1. Barbara Harriss-White
The Real Economy - Informal Capitalism - social order – theoretical and practical problems - institutional change
Barbara Harriss-White

2. ‘From custom to contract’ Key questions and practical problems:
Informal Economy
1.   Introduction  
Informal economy is a challenge to classical , neo-classical economics and development economics.
‘From custom to contract’
Key questions and practical problems:
the persistence of ‘forces for social inertia’ / ‘archaic forms of exchange’ in the modern economy
the persistence of small sized firms

3. India’s Informal Economy
Small-sized firms:
i) diversity : irrelevance of economic laws - of one technology ; of optimal organisational forms /contracts ; of assumption of common activities (complexity and uniqueness in activity-combinations )
ii) Functionality for
a) bigger firms
(informal economy inside bigger corporate firms, public sector enterprises and the state)
b) State
c) Labour

4. India’s Informal Economy
2. Social regulation of the informal economy
But not chaotic - ‘identity economics’
Unorganised is not disorganised
Cultural institutions and practices –reworked to have economic relevance and regulate the economy - They also pervade the state:
Age/generation
Gender
Caste
Ethnicity/ tribal status
Religion
Place
Language

5. e.g. Caste in the market
Labour market discrimination. Segmented by “corporatist” economic networks and strategies.
Caste-based access to formal and informal credit: means social discrimination in self-employment opportunities.
Product markets: discrimination as integral to the “social structure of accumulation”: socially corporatist projects (offensive), restrictive practices (defensive).

6. 2. Social regulation of the informal economy
Also – Douglass North’s ‘organisations’: Guilds, Business Associations, Lions/Rotary etc
Control recruitment and occupations
Organize apprenticeships
Calibrate weights and measures
Regulate derived markets (for porters, transport labour)
Adjudicate disputes
Guarantee livelihoods
Insure against misfortune
Lobby (bribe) – represent and defend interests / change policies
A system of corporatist regulation in which the interests of working people are pushed to the foot.
Sometimes dormant but impossible to destroy.?

7. b) informal economy – norms – deviance
Five comments
The informal economy and the limits of the state
                a) State – law – crime
                 b) informal economy – norms – deviance
Institutions police practice: ‘policy, politics, police’ same root in English
2. Unbridled capitalism versus the marginalized economy of the socially excluded: the socially excluded power elite!
3. Blurred boundaries of the formal and informal sectors
4. Blurred boundaries between deviance and crime
5. Liberalization, globalization, commodification, clashes of law and norms and multiple layers of INF. REGN

8. Conclusions Many challenges for (socio)economics / political economy.
Identifying the economy as a capitalist economy means acknowledging and studying its structures, logics, institutions and examining the relations between universal processes and specific outcomes.
Main features:
co-existence of primary and advanced forms of accumulation
idiosyncratic forms of social regulation and relation to state
rampant commodification – preceding state regulation
capital undermining its own existence conditions
hybrid governances institutions
increasing co-ordination problems
decreasing enforcement capacity and legitimacy of state

9. Theoretical challenges
Persistence of institutional and technological diversity
Hard regulative roles of soft institutions which social theorists usually site outside the economy
Co-existence of institutional destruction, persistence, reworking as functional for market exchange and new institutions.
Development policy ignores these questions unless – and rarely – devoted to transforming them – e.g. SHG
But they are at the heart of the development of the informal economy and the informal economy is at the heart of economic development.