[Marxism] Breman: Myth of the Global Saftey Net

Politicus E. epoliticus at gmail.com
Tue Oct 6 17:02:18 MDT 2009

>From the current issue of New Left Review (see


Media reports on the economic meltdown have mainly concentrated on the
impact of the crisis on the rich nations, with little concern for the
mass of the population living in what used to be called the Third
World. The current view seems to be that the setbacks in these
‘emerging economies’ may be less severe than expected. China’s and
India’s high growth rates have slackened, but the predicted slump has
not materialized. This line of thought, however, analyses only the
effects of the crisis on countries as a whole, masking its
differential impact across social classes. If one considers income
distribution, and not just macro-calculations of gdp, the global
downturn has taken a disproportionately higher toll on the most
vulnerable sectors: the huge armies of the poorly paid,
under-educated, resourceless workers that constitute the overcrowded
lower depths of the world economy.

To the extent that these many hundreds of millions are incorporated
into the production process it is as informal labour, characterized by
casualized and fluctuating employment and piece-rates, whether working
at home, in sweatshops, or on their own account in the open air; and
in the absence of any contractual or labour rights, or collective
organization. In a haphazard fashion, still little understood, work of
this nature has come to predominate within the global labour force at
large. The International Labour Organization estimates that informal
workers comprise over half the workforce in Latin America, over 70 per
cent in Sub-Saharan Africa and over 80 per cent in India; an Indian
government report suggests a figure of more than 90 per cent. [1] Cut
loose from their original social moorings, the majority remain stuck
in the vast shanty towns ringing city outskirts across the global

Recently, however, the life of street hawkers in Cairo, tortilla
vendors in Mexico City, rickshaw drivers in Calcutta or scrap mongers
in Jakarta has been cast in a much rosier light. The informal sector,
according to the Wall Street Journal, is ‘one of the last safe havens
in a darkening financial climate’ and ‘a critical safety net as the
economic crisis spreads’. [2] Thanks to these jobs, former imf Chief
Economist Simon Johnson is quoted as saying, ‘the situation in
desperately poor countries isn’t as bad as you’d think’. On this view,
an admirable spirit of self-reliance enables people to survive in the
underground circuits of the economy, unencumbered by the tax and
benefit systems of the ‘formal sector’. These streetwise operators are
able to get by without expensive social provisions or unemployment
benefit. World Bank economist W. F. Maloney assures the wsj that the
informal sector ‘will absorb a lot of people and offer them a source
of income’ over the next year.

The wsj draws its examples from Ahmedabad, the former mill city in
Gujarat where I conducted fieldwork in the 1990s. Here, in the Manek
Chowk market—‘a row of derelict stalls’, where ‘vendors peddle
everything from beans to brass pots as monkeys scramble
overhead’—Surajben ‘Babubhai’ Patni sells tomatoes, corn and nuts from
a makeshift shelter: ‘She makes as much as 250 rupees a day, or about
$5, but it’s enough to feed her household of nine, including her son,
who recently lost his job as a diamond polisher.’ Enough: really? Five
dollars for nine people is less than half the amount the World Bank
sets as the benchmark above extreme poverty: one dollar per capita per
day. Landless households in villages to the south of Ahmedabad have to
make do with even less than that—on the days they manage to find work.

Earlier this year I returned to the former mill districts of the city
to see how the economic crisis was affecting people there. By 2000,
these former working-class neighbourhoods had already degenerated into
pauperized quarters. But the situation has deteriorated markedly even
since then. Take the condition of the garbage pickers—all of them
women, since this is not considered to be man’s work. They are now
paid half what they used to get for the harvest of paper, rags and
plastic gleaned from the waste dumps on their daily rounds. To make up
the loss, they now begin their work at 3 am instead of at 5 am,
bringing along their children to provide more hands. The Self-Employed
Women’s Association, which organizes informal-sector workers in the
city, reports that ‘incomes have declined, days of work decreased,
prices have fallen and livelihoods disappeared’. [4] Their recent
newsletter presents the following table, testifying to the crash in
prices for the ‘goods’ collected on the dumps.

A sewa activist based in Ahmedabad reports on the anguish she met when
visiting local members. One of these, Ranjanben Ashokbhai Parmar,
started to cry: ‘Who sent this recession! Why did they send it?’

