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Beyond the Factory: Globalisation, Informalisation of Production and the New Locations of Labour

This essay foregrounds the phenomenon of informalised self-employment and explores its implications for potentially new forms of labour activism. The relation which defines the new location of labour is one in which the labourer is no longer a source of surplus, rather he/she is an unwanted possessor or occupier of economic resources from which he/she must be divorced to free those resources for use in the circuit of capital. This process of dispossession without proletarianisation or exploitation is referred to as exclusion. The traditional contradiction between wage-labour and capital is overshadowed by the contradiction between capital and a surplus labour force. Class politics - traditionally focused on exploitation of wage-labour - must reinvent itself to address the other great political movement shaping up around the exclusion of labour.

REVIEW OF LABOUR

Beyond the Factory: Globalisation, Informalisation of Production and the New Locations of Labour

Kalyan Sanyal, Rajesh Bhattacharyya

This essay foregrounds the phenomenon of informalised self-employment and explores its implications for potentially new forms of labour activism. The relation which defines the new location of labour is one in which the labourer is no longer a source of surplus, rather he/she is an unwanted possessor or occupier of economic resources from which he/she must be divorced to free those resources for use in the circuit of capital. This process of dispossession without proletarianisation or exploitation is referred to as exclusion. The traditional contradiction between wage-labour and capital is overshadowed by the contradiction between capital and a surplus labour force. Class politics – traditionally focused on exploitation of wage-labour – must reinvent itself to address the other great political movement shaping up around the exclusion of labour.

Kalyan Sanyal (kalyan_ calu@yahoo.co.in) is at the University of Calcutta and Rajesh Bhattacharyya (rajesh2466@gmail.com) is at the University of Massachusetts, Amherst.

Introduction

T
here are two contradictory views on the impact of globalisation on labour activism. It is widely argued that globalisation has considerably weakened labour movements all over the world. With labour tied to specific geographical locations, increasingly footloose capital has made economies, especially the developing ones, vulnerable to capital strike – the threat of capital moving out to places more attractive in terms of wages and standards, thus unleashing a race to the bottom. Labour, unlike in the second half of the 20th century, now has to passively adapt to the terms dictated by freely mobile global capital.

This view, however, has not gone uncontested. There is a counter perspective in which it is asserted that while globalisation has undoubtedly undermined the conditions that made traditional trade unionism associated with Fordist mass production possible, the very forces of globalisation themselves have opened up new terrains where radically new forms of labour activism can be imagined. Globalisation may have created conditions that are debilitating for labour in the traditional sense of working class power but, at the same time, it has potentially empowered the working class in ways that the 20th century pre-globalised world did not allow. As Silver (2003) and Webster et al (2008) argue, the complex global network of production based on outsourcing and subcontracting – that is emerging and consolidating is actually making global capital more vulnerable than before to disruptions in the global circuit of production and circulation, thus increasing the bargaining power of the working class.

In this otherwise illuminating debate, labour, it must be noted, is characterised as wage-labour, and employment as wageemployment. In other words, it focuses exclusively on employment based on capitalist production relations that are rooted in the separation of capital and labour. The reality of developing countries today, however, does not answer such a monist characterisation of labour. It is now well known that developing economies are marked by the existence of an overwhelmingly large volume of economic activities that fall within what is described as the informal sector. It is an economic space in which workers engage in economic activities in ways that are very different from the capitalist organisation of production. In particular, the prevalent form of labour in the informal sector is self-employment, which is different from the usual wage-based employment resting on the alienation of labour from capital.

Decades ago, Theodor Shanin, in introducing A V Chayanov’s The Theory of Peasant Economy, wrote,

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While in the “developing societies” islands of pre-capitalism disappear, what comes instead is mostly not the industrial proletariat of Europe’s 19th century but strata of plebian survivors – a mixture of increasingly mobile, half employed slum-dwellers, part farmers, lumpen traders, or pimps – another extra-capitalist pattern of social and economic existence under capitalism …Chayanov’s fundamental methods and insights may prove particularly enriching for worlds of fewer peasants as well as of fewer “classical” industrial proletarians while the subject of his actual concern, the Russian peasantry, has all but disappeared (23-24).

That nearly 50% of the non-agricultural workers in the Indian economy do not have an employer corroborates Shanin’s characterisation of developing societies. In the capitalist economic formations of today’s developing countries, the extra-capitalist space described by Shanin is increasingly becoming visible. And far from being a dark space inhabited by “half employed and pimps”, it is asserting its presence as one in which a large section of the population reproduces the material conditions of their everprecarious existence by engaging in concrete economic activities governed by a logic that is fundamentally different from the one that animates the world of capitalist production.

The purpose of this essay is to foreground the phenomenon of informalised self-employment and explore its implications for potentially new forms of labour activism. And in doing this we take particular note of the household as a site of commodity production, that is, of activities undertaken within the household in which marketable commodities are produced with family labour. Although our primary focus is on the urban informal sector, the analysis reaches out to rural non-farm employment as well.

Globalisation and Informalisation

While the informal sector has always existed in developing economies, there is ample evidence that globalisation has exacerbated the process of informalisation. The forces of globalisation have created conditions for informalisation in two ways.

  • (a) The dismantling of barriers to trade and capital flows has made way for the unhindered mobility of commodity and capital (both financial and real) across national boundaries. Faced with competition on the global level, firms in the formal sector of developing economies are engaged in a battle of competitive cost cutting. They are increasingly relying on outsourcing of production processes to informal units where wage costs and costs associated with complying with labour and environmental standards are considerably lower.
  • (b) The inflow of cheaper imports has caused a contraction of import-competing industries in the formal sector, but the expansion of the export sector has failed to generate sufficient employment to compensate for the loss. Moreover, global competition has forced domestic private as well as state enterprises to raise labour productivity and adopt lean production methods involving large-scale retrenchment of workers. Further, the neoliberal focus on fiscal discipline and inflation-targeting has eroded the power of the state to otherwise create employment. In other words, job destruction has outpaced job creation in the formal sector, forcing those thrown out of employment to eke out a living in the informal sector.
  • These two types of informalisation relate to two distinct spheres within the informal economy. The first expands informal production activities within the circuit of capital, connected to the latter through a complex network of subcontracting and outsourcing; the second expands the economic space outside the circuit of capital. Thus, while both types of informalisation constitute a reversal of Fordist capital-labour relations,1 they have different implications for the labour force as it relates to capital. The heterogeneous locations of labour with respect to capital calls for recognition of the plurality of contradictions that constitute capital-labour relations.

