Out of the Shadows

Since the beginning of scholarly writing about the informal economy in the mid-1970s, the debate has evolved from addressing survival strategies of the poor to considering the implications for national development and the global economy. Simultaneously, research on informal politics has ranged from neighborhood clientelism to contentious social movements basing their claims on a variety of social identities in their quest for social justice.

Despite related empirical and theoretical concerns, these research traditions have seldom engaged in dialogue with one another. Out of the Shadows brings leading scholars of the informal economy and informal politics together to address how globalization has influenced local efforts to resolve political and economic needs—and how these seemingly separate issues are indeed deeply related.

In addition to the editors, contributors are Javier Auyero, Miguel Angel Centeno, Sylvia Chant, Robert Gay, Mercedes González de la Rocha, José Itzigsohn, Alejandro Portes, and Juan Manuel Ramírez Sáiz.

“With few exceptions, scholars from Left to Right have presented simplistic accounts of the political ramifications of economic informality in the underdeveloped world. Such depictions have been curiously out of sync with the salutary influence of the ‘bringing the state back in’ scholarship of the last couple of decades or so. This volume makes a crucial contribution to the scholarly and policy literatures by emphasizing the embeddedness of informal economies in state-society arrangements that cut across local, national, and transnational terrains of the Latin American and global political economies. The volume represents essential reading for scholars, policy specialists, students, and others who seek to make sense of the politico-social consequences of deepening inequality and poverty in the contemporary world.”—Richard Tardanico, Florida International University

“On the whole, the contributions to Out of the Shadows are persuasively argued and provide excellent empirical material on grassroots informal activities across Latin America.”—Tina Hilgers, Latin American Research Review

“Out of the Shadows should be a central reference for those interested in the grassroots reality of neoliberalism and democracy, and its chapter by Centeno and Portes should be read by anyone interested in Latin American economies.”—Tina Hilgers, Latin American Research Review

Patricia Fernández-Kelly is Senior Lecturer in Sociology at Princeton University, where she also holds an appointment with the Office of Population Research.

Jon Shefner is Associate Professor of Sociology at the University of Tennessee.

Contents

Acknowledgments

Introduction

Patricia Fernández-Kelly

1. The Informal Economy in the Shadow of the State

Miguel Angel Centeno and Alejandro Portes

2. Risk and Regulation in Informal and Illegal Markets

John C. Cross and Sergio Peña

3. Neoliberalism, Markets, and Informal Grassroots Economies

José Itzigsohn

4. Vanishing Assets: Cumulative Disadvantages Among the Urban Poor

Mercedes González de la Rocha

5. Female Household Headship, Privation and Power: Challenging the “Feminization of Poverty” Thesis

Sylvia Chant

6. Protest in Contemporary Argentina: A Contentious Repertoire in the Making

Javier Auyero

7. The Even More Difficult Transition from Clientelism to Citizenship: Lessons from Brazil

Robert Gay

8. Informal Politics in the Mexican Democratic Transition: The Case of the People’s Urban Movement

Juan Manuel Ramírez Sáis

9. “Do You Think Democracy Is a Magical Thing?”—From Basic Needs to Democratization in Informal Politics

Jon Shefner

References

Index

Introduction

Patricia Fernández-Kelly

A few years ago, at an international conference held in a plush European setting, a well-known scholar advanced the notion that the informal economy is by definition apolitical—because unregulated workers ignore or violate state regulations, they try to keep a low profile, thus refraining from overt complaint, dispute, or negotiation. The chapters in this volume make clear that nothing could be further from the facts. The relationship between informal workers, employers, and public officials is more complex than logic can at first surmise.

The chapters that follow provide an integrated account of the political ramifications of a phenomenon first theorized more than three decades ago. Since the 1970s, informality in both advanced and less developed countries has received sustained attention (Tokman 1982; Capecchi 1991). Methodologies have been devised to measure its size and output in places as disparate as Buenos Aires, Miami, and Bologna (Portes, Castells, and Denton 1991). Controversy has raged about the effects, beneficial as well as harmful, of economic informality (de Soto 1989; Fortuna and Prates 1991). All along, however, political dimensions have been insinuated, not investigated, suggested but not explained. This book redresses that omission.

Introduced by Keith Hart in 1970, the term “informality” was first used to designate the transactions of petty entrepreneurs in Ghana, which were typically outside official control. Informality thus encompassed economic behaviors that were not inherently illegal but occurred outside the purview of the state; it also constituted a field where economic actors—employers as well as workers—circumvented government legislation.

