  That  was  and  affect towards  removal  i s , the  highly physical s t r a t e g i e s at  outward m a n i f e s t a t i o n  economy  not  poor  of  growth.  in content.  level  1979;  of c i t i e s ,  informal  national  removal  v i e w e d as  maintenance of m o d e r n i s a t i o n  i m p e d i m e n t s t o modern  1.  of  were n o t  economy-.  the  informal  the  urban  n a t i o n a l economy were not  the  in  f o r the  f o r the  a  therefore  r e l a t i o n s h i p of  consequences  s t r a t e g i e s s u c h as  activities  city's  the  if  planning  (Gerry,  and  had  dominant  planning  or  only  modernisation,  sector  The  not  Planning  were  1978).  sector  time  u r b a n and as  Thus,  formal  possible  It is  large.  course,  was  of  city.  informal  (Moser,  this  account.  at  the  synonymous w i t h  to the  so  Of  sector  process  restriction  period.  understood at and  of  the  and  colonies  sector  informal t o the  feature  towards  strategies  and  the  impediment  unaesthetic  attitude  was  that  i.e.  squatter or  negative  measures used  to  rural  aspects  m i g r a n t s eg.  the  urban  the p a r t i c i p a n t s  colonies,  economic  city  social  of  design  hawker of  zones  the  informal  Jakarta  (McGee,  were:  1 67  1972). 2.  Removal o f s q u a t t e r s  eg. 3.  K u a l a Lumpur Removal  cities Delhi 4.  eg.  of  fees,  There  the  and  (McGee, during  economy  against  of t h e  Yeung,  1977),  through  higher  t h e use o f t h e i r  planning  a lack  this  phase  i n the case of I n d i a ,  implementation  of  1979).  Consequently,  regional  t h e r e was  regional  which  rural  One  plans  and  as  a  development  regional  may  profession. time  and,  backing  for  i f t h e y had  meant  absence  reason f o r t h i s  legislative even  also  an  planners at t h i s  no  Secondly, n a t i o n a l  pro-modernisation,  t h e r e was  had not d e v e l o p e d  of t r a i n e d  services  1972).  approach to the problem.  regional  (Poulose,  1979).  t o the p e r i p h e r y  (McGee  informal  and p r o p a g a n d a  must n o t e t h a t  was  (Ghosh,  activities  Indonesia  of  Jakarta  a regional  be t h a t  as  the informal  Discouragement  One  1971), D e l h i  beautification  1979).  and goods e g .  of  (Poethig,  Phillipines,  (Ghosh,  licensing  f o r the purposes of c i t y  been made  strategies  were  pro-urbanisation.  development  were  not  a  priority. It concept  may  be s a i d  during  and  satellite  in  Gilbert  crowded of  the  oriented  that  this  the  phase,  i.e.  1976), d i d s y p h o n  informal  and,  to the achievement of  the  rural  the  growth o f new  ( A p p a l a r a j u and  some r u r a l  therefore,  sector.  of  by t h e c r e a t i o n  towns f o r t h e l a r g e c i t i e s  large c i t i e s  development  application  indirectly  economic  hinterland  towns, Safier  m i g r a n t s away f r o m t h e affect  However, g r o w t h p o l e s were of r a p i d  pole  growth,  in order  the  size  primarily and  to reduce  not rural  168  unemployment o r p o v e r t y .  The g r o w t h p o l e s ,  envisaged  for  as  alternative indirect the  locations  to  large  result.  cities,  In the  unemployed  were,  recieving although  rural  that  negative phase,  by and l a r g e ,  therefore,  migrants  might  have  therefore,  either  were as  been  the  neglected  not an the  p o o r and  or  treated  callously. The p o s i t i v e During  the  phase:  seventies,  had grown v o l u m i n o u s l y urban  dualism  1973;  McGee,  made  to  1973:  u r b a n economy,  and  seventies  l i t e r a t u r e on t h e  chapters  had  I.L.O., the  (Santos,  the  (see  models  identify  economy  1970-late  been  two and t h r e e ) .  proposed  1972).  to  1973).  (Hart,  Some a t t e m p t s  r e l a t i o n s h i p of even  the  the  national  Although t h i s  decade  i n p e r c e p t i o n of  the  informal  little  that  the  I.L.O.  approach that also be  the  in planning  the  ( R i c h a r d s o n , 1984).  informal sector  complementary preserved  presence  work o f  of  rather the  unacceptable  to  the  informal  for  aesthetic  as  beautify  This  the  approach  and p l a n n e r s i n t h e seemed  to  persist  the  the  (1972)  is  dominated  the  I.L.O.  proposed  in function,  the  squatter  retain  was  therefore, physical  areas  then upgrading the  poor c o u l d  to  there  and s h o u l d ,  or  been  international  Furthermore, i f  reasons,  Santos,  also  sector,  independent  activities  more  marks a p e r i o d o f  The  formal s e c t o r ,  than removed.  and l i v i n g c o n d i t i o n s o f well  although  1973;  had  and  sector  Many  informal sector  wide v a r i a t i o n doubt  informal  the  was  working  sector  as  city. was a c c e p t a b l e Third  World  inspite  of  to  some o f  because the  the  the  policy  informal  n e g a t i v e measures  makers sector  that  were  169  applied, under  and because t h e p r o - m o d e r n i s a t i o n  criticism.  critical  to maintain  eradicate (Angel  It  was, t h e r e f o r e , t h o u g h t  an image o f m o d e r n i s a t i o n  the informal  and Benjamin,  a p p r o a c h was  sector  ideas  such  receptive  to  alternative  approach to s p e c i f i c  as  1971).  those  sector  change d u r i n g With  to  unemployment  informal for  scientists  with It  1980;  positive  to  an  planning  Singer,  an  Thus,  towards  the  the  f o r modernisation;  poverty  1977; F u n n e l ,  increasing  although  rather,  strategies  and  i n t h e growth c e n t r e  of  social  r e s u l t e d i n the  aspects  sector  to this  was g r o w i n g a s  number  of f a c t o r s t h a t  the r i s e  not  the magnitude of the  of  i n urban and r e g i o n a l  informal  and  1976).  a s a complement  profession,  a combination for  Almost  development of  rural  introduced,  and economic  the d e c l i n e i n f a i t h  vehicle  as  pro-modernisation  regional planning  the p h y s i c a l aspects,  strategies  of  They were,  approach,  of the s o c i a l  was, t h u s ,  the  purposes of reducing  led  the  of  problems  i n l a r g e towns.  This  in  consideration  i.e.  the  s t r a t e g i e s were  the  i n development  a profession.  were  T h i s was n o t t h e o n l y  encouraged g r e a t e r  a l a r g e r scope of problems.  change  along  planning  development  sector  I.L.O.  attitude  level.  of c r i t i c i s m s  eleviate  for  planners  the  to  modernisation  problems of development.  urban  (Mabogunje,  exclusively  or  phase.  national  areas  Regional  this  the  the onslaught  approach, rural  at  in cities,  Some  of  t h e r e was a move t o w a r d s a more p o s i t i v e informal  t o b e , no l o n g e r  f o r the purposes of  1976; P o e t h i g ,  already  problems, planning.  l e d t o t h e more i n the seventies approach  as  a  o f r e g i o n a l p l a n n i n g , and  170  the  inclusion  strategies. informal Urban  of  Some of  sector  the  and  economic  factors  in  planning  p o s i t i v e approaches to planning  introduced  in this  period  for  the  were:  level:  1.  Relocation  new  areas  and  Yeung,  2.  Organisation  of  with  (Shah,  the  minimal  informal  activities  registration  such as  f e e s eg.  "hawking"  Singapore  to  (McGee  1977) .  infrastructure  3.  social  1976),  Retention  (Pendakur,  of  and  co-operatives  to  subsidise  c o n s t r u c t i o n of housing  (Sethuraman, of a c t i v i t y  1975),  eg.  the  costs  Ahmedabad,  of  India  1974). "as-is"  Hawkers  eg.  Manila  in South-east  Jeepney  Asia  drivers  (McGee and  Yeung,  1977). 4.  L o a n s and  work a t a 5. to  distribution  of equipment n e c e s s a r y  s u b s i d i s e d r a t e eg.  Provision squatter  of  'sites  c o l o n i e s eg.  and  a cart  for  s e r v i c e s ' as  Chile  for  specific  vendors. a housing  (Poethig,  1971),  alternative Delhi  (Rao,  1974). 6.  Rehabilitation  Jakarta 7.  (Poethig,  Intensive  (Lui  Thai  Regional 1.  Rural  urban 2.  and  squatters  eg.  Bangkok  and  1971).  housing  Ker,  r e l o c a t i o n of  1974,  programmes Poethig,  eg.  Singapore  and  reduce the  flow  Hongkong  1971).  level: development  as  a means t o  of  rural-  migration.  Development  of  small  towns  to  act  as  countermagnets  to  171  migrants  from  However it  rural having  must be s a i d  The  most  was p a t e r n a l i s m  as  i f they  their  was  free as  strategies  1976).  The  provided for  from  time  a  voice,  and B e n j a m i n , were a s t e p  the  and  were  properly  without  of planners 1976).  to dwell  Regional  plans  such  p l a n s , and a  upon  though  direction were  urban p l a n s , mostly  t o implement  political  T h u s , even  i n the right  criticisms. as  pertaining to  i n t h e i n f o r m a l s e c t o r were o f t e n  the tendency  quickly  i n matters  they not  because i t  longer  time  results.  By  the  strategies  other  The  therefore,  implemented  t h e r e was  view of development.  alternatives,  t h e most w i d e l y dominate  mid-seventies  were b e i n g  a more r a d i c a l and  also  measures  a longer  see  and Benjamin,  i n the i n f o r m a l s e c t o r  without  s o l u t i o n s (Angel  not  level  t h e r e f o r e , no c h e c k on whether t h e  The p a r t i c i p a n t s  There  criticised  to  the urban  1980; A n g e l  a n d t h e r e was,  positive  takes  against  reproach.  i n c a p a b l e o f c o n t r i b u t i n g t o t h e d e c i s i o n making  v i e w e d t o be c i t i z e n s  were  were more humane,  were n o t w i t h o u t  T h e i r o p i n i o n was u n s o l i c i t e d  considered.  the  strategies  criticism  needs of t h e p a r t i c i p a n t s  design  cities.  i n t h e i n f o r m a l s e c t o r were c h a r i t a b l y  welfare  will.  for larger  s t a t e d that the s t r a t e g i e s  (Skinner,  were  process.  heading  that these  important  participants  areas  i n the  already  But, i n s p i t e  the p o s i t i v e  implemented  while  the  positive  the r i s e  of c r i t i c i s m s  measures i n p l a n n i n g  seventies  and  of  continue  were to  today. R a d i c a l phase;  Dependency  theory,  late  seventies  onwards  the ' m a r g i n a l i s a t i o n ' concept,  and the  1 72  'bottom-up'  a p p r o a c h a r e major  strategies  in  Brookfield, radical The  1973).  changes  lack  Weaver, field  1979; open  offered  Basically,  that  for  includes  a  phase  (Ghai,  of the o l d e r  de-emphasising process,  1980;  the  the  Johnson, at  the grass  p.98) clearly not  just  planning  level  "dirty  the  development.  The  i t increased  ways o f  1981;  economically the  radical  phase  respect  and d i g n i t y  (Brookfield,  as i t s t r o v e  but s o c i a l l y  1973)  changes  informal  from the o t h e r  sector, phases  that  areas  of  in  t h e main  the  greater  national  wealth  Mabogunje  Taylor,  or as The  It  with  1975;  well.  i s that  are  to development.  started  McGee  (1978,  phase  was  amongst p e o p l e  With  regard  difference  i t promoted  o f t h e p o o r and t h e s t r a t e g i e s  1975;  that  radical  for equality as  achieving  T u r n e r , 1980;  Pioro,  poverty  1977).  development  distribution  1979;  development,  but  urban  b o o t s b e g e t wisdom".  more h u m a n i s t i c  for  left  In e s s e n c e , p r o m o t i n g d e v e l o p m e n t  roots  stated  of  of  rural  (Weaver,  and Weaver,  1975).  Singer,  strategy  role  promoting  population  Friedmann  1979;  the  had  underdevelopment,  i n c l u d e s a number  reversal  from  development.  