    There is yet a third process, probably more significant even as it is less recognised, by which capital in the formal sector relates to the informal economy. The classic paradigm of economic growth in developing countries was based on the pre-supposition that the modern (capitalist) economy would expand by breaking up traditional (pre-capitalist) economies, transferring both economic resources and labourers from the traditional to the modern economy. Yet, the experience of economic growth in developing countries shows that while the capitalist economy did expand by breaking up traditional economies, it did so by transferring resources, not l abourers. As a result, a “surplus” labour force emerged in developing countries consisting of dispossessed producers whose traditional livelihoods were destroyed but who were not absorbed in the modern sector. A significant part of this “surplus” labour force fell back on agriculture dominated by peasant production – the largest surviving traditional (pre-capitalist) economy in the world. The rest of the “surplus” labour force survived on petty nontraditional manufacturing as well as service activities, most importantly, retail. Wherever the “surplus” labour force settled, the following economic characteristics emerged – the clear preponderance of self-employment largely assisted by family labour, the household as a major site of production, particularly in case of nonagricultural activities, and community or kinship networks involving trust and reciprocity in place of impersonal exchange relations.

    Enterprises with these characteristics – which distinguish them from public and private corporate enterprises in the formal sector – came to be referred to as informal enterprises. The i nformal economy, that is, the economy of the “surplus” labour force, is a product of the process by which the capitalist economy secures its resources minus the people who traditionally survived on it, a process which Sanyal (2007) refers to as “exclusion”. A part of the informal economy is integrated to global or domestic capital via processes of subcontracting and putting-out, but an even larger part of it constitutes a non-capitalist production space.

    Further, exclusion is a constitutive process of the capitalist economy such that the reproduction and expansion of the latter involves repeated invasion of resources which lie outside it. Globalisation exacerbates the process by unleashing competitive pressure on capitalist firms to expand at minimum cost, often by dismantling social barriers to such dispossession. This low-cost expansion of the capitalist sector often involves a flow of economic assets – especially when they are cheaply valued by the market – from the informal to the formal economy either through coercion or compulsions of the market. This is, for example, what happens when peasant landholdings are forcibly acquired for industrial projects by the invocation of the “eminent domain” clause, traditional economies are destroyed to make way for

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    large-scale infrastructure projects or hawkers are evicted for ur urban unemployment. Hart (1973) introduced the concept of the
    ban renewal projects. However, for all the reasons mentioned urban “informal economy” as a site of economic activities of the
    above, the rate of job creation in the formal sector remains low or “working poor”. It was recognised that in the absence of social
    even declines in the neoliberal regime. Therefore, dispossessed security provisions in poorer countries, rural-urban migrants
    producers, who join the labour force, continue to find themselves could not afford open unemployment and would end up working
    in relative super-abundance to labour demand in formal sector in the informal sector. Ranis and Stewart (1999) presented a dis
    enterprises. This understanding of the informal economy as a aggregated model of the developing economy in terms of a dis
    product of exclusion places it right at the heart of capitalist devel tinction between four sectors – rural sector, urban formal sector,
    opment and yet outside the circuit of capital – an outside that is a dynamic informal sub-sector with linkages to the formal sector,
    expanded along with and in proportion to capitalist accumula and a traditional static informal sub-sector absorbing the residual
    tion. In our understanding, exclusion cuts across regimes of capi labour force in low-productivity jobs. Rural-urban migration leads
    talist development – across centrally planned or market-driven to the emergence of the urban informal sector. The growth of the
    economies, with or without free international trade, and irre formal sector expands the dynamic informal sub-sector via sub
    spective of whether the state or private capital occupies the com contracting linkages. The dynamic component of the informal
    manding heights of the economy. If we recognise post-colonial sector expands, in turn, by drawing surplus labour from the tradi
    capitalism to be a complex economic formation inescapably struc tional static informal sub-sector. Ranis and Stewart conclude that
    tured by the contradiction between capital and its outside, we are “if there is a vigorous urban formal sector that provides all the
    in a position to offer a new understanding of globalisation in employment opportunities required, there is no particular need
    terms of its contradictory effects on this outside. Thus, globalised for the continued existence of any informal sector” (268).
    capital affects its outside both by integrating a part of it through Given this persistence of the Lewisian vision, the informal
    subcontracting and putting-out as also by adding to the process economy is often understood as a temporary hold-up for labour in
    of exclusion through downsizing of its wage-labour force. a delayed process of integration into the formal sector. Hence, the
    The foregoing analysis brings a fresh perspective to the debate informal economy is commonly addressed in terms of welfarist
    on globalisation and its effects on labour. While the proponents of governance and conceptualised in legal terms. The most widely
    globalisation argue that it opens up new opportunities for the in shared operational definition of the informal sector continues to
    formal economy to integrate with the more dynamic and produc refer to activities which are outside the regulatory framework that
    tive part of the economy, detractors of globalisation point to the normally applies to the formal sector – with the emphasis variously
    subordinated nature of such integration as well as growth of job on either one or the other component of regulation like minimum
    lessness. While each side of the debate picks up either aspect of wages, quality control, environmental standards, customary
    the contradiction between globalised capital and its outside, the taxes, zoning laws, safety and health standards, and special regu
    very positing of the outside is a theoretical move largely absent in lations applying to child and women labour. Another variant is
    the ongoing debate. Our conceptualisation of the postcolonial the trade unionist perspective where the informal economy is of
    economy as a contradictory totality constituted by capital and its ten understood as a sub-economy with “unorganised” labour. The
    outside (a) contests the “oneness” of the economy that supporters legalist approach holds that the extra-legality of the informal sec
    of globalisation believe in and at the same time, and (b) inscribes tor makes welfarist interventions difficult at the level of the state.
    a radical discontinuity in the economy that is different from the One implication of the legalist approach is that a marginal re
    traditional/modern or pre-capital/capital dichotomy in conven vision of the minimum wage or environmental standards changes
    tional dualistic theories of underdevelopment. In our theorisa the status of the activities on the borderline. Alternatively, a policy
    tion, capital and its outside mutually constitute each other, that is, could be formulated which would enable a rise in the average in
    literally bring each other into existence. Hence, capi talist devel come of those on the borderline such that they could comply with
    opment cannot dissolve such dualism. This is where we radically the regulations. The whole problem is reduced to that of either
    depart from standard models of the dual economy where dualism lowering the threshold or tipping over the threshold.3 The legalist
    is fated to disappear with capi talist accumulation. perspective accepts a basic “oneness” of the economy and locates
    the discontinuity at the level of the legal superstructure.
    Dualism in the Postcolonial Economy Marxian theories, in contrast, do acknowledge the basic heter-
    Lewis (1954) provided the most well-known model of a dualistic ogeneity of the economy in terms of a class distinction between
    economy consisting of a small modern (capitalist) sector emplo capitalist, petty commodity and feudal modes of production.
    ying labour in accordance with the objective of profit-maximisa- Hence, post-colonial economies are often characterised as complex
    tion and a large traditional (pre-capitalist) sector characterised social formations4 with varying degrees of prevalence of these
    by a large “surplus labour force”. Under certain conditions,2 capi
    talist accumulation and growth in the modern sector can take
    place by withdrawing surplus labour from the traditional sector – Supriya RoyChowdury of the Institute for Social and Economic
    without a fall in output of the latter – until it is exhausted and the Change, Bangalore is the guest editor of this issue of the Review
    dual structure of the economy is dissolved in the process. Harris and Todaro (1970) recognised that rural-urban migra of Labour. EPW is grateful to her help in putting together this edition of the review.
    tion in a Lewisian economy may continue in conditions of open
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    three major class structures. However, the dominant tendency within Marxist theories is to historicise the modes of production such that petty commodity production is either taken as a precapitalist residue or a transitional feature in the development towards universal capitalism.5

