The Informal Economy Dilemmas: Old and New Views

Abstract

It is possible to state that since the origins of early modernity,¹ all economic and social systems have to varying extents comprised a heterogeneous set of processes whereby goods and services are produced by eluding one or more distinctive aspects of the formal or regular part of the economy. Specifically, they may dodge out of commercial, tax, or labor law, and at times, regulation of the market and the pursuit of profit. Such activities are not new, therefore, but they have assumed greater magnitude and visibility since the early 1970s, when the headlong economic growth of the industrialized countries (and the economic advance of some developing countries) abruptly slowed down. The dominant productive paradigm,² generating those high growth rates, has been gainsaid by an economic and social context that is no longer predictable, and has lost most of its presumed universal efficacy. Consequently, the economic environment has grown increasingly uncertain in many of its dimensions (from demand to the labor market, in their qualitative and quantitative aspects), and has exhibited a new distribution of risk among firms, the state, and the labor force. In this new economic situation, the narrative of the limitless growth of production, consumption, and work has lost much of its persuasiveness and is no longer considered the inevitable outcome of a linear process of economic development.³