World  C o n s e q u e n t l y , however, new  autonomy a n d a more e q u i t a b l e amongst  Third  1976;  and  c o u r s e of development  were p r o p o s e d  development  of  of  (Friedmann  1974),  to achieve  of the p e r s i s t e n c e , of  radical  Perlman  stemmed  strategy  Kongstad,  critique  alternative  development  1973;.  the s t r a t e g i e s  proposals  a  unemployment.  basically  1975;  other  theory,  no  The  (Quijano,  to the e v o l u t i o n  were p r o p o s e d f o r T h i r d W o r l d  Corragio,  awareness  and  phase  of s u c c e s s of the growth p o l e  dependency  the  this  contributors  were  to  of the  the to  self be  173  less of  paternalistic.  the poor.  It also  Planning  recognised  efforts in this  1.  L e g i t i m i s i o n of the i n f o r m a l  2.  Education  sector, city 3.  and  the  structure Provision  Mexico  4.  voting)  rapid  that  can c o n t r i b u t e  economic  these  the  industrial  quick  of the  (Skinner,  (Shah,  1980),  1976), B r a z i l  s o c i e t i e s eg.  Lima,  were  example, very  rural well  (Skinner,  development returns  As a r e s u l t , with  the  Therefore, in  sector  t o the making  economic  combined  phases.  p a r t i c i p a t i o n i n the  and  Peru  theory  in  were u n w i l l i n g t o perceived came  to  with  not  urbanradical  s t r a t e g i e s of the negative  and  the  radical  growth  sites  and  f o r the poor.  and  phase  is  in i t s application. centre  o f t h e same d e v e l o p m e n t  of s e l f - h e l p h o u s i n g and  of a housing program  actions  sacrifices  s t r a t e g i e s i n the  i t is less clear  part  whose  government.  some  that  although  development be  of a  was  preparation  1980).  body  w h i c h many n a t i o n s  rural  development.  distinguisable  be p a r t  Peru  strategies requires  development  provide  provision  i n t e g r a l part  the poor a r e a p o l i t i c a l  F o r example,  could  eg.  housing  o f community  implement  positive  informal  1976).  accept.  phase  the  1971)  Recognition  To  include:  1976).  s t r a t e g i e s f o r the i n f o r m a l  (eg.  a s an  1976), Ahmedabad, I n d i a  Incorporation  6.  For  colonies  F o r m a t i o n of c o - o p e r a t i v e  5.  strength  sector.  of s e l f - h e l p housing  (Vernes,  (Poethig,  phase  i n t o an a c c e p t a n c e o f  squatter  (McGee,  (Ward,  Tanzania  of  of the p u b l i c  the p o l i t i c a l  strategies strategy,  services could As  a  result,  or  both this  174  fragmented strategies 3.  approach of  the  has  radical  EFFECTIVENESS OF Current  petty  discussion  capitalist  this  context,  planning  best  efforts  it  should  or  this  be  in  section  from t h e  will  capitalist  the  but  there  reduced  sector,  and  is little  the  evidence  to  numbers.  or  the  to  of  planning  the  indicate  for  indirectly  at the  l a c k of  at  it  is  difficult  to  as  suffers  Taiwan from a c u t e  had  a  or  make the  poverty-bound  petty  and  unemployment,  this.  the  poverty  and  very  rate  Third  Obviously  different, while in  of  unemployment  industrialising  unemployment  unemployment  First,  and  comparisions.  South Korea are  declining  about  of p o v e r t y  newly  the  level,  i t , for s e v e r a l reasons. levels  the  urban  of p o v e r t y  generalise  for  analysis.  success  difficult  In  some s u g g e s t i o n s  or d i r e c t l y  extent  the  poverty-bound  in large  s e c t o r , whether  of  In  It  e c o n o m i e s o f B a n g l a d e s h and  have  success.  from fruit"  is  the  poverty-bound  t h a t the  success  size  W o r l d n a t i o n s have d i f f e r e n t  such  of  "In a p o l i c y view, the p r e s c r i p t i o n s emanating t h e i n f o r m a l s e c t o r a p p r o a c h have b o r n e l i t t l e ( R o g e r s o n , 1985 p . 1 9 ) .  planning,  and  success  the  great  present  alternative of  to  with  present  regional level,  the  clear 1980).  evident  is s t i l l  indicators  the  a  regard  met  be  poverty-bound petty c a p i t a l i s t national  to  (Skinner,  with  will  sector  arising  The  phase  s e c t o r have n o t  below,  petty  led  PAST PLANNING EFFORTS  planning  capitalist  not  the  the  the  nations former  the  latter  last  decade  175  (I.L.O. are  Y e a r b o o k of L a b o u r S t a t i s t i c s ,  also  problems  i n the  levels  are  dependent  Third,  the  definition  At  times  with  illustrate  the  of  squatters  in  population  per  1978  whether  the  of  figure  difficulties, poverty,  the  of  reduction Yearbook  and  of L a b o u r  newly  Yearbook  nations  unemployment  Poverty  one  t o be  and  line  is  1982,  face  the  There  are  picture  of  consequently  unemployment i n the  month i s b a s e d on  of  to the  Third  the  of  Nations  exception World,  rate.  a  I.L.O.  of  most  Although  developed  1963  is  conclusions.  the  a  of  choose  United  that with  nations  to  indication  According  the  the i.e.  2 1  effectiveness  in  f o r most  of Rs.30 p e r  s e c t o r and  nations high  but  squatters  sector.  and  i t appears  for  little  1984,  urban  (Government  generalised  unemployment.  Statistics  increased  on  there  the  30,  accurate  the  times  estimate  1978),  o f Rs.  figure  informal  based  An  f i f t h of  percent  informal  clear.  squatter colonies. India.  line  nation.  other  It is d i f f i c u l t  the  here about  industrialising  developing  the  at  (D'Souza,  1973).  the  national level,  in poverty  Statistics  that  51.3  or  of  t h e r e f o r e , i n p r e s e n t i n g an  s t r a t e g i e s has the  as  for poverty  d i s c u s s i o n presented  At  case  poverty  Planning,  unemployment  planning  the  of a  poverty  i s a l s o not  s u c h as  squatters  high  representative  sector  there  because  level  u r b a n p o o r , and  indicated  as  economic  informal the  Second,  of p o v e r t y  of p o v e r t y  under  month, was  Ministry  the  the  i n I n d i a were  India,  the  general  problem, take  population  more  of  manifestations  To  C$.4,  the  i t i s equated with  the  urban  on  definition  1984).  prices.  as  well  1 76  as  the  can  developing  be  expected that  World w i l l (1984)  to  add  that  rate, t h a n  increase.  indications  urban  overall  picture  informal  formal  51.3  (Census of  of  For  i n one  India,  1971).  of  have c o n t i n u e d  the  last  two  of  decades,  sector  this  in India  pace  and  the the  grow a t is  the  national  unemployment  a  likely  there  are  estimate  for  estimate  of  roomed t e n e m e n t s was At  Third  Richardson  unemployment,  1973,  Development  explanations  for this  that  proponents  expressed  the  to  the  the  that  dependency  underdevelopment  developing  the  not  the  66  percent  level, and  the  a  large  have  One  poverty, nations  because  and  features  recall  very  there  are  therefore not  yet  argued the  then,  also  successful.  of  find chapter  the  informal  poverty  modernisation  well  In and  process  T h i r d W o r l d and persistence  the of  documented.  i n d i c a t i o n s that The  theory  modernised.  that  the  are  the  to from  is  over  development  and  thereof  sector  tried  may  had  planning  persistence  unilinear  Clearly  town l e v e l , been  of  of  informal  r e l a t i o n s h i p between t h e  nations.  underdevelopment  success  the  theorists  persist  a dependent  study  persistence.  p e r s i s t s because the  rebuttal,  limited  theorists  of  opinion  the  because  phenomenon.  has  i n the  it  sector.  scholars  At  that  deep p o v e r t y ,  that  creates  but  in  recession,  sector.  informal  instance,  living  world  i n unemployment  i n d i c a t i o n s of  indication  sector,  the  does the  percent  i s one  of  informal  sector  Another  two  the  only  poverty.  population  1971  not  result  increase  size  the  was  a  any  Along with  of  urban poverty  in  to the  states  faster  w o r l d as  planning  poverty-bound  petty  1 77  capitalist informal the  s e c t o r , whether activity  Third  World.  statistical informal has  found  some o f  the  by  the  size  Sethuraman  force  in  of 1974  of  that the  interest  1965); M a n i l a vendors  in  2 2  large c i t i e s  in  'sites  and  impressions  India, absolute  of and  on  the  the  author  size  of  s e r v i c e s ' were p r o v i d e d  deteriorated  never  poor,  in c i t i e s  researcher  i n the  t h e s e have  scholars  the  informal  into  the to  'planned  benefitted  f r o m any  planning  the  of  informal  (1981)  sector  study  to  scholars  Jeepney  in Cali  O p i n i o n i s b a s e d on in Delhi, Raikot, casual observation  of  not  had  was  45  for  percent  and  There  the  much s u c c e s s .  remains h i g h  1977)  table.  as  of  40-50  eg.  Lucknow  Colombia (Bromley  1975);  1978);  Birkbeck,  the  labour in  statistical sector.  continues  (McGee and  (Peattie, and  the  rickshawallas  (Pendakur, countries  indicated  percent  is little  activities  The  instance,  a d e c l i n i n g informal  informal  Asian  size  In C a l c u t t a ,  Bose,  drivers  South East  of  3.  suggest  the  has  sector  ( L u b e l l , 1974;  to  of  planning  (1981) i n t a b l e  Shoe m a n u f a c t u r e r s occupations  a  informal  therefore,  Finally, of  As  urban  visible  personal  this.  squatters  made by  Sethuraman's  evidence,  both  the  2 2  suggests  estimate  is s t i l l  change  Although  many  Estimates  absolute  of  visible  urban poor,  and  are  in selected  little  strategies.  sector  There  sector.  slums',  squatters,  indications  sector  informal  or  i t i s equated with  to  be  (Gould,  Hawkers  and  Yeung,  1977);  and  Street  1984).  r e s e a r c h work done on t h e informal L u d h i a n a , Sambalpur and R o u r k e l a as  The  sector w e l l as  178  Table  I I I - E s t i m a t e s of t h e i n f o r m a l s e c t o r i n developing nations  TABLE 1:  selected  ESTIMATED SHARE OF URBAN LABOUR FORCE IN THE INFORMAL SECTOR IN SELECTED DEVELOPING COUNTRIES  Per Cent  Area i  Africa A b i d j a n ( I v o r y Coast) Lagos(Nigeria) Kumasi (Ghana) N a i r o b i (Kenya) Urban a r e a s (Senegal) Urban a r e a s ( T u n i s i a )  31 50 60/70 44 50 34  Asia Calcutta (India) Ahmedabad ( I n d i a ) J a k a r t a (Indonesia) Colombo ( S r i Lanka) Urban a r e a s i n West M a l a y s i a Singapore Urban a r e a s ( T h a i l a n d ) Urban a r e a s ( P a k i s t a n ) Latin  40/50 47 19  (Malaysia)  35 23 26 69  America Cordoba ( A r g e n t i n a ) Sao Paulo ( B r a z i l ) Urban a r e a s ( B r a z i l ) R i o de J a n e i r o ( B r a z i l ) Belo Horizonte ( B r a z i l ) Urban a r e a s ( C h i l e ) Bogota (Colombia) Santo Domingo (Dominican R e p u b l i c ) G u a y a q u i l (Ecuador) Q u i t o (Ecuador) San S a l v a d o r ( E l S a l v a d o r ) F e d e r a l D i s t r i c t and S t a t e of Mexico Mexico D.F., G u a d a l a j a r a and Monterey Asuncion (Paraguay) Urban a r e a s (Peru) Urban a r e a s (Venezuela) C a r a c a s (Venezuela) K i n g s t o n (Jamaica)  Source:  persistence the  of  S. U. Sethuraman, C o u n t r i e s (Ceneva:  such  The despite  the  The ILO,  s t u d i e s not  phenomenon, but more  them t h a t  '  45  Urban 1981).  only  38 43 30 24 31 39 43 50 48 48 41 27 42 57 60 44 40 33  Sector  .in  indicate  a  Informal  importantly, there  Developing  persistence  i s no  indication  of in  i n f o r m a l s e c t o r has d e c l i n e d .  overall  indication  planning e f f o r t s .  i s that  the  informal sector  I t i s because  the  persists  informal sector i s  1 79  large, that 4.  