Is the Informal Economy a General-Purpose Machine?
Prepared for the AAA 2012, San Francisco
Anush Kapadia
Harvard University
[email protected]
Introduction
In this short, programmatic piece based on secondarily-sourced ethnography and some
first-hand experience, I will suggest a novel framing for the informal economy as “a
general-purpose machine.” By this somewhat grandiloquent phrase, I mean to invoke
an historical record that will, at first blush, appear quite distant from the historical fact
of immiserated undercities in the Global South.1 This is the history of the fall and rise of
the craft industries of the Global North as told by economic historians Michael Piore and
Charles Sabel.2 The point of this seemingly-perverse juxtaposition is to jolt our imaginations out of their familiar grooves so that we might start to see a different future for these
undercities than is being currently outlined.
These craft industry ecologies discussed by Piore and Sabel foreshadowed what is
now called the regime of flexible specialization, namely that form of organizing industry
that has come to occupy the vanguard of the world economy in sectors like information and bio-technology, moving in some instances to characterize the entire productive
sectors of major national economies like Japan and Germany. I will try and sustain the
argument that there is a formal analogy—an analogy of form not content—between the
organization of these craft ecologies and the organization of many undercities, an analogy that might help us reframe these spaces as potentially transformative and generative
1 The
term “undercity” is taken from Katherine Boo’s ethnography-lite of a Bombay shanty, Behind the
Beautiful Forevers: Life, Death, and Hope in a Mumbai Undercity, (Random House: 2012). For a review, see
Anush Kapadia, “The Death of the Social,” Anthropology Now, forthcoming.
2 The Second Industrial Divide: Possibilities for Prosperity, (Basic Books: 1984).
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rather than merely requiring pastoral care.
I will build on the work of ethnographers and “urbanologists” Rahul Srivastava and
Mathias Echanove in making this analogy. Their work, based in Bombay and Tokyo,
centers on the idea of the “tool-house” as the blended productive form at the nucleus of
the undercity. Set beside the above history, this foregrounding of the productive essentials
of the undercity through the tool-house might give us a novel template with which to
think about the informal economy for both scholarly and policy purposes.
The following is arranged in two major sections. I will first outline the Piore/Sabel
story in three subsections that focus, respectively, on the warring technological paradigms
of craft and mass production, the plasticity of technology, and the prejudice of classical
political economy. The second full section then unpacks the idea of the tool-house, set
largely in Bombay. I then conclude by briefly contrasting this view of the informal with
that of the progenitor of the term “informal economy” in anthropology and more broadly,
namely Keith Hart.
I.
Two Technological Paradigms
Piore and Sabel start out by sketching the difference between two technological paradigms—
they take the Kuhnian metaphor literally, as we will see—that coexisted to differing degrees throughout the industrial era. The first is the craft paradigm:
Its foundation was the idea that machines and processes could augment the
craftman’s skill, allowing the worker to embody his or her knowledge in ever
more varieties of products: the more flexible the machine, the more widely
applicable the process, the more it expanded the craftman’s capacity for productive expression (19).
In the craft paradigm, one has a combination of relatively general-purpose labour and
tools to produce small product runs of relatively niche products for highly-differentiated
markets. Flexibility and innovation were therefore key to respond to changes in their
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markets. The emblematic form of the craft paradigm was the industrial district of the
nineteenth century: “Silks in Lyon, ribbons, hardware and specialty steel in St. Etienne,
edge tools, cutlery and specialty steel in Solingen, Remscheid, and Sheffield, calicoes in
Alsace, woolen and cotton textiles in Roubaix, cotton goods in Philadelphia and Pawtucket (28).
These industrial districts were spatial arrangements that expressed a complex mix
of cooperation and competition that facilitated their ongoing cycle of innovation. This
was facilitated by what Piore and Sabel called “municipalism.” In an agglomeration of
small producers with minimal capital, various means of collection action were required
so that firms could achieve economies of scale while maintain flexibility. Often a large
factory-type building that housed a large common power source was shared by many
small shops through rented rooms. Informality was a key aspect of discipline between
and within firms that was compatible with flexibility: formal rules would have slowed
and rigidified the labour process. Because the market was limited, production had to be
continually reorganized, and workers had to have a general understanding of the process
matched by a range of skills.
Critically, the local urban seat would provide key institutional props to this ecology.