I was speechless. Her situation is very bad, her husband is sick, she
has 5 children, she stays in a rented house, she has to spend on the
treatment of her husband and she is the sole earner in the family, how
can she meet her ends? When she goes to collect scrap she takes along
her little daughter, while her husband sits at home and makes wooden
ice-cream spoons, from which he can earn not more than 10 rupees a

In the industrial city of Surat, 120 miles south of Ahmedabad, half
the informal labour force of the diamond workshops was laid off
overnight at the end of 2008, with the collapse of worldwide demand
for jewels. Some 200,000 diamond cutters and polishers found
themselves jobless, while the rest had to contend with drastic
reductions in hours and piece-rates. A wave of suicides swept the
dismissed workers, who—with a monthly income of little more than
$140—were reputed to belong to the most skilled and highest paid ranks
of the informal economy. These bitter experiences of the
recession-struck informal economy in Gujarat can be repeated for
region after region across India, Africa and much of Latin America.
Confronted with such misery it is impossible to concur with the World
Bank’s and Wall Street Journal’s optimism about the sector’s
absorptive powers. As for their praise for the ‘self-reliance’ of
those struggling to get by in these conditions: living in a state of
constant emergency saps the energy to cope and erodes the strength to
endure. To suggest that these workers constitute a ‘vibrant’ new class
of self-employed entrepreneurs, ready to fight their way upward, is as
misleading as portraying children from the chawls of Mumbai as slumdog
Rural rope’s end

The second option currently being touted by the Western media as a
‘cushion for hard times’ is a return to the countryside. As an Asian
Development Bank official in Thailand recently informed the
International Herald Tribune, ‘returning to one’s traditional village
in the countryside is a sort of “social safety net”’. The complacent
assumption is that large numbers of rural migrants made redundant in
the cities can retreat to their families’ farms and be absorbed in
agricultural work, until they are recalled to their urban jobs by the
next uptick of the economy. The iht evokes a paradisial rural
hinterland in northeast Thailand. Even in the dry season,

there are still plenty of year-round crops—gourds, beans, coconuts and
bananas among them—that thrive with little rainwater. Farmers raise
chickens and cows, and dig fish ponds behind their homes . . .
Thailand’s king, Bhumibol Adulyadej, has long encouraged such
self-sufficiency. [5]

Similar views were published at the time of the Asian financial crisis
in 1997. Then, World Bank consultants assumed that agriculture could
act as a catchment reservoir for labour made redundant in other
sectors, based on the notion that the army of migrants moving back and
forth between the country and urban-growth poles had never ceased
their primary occupation. The myth persisted that Southeast Asian
countries were still essentially peasant societies. These tillers of
the land might go to the city to earn extra wages for cash
expenditure, but if they lost their jobs they were expected to
reintegrate into the peasant economy with no difficulty. This was far
from the case, as I wrote then. [6]

Returning to the localities of my fieldwork in Java this summer, I
listened to the latest stories of men and women who had come back to
the village, having lost their informal-sector jobs elsewhere, and
find no work here, either. Of course not: they were driven out of the
village economy in the first place because of lack of land or other
forms of capital. There is no family farm to fall back on. The
departure of the landless and the land-poor was a flight, part of a
coping strategy. Now that the members of this rural proletariat have
become redundant in Jakarta or Bangkok, or as contract workers in
Taiwan or Korea for that matter, they are back to square one, due to
an acute and sustained lack of demand for their labour power in their
place of origin. A comparable drama is taking place in China. Out of
the 120 to 150 million migrants who made the trek from the rural
interior to the rapidly growing coastal cities during the last
twenty-five years, official sources report that about 10 to 15 million
are now unemployed. For these victims of the new economy, there is no
alternative but to go back ‘home’ to a deeply impoverished