A lively debate soon grew about the origins and persistence of the informal economy in Latin America. Some saw it as a vestige of precapitalist social formations and the legacy of roughly three centuries of colonial domination. By the 1980s a new literature argued the opposite—informality was part and parcel of capitalist growth when (a) industry is unable to generate adequate demand for the available supply of labor, and (b) governments are incapable or unwilling to enact legislation to protect workers, discipline employers, and extract taxes from either. Informality was thus conceptualized as an effect of modernization and the byproduct of distorted or insufficient industrialization. The rapid growth of one or two cities in tandem with agricultural mechanization led to rapid rates of rural-urban migration, starting in the nineteenth century. Not able to survive in the countryside and lured by the promise of opportunity in cities, people had arrived searching for jobs in the private sector but ended up performing informal work in homes, assembly plants, or streets. Rather than a residue from the past, economic informality was understood to be an aspect of Latin America’s evolving present.

As important as unraveling the origin of economic informality was accounting for its internal dynamics and effects. The relationship between capital and labor took center stage (Bonacich and Light 1991). Interpretations about the repercussions of unregulated work fell into two main camps. Groups like the International Labor Organization (ILO) and Regional Program for Education in Latin America and the Caribbean (PREALC) envisioned informality as a low-cost way to create jobs through small business formation and self-employment (Economic Commission for Latin America and the Caribbean 2000). The Peruvian Hernando de Soto took a similar but extreme position in his influential book, The Other Path (1989), in which he represents the “mercantile” state as a monstrous impediment to business acumen. In his view even a humble street vender would have incalculable potential for entrepreneurship were it not for the intrusions of a state bent on thwarting individual freedom. Just as Hart had done years earlier, de Soto maintained that the informal economy had been ignored as a motor of development. According to him, multiple restrictions and bureaucratic time lags suffocate independence and self-reliance.

Marxist and neo-Marxist writings, by contrast, argued that “entrepreneurs” in the informal sector were really “disguised workers” being exploited through indirect channels (Bonacich and Light 1991). In this perspective, the divide between self-definition (small business owner or self-employed worker) and actual circumstance (proletarian) leads to a fragmentation of class consciousness and an incapacity for political expression. Popular awareness of common interests is impeded when people must eke out livings without the protection of government or trade unions. Informal workers have an impact similar to that of scabs and strikebreakers, whose actions weaken collective solidarity and political mobilization.

In the final analysis, both Marxist and non-Marxist interpretations, including de Soto’s oddly libertarian scheme, fall analytically short. Missing are cogent explorations of the role of the state and popular activism in the maintenance of economic informality. That limitation seems all the more surprising in hindsight because it is the state embodied in multiple practices, agencies, departments, and divisions that creates the conditions for the expansion or contraction of the informal economy. Without formal laws defining the relationship between employers and workers, the informal economy cannot exist. Put differently, formality breeds informality. Furthermore, underground transactions are facilitated by factors such as

<NL>

1. The passage of legislation and legislative amends at various governmental levels in response to constituencies in different positions of political and economic strength;

2. The uneven enforcement capabilities of state dependencies; and

3. The actions of agencies with specific and sometimes contradictory mandates.

<end NL>

Elsewhere I have described the garment industry in Southern California as a pertinent example of how those three forces shape the experience of informal workers (Fernández-Kelly and García 1991). As this volume further shows, it is through the interactions between public officials and unregulated actors that the informal economy evolves, taking different shapes and acquiring varying contents over time.

The spatial dimensions of economic informality are also worth considering. Unregulated dealings often occur on avenues, plazas, sidewalks, and even buses over which government agencies have jurisdiction. It is possible to conceptualize street vending, for example, as the result of negotiations between popular groups and government personnel over the use of public ambits. How and under what conditions do such compromises happen? What are the proximate and cumulative consequences of those accommodations? To what extent do informal workers and entrepreneurs represent new economic and political interests? These are the questions broached by this book.

<1> Situating Regulatory Control

Chapter 1, by Miguel Angel Centeno and Alejandro Portes, and Chapter 2, by John C. Cross and Sergio Peña, improve our understanding of nuances in the relationship between government structures and informal actors. This is in contrast to earlier studies, which emphasized the adversarial relationship between the state—envisioned as the organ responsible for the emission and implementation of legislative restrictions—and informal workers and entrepreneurs attempting to circumvent control. As the lead authors in this volume show, that dichotomy proved to be, at best, a simplification.

Centeno and Portes and Cross and Peña build on a rich tradition of inquiry about the relationship between unregulated workers and the state. Since the 1980s, a voluminous literature focused on advanced and less developed countries pointing to variations and regularities in the interactions between formal and informal sectors. Researchers documented, for example, how people move intermittently between the two domains, responding to need and opportunity (Fortuna and Prates 1991). They also showed how small businesses resort to unauthorized productive arrangements during times of financial crisis and how law-abiding firms occasionally engage the services of home workers to supplement production during periods of increasing demand (Benería and Roldán 1987). In other words, a mounting body of evidence made clear that a porous membrane, not a rigid boundary, separates the formal and informal sectors.

