Informal Economics: The Triumph of System D

People, cattle and vultures all enjoying the benefits 

of an informal economy

I recently attended an interesting talk given by Dr Marianna Koli, Senior Lecturer in Economics at NCH, on crime, development, and democratization in Latin America, using Mexico, Columbia, and Brazil as her case studies. Central to her paper was a concept which, apparently, has become increasingly popular amongst economists and sociologists, namely, that of informality.

Informality is a term that is used to refer to the unofficial, unregulated, and frequently illicit activity carried on by people either marginalized by the state, or self-excluded and self-employed from preference (often because they resent paying tax, or having to comply with restrictive laws and regulations).

We used to refer to this informal sector as the black market, or shadow economy, and many of those who objected to its existence might point to its flirtatious relationship with the criminal underground. But now, it seems, we are invited to view it in a rather more positive light; i.e. not as a sign of social division and corruption, but as a flourishing of entrepreneurial know-how and urban ingenuity involving skilled professionals and creative individuals and not just the poor and dispossessed desperate to earn a few dollars, or provide basic services and amenities for themselves and their families living in 'non-stable communities' (i.e. what we used to call slums or shanty towns).

Indeed, it is claimed by admirers and advocates that informal activity is not simply a feature of advanced capitalism, but the very engine of such, driving production and innovation forward. Libertarians - keen to do away with the State entirely - are particularly quick to argue that governments should give up their futile attempts to control or combat informal activity and celebrate, expand, and learn from it instead.

For such political optimists, ur-capitalism (or agorism) provides a working model for the future; we can all be free to earn less and do without public services and provisions (such as health care); we can all live hand-to-mouth like those happy-go-lucky Latin Americans, or other peoples who opt for a more traditional lifestyle free from government and state regulation, but not from poverty, exploitation, violence and insecurity.

Who needs civilized society with its boring formalities, material benefits, and universal rights when we can have culture - developed organically from within the conditions of actual lived existence - allowing every individual to shape their own future and stand on their own two feet atop the garbage heaps of the world ...?


Afterword

Dr Marianna Koli has kindly commented on this post below and made her own position clear. I would hope it's understood that the views expressed in this post are mine alone - as are the errors and distortions made. 

Obviously, the post is a piece of polemic written by someone lacking in expert knowledge or experience in this area. Nevertheless, I stand by the central argument that informal economics is simply another way of saying laissez faire capitalism and, as such, something likely to attract the attention of libertarians and those of an Ayn Rand persuasion (i.e. those I regard as political opponents).