    The second tendency within Marxist theoretical tradition is to internalise the outside – as in neo-Marxian theories (Moser 1978; Gerry 1987) where the informal petty commodity producers are actually “disguised wage-workers” linked to the formal sector through processes like subcontracting and putting out. They benefit the capitalist system either by supplying cheap wagegoods to the workers or by expanding the “reserve army of labour” and thereby depressing real wages. Thus, the informal petty producers are internalised to capital by an extension of the notion of “wage-workers” or the “reserve army of labour”.

    In contrast, we understand the informal producers as a “surplus” labour force akin to what is known as the “marginal mass” in Latin American theories (Nun 2000; Quijano and Westwell 1983).

    My marginal mass thesis was meant to question a left hyperfunctionalism, wherein even the last landless peasant in Latin America (or Africa) was considered to be functional to the reproduction of capitalist exploitation. On the contrary, I tried to show that in many places a surplus population was growing that in the best of cases was simply irrelevant to the hegemonic sector of the economy and in the worst of the cases endangered its stability. This presented the established order with the political problem of managing such nonfunctional surpluses to prevent them from being dysfunctional (Nun 2000: 12 emphasis added).

    The “redundant” labour force emerges as a product of exteriorisation of labour by capital, the social outcome of the exclusionary expansion of capital that relegates the victims of its expansion – dispossessed informal producers, the detritus of modern capitalism – to a non-capitalist outside, thus reproducing a basic fault-line running through the economy.

    Characterising the Informal Sector

    This surplus labour force is categorically distinguished from

    (a) wage-workers whom capital exploits, (b) the reserve army of labour which enables such exploitation to go on, and (c) noncapitalist producers tied to capital via subcontracting or outsourcing and from whom capital extracts their surplus. As opposed to the relations of exploitation and extraction that lie at the heart of traditional labour movements, we posit a third relation, exclusion, to identify the surplus labour force as a potential political force in the post-colonial social landscape.

    The surplus labour force presents the problem of livelihood on a scale that exceeds the redistributive capacity of most postcolonial nation states. Hence, an economic space has to emerge which must function in a way to ensure economic survival of surplus labour. This economic space must be organised around needs of the people and hence must constitute an outside to the space of capital where accumulation structures social outcomes. Sanyal (2007) refers to the space of capital as the “accumulationeconomy” and its outside as the “need-economy.” The informal economy is that economic space where people innovate new forms of production, distribution and redistribution so as to accommodate the surplus labour force at levels of economic subsistence.

    To understand this “need-economy”, it is quite natural that social scientists have looked back to the peasant economy which has always been the traditional fall-back option for the outcast labourers under modern capitalism. It is not surprising then that the informal economy resuscitates the idea of the “moral economy of the peasants”. When the sociologist T G McGee (1973) “discovers” urban informal producers, he refers to them as “peasants in the cities”. What is it about the “informals” that remind us of peasants? Almost a century ago, in the Russian context, Chayanov presented a theory of peasant economy. In this characterisation of peasant production, the peasant household takes its production decision on the basis of needs of the household on one hand and the drudgery of labour at the margin, on the other. Needs of the Chayanovian peasant household depend on the size of the family where only a subset of the family members can perform labour. The working members labour in the land owned by the family to satisfy the needs of the entire family. The amount of labour expended, and the output obtained, is determined by equating at the margin the utility derived from an additional unit of output to the drudgery of working an additional hour. The crucial point made by Chayanov is that the categories associated with capitalist production, such as revenues, wages and profits, have no place in the calculations on which the decisions regarding peasant production are based.