p e r s i s t a n t and  the  need  for planning  PROPOSED ROLE OF From t h e can  one  form or a n o t h e r  and  the  seen t h a t  informal  will  no  nations  states  fluctuating  but  small  low  scale,  not  a  although is  in  are  necessarily  capitalist  to  the  benefit  capitalism choice  that  not  intervened  when  petty  profit But,  World  are  the the  several  are  how  i n the So  w o r k i n g s of because  government  alternative is  the  to best sector,  scale,  activities the  low  developed  here  Western  d i f f e r e n c e between  the  The  discussed  capitalist  i n the  world  i t is petty  p h a s e , government  utilise so  its  that be  a  the  sector  either  the  illegal  nature  the  petty  sector  positively of  is  resources  f a r , T h i r d World governments  and  two  profit  poverty-bound  T h i r d World can  rules  a  economy.  Even  small  view  World  sector  being  in  World  Third  t y p e of  a temporary  poverty-bound  usually  the  the  Third  view, the  petty  since  not  need t o d e c i d e  compulsion.  if  i n any that  by  i n the  T h i r d World alone.  Therefore,  exists  and  efforts  deemed n e c e s s a r y  capitalist  feature  low  planning  were g u i d e d  to t h i s  poverty-bound while  i n the  negatively, violates  the  Third  p h a s e s of  efforts  activities  have  the  unemployment  ignored.  planning  contrast the  activities  with  was  the  present'  profit  so.  and  i s a temporary phase  permanent  the  be  three  only  that  In  of  the  i n l e s s e r numbers.  that  faced  be  nations  activities not  not  that  feature  capitalist  of  sector  longer  cannot  to poverty  STATE  but  developed.  analysis  are  THE  discussion  it  that  be  closely tied  the  regulations.  of have or  activity It  is  180  pertinent  to  consider  whether  this  sort  of  intervention  is  necessary. In  contrast  illegality be  the  of  basis  to  the for  petty state  benefits  of  the  decision  to  intervene  analysis.  In  capitalist to  i t i s suggested  capitalist  activity  in  intervention. to  and  activity  of  profit  high  profit,  state  create  tax  evasive  of  revenue  to  the  of  maintenance of  taps,  sanitation, public  and  how  city  by  the  social drug  to  the  example,  provides  and  to drug  more the  of  increase  users.  be  whether  a  hawkers and  and  on  the  this petty  necessary  illegal.  For  low  justifiable  if  to  they  any  be  economic c o s t s  state  services.  a  economic c o s t s  addicts  based  i t may  seems  the  state.  considerable vendors  should  p r e s e n c e of  loss  increase public  the  water  On  petty  against  capitalist  to provide  I f the  costs  to  the  intervention intervene  to  drug p e d d l i n g ,  activity,  other  weighed  state  in crimes, the  be  the  may  s u c h as the  the  negative  state  criminal activities, and  analysed  be  not  and  r e t a i n i n g the  then  create  should  costs  i n f r a s t r u c t u r e such as  the  exceed  illegal  of  were  much i t w o u l d c o s t  benefits,  be  activities  and  the  that  transportation.  s i m i l a r goods and  For  costs  activities  same o r  necessary.  benefits  intervention  social  However, t h e s e c o s t s received  should  if it  s t a t e , and  costs  activities,  even  capitalist  example,  benefits  i f the  activity  For  the  state  outwiegh the  petty  activities  the  itself  Instead,  i n what ways s h o u l d  some c a s e s ,  category  the  views,  activity  f a c i l i t a t e the  or  previous  s u c h as  the  state may  be  restrict  because  the  treatment  of  outwiegh the hand,  the  benefits i t  poverty-bound  181  petty focus  capitalist  activities  of d i s c u s s i o n here,  Consider  the  benefits  in  require  the T h i r d World, which less  negative  i s the  intervention.  from t h e p o v e r t y - b o u n d p e t t y  capitalist  sector. 1.  Provider  o f c h e a p goods and s e r v i c e s .  2.  Provider  of convenience  3.  A source  o f employment  4.  A source  o f income  5.  Recycler  of  6.  A source  f o r the preservation  The this  cost  created  by  employment It the  to  cope  l a n d and p r o p e r t y , the  activities  or welfare  should  This  or extend  the  skills. i t s services  illegal  occupation  and t h e h e a l t h a n d s a f e t y are high,  but the c o s t  in this  be more p o s i t i v e .  case  of  hazards  task.  the r o l e of  Some p o s i t i v e p l a n n i n g  ex.ist, as reviewed e a r l i e r , p o s i t i v e measures  i s discussed  that  to  of providing  t o t h e p o o r would be a no l e s s e r  suggests other  effective.  of t r a d i t i o n a l  with  i s , t h e r e f o r e , necessary  measures a l r e a d y  5.  f o r the poor.  to the state to provide  government  analysis  of the poor.  resources  population,  government  i n shopping.  i n t h e next  but the a l t e r n a t i v e  that  would  be  more  section.  SUGGESTIONS FOR PLANNING FOR THE POVERTY-BOUND PETTY  C A P I T A L I S T SECTOR IN INDIA There  are  serious  and  alternative  a n a l y s i s to planning  capitalist  sector.  main c o n c l u s i o n s  To d i s c u s s  important for these  the  implications poverty-bound  of  the petty  i m p l i c a t i o n s , some o f t h e  of the a l t e r n a t i v e a n a l y s i s are repeated  here:  1 82  1.  Rural  migrants are  not  the  only  poverty-bound petty c a p i t a l i s t 2. of  Demand the  3.  type  optional that 4.  of  or  labour  labour  for  the  necessary  to the c r e a t i o n  supply.  demand  present  cost-based,  will  in  an  affect  urban the  economy,  entry  of  i.e.  labour  into  sector. The  poverty-bound petty c a p i t a l i s t  urban poor as  w e l l as  resources  flow  capitalist  s e c t o r and  the  back  the  process  f o r the  it  is  not  the  T h i r d World without  discussion The  here  structure  of  1979). within  the  be  labour,  i n the that  used  to  poverty-bound  Indian  improve  aspect  the  therefore, suggestions  India  1981;  is  planning  sector.  However,  the  made w i t h i n  the  India. are The  top-down i.e.  posed.  to  in  therefore  institutional and  economic,  Poulose,1979;  necessary are  of  system.  of development,  (Wishwakarma,  petty  the  and,  presented  planning in  and  implications for planning  context  are  capital  the  sector.  over-generalising  planning  It i s , which  can  i s only  permeates every physical  formal  and  between t h e  to d i s c u s s the  suggestions of  forth  s e c t o r c a t e r s to both  poverty-bound petty c a p i t a l i s t  feasible  constraints  w e l l t o do,  and  These c o n c l u s i o n s  and  of  sector.  f o r p e t t y c a p i t a l i s m i s as  s e c t o r as  The  source  present  planning social,  Bhattacharya, the  context  183  5. 1 The I n s t i t u t i o n a l Framework F o r P l a n n i n g There a r e three poverty-bound appendix F. 1.  petty  making t h e f i v e The  development particular the  year plans  of  It  sector  to  the  Housing  on  See  responsibility by  economic  the  not  prepare  or  such  in that  of  a  i s responsible for  implement  Planning Organisation. that  with  is  level  urban  under  major  the  problems  and  urban  regional  Works  and  t h e T.C.P.O.  urban  and  Secondly,  regional  i t s t u d i e s the  by t h e M i n i s t r y  of  Works  of  India,  accordingly. o f f i c e s i n the s t a t e s  of the s t a t e M i n i s t r y  whether a t t h e n a t i o n a l  a  trained  and of  Firstly,  of  Planning.  urban a r e a s and r e g i o n s  state  is  with  Ministry  with  identified  has r e g i o n a l  the  of  roles.  concerned  This  staffed  problems  the s e t t i n g of g o a l s .  the  development  responsiblity  Commission  the s t a t e M i n i s t r i e s  of  i s responsible for  f u n d s f o r f e d e r a l and s t a t e  and p r e p a r e s p l a n s  a r e under  prepared  two  Ministries  T.C.P.O.  development  of  It i s directly  urban and r e g i o n a l  that  1979).  plans.  deal  has  guide  becomes  undertaking  It  development  The  does  and Country  development.  and  a f f e c t the  plans are s e c t o r a l l y divided  allocation  professionals  advises  that  (Poulose,  institution  The P l a n n i n g  development  Housing.  that  sector  Ministry.  The Town  public  year  each  development.  2.  i n India  sector  Commission: T h i s  five  sectoral  regional  capitalist  India  These a r e :  The P l a n n i n g  India.  l e v e l s of p l a n n i n g  In  actual  in a state  a r e the  of P l a n n i n g  T.C.P.O.'s. or s t a t e  The  level,  The  and  T.C.P.O.,  i s not  plans  are  however,  responsible  for  1 84  the  implementation  3.  The  that  plans  of  the  It  can  implement  by  the  be  seen  are  examining  the  literature  Third  At  are  organisations  f o r urban development Planning  but  also  under  the  implement  the  the  planning  structure  r e s p o n s i b i l i t i e s f o r urban to  the  regional  literature  and  offices. on  the  in India  is  regional  This  has  not  benefits  of  a  approach. the on  World,  the  planning  planning  certain  poverty-bound petty 1.  These  T.C.P.O..  delegated  By  the  of  that  c h a n g e d much i n s p i t e o f bottom-up  plans  state  c e n t r a l i s e d but  development  and  plans.  state Ministry  prepared  highly  urban  urban development a u t h o r i t i e s :  p r e p a r e and  advice  of  uncoordinated  and  strategies  sector  level,  i n d i r e c t due  the  i n the  in India  the to  (Wishwakarma,  in India,  limitations  capitalist  national  structure  as  1981)  well  as  approach to  the  become  planning  evident:  approach  sectoral basis  of  is  economic  planning. 2.  At  the  urban  level,  p i e c e m e a l manner and is  no  cover  are  the  l i m i t e d i n scope.  u n i f o r m a p p l i c a t i o n of a l l the  3.  The  and  incapable  squatters  majority of  of  strategies  the  in Delhi  the  reducing  sites  and  (Ghosh,  number  For  applied example,  services  in  a  there  programme  to  1979).  d i r e c t planning the  are  of  e f f o r t s are urban  'cosmetic'  poor  (Ghosh,  1979) . 4.  Some  designed may  of  the  ( A n g e l and  'cosmetic' Benjamin,  have been p r o v i d e d ,  approaches 1976).  i t frequently  are  inappropriately  For  example, w h i l e  did  not  meet  the  housing socio-  185  economic  n e e d s of  In the  the  next  n a t i o n a l and  situation, clarified  at  the  levels,  the  in  For  Planning  need  approach at  not  the  It  At  The  should  be  should  transferable  to  be  other  National Level  coordinated  the  national level  under a  of  and  d e v e l o p m e n t , and  a n a l y s i s showed t h a t  poverty-bound petty c a p i t a l i s m p o o r and  sector  relationship to poverty  are  is,  and  sector  unified  created  by  t h e r e f o r e , not  rural  migration.  and  this  will  efforts.  There are  three  not  the  the  source only  f o r the  of  reasons  goods and  coordination  for a coordinated  of  increased effectiveness.  Coordinated  planning  and  implementation  level  analysis  by of  ensuring the  t h a t the  issues  and  The  is  planning  approach.  and  planning  services  analysis  planning  of  migration  correlation  Coordinated  effectiveness  the  supply  groups.  level  will  of  labour  through  income  A national  because  development.  a straightforward  facilitate  planning  result  sectoral  i s not  a l l  of  overemphasised,  the  t h a t t h e demand  required  be  unemployment a r e  for  rural  unification  cannot  alternative  national  Indian  activities.  