#3 The Informal as Infrastructure

How could Japan have been bankrupt for a decade, but still look outwardly buzzing?

This has been a question that has bugged me for at least a decade now. That is, until I started my Masters Degree in World Cities and Urban Life in London, and moved (simultaneously) to Williamsburg, New York.

The fact is… what is reported as official economic statistics is probably only the tip of the iceberg in terms of the actual economic activity that goes on in a city at any one time.

The Informal Economy far outweighs the Formal

Abdoumaliq Simone (www.abdoumaliqsimone.com / BLOG: villes-noire.tumblr.com), my Professor at Goldsmiths College London and an expert in the Global South, has spent 30 years of his life working in urban Africa, and written extensively about the kinds of informal but critical economies that typify sub-Saharan African cities such as Luanda, Abidjan, Nairobi.

These informal economies are underpinned by “Social infrastructures,” or “People as Infrastructure” – networks of people interacting and negotiating to secure very fundamental things like food, shelter, love, sex, material goods.  There is an entire way of life and functioning that has very little to do with the official bureaucratic and corporate institutions that apparently run the cities.  Statistically, the African economies look like basket-cases, but somehow, people still manage to make do.

Similarly, in Williamsburg, in New York, I was struck just two days ago with a conversation I had with somebody I had just met at a bar, who had just successfully obtained a secure job after 5 years of freelancing as a designer and being paid “under the table” in Cash.

Clearly, New York’s Creative Economy is far larger than what is being reported officially because there is a huge community of freelancers that are at any one time, working and functioning “under the table” in total disregard of the official bureaucratic and corporate laws and institutions, and within a completely autonomous and self-sufficient social infrastructure / network.

I thought that was striking – the fact that the least developed cities of the world were actually not so dissimilar from the most developed ones.

The Informal is the Norm(al)

Which returns me to my initial question as to how a country could be bankrupt but still be buzzing.

Despite all pretensions to big, formal, transparent “over-the-table” corporations, the Global Economy is constituted and still very much dependent on a solid and substantial infrastructure of informal, “under-the-table” businesses, often small-and-local but not necessarily (the global black market in drugs, antiquities, wild animals, weapons, etc, comes to mind).

This informal economy is much more resilient than the World Economy – the latter might collapse, but informal markets and networks will continue functioning as they have done for millenia.

This informal economy may also be much more resilient than the Internet economy, which  McKinsey has termed the “Second Economy” (http://www.mckinseyquarterly.com/The_second_economy_2853).  [Incidentally, I disagree with McKinsey. The first economy was always and ever Informal, the second Formal, in the structural sense of the term, and only the third, Virtual.]

The Virtual economy – that fragile network of undersea and underground cables, may also be debilitated in a crisis of some kind, and in any case it still isn’t as prevalent as the Informal economy is, existing largely in the first and first-ish world economies and requiring some degree of technological infrastructure.  How this economy works appears to be a combination of Formal and Informal elements – there is an apparent sense of community and anonymity, but all transactions and exchanges are “formally” tracked, logged and stored in the system and retrievable.

Informal partners Formal

We have been conditioned to favor the Formal over the Informal because the former is manageable, “on the books” but the latter is disorganised, illegal. In actual fact, formal and informal exist in a symbiotic relationship.

Consider immigrant labour in America – they take most of the low-level jobs that Americans would not take. Step into any restaurant in New York and you’ll find that most of cleaning staff are Latino. Check out the fruit orchards in California and you’ll find that the fruit-pickers are also seasonal immigrant workers.  Immigrant labor is the backbone of the American Economy; it is necessary infrastructure.

Or consider North Africa, where the EU outsources many of its processes that cannot be undertaken on EU soil. I was having delicious baby shrimp in Schleswig-Holstein this past Summer and I was informed that the shrimp, caught just off the coast, have to be sent to Morocco to have their shells shucked by largely unregulated female labour, before being sent right back to where they were caught, to be put in the (informal) foodstalls.

Hmmm…

I think the moral of the story is: formal is good, but informal is not bad either. A thriving informal sector should not be regarded as an eyesore, but as a sign that the economy is healthy.  After all, it was BIG FORMAL CAPITAL that “brought down the economy,” so to speak.  Policies – economic, immigration, social – should be hands-off, or at least grey with regards to the informal economy, allowing businesses to make the most cost-effective decisions and steering clear of micro-level, day-to-day practices (such as shucking shrimp shells).

Where formal impinges on informal, one risks distorting and rendering torturous or risible, a partnership that is entirely natural, intuitive and elegant, not to mention age-old.

Backbone of the Economy

Blog Link #3: STEALTH OF NATIONS Blog, by Robert Neuwirth, author of Stealth of Nations: The Global Rise of the Informal Economy.  http://stealthofnations.blogspot.com/.

Also RN’s other blog, SQUATTERCITY   http://squattercity.blogspot.com/.