    The difference between today’s informal activities based on self-employment and Chayanov’s peasants is that unlike the peasants, the urban petty producers do not belong to the “natural economy”. While for Chayanov’s peasants, there is unity of labour and the means of labour, this unity for urban petty producers is mediated by the market and hence dependent on credit. While the traditional peasant economy is characterised by production of use-values, the urban informal economy is dominated by production for the market. It is an economy fully entrenched in the system of money and exchange.

    Yet, this informal economy has instituted a social mechanism that mimics the classical solution to survival – sharing of income. It has well recognised that the peasant economy accommodates the surplus labour force by maximising income rather than profit and then distributing the average product to the family members irrespective of their contribution to income. The same phenomenon is observed in more non-traditional forms of the informal economy. This is how a standard textbook looks at the matter.

    A profit-maximising firm regards wage payments to employees as a cost of production, that is subtracted from revenues to arrive at final profits…a family firm might employ labour beyond the point where the marginal product equals the “wage,” because the wage in this case is not really wage at all, but the average output of the farm…Income sharing is not just an agricultural phenomenon and occurs not just among families. It is not uncommon to see this in the urban informal sector as well. Thus the neighbourhood store may be run by a joint family, with the revenue distributed among its siblings. A cab driver might share his driving with a friend. The bus conductor of a crowded bus might sublease part of his ticket-collecting duties to a teenaged nephew (Ray 1999: 357).

    We must hasten to add that “need” and “accumulation” are not to be treated as economic objectives of the informal and the formal enterprises in the way neoclassical economics endows an

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    economic agent with an objective function. Marx made it abundantly clear that accumulation by the capitalist firm is a response to the economic forces of competition.6 Similarly, “external coercive laws” compel the informal producers to organise the economic space so as to ensure the economic subsistence of its members. The ceaseless reproduction of the surplus labour force – as a result of dispossession accompanying capitalist accumulation – requires that the informal economy must accommodate it on a residual resource base. The informal economy responds to this social conjuncture by distributing the total income generated on the resource base as average product among its members. It is this mechanism in the informal economy that establishes “need” as the organising/structuring principle of the contemporary petty producers’ economy. We call this space the “Chayanovian outside of capital”.

    Since the informal economy acts as a sponge that absorbs the surplus labour force, it is characterised by free entry – but only up to the point where average product is at the subsistence level. Further entry of labour jeopardises the social reproduction of the informal economy itself. The contemporary crisis in Indian agriculture reflects such a turning point. As a result, another component of the “need-economy” – the rural non-farm sector – expands to accommodate a part of the surplus labour force, while the rest of it is absorbed mainly in the urban informal economy. Contemporary post-colonial capitalism is an endless reproduction of a complex of capital and its Chayanovian outsides.

    Globalisation and Locations of Labour in the Indian Economy

    We use a disaggregated structure of the labour force to identify how globalisation affects each location of labour in the Indian context. We consider the following three-tier classification – (a) direct wage-workers in capitalist production, (b) labour force in informal enterprises linked to the capitalist enterprises in the formal economy through subcontracting and putting out, and (c) labour force in informal enterprises outside the circuit of capital. Wageworkers in capitalist production relations consist of agricultural workers on capitalist farms, public sector employees and private sector non-agricultural workers. The second-tier of the labour force consists mainly of a part of rural non-farm labour and u rban informal labour in non-agricultural informal enterprises linked to the capitalist economy via subcontracting as also agricultural workforce tied to agro-business enterprises through contractfarming. The third-tier of the labour force constitutes the surplus labour force in our understanding and populates the Chayanovian outside of capital. It consists of the rural non-farm and urban informal labour force with no direct linkages to the formal economy.

    Globalisation has its particular impact on each of these three tiers of the labour force in the Indian context. For reasons already mentioned, the forces of globalisation have constrained employment growth in the first-tier. Public sector employment has steadily declined over the period 1999-2005, from 19.058 million in 1999 to 18.007 million in 2005 (Economic Survey 2007-08). Private enterprises in the formal sector have generated additional employment entirely in the category of unprotected regular, casual or contract wage-workers which constitute informal employment

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    within the formal sector. Most of the growing labour force is accommodated in the other two tiers. A part of the additional labour force has been accommodated via putting out and subcontracting to informal producers in the rural non-farm and urban informal sectors. The growth in informal employment in the formal sector along with the growth of informal producers in subcontracting relationships with formal sector enterprises is together often referred to as informalisation of capitalist production and constitute a reversal of Fordist capital-labour relations– which is at the heart of the debate on globalisation.

    Yet, an overwhelming share of the growing labour force has been absorbed mainly as “independent” self-employed producers in rural non-farm and urban informal activities. In our understanding, it animates a production space outside the circuit of capital. Agriculture, which has traditionally acted as the sponge of surplus labour right from colonial times through the decades of postcolonial economic growth, has finally hit its limits and is absorbing additional labour at a sluggish rate. Manufacturing, trading (wholesale and retail) and repairing activities are the areas where informal employment is predominantly generated (see the table).

    Employment by Type and Sector (in millions)
    1999-2000 2004-2005
    InformalWorkers Formal Workers Total Workers InformalWorkers Formal Workers Total Workers
    Informal sector 341.3 1.4 342.6 393.5 1.4 394.9
    Formal sector 20.5 33.7 54.1 29.1 33.4 62.6
    Total 361.7 35 396.8 422.6 34.9 457.5

    Source: National Commission for Enterprises in the Unorganised Sector (NCEUS) 2007: 3.