Research made obvious as well the extent to which subcontracting arrangements link formal and informal activities (Tokman 1982). Early interpretations characterized the two domains as separate, responding to different stimuli, and bearing distinct internal logics. The new evidence established that, in many cases, informality grows with and depends on urbanization and industrial expansion, two markers of modernization. Unregulated economic activity was thus proven to be not a relic from the past, as authors like Bela Balassa and colleagues (1986) or Alex Inkeles and David Smith (1974) had intimated, but a byproduct of advanced forms of production. For example, comparatively high rates of prosperity in Latin America during the 1970s paralleled the extension of the informal sector partly because of the burgeoning demand for goods and services, many of them produced outside the limits of government regulation (Fernández-Kelly and García 1991).

Nevertheless, the ties between the formal and informal sectors proved to be contingent, not inevitable. Starting in the 1980s several forces decoupled the two economic realms. Crushing national debts and austerity measures imposed by international monetary organizations throughout Latin America arrested the fragile progress of the previous decade. For the first time, even the informal sector failed to grow, as an increasing number of people retrenched into subsistence activities outside labor markets, whether regulated or not. Even more recently, the diffusion of neoliberal policies exacerbated levels of immiseration throughout the hemisphere, leading to rising predation and the reappearance of nearly extinct behaviors like barter in, of all places, Buenos Aires, a city once known as the Paris of South America (Frasce 2002).

A main contribution of the two first chapters in this volume is the elucidation of how economic behaviors intersect with regulatory structures. According to Centeno and Portes, it is not only the state’s ability to pass laws but also its capacity to enforce them that determines the shape and size of the informal economy. Their distinction of frustrated, welfare, and liberal states finds complement in Cross and Peña’s use of the terms informal, illegal, and mafia to identify types of economic transactions among unregulated workers and entrepreneurs. The intersections in this model produce multiple outcomes. In some cases, informalization supplements state regulation; in others, it opposes it. At first blush the informal economy may seem uniform but, as the studies in this volume reveal, it is internally heterogeneous.

<comp: insert table 1 approximately here>

Table 1 summarizes the interactions between public functionaries and unregulated actors. Informality under the aegis of a benevolent state led to complementarity, not opposition, in the case of Emilia-Romagna aptly examined by Vittorio Cappechi (1991, 1997). Aided by members of the Italian Communist party—less interested in ideological purity than in opening channels for production and accumulation—formerly unionized Fiat workers became entrepreneurs. Government facilitated that conversion by modifying existing legislation. Proletarian spirit transmogrified into business shrewdness. The result was a network of small firms dependent on mutual trust and oriented toward flexible specialization. Although later studies suggested the impracticability of its transference to other, less adaptable settings, Emilia-Romagna became a celebrated, illustration of state versatility and worker imagination.

By comparison a strong governing apparatus with ample regulatory capacity but limited ability or will for enforcement delivers what Cross and Peña call a mafia state. In that scenario informal actors not only fill the demand for illegal goods and services but also assume state-like functions. A case in point is the almost wholesale absorption of the Colombian structure of governance by powerful drug cartels in the 1980s (Fortuna and Prates 1991; Blanes Jiménez 1991).

Drug trafficking under the watch of a state unable or unwilling to control it is a related instance sketched by the same authors. Throughout the first half of the twentieth century, American cities experienced the steady arrival of black migrants from the South. Demographic change led to drops in urban investment and “white flight.” Market activity in inner-city neighborhoods stagnated, and by the 1970s, ghettos became permanent enclosures. The agents of a massive state—social workers, program managers, public service providers, and police officers, among others—rapidly occupied the spaces left empty by capital defection. State omnipresence thus became a distinctive feature in U.S. cities. Paradoxically, the absence of political clout at the grassroots level enabled predatory entrepreneurs to flood poor neighborhoods with dangerous drugs, like crack cocaine, that would have been unmarketable in better-protected residential areas (Fernández-Kelly 2003).

As government programs multiplied to make up for feeble market activity in urban ghettos, youngsters, especially young men, organized and competed for the control of public spaces where they could hustle drugs and guns. Their confrontations and “drive-by shootings”—sometimes portrayed by the media as racially specific phenomena—echoed the behaviors of Italian and Irish gangsters during the Prohibition Era. Shared by the two cases was the emergence of alternative mechanisms for the production and distribution of illegal commodities and the articulation of hierarchical arrangements that replicated some of the functions of the state.