f o r c o o r d i n a t i o n and  process  the  analysis.  are  The  of  of  f o r the poverty-bound p e t t y c a p i t a l i s t  p r o b l e m s of p o v e r t y  the  context  at  policy.  The  of  a r e made f o r p l a n n i n g  the  alternative  suggestions  national level  entire  poor.  of p e t t y c a p i t a l i s t  Planning  national  the  urban  that these  Suggestions  A.  urban  section, suggestions  using  categories 5.2  the  increase plans that  the  reflect  a  separate  186  strategies for  do  poverty  approach  and  has  planning  may  create  industrial be  a  affect  developed rural  is  the  the  plan.  development  sector  As and  unsuccessful  a  the  created a higher  small  (Das,  but  the  strategy  i n another where  the  industrial to  each  in  the  one  than  migration  has  strategy of  the  sector  small  towns  can  were  t o a b s o r b some of  However,  wages  provide  drawback  state's agricultural D.  sectoral  sector.  industries  town  the  own,  to  development  estates  their  the  economic  into  agricultural  market c e n t r e s of  India,  Strategies  fitted  On  planning  because  areas while  poor.  appendix  result,  the  Coordinated  a part  is  industrial  i n Punjab  See  provided  markets. cities  that  into agricultural  development  rural  effort  strategy  case  m i g r a n t s , as  towns and  f o r the  intentioned  adversely  was  i n the  the  in  sectors.  then  example,  Although  priority This  are  constructs  employment  approach  This  For  jobs  sectoral  a  economic  unemployment  sector  well  is  i s d i v i d e d by  and  each other.  uncoordinated.  plans.  development  may  unemployment  in India  development  work a g a i n s t  been  reduce poverty  sector  not  and  the jobs  that  development  rural  industrial i n the  in  continued  and  the  large  agricultural towards  strategy  large  has  been  1984B).  planning  and  better  r e g i o n a l coverage  of  strategies. A  coordinated  neglected  i n the  policies  can  totally  approach  development  overlap  neglected.  This  will process  ensure by  i n some r e g i o n s , makes  it  that  no  regions  oversight. while  difficult  other to  are  Sectoral regions  predict  are the  187  results  of  a  example,  the  development  town  in  1951  was  of  that  population studies  development  showed  developed  of R o u r k e l a  , India  to  region.  However,  the  took  population greater  source  demand f o r p o v e r t y - b o u n d p e t t y supply  was  Consequently,  population  had  Coordination also  will  not  only  ensure that  the  Coordinated  planning  A  reach  and  can  base on  Currently,  information  collection  because  p r o b l e m has  been v i e w e d  as  the  alternative  capitalist  sector  Furthermore, s e r v i c e s are large petty  and  the  the  but  do  provide  capitalist  also  sector  be  study  the  local 1977).  is  but  of  to  not  b a s e on  the  essential  to l a r g e  towns  However,  smaller  petty  towns.  s e c t o r ' s goods  sector of only  them.  the  sector.  poverty-bound  the  study  improve  context.  in  the  base.  capitalist  the  for  i s necessary  information that  only  surrounding  (Das,-  used  in that  The  between  in  activities,  the  is restricted  demand  town l e v e l .  for linkages the  less  a l s o the  amongst  present  i n the  sector  was  information  shows,  also  consumer  small  capitalist  areas not  analysis  neglected  demographic  capitalist  poverty-bound petty  is  the  a l l regions.  improved  information  the  to  employment  significantly  approach the  industrial  improve e f f e c t i v e n e s s of p o l i c i e s  policies  coordinated  For  surrounding  of  Rourkela  unemployment  decreased  an  1971,  a v a i l a b l e from many o f  regions.  not  by  advantage  population.  region.  employment  from the  than  whereas l a b o u r  local  , as  provide  Rourkela of  the  in a particular  expected  that  regions  policy  at  the  both  and the  poverty-bound  for  all  Sectoral policy poverty-bound  for planning.  urban data petty  Sectoral  188  planning  is  particular affects  concerned  sector,  that  sector  more  and d a t a  sector.  involves  directly  information  base  true  periodically  Census c o l l e c t i o n , sector  the formal  f o r the formal  sector  production  for  the p a r t i c i p a n t s i n t h e p e t t y  though  these  sector.  For instance,  unrecorded  in  Rourkela.  employment  This  labour,  sector,  assists  recorded  nor a n a l y s e d  approach unified In to  will  was  hired  i s part  the production  facilitate  through  National  on  in of  the  mill  do  not  activities  even  a  casual  the  the  steel  petty  project.  collection  A  suggestion  effectiveness information B.  of  approach planning,  to  the  cover  capitalist  coordinated  problem,  a l l regions,  in a  base.  at the n a t i o n a l  the s t r a t e g i e s i n the d i f f e r e n t  national  m i l l s of  of i n f o r m a t i o n  summary,  a  basis,  but i s n e i t h e r  enhance t h e i n f o r m a t i o n  the f i r s t  f o r formal  But t h e s e  of the s t e e l m i l l  i n the s t e e l  is  t h e needs o f t h e f o r m a l  documents,  that  t h e same  Data i s  capitalist  provide  the  sector.  manner a n d t h e r e b y  coordinate  under  labour  mills.  of  Yet, while the  studies also exist  include  often  sector  as i t  capitalist  much  i s extensive  capitalist  u n i t s such as s t e e l  activities  as  the  only  petty  sector.  the formal  and c o o r d i n a t e d  of  i s collected  indirectly  f o r the poverty-bound petty  collected  development  poverty-bound  and  i f n o t more, t h a n  the  on p o v e r t y  But, the  population,  not  with  level  economic to  is  sectors increase  a n d improve t h e  base.  Demand  for petty  c a p i t a l i s m and s p a t i a l  linkages  planning. The  alternative  analysis  proposed  that  demands  are  189  essential that  two  to the c r e a t i o n of poverty-bound p e t t y c a p i t a l i s m types  of demands a r e  cost-based.  These  urban a r e a s .  Consequently,  demands a r e  poverty  distribution  of demand a l o n g  petty  much  capitalist  reduce  i t . by  the  towns.  But,  with  thought  strategies  t h e a n a l y s i s of  i s given  and  efforts  c r e a t i o n of  jobs  thought  i n the is  to the  for  a r e made t o r e d i r e c t  or  or  redirecting  rural  given  areas  to the  labour  i s t o be  To  demands  created  capacity  to absorb  the  poorer  patterns formal the  by  the  labour  population.  recapitulate  regard,  upper than  I t was  i t was  income  the  s e c t o r u n i t s and  l a r g e towns  creating f o c u s on  more  (Mathur and  stated that optional have  a  higher  demands c r e a t e d  c o n c e n t r a t i o n of  upper  o p t i o n a l demands t h e r e .  Current  strategies  consider  the  income g r o u p s i n 1979),  not  by  development  Santos,  j o b s do  this  the  1984;  the c r e a t i o n of  Kundu,  that  the arguments of  a l s o s t a t e d t h a t the  the  smaller  if  cost-based  consequently  rural  created  groups  i n t h e T h i r d W o r l d have l e d t o t h e  the  or  fact  demands w h i c h have t o be  analysis in this  supply.  supply  caters to p a r t i c u l a r  alternative  in a l l  spatial  labour  labour  the  designed  the  labour  attracted.  and  t o some d e g r e e ,  development  amounts t o r e d u c i n g  little  optional  unemployment must a n a l y s e  activities  This  migrants  and  the  present,  any  t o cope w i t h  Currently,  present,  and  the  thereby that  aspects  of  demand. In towns  India, to  attract  opportunities few  agricultural  i n number.  for The  markets are developed  rural  migrants.  petty  capitalist  c r e a t i o n of a  few  These goods and  i n the  markets  small create  s e r v i c e s but  job o p p o r t u n i t i e s  in  are the  190  petty  capitalist  sufficient of  sector  to a t t r a c t  again  development that  too  to a t t r a c t  few  jobs  by  the  created  Without  these  few  offered  g r o u p s , and scope  jobs  only  demands.  wide r a n g e o f In rural  the  lack  of  there  should  for  optional  result,  of  that  study  need t o  attracting that i n the  problems of creation  demand, i s n o t  the  rural  of  markets  and  migrant  not  create migrants.  towns  to  (Das,  attracted was  a  1984B).  have a t t r a c t e d  been p l a c e d  feasible  due  there to  a  development,  agricultural That  was  create  there  towns m i g h t  was  limited  there  was  no  created  larger  group  to  were  groups.  a l s o because  markets  i s , i t would  be  demand f o r p e t t y c a p i t a l i s m i s  l a r g e towns  the  Punjab  income  industry, income  town  were  the  d e v e l o p m e n t had  If t h i s  in  is  There  i n f r a s t r u c t u r e for i n d u s t r i a l  to accept  the  small  This  m i g r a n t s was  could cater  study,  have been no  the  they  1975).  rural  in  the  creation  Punjab s m a l l  1984B).  middle  industrial  more dynamic  with  and  a  the  In c o n t r a s t , jobs  the  o p t i o n a l demands  of  i n i n d u s t r y but  Johl,  purpose  and  provided  jobs  i f the  more r e a l i s t i c  dealing  As  supporting  the  larger  of  Punjab case  1977;  (Das  i n demand  labour.  upper or m i d d l e  market.  demands t h a t  labour  (Bhalla,  the  to  agricultural  consequently  number  of  of  Field  i n the  for attraction  i n the  to the  study  migrants  increase  s e c t o r , nor  earlier.  created  a s i z e a b l e upper  optional not  cited  t o an  easier entry  case  attract  greater  already  allow  rural  leads  to that  the  jobs  to  them, t h e the  by  strategy  showed  to  labour  o p t i o n a l demands t h a t  illustrated  neither  sector at greater  p o s s i b l e at the  and the  concentrate l a r g e town  level,  demands, i n c l u d i n g  small  town  level.  on  the The  191  l o c a t i o n and d i s t r i b u t i o n of the types of demand i s , t h e r e f o r e , a necessary c o n s i d e r a t i o n  i n r e g i o n a l development s t r a t e g i e s  that seek t o r e d i s t r i b u t e labour. planning  at  the  urban  T h i s b r i n g s the d i s c u s s i o n to  l e v e l and how the a l t e r n a t i v e a n a l y s i s  affects i t . . 5.3  Suggestions For Planning The  At The Town L e v e l  d i s c u s s i o n here w i l l be  earlier  that  the  role  However, the suggestions minimal  to  situation.  more All  on  the  view  of the government should  proposed  be p o s i t i v e .  f o r government i n t e r v e n t i o n range  direct the  based  and  intensive,  suggestions  depending  proposed  r e s p o n s i b i l i t y of the Town and Country Planning  can  from  on be  the the  O r g a n i s a t i o n and  implemented by the urban a u t h o r i t i e s . A.  demand f o r p e t t y c a p i t a l i s m i n urban areas and s p a t i a l  linkages  planning.  It  i s necessary  planning in  an  whether t h i s existing  to  i n c l u d e the demand aspect  i s planning  town  or  in  f o r the  a new town.  poverty-bound  poor  sector  This necessitates a  r e c o g n i t i o n that the l o c a t i o n of the p e t t y c a p i t a l i s t in a c i t y  in spatial  activities  i s c l o s e l y t i e d to the l o c a t i o n of i t s demand.  people  make  the  r i g h t choices  for their  l o c a t i o n within  e x i s t i n g c o n s t r a i n t s , with regard t o the demand f o r t h e i r and city  Most  goods  s e r v i c e s , even though these c h o i c e s may not be a c c e p t a b l e to a u t h o r i t i e s f o r economic, p o l i t i c a l or a e s t h e t i c reasons.  