    Total employment in the Indian economy increased from 396.8 million in 1999-2000 to 457.5 million in 2004-05. The informal sector absorbed an additional 52.3 million labourers, 86% of total employment generated between 1999-2000 and 2004-05. The number of protected formal sector jobs declined marginally from

    33.7 to 33.4 million while informal jobs in the formal sector – consisting of regular, casual and contract workers without any job security or social security benefits – increased by 8.5 million between 1999-2000 and 2004-05. Thus, while employment in the informal sector increased by 52.3 million, informal employment increased by 60.9 million. The distinction between informal employment and employment in the informal sector reflects the impact of globalisation on the workforce. While the informal sector has always dominated employment in the Indian economy, globalisation has led to growth of employment within the formal sector under conditions (casual and contract employment, regular employment without stipulated benefits) which approximate employment in the informal sector. In addition, there are homeworkers in the non-agricultural informal sector, who are often located in domestic or global value-chains (for example, garments) through subcontracting or putting out relationships and are really “disguised wage-workers” (NCEUS 2007). Homeworkers (8.2 million) – included as informal “self-employed” in statistics – constituted 7.4% of non-agricultural informal labour force and 30% of informal manufacturing workforce in 19992000 (NCEUS 2007: 57). Subcontracting from large firms to small firms has been increasing and consequently homeworkers, to whom small firms in turn subcontract, are also increasing. When we speak of informalisation within the circuit of capital, we refer to the growth of informalised wage-workers within the formal sector as well as disguised wage-workers in the informal sector, accompanied by stagnant or declining regular and protected employment in the formal sector.

    On the other hand, the growth of self-employed producers – minus the category of homeworkers – constitutes an expanding non-capitalist space in the Indian economy. Self-employed workers constituted 56% of the total workforce – 64% of the agricultural workforce and 46% of the non-agricultural workforce in 2004-05 (NCEUS 2007: 49). In agriculture, farmers (self-employed in agriculture)7 still dominate the workforce – their share rising between 1999-2000 and 2004-05 after a steady decline in the 1990s, while the agricultural wage-labour force declined over the same period8 (NCEUS 2007: 111).

    Within the unorganised non-agricultural sector, there are two kinds of enterprises – (a) own-account enterprises (OAEs) where production is done by the owner-operator assisted by family labour, and (b) establishments where production is done by the owner-operator along with family labour and “hired labour”. OAEs constituted 87% of all informal enterprises and accounted for 73% of the informal non-agricultural workforce in 1999-2000 (NCEUS 2007: 51). A majority of the OAEs were engaged in manufacturing (31.83%), repairing and trading (wholesale and retail) activities (39.67%) in 1999-2000 (National Sample Survey Organisation 2001). That only about 11% of the OAEs worked with any kind of contract with master-enterprises/contractors in 19992000 (NSSO 2001) reflects the relatively “independent” mode of petty production in the informal economy.

    There is thus a growing informalisation of the Indian economy with a clear trend towards self-employment as the main source of livelihood for the informal labour force. These developments within the labour force point to a basic feature of economic growth in the Indian economy under globalisation – there is a decoupling of employment growth from output growth in the formal sector of the economy. As a document of the ministry of labour points out, throughout the period under globalisation, “self-employment and casual labour continued to play a pivotal role in rehabilitation of the unemployed”.9

    Urbanisation of Poverty and Informal Labourers

    For half a century after independence, agriculture as a whole played the role of a Chayanovian outside to capitalist industrialisation in India. This is borne out by the fact that farmers rather than wage-labourers dominate Indian agriculture, small and marginal farmers with uneconomical landholdings dominate the class of farmers, and agriculture as a whole carries a disproportionate share of the total workforce of the country. In recent times, there are clear signs that this traditional “sink” of surplus labour is overflowing. In the Indian economy, the expansion of the rural non-farm sector is largely distress-driven. The era of globalisation has seen poor agricultural output and employment growth. While the total workforce grew by 2.1% between 1983 and 1994 and by 1.9% between 1994 and 2005, the corresponding growth rates of the agricultural workforce have been 1.4% and 0.8%, respectively (NCEUS 2007: 116).

    The rising share of farmers in the agricultural workforce is reflective of agricultural involution, where a growing part of the workforce is absorbed on the basis of fragmentation of land and sharing of work (NCEUS 2007). The proportion of rural households with marginal holdings increased from 59% in 1999-2000 to 62% in 2004-05 while that of households with small, medium and large holdings declined slightly over the same period. As a result, the average size of a holding decreased from 1.00 hectare in 1999-2000 to 0.8 hectare in 2004-05 (NCEUS 2007: 112).10 This pattern of change in the distribution of landholdings – the i ncreasing share of marginal farms vis-à-vis all other categories of farms – has been a continuous process since the 1950s. In 2002-03, marginal and small farmers constituted 86% of all farmers and cultivated 43% of land (NCEUS 2007: 113). This process underlies the classic mechanism by which agriculture absorbed the surplus labour through fragmentation of land and sharing of average product – the textbook example of disguised u nemployment. A comparison between average monthly income and average monthly expenditure by farm size shows that for small and marginal farmers, per capita monthly income levels fall short of expenditure levels, so these households have to b orrow to meet their consumption needs (NCEUS 2007: 120).11

    The critical condition of agriculture in India is reflected in a steadily declining share of agricultural workers in the rural workforce (from 81.4% in 1983 to 72.7% in 2004-05) with clear signs of occupational diversification among rural workers with people migrating out of agriculture. A significant part of it is absorbed in the rural non-farm sector, largely as informal self-employed in manufacture of apparels, retail trade, land transport, STD/ISD booths, maintenance and repair of motor vehicles and hotels and restaurants.

    Rural-urban migration of course is the other great response to the exhaustion of agriculture. For the first time in history, the u rban population today exceeds the rural population. According to the UN Habitat report, The Challenge of Slums, 2003, cities will absorb all future population growth.12

    As rural areas lose their “storage capacity,” slums take their place, and urban “involution” replaces rural involution as a sink for surplus labour which can only keep pace with subsistence by ever more heroic feats of self-exploitation and the further competitive subdivision of already densely filled survival niches. (Davis 2004: 27)

    Most of the urban OAEs in India operate with a very low average value of investment (Rs 70,000 in 1999-2000) in fixed assets,13 most of them owned by petty producers. Monthly gross value added per urban informal OAE was Rs 2,175 on average in 1999-200014 (NCEUS 2007: 52-53). The gross value added per worker approximates the income of the petty producer who hires no labour and minimal capital. On average therefore, the urban petty production units operate at subsistence levels-implying that with projected levels of urbanisation, the urban informal economy is going to replace the rural economy as the largest location of poverty in the world in the near future.