The contestation of rights over the use of public space is also a central theme in John Cross’s Informal Politics: A Study of Street Venders in Mexico City (1998), the book that most closely antedates and inspires the present volume. On the basis of ethnographic and historical research Cross showed how, in the 1960s and subsequently, local authorities combined harsh repression and negotiation to quell the informal occupation of walkways and parks in Mexico City. Street peddlers responded by seeking protection from politicians in exchange for votes. Nevertheless, the forging of patron-client relationships—a common practice in Mexico—was only part of the story. Overwhelmed by individual applications for permits to sell goods al fresco, and eager to rid themselves of continuous demands, government officials offered to negotiate with street merchants but only if they formed trade organizations. The result was not, as they expected, the elimination of perambulatory commerce but the multiplication of street vender associations—an unintended effect of the less than visible interaction between state representatives and informal economic agents. In this case, city officials acted as catalysts for the political mobilization of unregulated merchants. Jeremy Grest documents equivalent phenomena in Durban, South Africa (Grest 2001).

A dramatic illustration of the relationship between economic actors and what Centeno and Portes call the liberal state is not found in studies of the informal economy but in the emerging literature on transnational communities (Portes 1997). Growing economic integration on a world scale, cheaper and faster transportation, and sophisticated communications technologies paralleled the diffusion of neoliberal economic policies in the 1990s. Those, in turn, led to the partial informalization of national bodies of government or, put differently, to a dismantling of regulatory controls and welfare provisions. Globalization is therefore more than an economic trend aimed at maximizing capital gains through the transfer of production from advanced to less developed countries—it is also a political strategy that atomizes and weakens labor forces in various locations (Evans 1995). Partly for that reason, the age of global integration has coincided with unionization declines in advanced countries and a dearth of effective mobilization in export production zones located in Asia, Eastern Europe, Latin America, and the Caribbean. The opposite of what Karl Marx predicted has occurred—growing similarity in the experience of workers around the world has not led to alliances and unified militancy.

Nevertheless, as the research on transnational communities shows, this does not mean that workers have remained passive vis-à-vis the impact of neoliberal policies. A new class of people whose members travel regularly across borders to earn a living is using the same routes opened by international capital in its search for more productive and compliant workforces. For individual workers and entrepreneurs, international travel offers greater opportunities to circumvent the restrictions imposed by weakened national states. As José Itzigsohn shows in Chapter 3, globalization is creating new locations within which informal workers and entrepreneurs increase their command over resources. Remittances, for example, have become a major source of revenue for towns and villages in Costa Rica and the Dominican Republic—a sort of foreign aid program implemented by people from those countries who work in the United States. Although most transnational entrepreneurs are men, the channels of travel and trade associated with economic integration are also creating new opportunities for women, as research by Hatice Deniz Yenal (2000) and Carla Freeman (2000) has shown.

It is not uncommon in this brave new world for individuals to see their hometowns in less developed nations as sources of personal and collective identity while envisioning countries of destination mostly as fields of economic opportunity. The political implications of this development are momentous. As some have begun to observe, the ripping apart of identity and place is likely to have a profound effect on the very meaning of citizenship, a major dimension of political praxis (Sassen 1996).

Finally, the chapters by Centeno and Portes and Cross and Peña raise issues of significance to the new economic sociology. While early studies of the informal economy focused mostly on the extent to which workers and entrepreneurs escape state regulation, the present volume shifts emphasis to norms of trust and mutuality that social actors must deploy to maximize advantage and reduce risks. Interdependence and rules of reciprocity bring order and consistency to human interactions. It is not that the informal economy lacks regulation but that the sources and means of control are situated within it and not in the official structure of government. Bypassing the dictates of the law alters economic terms. The hazards stemming from informal transactions can increase costs, making it vital to distribute the risk among the members of social networks marked by what Alejandro Portes and Julia Sensenbrenner (1993) call bounded solidarity.

That generalization applies not just to marginal commerce in general but also and especially to trafficking in illegal products or services such as drugs and prostitution. It is in those confines that the phrase “honor among thieves” acquires its most powerful meaning.

Finally, José Itzigsohn’s comparative study of families in Costa Rica and the Dominican Republic echoes the findings of the two previous chapters while moving analysis into an international plane. As standards of living fall for many throughout Latin America and the Caribbean, workers seek new avenues to survive through migration and the deployment of transnational economic strategies. Immigrant workers in the United States, for example, put into motion vast financial flows that energize their home economies. Remittances are already the second source of foreign exchange in the Dominican Republic, surpassed only by tourism. Even more significant from this book’s perspective, migrants—and in some cases the children of migrants—increasingly participate in the political life of their ancestral countries. They stride borders bypassing government regulations and altering conventional notions of social assimilation at both ends of the geographical span (Portes 1997). Whether as undocumented migrants in some American city or as traders crossing borders back and forth on a regular basis, Latin American workers are operating within and broadening the reach of the informal economy.

