The Political Economy of Informal Economies

Abstract

This article considers the mutual interrelationship between informal economies and the wider political economy of capitalism. Four dimensions are discussed: (1) the generation of informal economies as a paradoxical outcome of distinguishing them from capitalism; (2) the support given by capitalism and reciprocated by informal economies that enables each to gain strength from their similarities; (3) the opposition to informal economies that is reflected back on the wider economy; and (4) the destruction capitalism inflicts as it attempts to colonize and co-opt informal economies and the simultaneous transformation of capitalism that occurs with their absorption into the wider structure. The article argues that as a result of these complex interrelations, the development of, and intervention in, informal economies is neither simple nor linear. Failure to take these relations into account can lead to policy and its implementation that produce many unforeseen outcomes.