Insurance mechanisms funded by local taxes would help firms see out the down-cycle,
thereby encouraging them to compete on product quality rather than labour costs. Subsidized credit was made available. Vocational schools and research institutes were funded
to push technological competition. Quality was tightly controlled to preserve the brand
of the urban seat. Strong political enforcement of wage-stabilization schemes pushed
competition in the direction of innovation.
This municipalism often took different forms: when housed in large firm based in a
company town that, the company itself took on these municipal functions for what might
appear to be a mass production initiative was but was, in effect, an agglomeration of
artisans. In other cases, large chains of medium-sized firms linked together by familial
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connections performed these functions.
Yet the most characteristic feature of the craft paradigm was a particular relationship
between worker and tool. The artisan’s skill remained paramount. Although the tools
came to be quite specialized, they remained a means to express the worker’s ideas into a
product. The tool was the adjunct to the worker.
The second paradigm that competed with and partially vanquished the craft paradigm
was of course mass production:
Its guiding principle was that the cost of making any particular good could be
dramatically reduced if only machinery could be substituted for the human
skill needed to produce it. Its aim was to decompose every handwork task into
simple steps, each of which could be performed faster and more accurately
by a machine dedicated to that purpose than by a human hand. The more
specialized the machine—the faster it worked and less specialized its operator
needed to be—the greater its contribution to cutting production costs (19).
After more than a century of experience with mass production, the special-purpose machines that were used to build Ford’s Model T in 1913 were so advanced that they hardly
needed any hand-finishing. The machines were so simple to operate that farm hands
could be pulled off the farm to run them. Thus the mass production paradigm embodied
the inverse relationship between labour and machine: the labourer became the unskilled
adjunct to the machine. Competition between strictly hierarchical firms on a ruthless
basis of cost-cutting was the driver of innovation. Modernity and immiseration became
synonymous.
Mass production was of course vitally dependent on mass markets. The chilling rates
of productivity meant that mass production could only expand to the extent that a mass
consumer base was constructed. The Smithian aphorism was indeed correct: the division
of labour under mass production was limited to the extent of the market. Thus consumer
tastes had to be modified to conform to standardized products.
This dependence on tastes points us to a critical theoretical innovation made by Piore
and Sabel. They embed the technological into the socio-political context to generate the
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idea of the inherent plasticity of technology. Constructed to do ideological battle with
the received idea of technological determinism, their idea of technological plasticity gives
pride of place to the contextual, the contingent, and the conjunctural in explaining the
path of technological and economic development. Thus with tastes, Piore and Sabel note
that it was thanks to the wiping away of highly-differentiated continental tastes that the
yeoman farmers of the New World were prepared to consume the crude standard products of early mass production. Different stimuli in different contexts led to divergent
paths of development.
Thus the victory of mass production over the craft paradigm was by no means preordained. To start with, mass production was not as universally dominant even in the areas
most suited to its development: as late as the 1970s, seventy percent of all metal work in
the US was in small batches. Why was this not eliminated?
One thesis was industrial dualism: craft production survived in the interstices of mass
production because the very special-purpose machines on which the mass paradigm was
based were, of necessity, the product of a craft-based industrial formation. By definition,
the special-purpose machinery of mass production could not itself be mass produced.
Yet the death of mass production in the Anglo-American world proved that this thesis
of industrial dualism lent too much permanence to the mass paradigm by framing craft
as an ongoing complement rather than a robust alternative. The fabrication of flexible
specialization, mastered by the rising economies of East Asian, indicated that the war of
paradigms was being decided by politics rather than naturalized economics. Yet to fully
appreciate this, we have to unpack the idea of technological plasticity.
The Plasticity of Technology
There are three core elements of the idea of technological plasticity. The first is that there
are may paths from science to technology, some more flexible than others. At critical junctures when new knowledge is produced, a “branching point” is reached where the new
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knowledge might admit many different technological forms of expression. This is the
most critical axiom: by opening up a space between knowledge and its engineered expression, Piore and Sabel undermine the teleological view that governs our ideas of economic development through technological determinism. Underwritten by classical political economy of both the Marxian and Smithian kind—examined in the next section—
these ideas form part of the socio-political matrix that give concrete form to protean technology.