    A significant part of non-agricultural informal activity takes place within the household using family labour. Self-employed production units involve the contribution of family members as

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    “helpers”, the dwelling unit itself is used as the site of production, personal assets of family members like bicycles act as assets of the enterprise, durable assets of households act as fixed business investments and household expenditures and production expenditures overlap. It is thus difficult to separate household production of use-values for immediate consumption and production of commodities within the household. Production of commodities within household premises allows informal production units to supplement their scarce resources by drawing on household resources for consumption. The location of production within the household explains how informal production units with such low levels of fixed business investment manage to survive. This is particularly true for manufacturing enterprises. In 1999-2000, among manufacturing OAEs, 76% of rural units and 63% of urban units were located within household premises (NCEUS 2007: 265).

    As the home and the workshop converge, the production of commodities is synchronised with reproduction of life. The inseparability of the life process and the labour process within the household is thus an emerging feature of the informal economy. This is a radical reversal of the general 20th century notion of labour where the worker works for eight hours within the factory gates, after which (s)he reproduces her life within the family. The blurring of the distinction between the home and the workshop implies that labour activism must face up to the new conditions of labour that home-based production brings to the fore and a potentially new subjectivity of labour shaped by such conditions.

    The urban slums are exemplary products of homesteading by the urban informal population. Slums are more than poor people’s settlements – each slum literally is a production hub by itself. With close to a one billion-strong slum population in 2001 (UN-Habitat 2003: 246), slums worldwide are emerging as poor people’s Manchesters and Chicagos. The convergence of the home and the workshop takes place at the level of entire “townships” which is what the mega-slums already are in urban metropolises. The unstoppable horizontal spread of third world metropolises is fuelled by the explosive growth of slums. The horizontal sprawl of the slums reflects the demand for “fungible” space – so essential to survival of the informal producers in the slums – which can function both as the site of production of commodities and reproduction of life.

    Mumbai’s Dharavi is spread over 550 acres with the number of residents ranging between 7,00,000 and 1.2 million (Chatterjee 2005). No comprehensive survey of Dharavi exists, but its annual turnover is estimated to be between $700 and $1 billion. There are at least 5,000 estimated industrial enterprises amid the cramped housing of Dharavi that produce textiles, pottery and leather, jewellery, food products and so on (Apte 2008). At least 2,00,000 people are engaged in recycling itself (Ramchandran 2008).

    When an ambitious $3 billion Dharavi Redevelopment Project was announced by the Maharashtra government in 2004, it immediately faced resistance from the Dharavi people. According to the plan, Dharavi residents are to be provided 225 square feet of housing free of cost in high-rise buildings (Menon 2008). Such

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    small residential spaces cannot accommodate production units and the “rise”, by replacing the “sprawl”, destroys the fungibility of space required for informal home-based economic activities. The problem with the redevelopment plan is that it recognises the “residents” but not the “producers” of Dharavi.15

    The entire business district of Dharavi is under threat as most of the enterprises do not have licences and hence cannot find any place in the new redeveloped Dharavi. The government has agreed to rehabilitate industrial units within redeveloped Dharavi as long as they are “non-hazardous and non-polluting”. But this will mean closure of Dharavi’s most important businesses – pottery, leather goods and recycling. At the heart of resistance to the Dharavi plan, therefore, are the “producers” rather than the squatters.

    The New Modalities of Labour Resistance

    In our understanding, the Dharavi resistance qualifies more as a “labour” mobilisation than slum-dwellers’ resistance. It is symptomatic of an emerging terrain of “labour” mobilisation – outside the familiar space of proletarian resistance and peasant uprisings – originating in a new location of labour, that is, discernible as a theorised outside of capital. The “outside” of capital brings forth new demonstrations of workers’ power articulated differently, in style and content, from traditional working class power.

    Traditional power of the working class flows from its location within the capitalist class structure. Eric Olin Wright (2000) makes a distinction between associational and structural working-class power. Structural power accrues to the workingclass by virtue of its location within the economic institutions of capitalism – either in the wage-labour market or within the production system. Market bargaining power of workers depends on the level of unemployment as well as the presence of remunerative non-capitalist sources of livelihood. In conditions of the Indian labour market, such power is almost entirely absent for the unskilled labour force. The other form of structural power emerges in the context of integrated production systems where localised resistance by labour (strikes, “work to rule”) is transmitted throughout the entire production chain. Associational power, on the other hand, originates in the formation of collective organisations of workers, like trade unions and political parties.

    Working-class power in the formal sector in India had traditionally taken the form of workplace structural power backed typically by trade unions and political parties. Globalisation has weakened this form of working-class power by informalisation – either through casualisation of the formal sector workforce or by subcontracting and putting out, domestically as well as globally. Silver (2003) argues that new deployments of working-class associational power are possible to counter such informalisation of production. Associational power has to be enhanced in order to make up for the loss of structural power. Textile workers, for example, “have quite limited structural power, since production can be easily re-routed, and have therefore had to compensate by strengthening their associational power” (Webster et al 2008: 11-12). Silver argues that such strengthening of the associational power works by a mode of organisation that is more communitybased and involves new tactics of mobilisation.

    Webster et al (2008: 12-13) extends Silver’s argument by introducing the concepts of symbolic power and logistical power, which are forms of associational and structural power, respectively. Symbolic power “draws its strength from taking moral claims in the workplace and articulating them as general social claims”. Logistical power is a kind of structural power that “takes matters out of the workplace and onto the landscape where workplaces are located” by blocking transportation (roads) and communication (internet) lines essential to production. Both symbolic power and logistical power takes resistance to capital outside the capital-labour relation itself and into the public domain (Fine 2006).