<1> The Household as a Political Category

While the first three chapters take stock of past research and conceptualize afresh the relationship between political action and the informal economy, Chapter 4, by Mercedes González de la Rocha, and Chapter 5, by Sylvia Chant, assume equivalent tasks with respect to domestic units. Households have attracted lively inquiry and debate in the social sciences, but no matter how they are defined, there is agreement that they connect various levels of economic action. It is within households that labor providers are nurtured, disciplined, and placed into circulation (Fernández-Kelly 1994; Chant 1999). Cost-benefit calculations involving age, sex, level of education, experience, and ability lead individuals into different market niches, some formal, others informal. Yet there is more to households than their reproductive functions.

Starting in the 1970s, a suggestive literature influenced by feminist thinking interrogated the relationship between private and public domains and exposed a paradoxical convention: goods produced and services provided in domestic spaces are generally understood to be outside the price system and therefore to have no explicit economic value. Household chores, mostly the responsibility of women, are performed in the name of duty, instinct, or sentiment—not as part of market exchanges. Such emphasis on biological and emotive determinants naturalizes what are, in fact, economic transactions subject to price classification and market effects of supply and demand when occurring in the public domain (Hartmann 1976). A meal may be a symbol of hospitality in the home but it is a commodity when purchased in a restaurant. Feminist critics convincingly argued that denuding domestic work of its economic significance affects the balance of power between men and women, putting the latter at a major disadvantage (Edholm 1977; Deere and Léon de Leal 1990; Kessler-Harris 1975).

In the years that followed, the separation between private and public life and the relationship between productive and reproductive processes were viewed from the perspective of gender inequality (Benería and Sen 1986). As a result, power and resource differentials between men and women received the most attention. The chapters by Chant, González de la Rocha, and Itzigsohn underscore different but equally significant political dimensions. To the extent that it is constructed as a private space outside state regulation, the household presents in extreme modalities some of the characteristics of the informal economy. Furthermore, it is not possible to understand changes in the unregulated sector without appraising equivalent transformations in the domestic sphere.

González de la Rocha vividly documents the transition from what she calls the resources of poverty to the poverty of resources resulting from the application of neoliberal policies over the last two decades. Her point is that during the 1970s and 1980s informal workers throughout Latin America deployed creative strategies to maximize access to income and meet survival needs, often through the domestic production of goods and services sold in public markets. The street vendors that Cross examined in their dealings with local authorities were sons and daughters, husbands and wives, relatives and friends, putting together plastic trinkets, preparing food, or sewing garments in quarters they inhabited as members of families. In those cases the limits of personal and public action blurred as individuals confronted the challenges of daily existence. I noted earlier that during periods of economic growth the informal and formal sectors expand harmoniously partly as a result of subcontracting connections. Subcontracting aims at diversifying production while at the same time lowering costs. It is often within the confines of the household that those two objectives can be met most effectively.

Even in the 1980s, when external debt and cuts in public spending threw countries like Mexico into deep recession, households were able to satisfy basic needs by pushing wives and even children into the labor force (Chant 1991). Contrary to plausible expectations that crisis would result in family atomization—unemployed men deserting families they could not support; women fleeing violence and poverty—the opposite occurred. González de la Rocha (1990) and Chant (1991) documented the increase in the average number of household members as a response to economic decline. Instructive reasons were behind that counterintuitive finding—when able to, families shared their quarters with displaced relatives or enlisted young female kin to take charge of domestic obligations while older women worked long hours outside the home.

By the 1990s even those strategies were insufficient to maintain minimum standards of living. As economic growth stagnated and then reversed, informality gave way to even more elemental transactions: scavenging, a panoply of rapacious acts, some of them terrifying, the bartering of services and goods, or the use of promissory coupons to mark economic exchanges. The dismantling of public welfare legislation, itself the fragile legacy of an earlier stage of development is thus muting to some extent the differentiation between domestic and public spheres. Older household studies emphasized the politics of gender. The chapters in this volume expose an equally important phenomenon: the extent to which the overlap between domestic and informal economic activities reflects accentuating political vulnerability for a large number of Latin American families.

<comp: insert fig. 1 approximately here>

Figure 1 conceptualizes two moments in the relationship between three economic fields. The first example could be Mexico during the 1970s when import substitution industrialization programs were still in effect and economic growth was comparatively vibrant. In that instance the overlap between domestic and informal activities was significant but many products assembled in homes found buyers in the formal or informal sectors. Those two domains, in turn, were often linked through subcontracting arrangements represented by the arrows in the figure.