However, i f such l i n k a g e s e x i s t between demand and supply linkages  should  be  put  into  the  analytical  framework  these for  192  planning. and  I n some i n s t a n c e s ,  the  but  poor  i n other  relocation towns.  c a n be a l l o w e d  instances of  activities  benefits  and  selection  o f optimum  security  of  tenure  i s necessary  does not occur  1976)  cope with the  their  be  minimal  original  f o r the  Research Centre  poor  poor  r e l o c a t i o n of This  the sector  costs.  at the selected s i t e . so t h a t  Consideration  poverty-bound  minimise  for the  sites  i n new  maximise  Related  to the  is  provision  of  Some s y s t e m o f l a n d the  same  population  i n Bombay where  relocated  required  in  to  was t h e c a s e  were e v i c t e d f r o m t h e i r  Bhabha A t o m i c  in their  planning  be t o a l l o w  s e v e r a l times.  72,000 s q u a t t e r s the  or  location  tenure  t o remain  can  more i n t e r v e n t i o n may be n e c e s s a r y a s  But, the aim should  their  the i n t e r v e n t i o n  sites  the land  because  (Deshpande,  o f t h e l o c a t i o n o f consumer demands f o r t h e  petty  capitalist  urban p o v e r t y  sector  in spatial  as w e l l as maintain  planning can  a orderly  image  of  In  an  city. Spatial  existing  linkages  manifest,  labour  supply  relocation  the  for  the  may  locations.  capitalist consumer  c a n be p l a n n e d  and  retaining  the  When t h e a c t i v i t y are least  s a f e t y problem.  be  provided  as c l o s e source  In such  instances,  to the o r i g i n a l of  demand  sector i s  demand  activities  i s retained  disrupted.  in  i n the  However,  pose a h e a l t h  the r e l o c a t e d s i t e  site  and  f o r i n two ways,  be n e c e s s a r y where t h e a c t i v i t i e s  or  alternative  between  sector  l o c a t i o n , the linkages  relocation  bound p e t t y  linkages  of the a c t i v i t i e s  original  original  i n an e x i s t i n g town.  town where t h e p o v e r t y  already  their  planning  as p o s s i b l e or  f o r the a c t i v i t i e s .  should at  an  Currently,  193  relocation other  s t r a t e g i e s , which are  developing  sector. and  nations,  Activities  space  services'  were p r o v i d e d  s i g n i f i c a n c e of  This it  s o r t of  cope w i t h  bound p e t t y  or of  as  long  in  as  of  Ghosh  authorities, the  the  that and  city  families  intiated  by  will  city  town  periphery as  a  part  politician  of  image,  some of  the  r o l e i n the  economy  and  sites  the  city  (Ghosh,  1979).  image nor  to  does  was  for  poverty-  Take the India.  resettlement  when t h e r e  site  case  study  Field  study  were r e s e t t l e d on  original  c o s t l y to  demands.  its original  who  to t h e i r the  city  t o meet t h e  i t .  squatters  of  city  the  to  in Orissa,  returned  the  was  sites  (Das,  schemes  in  p e o p l e and  the  an  adequate  area  them.  years were  of  of  and  respond  occupy  unnecessary  the  linkages  as  'sites  either return  will  well  poor.  r e l o c a t i o n of  without c o n s i d e r a t i o n  squatter  Authority,  city  removal or  During  the  will  to c o n t a i n  poverty.  basis  demand e x i s t s i n t h e  resettlement  was  their  urban  (1979) s p e a k i n g  squatters  to  the  the  as  mid-seventies,  improves  indicated that  Furthermore,  Delhi  the  the  selected original  industrial  1977  argued  within  to an  periphery  Delhi  or  their  India  o u t s k i r t s of D e l h i  c a p i t a l i s m , labour  Rourkela,  1978).  the  in  consider  the  a n a l y s i s of  problems of  migrants  conducted the  on  relocated population new  In  relocation neither  Firstly,  The  any  not  r e l o c a t e d on  availabity.  urban poor w i t h o u t the  are  do  common  the of  from  city the  Sanjay  informal  o f demands o n l y  1973-1977,  removed  the  by  'city Gandhi  for  sector  perpetuates  instance,  150,105  Jama M a s j i d  area  the  Development  Delhi  in old  b e a u t i f i c a t i o n movement' (Government  of  India,  194  1978). the  This  people  increased their  and their  access  increased to  framework  costs  the  city  accomodating to  India,  a new  squatters design been like.  This  within upper  due  capitalist  could  the  to  towns,  existing into the  time  the  that  analytic  i s present  in  f o r the growth of the s e c t o r as  and a r e a . i n new  towns.  there  is  no  p r o v i s i o n made f o r  capitalist  sector  t h e demands p r e s e n t .  the c i t y  violating (Sarin,  that  is  In C h a n d i g a r h ,  hawkers v e n d o r s ,  and  some o f t h e o r i g i n a l  plan  1982).  Planners  have  since  p r o b l e m s by r e l o c a t i o n , r e m o v a l a n d t h e  have been a v o i d e d  city,  In  sector  town p l a n n e d by Le C o r b u s i e r ,  with  result  t h e optimum l o c a t i o n s c a n be d e r i v e d n o t  towns,  short  contradictory  are f i t t e d  the poverty-bound petty  i n a very  livelihood,  I n sum, r e l o c a t i o n  linkages  planning  planned  crowded  coping  the c i t y .  1979).  i n population  linkages  of  t i e s of  o f work, a n d d e c r e a s e d  (Ghosh,  the petty  develop  means  to places  b u t t o make p r o v i s i o n s  new  their  of the poor, a r a t h e r  f o r planning,  Spatial  sure  of t r a v e l  i f the s p a t i a l  expands  In  removed  intended  t o cope w i t h city,  as  thereby  t h e economic and and s o c i a l  t o c h e a p goods w i t h i n  one  therefore,  the  severed  the poverty  the  only  move  i f areas  c l o s e to the expected  income r e s i d e n t i a l  areas,  had  been  alloted  s o u r c e s o f demand,  market p l a c e s  and  such  transport  nodes. B.  Planning  While to  f o r i n f r a s t r u c t u r e and h o u s i n g .  t h e s e l e c t i o n o f t h e optimum l o c a t i o n a l l o w s  maximise  their  benefits  i n the long  needs of t h e poverty-bound p e t t y  run, c e r t a i n  capitalist  sector  also  t h e poor immediate require  195  the  attention  of  urban  provision  o r improvement  Although  the  government building  planners. of s h e l t e r ,  provision  can  of  undertake  materials  the  necessary.  provide  the  distribution urban  becomes  light,  is  that  minimum  other users of  that  equipment  water,  pilfering  t o remain  efforts  and  the  made  the  services.  do  from  poor  live  not  have  access  nearby  will  or garbage sources.  be r e d u c e d original  upgrading t h e i r  In I n d i a , basic  there needs  towns i n f r a s t r u c t u r e sector  is  a  to  In  if  sites living  programme  improve t h e  t o t h e poor a t and  their  work  to  disposal  the  public  e x c e p t by  activities  or close  for  conditions  the case  the  i n the  provision slow.  towns some  of  I n new  c a n be p r e p a r e d f o r t h e p o v e r t y - b o u n d and i n e x i s t i n g  are  by, r e s o u r c e s  and working  b u t i m p l e m e n t a t i o n h a s been  i n advance  in  Since the c o s t s of  u n i f o r m manner, n o t p i e c e m e a l a s h a s been  capitalist  strains  the  electricity  in their  be  and f a c i l i t i e s  Currently,  structures  c a n be p u t t o w a r d s  past.  to  of i n f r a s t u c t u r e .  removal and r e l o c a t i o n  a  government  was n o t e q u i p e d t o h a n d l e t h e e x t r a  affects  suggested  transportation,  in  the  poor,  location.  allowed  for  of the  optimum  or  knowhow f o r c o n s t r u c t i o n  n o t meet t h e needs  working  using  appropriate  the present unequal  services,  substandard  providing  supplying  t h e r e a r e two s u g g e s t i o n s .  Distribution It  of  because  and u l t i m a t e l y  this  facilities.  needs  infrastructure  load,  technical  i n the  an enormous t a s k , t h e  rate,  necessary  infrastructural does  is  mostly  and  responsibility  at a subsidised  It  are  services  housing  h o u s i n g d e s i g n s and p r o v i d i n g if  These  petty  advance  196  preparation Design  can  a l s o be  of  housing.  Improvement 'sites the  and  needs . of  the  design  Since, state and be  it to  the  needs of of  was  given  be  poor.  by  ineffective  schemes  stated earlier  The  of  low  According  to  Development  high  originally  Urban  cost housing  Rs.  115  per  squatted  original  links  analysed urban  that  on  sites  between  before  level.  than  Rs.  may  the  the  (1975), 250  because nets.  social design  and of  per  be  The  in  of  no  enough of  yet  the  India  1977).  has  a  monthly  In  Madras,  fishermen  fishermen  was  profile  month and  to the  the  percent  requires  (Mulk R a j ,  there  for  cheap  71  Corporation  beaches.  1974).  pose h e a l t h  design  not  the  incorporated  necessary  i n the  meet  that  Payne,  be  in Delhi that month  not  socio-economic  r i s e a p a r t m e n t s were p r o v i d e d  a p a r t m e n t s t o hang t h e i r the  i t may  Mazumdar  and  of  1978;  u n i t s or  case  adequately  cost housing  Housing  low  does  r e l o c a t e a c t i v i t i e s when t h e y  less  constructed  of h o u s i n g  if it  (Das,  that  i n D e l h i earn  their  not  i t i s suggested  design  expansion.  o f t e n been t h e  the poor are  squatters  India,  design  greater attention, p a r t i c u l a r l y  poor.  payment  for c i t y  the  I t has  relocation  s a f e t y problems,  the  will  i n t e r v e n e and  housing. for  housing,  services',  socio-economic in  of  made t o a l l o w  who  returned  space  to  in  the  I t i s , t h e r e f o r e , suggested  that  economic a s p e c t s  strategies  at  the  of p o v e r t y national  be and  1 97  5.4  D i f f e r e n c e s Between P r o p o s e d S t r a t e g i e s The  those  s u g g e s t i o n s p r e s e n t e d h e r e may  i n the p o s i t i v e  earlier.  However,  analysis labour the  radical  previous  of the s p a t i a l  informal  phase,  sector  w i t h a view  sector  strategies  was  t o maximise  frequently  its  the  reverse  t h e top-down a p p r o a c h  the l o c a l  governments;  development,  1979). replacing a  more d i g n i f i e d  with  some  providing  government housing  poor can c o n s t r u c t  the  in  relocated  i n Lima,  because  term  was  autonomy  (Friedmann  poor,  in that  and  But  this  removed  for  self-help  of the approach  the because  the  poor  themselves,  example,  from  Weaver,  c o n t e x t , meant  the poor h e l p For  on  instead  of  so t h a t  the  housing  was  demand a r e a s . of  i t s dismal  Peru.  self-help  itself  t h e p o o r have a l r e a d y capitalist  the  were made  greater  poor, p r o v i d e m a t e r i a l s  sites,  failure  of  of the time which  with  growth  of l e t t i n g  own.  (1980) i s c r i t i c a l  phase  approach of p r o v i d i n g  way  Skinner  The  urban  the  their  but  location.  t o one  assistance.  to  the  a bottom-up a p p r o a c h w i t h emphasis  the p a t e r n a l i s t i c  with  often  for  In  the formal s e c t o r ,  approach  and a g r o p o l i t a n  Self-help  sector.  Relocation  an and  compensate  suggestions i n the r a d i c a l  to  demand  capitalist  to  described  n o t b a s e d on  consumer  benefits.  not t o an optimum  the c o n t e x t of the development  petty  between  similar  planning were  i t complemented  in  rural  of  t o be  s t r a t e g i e s were d e s i g n e d t o  because  Similarly,  for  phases  linkages  Others  appear  s u p p l y of the p o v e r t y - b o u n d p e t t y  positive  not  and  And  activities  also  appears  t o be  inappropriate,  h e l p e d t h e m s e l v e s by to  cope  with  their  engaging  in  p o v e r t y and  1 98  unemployment.  