    We argue, however, that this deployment of the concepts of symbolic and logistical power revolve around exploitation of labour by capital. It is the articulation in the public domain of legitimate claims of the wage-labourer on the fruits of his/her labours – the moral right of the labourer to the wealth produced by it and appropriated perniciously by capital. Informalisation of wage-labour creates conditions for an increase in the degree of exploitation of labour by enabling greater appropriation or extraction of surplus value from the wage-worker by the capitalist. It is this brazen and shameless face of exploitation that calls forth the deployment of symbolic and logistical power by the working-class.

    The informal petty producers, on the other hand, contest capital from the outside. They are always on the boundary, pushing it back as they struggle to close the frontiers against encroaching capital. The legitimate claim of capital to valorise and reproduce itself – and it can do so only by “accumulation by dispossession” (Harvey 2005) – comes into conflict with the legitimate claim of petty producers to reproduce their subsistence. Here, two different economic systems are pitted against each other, each taking to the broader society its own moral claims – the capitalist economy representing itself as the vehicle of progress and development and the petty producers championing a human being’s inalienable right to survival.

    Structural power of excluded labour emanates from its ability to encroach on the domain of capital; “squatting” becomes the new form of resistance. Squatting has traditionally been the tactic resorted to by the urban poor for reproduction of their life processes. In an age when the life process and the labour process are so intricately enmeshed for a growing part of the labouring population, squatting provides the compelling image of resistance to capital. As capital invades the petty producers’ economy, the dispossessed fight back through silent encroachment on property. Such encroachments may take the form of “colonisation” of public and private land by the migrants to the city, piracy on copyrights and trademarks by street vendors, and so on. The associational power is raised to the level of entire communities – conjunctural or lasting – forged in opposition to capital and engaged in violent and periodic uprisings against eviction and dispossession. Such collective actions by “informal” communities involve mobilisations which are defensive (holding on to the “colonies”) as well as aggressive (seeking redistribution of society’s resources to improve life in the informal communities). The symbolic power in this case stems from pitting the “ethics of the local” against the profit-calculus of global capital (Basu 2007) and the logistical power is exercised by taking the fight to the streets where day to day life of the entire society is reproduced.

    Conclusions

    In this essay, we have made an attempt to mark a new location of labour-independent petty-production based on family labour and organised within the household. We do not deny other locations of labour that are emerging (the “home-workers” in the puttingout system of the global or domestic circuits of capital) or continue to be important (the regular as well as the casual wage-labour force). Instead, we offer a new topographical account of the labour force by redrawing the boundaries to enable new locations to emerge. New locations constitute new relations between labour and capital. Thus, while capital has always exploited wage-workers by appropriating surplus value out of them, globalised capital raises it to a higher degree by casualisation of its wage-labour force involving super-exploitation of labour based on reduction in wages and benefits. At the same time, informalisation within circuits of capital – global as well as domestic – allows capital to extract surplus from petty producers within the putting-out system. Yet, in all these relations, capital relates to labour as a source of surplus value or profit. The relation we emphasise and which defines the new location of labour is one in which the labourer is no longer a source of surplus, rather the labourer is an unwanted possessor or occupier of economic resources from which (s)he must be divorced in order to free those resources for use in the circuit of capital. This process of dispossession without proletarianisation or exploitation is what we refer to as exclusion. It is this picture of the labour force that presents a real problem for labour activism. The traditional contradiction between wage-labour and capital is overshadowed by the contradiction between capital and a surplus labour force. Marxist class politics

    – traditionally focused on exploi tation of wage-labour – must reinvent itself to address the other great political movement shaping up around the exclusion of labour.

    The radical mobilisations against capitalist globalisation that we have been witnessing all over the world – in the streets of Seattle, Prague, Washington, Genoa and elsewhere, the Zapatista movement in Mexico down to peasant resistance Singur and Nandigram – are all mobilisations against dispossession and loss of livelihood rather than against exploitation within the capitalist system of production. In order to locate the agents of such mobilisation, we have identified the informal petty producers’ economy as a Chayanovian outside of capital. At the same time, we understand that the sociology and anthropology of the urban informal petty producer is different from that of traditional peasants. Thus, contemporary politics of the informals is shaped outside the narrative of transition.

    Traditionally, post-colonial politics has been dominated by questions such as: What kind of class configurations are acting as obstacles to a full-scale capitalist transformation? Is there a national bourgeoisie capable of resisting imperialistic domination and ushering in a national capitalist development? If the

    may 30, 2009 vol xliv no 22

    bourgeoisie is inadequate for that task, could an alliance of the outside the dynamics of the great transformation. The resistance working-class and peasantry bring about a people’s democratic in Singur drew much of its strength from the presence in the morevolution? The politics of transition was defined around these bilisation not only of landless agricultural labourers who were questions. This is still the dominant political language in which left out of the proposed compensation package but also of people contemporary struggles are articulated. Take, for example, the who, although without any ownership right, derived their livelicase Singur and Nandigram in West Bengal where the govern-hood from the acquired land in various forms of non-farm emment’s attempts to acquire agricultural land for proposed spe-ployment. To describe it merely as peasant resistance against cial economic zones (SEZs) and modern factories has caused big capital is misleading for such a description keeps out of sight intense political and social unrest. The ruling and the opposi-the fact that it is also the resistance of excluded labour, located tion parties have both engaged in a representation of the con-outside the circuit of capital, defending its subsistence-driven flict as one between the traditional peasant economy and the production activities against capitalist encroachment. In this capitalist economy. According to the ruling party, capitalist sense, there is a thread of continuity running through the industrialisation will transform the impoverished peasant D haravi resistance, the petty retailers’ fight against department economy; paving the way to an advanced and dynamic mode stores and shopping malls and the rural resistance in Singur of production. On the other hand, for the opposition, the peas-and Nandigram. ant community must resist alienation of its land. The argu-The forces of globalisation have brought about large changes ments from the two sides bring to one’s mind the Lenin-in the organisation of the production economy, resulting in the Narodniks debate. emergence of multiple locations of labour and therefore, a plural-