By showing that historical development is not a narrowing track but a contingent
branching of possible paths, we see that our present world not as the end of an inevitable
train of development but one of many possible worlds. Contingency demonstrates plasticity where before we saw false necessity; contingency creates hope.3
The second element of technological plasticity is that the lack of one-to-one mapping
between science and technology brings in politics as the determinant factor. In the face
of technological indeterminacy, those in power chose a path of development that favors
their particular interests. The record of industrial history in automobile, aircraft, and
computer industries attest to this fact. In the face of many possible paths in the wake of
new knowledge, each firm is scared of first mover error and others learning from their
mistakes, yet no firm wants to abandon its favored solution. Economic power ended
the deadlock in each case as the firm with enough market share to assure demand for
whatever it came up with, and enough capital to make up for mistakes, placed its will
on the market. Politics is thus intrinsic to economic development: it plays more than a
merely accelerating or retarding function.
The third element of technological plasticity is lock-in costs. Once choices are made
through a combination of market power and ideological paradigms, there is a high upfront investment to be made in the technology generating huge fixed costs. These then set
the path of development until some combination of market conditions and new science
3 see
Roberto Unger, False Necessity: Anti-Necessitarian Social Theory in the Service of Radical Democracy,
(Verso: 2004).
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overcome sunk costs.
The upshot is that short periods of diversification punctured long periods of uniformity. Moments of possibility—branching points—interact with political circumstances to
generate diverse outcomes. There is no march to universal history: all we have is the
contingency of this world, not the best of all worlds. The irony is that, given the fundamental indeterminacy between science and technology, even the winners don’t know if
they have hit on the best thing.
As it turned out, American conditions proved the most hospitable for mass production; the dominance of America furthered the ideological hegemony of the teleological
reading of mass production as the end of history. In addition to tastes being homogenized by the transition from Europe, creating a mass market for low-quality standardized
products, raw materials were plentiful in the US so the wasteful, uneconomical machines
of the early 19th century were economically bearable. In France, by contrast, peasants
held on to land and remained self-sufficient outside the cash economy. The main market
for manufactures was thus made up of regional nobles and bourgeoisie, hence diverse in
its regional attachments. The guild structure also remained in place longer, albeit with
some flexibility, further incubating the supply side of the craft economy. Britain was the
intermediate case: mass production resulted from the pairing of a labour pool created
by enclosures and the presence of colonial markets. The putting-out system gradually
transformed to mass manufacturing. But regional tastes and populations subsisted, bring
some craft ecologies with it.
Given this interplay of technical and socio-cultural, why then did mass production
win out? To answer this, we will have to look finally at the battle of ideas.
The Prejudice of Classical Political Economy
Piore and Sabel argue that while ideas inherited from classical political economy do account for some of the key features of economic history, namely the success of the Anglo7
American economies and the limited plasticity of our inherited technological field, these
ideas provide only a partial account given the robust survival of craft ecologies and the
rise to dominance of flexible specialization on the ruins of mass production. The key role
for classical political economy is the hegemonic narrative it constructed that then lend
determinacy to an otherwise indeterminant historical process.
The first key trope of political economy from Smith through Marx was to render productivity growth as synonymous with specialization through the ever-increasing use of
special-purpose machines and the consequent unskilling of labour. The logic of specialization was sovereign: its drive would refashion feudal society around it to make it compatible with mass production. Mercantile privileges were cast aside, peasants turned to
proletariat, and social power translated into political power. The state was epiphenominal. This transition—and this is the third trope—was inevitable: where it started was a
matter of accident, but once stared, the logic of the special-purpose machine was unstoppable.
Given the dominance of these ideas, the visionaries of the craft ecology came to sound
quaint and utopian. Piore and Sabel cite Proudhon as the classic organic intellectual of the
industrial district, a typographer who insisted on the efficiency of his form of production.
The authors provide several examples for varied constituencies to show how victory on
the battleground of ideas created a self-fulfilling prophecy: at critical branching points,
craft ecologies were set aside and mass production put in its place. The craft ecology
became a discredited paradigm. That is, until mass production itself fell to the latter day
resurgence of the craft economy, namely flexible specialization.
II.