In the second example—perhaps Argentina in the year 2002—the interaction among the three sectors has been rearticulated. In response to shrinking formal demand of goods and services, subcontracting wanes and potential workers retrench into domestic spaces, directing their energy to subsistence production and mobilization. The proliferation of communal kitchens and the use of grassroots associations to provide public services are examples of that shift. It is as if, under the impact of neoliberal reform, the private ambit extended outward, beyond conventional boundaries, in order to address survival needs formerly satisfied by the welfare state or the Keynesian market. González de la Rocha’s analysis gives pause and raises anew questions about the relationship between economic efficiency and social rights (see also MacLeod 2001 and Sassen 1996). To say that the personal is political, echoing the feminist slogan of the 1970s, acquires a new significance in the early twenty-first century when economic change is leading to a tighter articulation of and greater overlap between the domestic and public sectors.

In that bleak picture, some auspicious news is available. According to Chant, the feminization of the labor force that has paralleled globalization both in central and peripheral countries does not perforce entail a further weakening of women’s power or limit their access to resources. Studies published mainly in the United States associate rising numbers of female-headed households with sharp poverty levels. Chant offers persuasive evidence that such generalizations may be overstated. In places like Mexico the poorest households are not, by and large, those led by single women but those in which men are the heads. That is because escalating levels of male unemployment coupled with cultural conventions that sanction women’s dependence and domesticity can exacerbate economic penury. It is at this level that gender politics backfire, creating even larger risks for both men and women.

Chant’s research also shows that, in order to reinforce their masculine role, men are likely to use even modest earnings in conspicuous displays like gambling, purchasing sexual services, or drinking with friends. Women, on the other hand, exhibit a higher propensity to invest in children, even at the expense of their own well-being. Female-headed households derive substantial benefits from replacing husbands’ earnings with those of grown children. In such cases the average income may be lower than that in situations where both husband and wife earn wages, but women’s higher level of control over funds makes up for that limitation. In other words, the contributions of employed sons and daughters to mothers in charge of domestic services can turn female-headed households into versatile mechanisms that widen advantages where resources are in short supply.

<1> Public Mobilization

Neoliberal economic policies may have expanded the overlap between households and markets but the demarcation between private and public spaces has not faded away. The last four chapters in this book— by Javier Auyero, Robert Gay, Juan Manuel Ramírez Sáis, and Jon Shefner—explore the open expressions of political dissatisfaction in the global age. They thus connect our studies of the informal economy with the existing literature on social movements (Escobar and Álvarez 1992; Avritzer 2002).

In Chapter 6, Javier Auyero writes eloquently about the innovative strategies conceived and implemented by disgruntled workers in Argentina. He approaches collective unrest from the theoretical perspective first formulated by Charles Tilly (1995), thus emphasizing the cultural repertoires used by social actors as they try to attract attention to their plight. Auyero’s is a response to an earlier, more simplistic perspective that envisioned mass protest mostly as a reaction to “grievances.” In that view, the buildup of collective resentment—over low wages, inadequate working conditions, insufficient services, and government violence—inevitably leads to explosions. Two limitations mar that seemingly plausible framework: first, it equates complex social phenomena with simple laboratory events—just as gases can detonate in a heated flask, rising collective stress is said to cause public mobilization. The evidence does not confirm that generalization. Second, the focus on grievances does not explain cases in which vast resentment is not followed by violent eruptions or those in which minor complaints lead to major outbursts.

Auyero does not underestimate grievances as factors leading to popular unrest, but rather emphasizes shared traditions, communicative exchanges, and institutional expectations, that is, cultural repertoires. Collective strife takes place everywhere but how groups express their discontent varies markedly from context to context. In Argentina the harsh conditions resulting from the extension of neoliberal policies have had a three-fold effect: first, they have contributed to the emergence of fluid groups that, although adversarial, do not generally resort to violence. Second, they have facilitated a reshuffling of class alliances in which el pueblo, “the people,” now encompasses not only members of the rural and urban proletariat but also a larger segment of the middle class—educators, managerial workers, and government employees. Finally, the dismantling of Argentina’s welfare state has made it less likely for workers to see capitalists as the group responsible for their predicament—it is government that civil society now sees as a betrayer of the common interest. The tearing apart of what little was left of the Peronist legacy has led a people internally diverse in terms of class but united by shared political concerns to occupy streets and block intersections to galvanize public attention.

Even today, Argentina is far from being the most impoverished country in the hemisphere. In that nation public disturbances are not caused by economic privation alone but by the disjuncture between the collective memory of past promises and the collective experience of the inability of government to deliver on those promises. In John Cross’s Mexico City, venders occupy streets not only to survive economically but also to apply political pressure on local authorities. Argentina offers a parallel case in which formal and informal workers take over public spaces as a way to leverage the state. It is the delicate balance between economic intention and political calculus that varies in the two cases.