Whatever  with  whether p a t e r n a l i s t i c  of  poverty,  i s done by  p r o v i s i o n or c o m p e n s a t i o n  more  directly  suggestions into  this  by  the  arising  out  suggestion  poverty-bound petty There  are  from  under  given  twenty  enormous (1980,  of  the  to  p o o r who  could  not  of  nation.  aspects  be  activities to  situations  magnitude of sixty  of  in  fit  of  the  where 40-50 p e r c e n t  to attempt  sector  organising  will  activities  not  benefit  into  conveniently activities  the  the  can  even a f f e c t  organising  the  some d e g r e e of  and  lead  i t . may  hawkers who  items  located  that  from  cooperatives  I n d i a , many of because  one  to  the  informal  are  Secondly,  result sell  cheap  provide increase location  then  food but  in costs of  activities  the  strategy because  survive  therefore  activity.  not  they  Organising  and  the  clientale.  into cooperatives  f o r m a l i s a t i o n in marketing  such  organising  a l s o because  and  It  for  effective  items  variety.  estimated  the  i n l o s s of  is  million  1981).  cooperatives  is totally  as  been  varies task  9  (Sethuraman,  considered  be  the  over  has  World.  which  population  is a city  the  makes i t  Third  sector  cannot  may  The  also  that  the  i s taken,  and  benefit  cooperatives.  approach  informal  Calcutta  informal  diffcult.  the  percent  India)  to the  this  into  i f a piecemeal approach  only  the  analysis  numbers and  In  cope  o r more humane, i s some a c t  alternative  capitalist  i n many i n s t a n c e s .  belonging  many  to  i s sometimes made i s t o o r g a n i s e  current  the  Census  would  the  government  development p r o c e s s  that  several  unfeasible Firstly,  to  the  context.  One  as  else  are  these prices, Finally,  leads  distribution  to of  199  the  goods.  those the not  This  raises  i n the cooperative government  must  may  then  of  the  cooperatives Dairy  needs  may a f f e c t  farmers  organised  cope w i t h  in  the  Kaira  Today  the  As  a  planning,  final  cooperative  that  met  of  by  cheap  initiative provides  have  goods.  the poor, and  Gujarat,  poor.  India, of  a  were  private  many o f t h e d a i r y poor  continue  s e c t i o n on s u g g e s t i o n s f o r  since the f i n a n c i a l  their  this  but  out of f r u s t r a t i o n  sector  their  i n the c i t i e s  costs, rather  The D e l h i D e v e l o p m e n t  position,  in  o f t h e poor and t h e government  b e n e f i t s and minimise  activities.  resources  i n what c a n be done f o r t h e  the poverty-bound p e t t y c a p i t a l i s t  taken  that  entire  are limited  already only  with  income g r o u p s b u t t h e  n o t e on t h i s  i t c a n be s a i d  to maximise t h e i r disrupt  incomes,  o f c h e a p goods t o t h e  the  i t would be i n t h e i n t e r e s t  help  higher  although  f r o m t h e 'gwala' o r t h e m i l k m a n .  most T h i r d W o r l d n a t i o n s poor,  and  p r o v i d i n g t h e p o o r who  are  district  needs o f t h e u p p e r  t o buy m i l k  poor  by  enjoy  system,  the supply  into a cooperative  individual. product  of  of the product  ultimately  b e n e f i t t e d by t h e c o o p e r a t i v e  Many  to  the p r i c e  Authority  as the f o l l o w i n g quote  of c o p i n g  endlessly with  than has  indicates, a  problem  does not l e s s e n . "We r e a l i s e d we c o u l d n ' t b e a t t h e s q u a t t e r s . Instead we've j o i n e d them by p r o v i d i n g t h e minimum sanitation and s e r v i c e s and r e g i s t e r i n g t h e s q u a t t e r c o l o n i e s a s a l e g a l p a r t of our housing s t o c k . " Rebiero, Planning Commissioner for Delhi Development Authority, in Hodgson, 1985.  However,  efforts  should  be i n c r e a s e d a t t h e n a t i o n a l  level  200  t o a b s o r b the higher  paying  industrial and  development  etc.  surplus be  land, all  labour  to  capitalist choice.  For  urban  the  i s where  rural  in India  of  absentee  which are  the  poverty-bound  and  to  make  to  or  needs t o  in  sector  t h i s p u r p o s e , a macro l e v e l  in  more  a  approach to  of  rural to  policy objective  activities  the  also  redistribution  landlordism  in  poverty  known t o have c o n t r i b u t e d  Ultimately,  into  sector  solutions  Government  of  areas  the  should  the  petty  sector the  of  problem  important. To  summarize  diagram  goals,  the  of  r o l e of  of  thriving,  small  bound p e t t y  categories nations.  t h i s chapter, has  activities.  problem  selected  s t a t e , and  scale  and  for  of a c t i v i t i e s  this  briefly  analysis suggestions  i t should  be  formulation  for  planning.  reitrated  t y p e s of a c t i v i t i e s , need a  planning  activities here, are  it  separate  approach.  in  that  poverty-bound  the  does  l e s s important  not  of  the  petty  such as  the  analysis  of  While  Third  a the  to  Other  will  on  chapter,  describes  mostly  a different  discussion  in  been  sector  capitalist  made  that  alternative  the  t h i s chapter  capitalist  suggestions  ( f i g u r e 14),  the  In c o n c l u d i n g focus  the  i s presented  implications  the  and  either  The  control  the  sector  in  rural  c o n t r o l , c o n s o l i d a t i o n and  supply.  reduce  in  for t h i s  lie.  population  agricultural areas  labour  activities  unemployment  consider  is  surplus  poverty-  World  were  mean t h a t  other  in these  or  in  other  201  Figure  14 - The i m p l i c a t i o n s o f t h e a l t e r n a t i v e a n a l y s i s t o planning  OOAI, OF PLANNING  ALL TYPES Ot PETTY CAPITALIST ACTIVITIES  Diveroifieddepends on , nature of — 'problem'  POVERTYBOUND PETTY CAPITALISM  Vo decrease poverty & •unemployment•  6.  Separate a n a l y s i s and separate planning approach f o r each category of a c t i v i t y  Positive role but minimal . intervention .  NATIONAL  LEVEL: TOWN LEVEL: 1. Coordinated approach 1. I n c l u s i o n of 'demand' _ to increase e f f e c t aspect i n s p a t i a l iveness of plans tl planning i n e x i s t i n g improve data base towns and planned f o r planning. new towns. 2 . I n c l u s i o n of 'demand' 2. P l a n n i n g f o r minimum aepect i n s p a t i a l b a s i c needs f o r the planning. poor. 3. C o n s i d e r a t i o n of s o c i a l aspects of the poor i n p l a n n i n g .  light  global  development differences  only  of to  capitalist  within  analysis  has  a s a means t o u n d e r s t a n d  necessary  can  Depends on c o s t s Is. b e n e f i t s to — the s t a t e not legal status of a c t i v i t y  alternative  research  its  SUGGESTIONS FOII PLANNING  CONCLUSION The  the  HOLE OF THE S T A T E  recent draw  sector  in  occurrence. and  on  petty  capitalist  sector in  the s u b j e c t .  the  context  this  I t h a s been  about  the  particular in a nation  capitalist  type o f economic  be known by e m p i r i c a l  in  petty  t y p e s of economies t o c o v e r  However,  i n the types of  presented  conclusions  the dominant  socio-cultural  one d o m i n a n t  the petty  knowledge  . generalised  been  study.  system.  economic can c r e a t e  activities These  even  differences  The a l t e r n a t i v e  analysis  202  will,  therefore,  these  empirical  greatly  benefit  studies.  by  and  can  be  refined  through  203  BIBLIOGRAPHY Abu  L u g h o d , J . a n d Hay, R. 1977. 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Income a n d Employment i n t h e u r b a n a n d t r a d i t i o n a l s e c t o r s o f P e r u . Mimeo, W o r l d Bank. Washington. Weeks, J . 1975. P o l i t i c s f o r e x p a n d i n g employment i n t h e i n f o r m a l urban s e c t o r of d e v e l o p i n g economies. I n t e r n a t i o n a l L a b o u r Review no. 111. J a n u a r y . W h i t e , L . T . 1978. Low power: S m a l l e n t e r p r i s e s 1949-1967. The C h i n a Q u a r t e r l y v o l . 7 3 .  i n Shanghai,  Wishwakarma, R.D. 1981. U r b a n a n d r e g i o n a l p l a n n i n g India. Uppal p u b l i s h i n g house. New D e l h i . W i s s e r , W.A.  1981.  India's black  economy.  South,  policy in  July.  Yu, D. a n d Sun, Z. 1982. The s t r a t e g i c o b j e c t i v e o f u r b a n development i n C h i n a : t a k i n g v i g o r o u s a c t i o n t o d e v e l o p s m a l l c i t i e s , i n M a t h u r , O.P. ( e d . ) , S m a l l c i t i e s and n a t i o n a l development. U.N.C.R.D., N a g o y a . Z a c h a r i a h , K.C. 1968. M i g r a n t s i n g r e a t e r p u b l i s h i n g House, New D e l h i .  Bombay.  Z e l i n s k y , W. 1971. The h y p o t h e s i s o f t h e m o b i l i t y The G e o g r a p h i c a l Review, v o l . L X I .  Asia transition.  231  APPENDIX  A  -  THE  TWO  CIRCUITS  OF  THE  URBAN  E x t r a - r e g i o n a l modern  ECONOMY:  circuit  3 = t Bank  Export T r a d i ng  a.  r i i  o cc UJ Q.  Export I ndustry  Non c a p i t a l i s t m a n u f a c t u r i ng  Non-modern  Hierarchical relations  S o u r c e :  S a n t o s ,  1977.  Trading  Relations o f simple complementarity  Relationsof reciprocal complementarity  SANTOS  1977  232  APPENDIX B ~ DUALISM MODEL OF URBAN ECONOMY BASED ON INCOME OPPORTUNITIES: HART 1973  FORMAL INCOME OPPORTUNITIES (a) (b) (c)  P u b l i c s e c t o r wages. P r i v a t e s e c t o r wages. T r a n s f e r payments - p e n s i o n s , benefi t s .  unemployment  INFORMAL INCOME OPPORTUNITIES: LEGITIMATE (a)  P r i m a r y and s e c o n d a r y a c t i v i t i e s - - f a r m i n g , m a r k e t g a r d e n i n g , b u i l d i n g c o n t r a c t o r s , and associated a c t i v i t i e s , self-employed a r t i s a n s , shoemakers, t a i l o r s , manufacturers o f b e e r s and s p i r i t s . (b) . T e r t i a r y e n t e r p r i s e s w i t h r e l a t i v e l y large capital inputs -- housing, transport, u t i l i t i e s , commodity s p e c u l a t i o n , r e n t i e r a c t i v i t i es . (c) S m a l l - s c a l e d i s t r i b u t i o n - - market o p e r a t i v e s , petty t r a d e r s , s t r e e t hawkers, c a t e r e r s in f o o d and d r i n k , b a r a t t e n d a n t s , c a r r i e r s ( k a y a k a y a ) , c o m m i s s i o n a g e n t s , and d e a l e r s . (d) Other s e r v i c e s - - m u s i c i a n s , l a u n d e r e r s , shoes h i n e r s , b a r b e r s , n i g h t - s o i l r e m o v e r s , photog r a p h e r s , v e h i c l e r e p a i r and o t h e r m a i n t e n a n c e w o r k e r s ; b r o k e r a g e and m i d d l e m a n s h i p ( t h e m a i g i d a s y s t e m i n m a r k e t s , law c o u r t s , e t c ) ; r i t u a l s e r v i c e s , m a g i c , and medicine. (e) P r i v a t e t r a n s e r payments - - g i f t s and s i m i l a r f l o w s o f money and goods .between p e r s o n s ; borrowing; begging.  INFORMAL INCOME OPPORTUNITIES: I L L E G I T I M A T E (a)  (b)  (Hart  S e r v i c e s - - h u s t l e r s and s p i v s i n g e n e r a l ; r e c e i v e r s o f s t o l e n g o o d s ; u s u r y , and pawnbroking (at i l l e g a l i n t e r e s t r a t e s ) ; drugp u s h i n g , p r o s t i t u t i o n , p o n c i n g ( ' p i l o t boy smuggling, bribery, p o l i t i c a l corruption Tammany H a l l - s t y l e , p r o t e c t i o n r a c k e s . Transfers -- petty theft (e.g. pickpockets), l a r c e n y ( e . g . b u r g l a r y and armed r o b b e r y ) , s p e c u l a t i o n and e m b e z z l e m e n t , c o n f i d e n c e t r i c k s t e r s ( e . g . money d o u b l e r s ) , g a m b l i n g  1 9 7 3 : p 69)  233  APPENDIX  Mid.  