    In our understanding, the sociology of contemporary peasants ity of labour-capital contradiction. While globalisation has weakin Singur and Nandigram is very different from that of 19th cen-ened the traditional forms of working-class power within the tury insurgent peasants in British India. What is at play here is capitalist relations of production, in a double movement it has not the political conflict over the process of transition from one opened up new terrains of labour activism where labour, from its mode of production to a higher one. Rather, at the heart of the newly emergent locations, can confront capital from the outside. conflict lies the recognition of the impossibility of transition itself The dismay over the loss of the traditional forms of labour activ

    – a recognition of the process of dispossession without proletari-ism should not be allowed to overshadow the immense potential anisation that leaves a majority of the labouring population of these new forms of resistance against capital.

    Notes

    1 In the pre-globalisation era, Fordist capital-labour relations prevailed in developed economies and in certain “enclaves” in developing economies, for example, state enterprises and large corporate enterprises.

    2 Since surplus labour force exists in the traditional sector, labour can be withdrawn from this sector without sacrifice of output. However, the extraction of surplus labour must proceed in a way that leaves per capita food consumption constant in the traditional sector such that a food surplus can be siphoned off to the modern sector to feed the new workers. Disguised unemployment, in Lewis, under these conditions, provides “concealed savings” which can be used to promote economic development in a “costless” way.

    3 Not surprisingly, there are two competing views within the legalist perspective. According to one view, most provocatively argued by Hernando de Soto (1989), the regulations themselves reflect the excessively interventionist nature of the state which thwart the dynamic growth of the informal sector and favour an elite but small formal sector. de Soto therefore “advocates deregulation, decriminalisation, and accelerated legalisation as the solutions to most illegal business operations and squatting, arguing that the poor are the victims of an over-zealous bureaucracy and a hopelessly inefficient legal system” (Bromley 1990: 332). This contrasts sharply with the International Labour Organi sation (ILO) view which argues that policies should aim at promoting income within the informal sector so as to bring them within the regulatory framework of the formal economy.

    4 In Marxian theories, the notion of “social formation” applies to the complex structure of a society characterised by the articulation of different modes of production.

    5 Wherever petty production persists, Marxists blame it on the peculiar nature of post-colonial capitalist development. Thus, for example, continued dominance of petty production is explained by the dependent or peripheral nature of capitalist development in post-colonial countries that are subordinated to imperialist foreign capital.

    6 “Moreover, the development of capitalist production makes it constantly necessary to keep increasing the amount of the capital laid out in a given industrial undertaking, and competition makes the immanent laws of capitalist production to be felt by each individual capitalist, as external coercive laws. It compels him to keep constantly expanding his capital, in order to preserve it, but extend it he cannot, except by means of progressive accumulation” (Marx 1983: 555, emphasis added).

    7 There is heterogeneity within the class of farmers. Indian agriculture is mainly a farmers’ economy, with limited presence of large-scale capitalist farming. Medium and large farmers (with more than 2 hectares of land) are net employers of labour, while marginal (0.4-1 hectares of land) and small farmers (1.00 to 2.00 hectares of land)

    – constituting 86% of the farmers – are subsistence farmers who often have to resort to wageemployment to supplement their income from land. In our understanding, small and marginal farmers truly constitute the self-exploitative peasant economy of India.

    8 Farmers constituted 60.1% of the agricultural workforce in 1993-1994, 57.8% in 1999-2000 and 64.2% in 2004-05 (NCEUS 2007).

    9 Employment and Unemployment Scenario in India, Directorate General of Employment and Training, Ministry of Labour, Government of I ndia, http://dget.nic.in/dex/empscenario.pdf

    10 Kerala had the lowest average size of land possessed by rural households (0.25 hectares) followed by West Bengal (0.31 hectare), Tamil Nadu

    (0.34 hectare), Uttarakhand (0.47 hectare), Bihar

    (0.52 hectare) and Orissa (0.58 hectare) (NSSO 2006).

    11 Marginal and small farmer households earn Rs 435 and Rs 1,578 from cultivation per month, respectively. At the same time, the cost of cultivation for the farmer has increased due to increased share of purchased inputs, making farming an unviable economic activity. Unproductive loans (for consumption purposes) constituted 43% and 29% of outstanding loans of marginal and small farmers in 2003 (NSSO 2006).

    12 According to the UN-Habitat Report (2003), the projected level of urbanisation by the year 2020 is 56% with 4.24 and 3.34 billion people living in urban and rural areas, respectively. After 2020, the rural population is expected to shrink.

    13 Only 8% of the OAEs had business fixed investment over Rs 1 lakh and 37% had an average value of fixed assets less than Rs 5,000. Sixty per cent of urban informal OAEs did not hire any fixed assets in 1999-2000. Thus most of the non-agricultural OAEs mirror the scale of operation of small and marginal farmers in agriculture.

    14 The average gross value added per worker in the rural non-farm OAEs was Rs 1,167 in 1999-2000. Thus rural non-farm self-employment generated incomes that lie between that of marginal and small farmers.

    15 “Case studies all over the world have documented the inappropriateness of high-rise resettlement projects in poor areas. The social and economic networks which the poor rely on for subsistence can hardly be sustained in high-rise structures. These high-rise projects are not appro priate for home-based economic activities, which play a major role in Dharavi. The least that can be done in this redevelopment plan is to refurbish the work places of the existing industries within the residential areas and remodel this project by providing low-rise high-density row housing for existing families engaged in home based occupations. This way, each house

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    will have a ground floor and an additional storey, as well as a terrace and a courtyard which can be used for these home-based business activities” (Apte 2008).

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