In Chapter 7 Robert Gay complements Auyero’s analysis by focusing on the gradual transition between clientelism and citizenship in Brazil. In conventional interpretations, political machines are activated and maintained through a complex system of reciprocity meant to garner the support of constituencies often formed by informal and marginal workers. Given the large imbalance between the material, human, and ideological resources available to politicians and those at the disposal of popular groups, the assumption has been that patron-client relationships are vertical and top-heavy. Gay paints a more complex image by describing how grassroots leaders play politicians against one another in order to maximize their own access to public services. Gay’s account connects brilliantly with the typology by Centeno and Portes showing the limitations of the frustrated state. Latin American politicians are less powerful than sometimes imagined. Force and suppression are not viable means to secure popular compliance in the long run, and the assets needed to buy votes are not always available. This opens up opportunities for informal transactions that local populations use to advance their goals. By restoring agency to both political machines and constituencies, Gay makes a signal contribution. The dwellers of Brazilian favelas may still be dependent on employers and public officials, but now we can appreciate their enhanced capacity to manipulate benefactors. Gay’s study of the new clientelism uncovers grassroots diplomacy.

As leaders of popular organizations improve their negotiating positions, their motives and objectives can change. Beyond the satisfaction of material needs they may seek firmer inclusion in the larger society. Gay hypothesizes that in Brazil, as in other parts of Latin America, the trend has been from a defense of particularistic interests to the universalistic pursuit of citizen rights. Juan Manuel Ramírez Sáis reveals the unexpected consequences of that process in his compelling description of the rise and fall of Mexico’s Movimiento Urbano Popular (MUP). The case study is of interest here because it exposes the conditions under which political means are converted into economic ends. Among affluent groups, observes the author, the acquisition of real estate is mostly an economic operation guided by market forces, just as orthodox economists would have it. By contrast, for populations without adequate employment and therefore the means to purchase homes, access to shelter depends primarily on political activism. At the peak of their success MUP leaders used mass mobilization to secure homes for nearly a million workers—a remarkable accomplishment by any standard.

In its early stages, the MUP’s dazzling success depended on its autonomy vis-à-vis government officials. Although not completely immune to patron-client dealings, the movement maintained its independence for almost twenty years. That, in turn, increased its credibility and following. In the 1980s, however, the MUP fell prey to the influence of partisan politics. Ramírez Sáis shows how, in their effort to control and mobilize resources, MUP leaders forged alliances with candidates of various political stripes. This not only produced divisions within the movement, but also put the brakes on action. To the extent that grassroots organizers had to adjust their behavior to the requirements of party bureaucracies, they were less able to meet collective needs or even maintain the detachment that had contributed to their earlier success.

The chapter by Ramírez Sáis is in good measure the telling of a paradox: in the early stages of their development, popular movements are fueled by the expectation that collective action will bring about a better allocation of essential resources. Yet success can have a paralyzing effect. As popular leaders become part of institutional bodies, their capacity for mobilization diminishes. Put differently, the lack of bureaucratic structure gives popular movements flexibility but not necessarily ways to satisfy basic needs. Bureaucratic mechanisms, on the other hand, facilitate access to resources but hinder the capacity for the equitable distribution of limited goods. That problem, concludes Ramírez Sáis, lingers unsolved.

In the closing chapter, Jon Shefner approaches the continuum between narrow economic ends and the broad pursuit of citizen rights from a somewhat different angle. Through his remarkable study of a marginal colonia in Guadalajara, Mexico, he brings into full view the paradoxes of democratic improvements amid declining material assets. Deviating from typical practice, the neighborhoods that Shefner investigated were not populated by squatters first tolerated and then sanctioned by the authorities. Instead, government representatives made those residential alternatives available as part of a populist agenda that also included plans for greater political participation and the more efficient provision of services. As in the case of Brazil described by Gay, this forged a host of patron-client relationships but that was only the beginning. In subsequent years, government failed to heed its pledges. Evidence of this, notes Shefner, was a manhole in a central street, originally envisioned as the beginning of a public water project, which to the dismay of local residents remained exposed and untouched for more than a decade.

Working people in Latin America are familiar with disappointment. In countries where national states are limited by insufficient resources and bureaucratic sclerosis, local communities have learned to rely on their own strengths. In the case reviewed by Shefner, however, mobilization diminished despite generalized frustration among the dwellers of the humble Guadalajara colonia. Why? Because, replies the author, neoliberal policies may have weakened even the capacity of local communities for self-reliance. Furthermore, a multitude of nongovernmental organizations now populating the Latin American landscape may have inadvertently encouraged passivity. In earlier decades, under the rhetorical mantle of nationalism and class warfare, local residents often took an adversarial stance vis-à-vis governments and employers. More recently, NGOs have become patrons of last resort for vulnerable groups. As in the case of American inner cities, where people often use welfare agencies as one of several resource venues, the poor in Latin America increasingly depend on international philanthropy to maximize access to limited goods. The result is quiescence.