C  ~  A  S I M P L I S T I C C H A R T ON T H E FLOW O F D U A L I S M AND D E V E L O P M E N T  RISE OF ECONOMIC LIBERALISM (Classical  18C.  IDEAS  ON  ECONOMIC  Economics)  Adam Smith J . J . Rousseau Ricardo  LIMITS GROWTH  1 9C.  Marx  Ricardo Mai thus  Late  19C. Schumpeter  Early  20C.  Keynes Harrod Domar  1950  1960 ' s  ETHICAL 4MOVEMENT :MENTv New p o l i - \ CLASSIC ^DUALISM^ c i e :s rf no rr dependent people in third world  ECONOMICS Perroux  REGIONAL SCIENCE Myrdal Hi rschman  LABOUR UTILITY STUOIES  How to induce growth spati a l l y UNILINEAR DEVELOPMENT THEORY  EXPLOITATION THEORIES 'Hob son Boeke  • URBAN DUALISM  UNDERDEVELOPMENT/ DEPENDENCY THEORY  234  APPENDIX D - A STUDY OF SMALL TOWN DEVELOPMENT PUNJAB, INDIA  India, made  along  policy  development it  at  Census  population  1983)  of  aged  of set  the  Small  a  end o f  5,000  during  the  "Task  Force  sixth  up by t h e of  programme  and Medium T o w n s " .  of  in  population  the By the  conges-  plan plan  (1974(1979-  d e v e l o p m e n t . The  and Medium Towns India  in  "Integrated  The s i x t h  on  has s t r e s s e d  five-year  Small  Government  lie  India  town  town  hierarchy.  five-year  small  has  a consensus  towns  relieve  on  is  the urban  since the f i f t h  small  agreement  there  20,000.  to  countries, the  no  small  to  urbanisation  creation  is  town,  emphasis changed t o  findings India"  small  classification,  However, the  there  lower  in large c i t i e s  1978).  a  the  range  "intermediate" tion  of  developing  incorporating  Whereas  limits  lies  Indian  other  decisions idea.  population that  with  STRATEGY IN  in  1975 e n c o u r -  Development  five-year  plan  of  states:  "the t h r u s t of the u r b a n i s a t i o n p o l i c y during the next decade would be to give greater emphasis t o t h e p r o v i s i o n of adequate infrastructural and o t h e r f a c i l i t i e s i n the s m a l l , medium, and intermediate towns which have been neglected hitherto in this respect. The a i m w o u l d be t o s t r a i g h t e n these market centres to equip them to serve as growth and s e r v i c e c e n t r e s f o r t h e r u r a l h i n t e r l a n d . " In Works 1979 on  compliance and  Housing,  sent the  with  to  all  Government the  'Centrally  Development  of  this  Small  States  Sponsored and  were t o r e s p o n d w i t h a l i s t 1980.  The  Government  of  plan, of in  India, India  Scheme  Medium  the  of  December guidelines  for  Towns'. would  by  the  o f s e l e c t e d towns India  Ministry  Integrated The  States  by e a r l y  allot  finances  235  for  the  development  of  the  s e l e c t e d towns.  The s c h e m e :  "would cover small and medium towns with a population of 1 lakh (100,000) and below on t h e b a s i s o f t h e 1971 C e n s u s . In selecting the towns for support, preference would be given to district headquarters, followed by subdivisional towns, mandi (market) towns and o t h e r important growth c e n t r e s .... towns selected for priority development should be s u c h as w i l l check the m i g r a t i o n of rural population to the large cities and would" p e r f o r m t h e r o l e o f s e r v i c e and m a r k e t centres to the rural hinterland Tn the context oT balanced d eve I opment 6~T~. t h e whole district and r e g i o n . " E x c e r p t f r o m t h e Scheme. this Government 200  such  to  was  of  made  wake  evaluate  development ences  in  of  the of  has  and  growth  the  expressed  decisions  s e r v e as a g u i d e t o The  Punjab:  as  agricultural  of  the  India  for  However, nology  widest in  The  the  below.  important  St a t e  Of  the  where  the  the  mid  in three  prefer-  in  the  scheme,  towns  and  markets)  cited  market  Punjab  and  the  towns  as  experience  the  and  sixth service  in  Government  seventies  markets  in  changes were  assist  and  becomes  application,  towns  "Intensive  that  it  undertaken  towns  Small  districts the  and  the  small  of  India  should  therefore  were  developed  expectations.  agricultural  Initially  of  the  and  1 00,000  Punjab  was  precedes of  of  subdivisional  centres.  1981  identify  marketing.  faith  development  of  towns  selection had  to  emphasis  experience for  in  1981).  such  headquarters,  plan  policy  plans  population  small  the  markets  town  a  particularly  (district the  with  reiterated  T i m e s , August 4,  the  sixties  India  towns  (Hindustan In  emphasis  in the  development were  chosen  Agricultural in  Punjab  mid-sixties programme from  introduced  got  of  each  Development  agricultural  as  to  part  Punjab. state  in  Programme".  cultivation  dispersed  a  the  techother  236 districts  of  Punjab very q u i c k l y .  University and  played  strengthening  (Sidhu the  D.S.  had  towns.  In  to  108  in  1971  G.S. seller  and  so  the  in  While ment  the  had  in of  to  sometimes boast  country  As has,  of  last  two  indicates  that  only  an  increase  State the to  average total  76  growing 1981). of  in  1974). (govern-  o f proper  can  1974)  and  would  the  Christahler  in  smaller  market  in  surely  the  satisfy  and L o s c h  (1970).  in  development  or  The of  urban  large  towns.  declined  1981 76  small  is  towns towns of  growth Small growth recorded  above  increased  shows t h a t  proportion  towns rate  mar-  of Punjab  significant  towns small  in  Census  growth  This  and  This  the  annual small  per  in  mar-  Punjab  expense  size.  B.  Thus  at  the  (Harris  villages  of  specially  as w e l l .  Large  in  was  but  out  table  farmer-  of  4.4%.  The f o l l o w i n g  the  time,  1971-1981.  the  placed  first  stagnant  of  were  the  accelerated.  12  (Bhalla  "regulated"  for  during  disparities  urban  were  Johnson  their  number  This  classified  often  decades.  of  markets  rose  markets  concentrated  the  with  agricultural  remained  This  areas  markets  medium  improved,  towns  urbanisation have  over  market  result  however,  towns  M.S.,  s u c h as E . A . J . a  keting,  ratio  marketing and  gap between  and r e g u l a t e d  lowest  traditional  markets.  prices, provision  and  Punjab  accommodate  the  Punjab  towns  created,  (Randhawa,  fashion,  of  To  large  markets.  part  in  urban  created  reduce the  etc.)  a d v o c a t e s of  the  provided  commodity  be  the  such  larger  improved  of  87  existing  yards,  towns  were  to  southern  control  keting  the  towns  markets  the  newly  diffusion  traditional  in  were  The  yields,  all  this  1974).  The  Agricultural  change  mainly Thus  Census,  small  M.S.  changed.  there  1 975 .  1978).  the  Randhawa  was  1 966  in  agricultural  markets  by  role  agricultural  system  system  prominent  of  1975,  increased  marketing  in  a  The P u n j a b  because from  are  the 63  obviously  (McGee  and  there  is  urban  population  Das  a widening by  237  Distribution  Census definition  o f Urban P o p u l a t i o n by U r b a n i n P u n j a b 1971-1981  Urban s i ze category  Number o f urban areas  P r o p o r t i on urban pop. percentage  1 971  1981  1971  4  7  40.62  46  8  9  1 5.68  13  22  28  21 . 74  21  33  35  13.78  11  30  41  7.00  6  1 a r g e town class 1 (above 100,000) medium towns class 2 (50,000-100,000) c1 a s s 3 (20,000-50,000) s m a l l towns class 4 (10,000-20,000) class 5 (5,000-10,000) Source:  Census of Tables  India,  It  be  that  areas growth  may  be  considered  rates  are  subject  boundaries, in  not  size  earlier  categories.  the growth r a t e s , distribution  in the  apparent,  to  on  indicate  between l a r g e  is  of  the  analysis.  such  as  of  of  a widening  Growth i n percent 1961-71 1971-81  large, class 1 medium, c l a s s 2 class 3  +31.97 141.19 -5.60  +64.13 +21.68 +40.80  smal1,  +49.83 -12.96  +15.35 +38.05  Source:  class 4 class 5 Census of  India,  town  as c o n c l u s i v e as urban in  the  the  population even  in  population  towns.  Growth R a t e s o f Urban A r e a s i n P u n j a b by U r b a n S i z e 1961-1971 Size categories of urban a r e a s  other  changes i n  enough e v i d e n c e ,  and s m a l l  urban  However,  consideration  proportion  There  rates  such  and by t h e m s e l v e s a r e not  presented  the  readily  to  growth  1981  Population  1971 and 1981  the  should  variables, data  argued  Size  Reasons g i v e n by C e n s u s  e x t e n s i o n of jurisdiction urban areas  increase in number o f S e r i e s 17 P u n j a b  238  This in  the  for  increasing  large  the  strategy  towns  indicates  development had  been  towns  should  which  increasing  have  size  categories.  they  were  rural  concentration  to  small  Small with  towns  towns.  the  quite  urbanisation  urban  a weakness  effective led  provided  migrants.  of  of  did  the  strategy  Surely  if  development  the is  in  population  reverse  shared not  agricultural  of  the small  situation  by a l l  the  grow  even  markets  to  in  urban though attract  239  APPENDIX E - A F I E L D STUDY ON THE INFORMAL SECTOR IN RAIKOT, A SMALL TOWN IN PUNJAB, INDIA  Raikot:  popu 1 a t i on : 1 7,110  Raikot India.  is  The• s t u d y  office  at  during  small  and  survey  use of  data  of  transport  of  a  57  large  and s e r v i c e  Public of  For  units  beds  such  services,  sector  (1971  does  prefer  to  whom  banks.  The  state  the a  of  municipal  participant-  capitalist  1981:  Harris  activities  entirely those  in  involved  sector.  To  of  at  whom  one).  Their  wear,  of  constant  amount  easy  (Survey  findings  Other  services  helpers,  the the  twenty near is  majority, is  (equivalent  in if  the big of  easier of  at  shoe  five  for  example, agents, the  transactions,  and  Raikot, such  November  as  those  repairers  far the stop  demand poor  etc. the  of  the  time  of  survey,  in  Raikot,  (there  because quality  a  of  number  outweigh  repairers  bus  for  for  from  services  point,  even  The a b s o l u t e  services  public  only  informal  than  shoe  sector.  are  has  commission  rather  simple:  such  centre  farmers  crops,  and  numbers  competitive  private  in  It  but  the  least  repairs.  trade,  But t h e  However,  from  cluster  the  planning  the  informal  in  sector.  Punjab).  domestic  service  can  education,  total  of  illustrate  were  of  1974).  involved  Raikot  i n commerce,  their  family  are  the  numbers  as  their  barbers,  in  banking,  organised  rates B.  sector  Many  loans  reasons  interest  small  by  labour  as  well  Census  sell  lower  half  from  by t h e f o r m a l  the  exist.  they  janitors,  as  a less  take  of  such  example,  four  there  Punjab  activities.  services  the  small.  of  petty informal  h e a l t h c a r e are dominated  are  data  collected  s e e n by t h e d i s t r i b u t i o n  size  i n the  November 1 9 8 1 - J a n u a r y 1 9 8 2 .  Evidence  to  town  includes  Raikot  observation  be  a  (1981)  person  is  only  the  foot-  and  needs  to  Canadian cents)  formal  spend a on c h e a p  240  r repair  than  findings  purchase  Raikot,  The a  to  November  commerce  distinct  sectors.  sale  sils,  candles,  care  dominated  fruits,  of  soap by  by t h e  the  etc.),  informal  of  Total  68  in  the  informal  in  the  formal  the 600  commerce  kers, in  and  place,  (both  fifth  of  the  i.e.  123  Municipal a total  formal total  units, Office.  annual  are  because  which half  are  at  60 15  25  50  140  135  of  N o v . 