The Asian village economy is not capable of accommodating all those
who possess no means of production; nor has the urban informal sector
the elasticity to absorb all those eager to drift into it. According
to policymakers’ notions of cross-sectoral mobility, the informal
economy should swallow up the labour surplus pushed out of higher-paid
jobs, enabling the displaced workforce to stick it out through
income-sharing arrangements until the economic tide turned again. I
have never found any evidence that such a horizontal drift has taken
place. Street vendors do not turn into becak drivers, domestic
servants or construction workers overnight. The labour market of the
informal sector is highly fragmented; those who are laid off in their
branch of activity have no alternative but to go back ‘home’, because
staying on in the city without earnings is next to impossible. But
returning to their place of origin is not a straightforward option,
given the lack of space in the rural economy. Nevertheless, my
informants do not simply lay the blame for their predicament on the
economic meltdown. From the perspective of the world’s underclasses,
what looks like a conjunctural crisis is actually a structural one,
the absence of regular and decent employment. The massive army of
reserve labour at the bottom of the informal economy is entrapped in a
permanent state of crisis which will not be lifted when the Dow Jones
Index goes up again.
New economic order

The transformation that took place in nineteenth-century Western
Europe, as land-poor and landless peasants migrated to the towns, is
now being repeated on a truly global scale. But the restructuring that
would create an industrial-urban order, of the sort which vastly
improved the lot of the former peasants of the Northern hemisphere,
has not materialized. The ex-peasants of the South have failed to find
secure jobs and housing on their arrival in the cities. Struggling to
gain a foothold there, they have become mired for successive
generations in the deprivation of the shanties, a vast reserve army of
informal labour.

In the 1960s and 70s, Western policymakers viewed the informal sector
as a waiting room, or temporary transit zone: newcomers could find
their feet there and learn the ways of the urban labour market. Once
savvy to these, they would increasingly be able to qualify for higher
wages and more respectable working conditions. In fact the trend went
in the opposite direction, due in large part to the onslaught of
market-driven policies, the retreat of the state in the domain of
employment and the decisive weakening of organized labour. The small
fraction that made their way to the formal sector was now accused of
being a labour aristocracy, selfishly laying claim to privileges of
protection and security. At the same time, the informal sector began
to be heralded by the World Bank and other transnational agencies as a
motor of economic growth. Flexibilization became the order of the
day—in other words, dismantling of job security and a crackdown on
collective bargaining. The process of informalization that has taken
shape over the last twenty years saw, among other things, the end of
the large-scale textile industry in South Asia. In Ahmedabad itself,
more than 150,000 mill workers were laid off at a stroke. This did not
mean the end of textile production in the city. Cloth is now produced
in power-loom workshops by operators who work twelve-hour days,
instead of eight, and at less than half the wages they received in the
mill; garment manufacture has become home-based work, in which the
whole family is engaged day and night. The textile workers’ union has
all but disappeared. Sliding down the labour hierarchy has plunged
these households into a permanent social and economic crisis.

It is not only that the cost of labour at the bottom of the world
economy has been scaled down to the lowest possible level;
fragmentation also keeps the under-employed masses internally
compartmentalized. These people are competitors in a labour market in
which the supply side is now structurally larger than the—constantly
fluctuating—demand for labour power. They react to this disequilibrium
by trying to strengthen their ties along lines of family, region,
tribe, caste, religion, or other primordial identities which preclude
collective bargaining on the basis of work status and occupation.
Their vulnerability is exacerbated by their enforced rootlessness:
they are pushed off the land, but then pushed back onto it again,
roaming around in an endless search for work and shelter.

The emergence of the early welfare state in the Western hemisphere at
the end of the nineteenth century has been attributed to the
bourgeoisie’s fear that the policy of excluding the lower ranks of
society could end in the collapse of the established order. [7] The
propertied part of mankind today does not seem to be frightened by the
presence of a much more voluminous classe dangereuse. Their
appropriation of ever-more wealth is the other side of the trend
towards informalization, which has resulted in the growing imbalance
between capital and labour. There are no signs of a change of
direction in this economic course. Promises of poverty reduction by
global leaders are mere lip service, or photo-opportunities. During
his campaign, Obama would once in a while air his appreciation for
Roosevelt’s New Deal. Since his election the idea of a broad-based
social-welfare scheme has been shelved without further ado. The global
crisis is being tackled by a massive transfer of wealth from poor to
rich. The logic suggests a return to nineteenth-century beliefs in the
principle and practice of natural inequality. On this view, it is not
poverty that needs to be eradicated. The problem is the poor people
themselves, who lack the ability to pull themselves up out of their
misery. Handicapped by all kinds of defects, they constitute a useless
residue and an unnecessary burden. How to get rid of this ballast?

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