The Tool House of the Informal
To summarize, the craft ecology of the industrial district is one whose logic is emulated
in the most productive vanguards of our contemporary economy characterized by flex8
ible specialization. Its main characteristics are the inverse of mass production: generalpurpose skills are combined with flexible machines, products are for niche markets, there
is an attenuation of supervision and execution within productive units as well as a braiding of competition and cooperation between them. Cooperation takes the form of publicgood provision to a point that renders the the entire spatial form something of a generalpurpose machine writ large.
My provocation in this paper, and it is no more than that, is to suggest that we might
productively think of the poor informal settlements of the Global South as expressing
something of the form of these craft ecologies if by no means the content. The aim of
course is to open up our imaginations. Without romanticizing these wretched locations,
might we discern a different future for them than the one currently envisaged, namely
mass housing as the spatial analogue to mass production?
The work of Rahul Srivastava and Mathias Echanove, self-described as “urbanologists” based in Bombay, India, gives us the housing version of this potential reimagination. At the center of their reimagining of the “slum” is what Rahul and Mathias call the
tool-house:
One of the most enduring artifacts of pre-industrial society in contemporary
times is the tool-house; the habitat of the artisan where work and residence
co-exist amicably. Conceptually located between Le Corbusier’s machine for
living and Ivan Illich’s convivial tool, the tool-house is an apparatus fulfilling
economic and sheltering purposes.4
Rendering the slum as something of an urban village, Rahul and Mathias locate the toolhouse at the center of the self-employed economy of the slum. Cutting against the logic of
the modernist city with its segmented spatial functions of work and living, the economics
of the slum warps it organization around a conservation and maximization of space. Informality generates spatial flexibility: “the home needs to double up as a productive site.”
The global return of the home-working “post-industrial artisan” finds its uncanny echo
4 http://www.airoots.org/2009/09/the-tool-house-expanded/
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at the heart of the slum. In their description of how the tool-house defines the spatiality of the slum, Rahul and Mathias echo Proudhon as the new visionaries of a subaltern
economic formation:
Several of Mumbai’s informal settlements are shaped by the contours of the
tool-house. You can see every wall, nook and corner becoming an extension
of the tools of the trade of its inhabitants, where the furnace and the cooking hearth exchange roles and sleeping competes with warehouse space, with
eventually a cluster of tool-houses making for a thriving workshop-neighbourhood.
These clusters, arguably, are the formal spatial analogy, as a kernel, of the industrial district or modern tech park. This parallel has suggested itself to Rahul and Mathias:
Dharavi became the hub for embroidery and garments, while other centers with which
Dharavi has active connections with, became sites for weaving and looms. Today this industry is not organized in large factories and assembly lines, but in hundreds of tiny
workshops in as many tool-houses that are connected to each other as by swarms of
agents, contractors and transporters.5
Of the varied forms of production that occur in locations such as Dharavi in Bombay,
perhaps the most vibrant is the production an reproduction of the built form itself. Tenuous by definition, the tool-house is an incremental achievement. As and when liquid
funds come online, as the opportune moment in the political cycle of recurrent demolitions presents itself, as the need for a sibling or child or parent or product is urgent, more
rooms are added, rough-hewn spaces made solid, and the cycle begins again. The very
shape of the neighborhood is an expression of its tightly-gauged responses to its environment.
Slums in Bombay occupy a domain of governmentality dubbed “political society” by
Partha Chatterjee.6 Acting in the register of political society, people mobilize not as citizens, namely authors of their collective fate, but as biopolitical subjects, bearer of various
“rights” to particular forms of pastoral care from the state. These “rights” are intrinsically
those of the subaltern: they are not nothing, but they are not generative of the potent
5 http://urbz.net/tool-house-urbz-office/
6 The
Politics of the Governed, (Columbia: 2006).
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transformative power of their hegemonic cousins in the register of “civil society.” They
are conservative in the literal sense, aimed at maintaining the fragile individual and social
metabolism in the face of constant threats from all sides. Occupational rights within informal settlements are one such set of biopolitical rights. They form the tentative ground
on which the informal economy is built.
These rights are the result of a political bargain, a balance of power between those
mobilizing the discourse of “democracy” on the subaltern ground of political society and
those seeking to capitalize on electoral patronage available from the residents of the city’s
informal spaces. To render biopolitical rights fully formal would be to secure the informal
in a manner that would tip the balance of the patronage game in favor of the urban voter.
The continual need of the dominant classes to reproduce insecurity is thus the critical
element that keeps political society distinct from civil society.
