Polanyi, Chayanov, and Lessons for the Study of the Informal Sector

By Ozveren, Eyup | Journal of Economic Issues, September 2005 | Go to article overview

Polanyi, Chayanov, and Lessons for the Study of the Informal Sector


Ozveren, Eyup, Journal of Economic Issues


Far from withering away, the informal sector continues to occupy an important place within economies in general (Castells and Portes 1989) and within the so-called developing economies in particular (de Soto 1989). As one now-classic work puts it, it is "because there is a formal economy (i.e., an institutional framework of economic activity) that we can speak of an 'informal' one" (Castells and Portes 1989, 13). One author has stated that "as long as there is formal economic analysis and the partial institutionalization of economies around the globe.... there will be a need for some such remedial concept as the informal economy" (Hart 1987, 846). Taking a further step, another analyst has gone as far as to argue that, just as order creates disorder, the formal economy inevitably creates its own informality (Lomnitz 2002, 189).

From these statements we can surmise that the informal sector can only be defined in relational terms. In any case, this definition is no easy task. One way to proceed with the definition is to adopt a practical and observational approach. Relatively speaking, the informal sector is inferior and more spontaneous, if not actually incomplete. Within the informal sector we find numerous small competitive firms, free entry, market-determined factor and product prices, together with a concentration of petty retail and services, labor-intensive production processes, and low productivity (Hart 1987, 845; Todaro 2000, 749). In addition to these observations, we can further add that the "informal sector" consists of a range of economic activities that, distinct from other economic activities within the same environment, remain outside the domain of governmental records and regulations (Castells and Portes 1989), or to put it differently, "outside the framework of corporate public and private sector establishments" (Hart 1987, 845). This definition would broaden the scope immensely so as to include even the manufacturing activities relocated from cities to countryside in early modern Europe in order to escape from guild regulations. For the sake of convenience and common sense, we might better define the "informal sector" by recourse to the intersection subset of the empirical and relational definitions above. The term first became current in the 1970s in response to the embarrassing spread of urban self-employment and casual labor in the wake of insufficient developmental policies in the third world. Afterward, it was imported to the first world, then experiencing a painful process of de-industrialization. It was the striking presence of the phenomenon that necessitated the terminology. Fernand Braudel, as an eyewitness and an influential economic historian, made note of the fact

   in the wake of the economic depression following the 1973-4 crisis,
   we are beginning to see the development of a modern version of the
   non-market economy: hardly disguised forms of barter, the direct
   exchange of services, "moonlighting" as it is called, plus all the
   various forms of home working and "odd-jobs.'" This layer of
   activity, lying below or alongside the market, has reached
   sufficient proportions to attract the attention of several
   economists: some have estimated that it may represent 30 or 40
   percent of the gross national product, which thus lies outside all
   official accounting, even in industrialized countries. (1981, 25)

Persistence of the informal sector has forced economists to take note of it, if not to explain it properly. Adherents of the dominant neoclassical economic theory have ventured into this domain to conveniently do away with its distinguishing characteristics and to explain it as if it were no different in essence or functioning from the market economy. (1) To paraphrase Karl Polanyi, being obsessed with the "obsolete market hypothesis," they pretended they identified markets where there were actually none. In contradistinction, if we were truly respectful of the distinguishing attributes of the informal sector, then this would also provide us with a springboard to attempt a thorough critique of some of the highly flawed fundamental assumptions of the orthodox approach. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Polanyi, Chayanov, and Lessons for the Study of the Informal Sector
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.