Paradoxically, narratives muting socioeconomic inequality and emphasizing democratic participation have accompanied the shift in the locus of patronage. Freedom of expression, broader involvement in the electoral process, and fairer representation in government are laudable ends. Yet as Shefner astutely shows, the very meaning of democratic participation is subverted in contexts characterized by what González de la Rocha calls earlier in this volume the poverty of resources.

<comp: insert fig. 2 approximately here>

Figure 2 summarizes the central ideas in Shefner’s argument. In agreement with Auyero, Gay, and Ramírez Sáis, he points to a progression from particularistic to universalistic political practices. Old forms of patronage gradually give way to movements oriented toward electoral participation and voters’ rights. The goal is for popular groups to achieve full membership in the larger society. Yet genuine citizenship requires coordination between market activity and state regulation as it occurred in many European—and some Latin American—countries earlier in the twentieth century. By contrast, in settings affected by the extension of neoliberal policies, the movement away from early modes of patronage has not brought about full citizenship but new types of clientelism, some of them involving nongovernmental organizations.

With these insights Shefner brings our book’s argument full circle. His analysis also echoes concerns advanced by authors not represented in this volume. William Robinson’s prescient analysis of polyarchy as the language and modus operandi of the most advanced capitalist sectors comes to mind (Carroll and Carson 2003; Robinson 1996). In their pursuit of profit and flexible conditions for production, members of that potent international class have supported the passage of free trade agreements and the obliteration of paternalistic legislation. They have done this guided by democratic ideals through the extension of individual rights and responsibilities, even as neoliberal policies erode the capacity of many workers to meet fundamental needs (Galbraith 2000, 2002). Shefner’s analysis gives pause. Are the new working classes in Latin America and beyond advancing thanks to democracy’s embrace or are they just waiting, strangled and dispossessed, for a new moment of resurgence? Only time will tell.

<1> Conclusion

The chapters in this book are united by a common preoccupation: to reveal the political dimensions of informal economic action. As a whole, they form an integrated analysis whose main tenets I summarize below.

First, in agreement with earlier studies on the subject, this book provides new evidence that the informal economy is far from a vestige of earlier stages in economic development. Instead, informality is part and parcel of the processes of modernization. Its content and type of relationship with regulated production and commerce vary in consonance with changes in the material foundations of society. Contrary to early arguments, we present the informal economy as an organized entity. Its regulatory means are not to be found at any level of structured government but within the informal economy itself. To exist, informal workers must rely on norms of reciprocity and solidarity, a subject that joins this book to the field of economic sociology.

Second, the chapters in this book make it clear that informal actors are far from apolitical. Their economic survival depends routinely on transactions they make and alliances they forge with government authorities at the local, state, and federal levels. Conversely, government entities are not always in opposition to unregulated sectors. Distinctions between formal and informal politics may be useful at the analytical level, but on the ground, government officials are often pushed into arrangements that promote the continuance and even growth of the informal economy. In other words, it is the state through its regulatory and implementing capacity that partly determines the size and shape of the unregulated sector.

Third, this book makes an important contribution to our understanding of households as economic fields in close but fluid relationship with both the informal and formal sectors. Although the reproductive functions of domestic units have received attention in the past, this is one of the first attempts to systematize the relationship between unpaid labor as it occurs in domestic ambits and the informal and formal economies. Of special interest to the present moment is the greater overlap between private and public spheres as a result of the extension of neoliberal economic policies.

Finally, this book brings to light the logic of innovative forms of clientelism emerging in the age of global economic integration. Old patron-client relationships are being displaced by new arrangements. Even as national states dismantle protective legislation and working classes resort to self-provisioning, nongovernmental organizations and self-help entities become the new loci of patronage. The language and practice of democratic participation thrive in a volatile age when inequities are on the rise throughout the hemisphere.

At its most fundamental, political action is about the collective production, dispersal, and exercise of power, authority, and influence. Too frequently in the past informal workers have been portrayed as economic players without a recognition of their active participation in the push-and-pull that alters processes of negotiation, co-optation and realignment. They have been, in Eric Wolf’s memorable words, a people without history. With this volume we hope to redress that narrow conception of a population that constitutes the majority of workers in Latin America.

Latin American Studies

           Political Science

           Sociology

Political Science

           Comparative Politics

Sociology