In the dominant narrative, the only route of escape from the informal undercity is by
means of “slum redevelopment” that incentivizes oligarchical real estate developers close
to the party-political apparatus to “rehabilitate” resident-workers in these areas by piling
them into high-rise constructions at one end of the designated plot, thereby freeing up the
rest of the plot (or the building-rights thereof) for commercial development. Formality
viz. rights would then be secured, but entry into civil society comes at the price of renting
the economic fabric that the tool-house has built. Formalization is thus a mirage: housing
policy in a place like Bombay is merely a smoke-screen for capturing and capitalizing the
spatial resources controlled by the undercity.
It is against this narrative that Rahul and Mathias mobilize their idea of the tool-house.
The aim is to illustrate that wretched as they are, these undercity spaces are in fact productive industrial districts. To misrecognize them as mere low-cost housing solutions is to see
them through the prism of the modernist planner and thus the now-dead logic of mass
production. In their comparative work with the suburbs of Toyko, Rahul and Mathias
show how what used to be called “slums” in those precincts are in fact efficient, low-rise,
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high-density solutions to problems of housing and employment.
Like the narrative of classical political economy, the hegemony of the hi-rise development paints the undercity as “slum,” as outside the formal, as a surplus that is to be
disciplined into the grid of modernism. Yet it is no coincidence that Rahul and Mathias
point to Japan to see another future. The home of flexible specialization has apparently
generated a housing solution to mimic its productive paradigm.
By systematic retro-fitting, the slums of suburban Tokyo filled in and formalized. The
modernist distopia that sees Bombay as the next Shanghai falls flat again and again on
the subaltern recalcitrance of the denizens undercity who have enough political capital
to stay put but not enough discursive power to defeat its political enemy. Urban political
society is caught in the discursive cul-de-sac of its conservative subalternality, unable to
think the transformative in the midst of deep insecurity. Rahul and Mathias are attempting to switch this gestalt. The echo with the industrial district, coupled with the deep
indeterminacy of modern economic life, illustrate that this is not an idle hope.
Conclusion
The anthropological literature on the informal economy is dominated by the work of
Keith Hart.7 In reprising his long-term contribution to the concept, Hart has recently
suggested a four-dimensional relationship between the formal and the informal economy:
“[The formal and in the informal]...may be related in any of four ways: as division, as
content, as negation and as residue.”8
As division, informal practices constitute the irregular, insecure, and unwritten practices of economic life, the erratic compared to the bureaucratic. Yet any abstract rule
requires specific application; the gap between the rule and the world often comes to be
filled by the practice of the informal. This is the informal as “content.” Then again, the
7 “Informal
income opportunities and urban employment in Ghana.” Journal of Modern African Studies
11, p. 61–89, 1973.
8 Bureaucratic Form and the Informal Economy,
http://thememorybank.co.uk/papers/bureaucratic-form-and-the-informal-economy/
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informal can be antagonistic to the formal when it expresses itself as the blatantly illegal.
The line of criminality has to be continually redrawn to reassure the self-image of the formal. Lastly, Hart gives us the informal as a residue to be either excluded or co-opted by
the state.
What I have tried to point to in this intervention is another potential way of conceiving the informal, indeed in a manner that attends specifically to the form of the informal
rather than its content. Analogizing, admittedly somewhat heroically, to the history and
present of the craft form of industrial organization, I have tried to suggest that the logic
of production that one set of ethnographers take to be at the heart of the informal bears a
striking resemblance to our dominant mode of production today. The tool-house and its
concomitant cluster might then also be seen as a foreshadowing of the economy that is to
come rather than the problem to be rationalized.
Rendered this way, urban political society might begin to move out of its subaltern,
conservative disposition and take the high-ground of futural transformation. It is not
merely a matter of asserting that the undercity is a space of production as well as housing,
and therefore that the gambit of formalization viz. mass hi-rise housing is simply a bad
fit. Nor is it sufficient to bank on the resilience of the subaltern in holding out against
the utopias of capital. If we recognize that that the form of production underway in the
undercity is of a progressive nature, we might start to build a discursive repertoire that
can combat its subalternality.
Of course, given that my analogy is mobilized on subaltern ground, it is bound to
sound utopian. Yet this hegemonic contrast-effect holds our imaginations in check. The
history of the fall and rise of the craft paradigm encourages us to think again.
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