1981 .  commerce  to  units  than  those  are  approximately mobile  those  of  total  are  the  the  number  when  Rs. 20,000  only  formal  registered there  haw-  operating  Furthermore, of  give  Municipal  covers  occurs  least  the  includes  part  they  Registration  75 10  greater  there  informal).  600  10  the above t a b l e does not  1 only  than  sector 1981  30  Raikot,  According  and  income of  of  eatables  —  slightly  Table  of  sale  Informal 1971  number  Raikot,  less  the  Raikot  1 23  establishments,  peddlars.  a fixed  units  at  goods  sector 1981  However,  picture.  Office  electrical  30 18 50 2 15 8  are  sector.  two uten-  cooked  shops i n  absolute  sector  complete  Corporation  the  the  (cooking  whereas  Corporation Office,  with,  by  show  sector.  10 16 30 2 5 5  To b e g i n  and  and  Formal 1971  Municipal  dominated  sector  groceries,  General merchandise Clothes G r o c e r i es Vegetables & F r u i t E l e c t r i c a l goods Drugs & P h a r m a c e u t i c a l s Restaurants  Source:  (Survey  similarly  merchandise  formal  shop  Raikot  clothes,  Distribution Type o f  in  types  general  the  footwear  1981).  in  vegetables,  dominated  expensive  establishments  breakdown  The  more  of a  sector by  the  has  been  (approx.  241  C$ 2 8 5 0 ) .  This camouflages the  sector  units  labour  and  and  are are  are  The  of  enumerated  Some  of  the  municipal Rs.  include  remaining  200  Survey  these  to  be  with  or  so  (Field  "lohars"  (traditional  p e d d l a r s of  fruits,  market  agricultural from  for  produce  observations  generated  by  culation this.  the  of  In  the any  arhatiyas"  agent mately  November  1981,  Food they  do  (farmer). Each  Kahlon  and  stitching  the  600  An  are casual  29  and  bags  for  commission labourers.  is  The  pay  the show  and  the  force  as  the  will  directly the  are  the  with  the  commission  hires  approxi-  Committee are  arrivals  storage agents  "pucca  government  India)  the  of  who in  Raikot required of  grain  grains.  hire  the  cal-  support  the  Labourers  of  employment  A simple  agent  Thus  tax.  evident,  the  intermediary,  1970).  (likely  around  the  of  transact  and w e i g h i n g  jute  It  Punjab  (Marketing  A.S.  the  and d i s t r i b u t i o n  of  commission  labourers seiving  mately  not  at  "samosas".  structure  Corporation  to  a  repairsmen),  labour  informal.  market  pay  1981)  etc.  that  wholesalers),  unloading,  there  the  survey,  employment  regulated  nor  Nov.  hinterland.  market  for  Raikot,  field  this  is concentrated  is mainly  required. 15-20  to  market  However, is  the  pay  doctors  collection  from  and  (eg.  producer-seller  Raikot the  (private  wholesalers buyers.  in  units  bucket  vegetables, candy,  Trade a c t i v i t i e s agriculture  (metal  t a b l e .  earns  280  survey  newcomers  the  unit  by have  sector  registered  medicine)  unsteady  of  According  locations)  observations  commerce  locations  the  approximately neither  and  if  skills  unprotected  informal  only  are  the  part  annually.  fixed  itinerant  "ayurvedic" transient  180)  records  those  the  paid  of  fixed a  family  formal  totally  form  formal  employing  without  with  in  is  (C$  office  are  Those  units  tax  even t h e s e  four-fifths  therefore  This  1200  municipal  tax.  and  commerce  tax.  persons  and  sort.  that  operations,  remaining  any  been  to  by  unregistered  legislation  least  scale  operated  training.  units  small  fact  In  approxiemployment  242 structure sion  agents  ernment of  of  Raikot market  and  formal s e c t o r .  sons.  In  informal  contract, sector  are only  number of  This t o t a l s to there  Transport  activities  also  a distinct  are  600  persons  in the  formal  breakdown  in  fifteen  a l s o four)d w i t h i n for by  inter-regional, the  system is  the  are  town.  the  Some  part  of  however,  are  formal  in the forms  a major  formal  "rehri"  the  is  and the  means  The more wealthy of  trucks  and  efficient.  for  the  for  is  of  this  in  part is the  many  "rehri",  the  agri-  system.  poor  cheap, large  and i s  richer  at the  The  farmers. they  farmers  towns  for  same time quick  have  a  preference  many reasons,  1984).  not  there  a distinction  and  petition  public  and  of  the higher p r i c e s f o r t h e i r commodities  agricultural  met  sector.  which i s Das  is  of a g r i c u l t u r a l goods to trans p o r t .  However,  markets  is  only r e q u i r e d  informal t r a n s p o r t  transport  traffic  farmers p r e f e r to use trucks because  have l a r g e r q u a n t i t i e s The use  of  i s com-  and t h i s  informal  sec-  town can  sector  c u l t u r e market in the town and here there between the  in  purpose.  entire  Employees  the  and  bicycle  Automobiles  system.  no counterpart f o r t h i s Transport,  a wall,  minutes.  bus  obviously  are  The town  or i n t e r - u r b a n t r a v e l  Punjab s t a t e  a part  who  by mode  within  traversed  as  gov-  and informal  pact, be  and  in the market.  mainly p e d e s t r i a n .  contained  private  approximately 60 per-  Movement i n Raikot i s being  2 9 commis-  who can be c l a s s i f i e d  activities  have  there  an e q u i v a l e n t  wholesaler-buyers  the  tor  the  Higher p r i c e s  are o f f e r e d  for  one  of  (Pendakur  the  sale  of  goods' in large towns because of stronger com-  from rich  a  greater farmers  number come  of  to  informal t r a n s p o r t system  buyers. Raikot.  Consequently, Therefore  predominates.  the  243  The is  size  of  the  informal  inconsequential.  transport public main  The  systems  bus  bus  do  system  depots  are  usually  in  villagers  population  informal  and  a formal  A small transport  minority sector.  sellers  who  goods t o  unregistered the  transport  may b e , i s In sector informal workers. must tered ones any  be  and  because  sons  The  are  crop a r r i v a l  the  trucking these  s o u r c e of  but  by  the  force  mobile  their  the  both  an  transport  do j o i n  the  vegetable/fruit  carts  to  transport  These c a r t s  authorities however  and  are  therefore  insignificant  smaller of  under  a r e not  rice  sector  but  it  can  the  in  be  much b i g g e r  mills.  and  season i n  The  at  November.  the  formal  workers  least  casual  ten  greater only  two  The  regis-  unregistered Act  seven of  the  industries  sector.  Disputes  largest  with  the  (for  under  are  these  than  T h e s e employ  additional  in  often  informal  employing  least  industries  size,  Industrial  the  classified  r e g i s t r a t i on, the  is  employ  unregistered  unit  permanently  where  serviced  establishments who  as an i n d u s t r y . the  the  size,  a lack  under  production  the  labour  industrial  labour)  classified  industries  at  is  Raikot,  in  even  Due t o  registered tries  small  sector.  number,  state's  population.  use  industrial  casual  cities  the  informal. the  The  are  of  The  o w n e r s h i p but  system  municipal  sector  Raikot  temporary  are  engaged i n  and f r o m t h e m a r k e t .  the  largely  developed.  in  by  the  sector  L u d h i a n a . The  Raikot  Raikot's  occasionally  agricultural  case  local  There  Raikot.  in  transport of  in  villages  of  employ t h e  those  or p u b l i c  from  The  does not  this  transport  of  live  private  produce. sector  live  employees  s y s t e m s may be under  formal  majority not  are,  or  of  persons  Raikot's to  labour  India, is  indus-  twenty during  perthe  244  Distribution  o f r e g i s t e r e d and u n r e g i s t e r e d i n d u s t r i e s ' in Raikot  Registered  Date of registn  Rice ( s h e l l i n g ) Cotton (ginning)  4  1978-79  Sugar (refining) Tractor repair Ice  1  1978  2  1954,1967  Industry  Source: Thus  Type  Municipal  it  can  commerce, capitalism of  be  trade, is  not  Corporation seen, only  capitalism  absorption  of  dominant, But  and  surplus  it this  labour  Raikot  is  other but  of  sectors, is  not  prohibits from  1971 o n 1980  18 1  distribution  and  Date o f O p e r a t i on p r i o r to 1960  Office,  the  transport  R a i k o t ' s economy.  petty  by  UnregiS' tered  rural  often a  labour that  the  dynamic any  areas.  in  petty  mainstay type  of  significant  245  APPENDIX F - INSTITUTIONAL  STRUCTURE OF PLANNING IN INDIA  ^National PlanningCommission (Govt.) Ministry' concerned with regi onal development  -Goals  Mini stry concerned with urban development  Town a n d C o u n t r y Planning Organ.  Urban Authorities. Municipalities  -Means identlfi cation o f means b a s e d on t e c h n i c a l , skills  Implementat ion  UNIVERSITY OF  BRITISH COLUMBIA  Papers/Publications VEECHLBALA  School of Community and R e g i o n a l F a c u l t y o f Graduate S t u d i e s  Record DAS  Planning May  1986  1.  Das, V. 1984. The I n f o r m a l S e c t o r i n S o c i a l i s t C o u n t r i e s : A Re-examination o f Urban D u a l i s m and the Development P r o c e s s . R e g i o n a l Development D i a l o g u e . United Nations Centre f o r Regional Development p u b l i c a t i o n . Nagoya, Japan. F a l l i s s u e , V o l . 5, No. 2.  2.  Das, V. 1984. R u r a l Development: I t s Impact on R u r a l - U r b a n Migration. A Case Study o f Punjab, I n d i a . P r e s e n t e d a t the annual c o n f e r e n c e o f the Canadian A s i a n S t u d i e s A s s o c i a t i o n . at Guelph, O n t a r i o , Canada, June 6-8.  Held  3.  Co-authored w i t h Pendakur, V.S. 1983. A g r i c u l t u r a l Markets Towns i n India: A Development P e r s p e c t i v e . P r e s e n t e d a t Canadian A s i a n S t u d i e s A s s o c i a t i o n , Learned S o c i e t i e s C o n f e r e n c e . Held i n Vancouver, Canada, June 6-8. Published i n conference proceedings. A l s o p u b l i s h e d i n U.B.C. P l a n n i n g Papers CS 10, A p r i l 1984.  4.  Co-authored w i t h Weaver, C. and J e s s o p , P. 1982. R a t i o n a l i t y i n the Public Interest. Notes towards a new s y n t h e s i s . Paper p r e s e n t e d at the c o n f e r e n c e on ' R a t i o n a l i t y i n P l a n Making'. Held a t the U n i v e r s i t y o f Reading, U n i t e d Kingdom, December 13-14. P u b l i s h e d i n Breheny M.J. and Hooper A . J . (eds.) 1983. Rationality in Planning: C r i t i c a l E s s a y s on the Role of R a t i o n a l i t y i n Urban and Regional Planning. P i o n , London.  5.  Das, V. 1982. P l a n n i n g f o r the I n f o r m a l S e c t o r i n Small Towns. Report p r e p a r e d f o r S c h o o l o f P l a n n i n g and A r c h i t e c t u r e , New Delhi, India.  6.  Co-authored w i t h McGee, T.G. 1981. The r o l e o f Small Towns i n the Development P r o c e s s . Paper p r e s e n t e d a t the F i f t h P a c i f i c S c i e n c e Congress. H e l d a t S i n g a p o r e , September 1-5. Published i n M a l a y s i a n J o u r n a l o f T r o p i c a l Geography, V o l . 8, December 1983.  7.  Das, V. 1978. I n f o r m a l Growth and Urban Development: Case Study o f R o u r k e l a and Sambalpur. Nagarlok, Urban A f f a i r s Q u a r t e r l y , V o l 10, No. 4. P u b l i s h e d by the I n d i a n I n s t i t u t e of P u b l i c A d m i n i s t r a t i o n , New D e l h i .  8.  Das, V. 1977. Book Review o f ' I n t e g r a t e d R u r a l Development' by A r o r a , R.C. i n Urban and R u r a l P l a n n i n g Thought. School o f P l a n n i n g and A r c h i t e c t u r e p u b l i c a t i o n , V o l 20, No. 1, New D e l h i .  

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