Reinventing the Informal Economy

From Sharon Astyk

June 2, 2009 Ukiah, Mendocino County, North California

…Now the informal economy isn’t perfect. Unless you join the criminal parts of it, or are a natural scrounger, you probably won’t get rich off of it.

But the truth is that the informal economy is more resilient (being vastly larger) than the formal economy – markets, as we all know, long preceeded “the market.” That is, human beings always have economies – they are simply not always formal.

In most cases, people live partly in one, partly in the other – the formal economy is needed for the paying taxes and debts, for some projects, while the informal economy meets other needs. The more cash money you have, the less you may rely on the personal ties and subsistence labor of the informal economy, but also, the more unstable, complex and vulnerable the formal economy is (and these are the defining characteristics of modern finance), the more the informal economy is necessary – family ties take over for retirement accounts, barter when neither of you has any cash, subsistence labor replaces money labor for some people, so that you need to earn less.

I do not believe that the formal economy will disappear – but we are facing falling incomes, increasing insecurity and instability, and more and more of our formal economy incomes being used to serve enormous, and unsustainable debts. We already know that Medicare is going broke, that workers are facing high tax burdens, and uncertain futures – this is a long term problem, whether there are green shoots or not. And most of us are vastly overreliant on the formal economy.

Which means that we must rebuild the commons, and the informal economy – and that means reallocating time and resources and labor away from the formal economy – the law of conservation here requires that just as we have rapidly taken our commons and informal economy labor and placed it in the service of economic growth, we must equally rapidly begin shifting our resources to the informal economy – we need to spend more time volunteering, we need to return to domestic labor that saves us money, like gardening, mending, making things.

We need cottage industries that can operate under the table, if necessary, and barter. We must take things away from the formal economy to build new commons – new water resources, new food resources, new community resources. Mostly, what we need to take is our time and labor – because we can’t do it all, to the extent we can, we need to use the destruction of the formal economy to make new and better work for ourselves in the informal economy.

Don’t think that I believe this is easy – your mortgage lender won’t take chickens, and most of us can’t pay for our day to day life without formal economy work. Which is why what we’re doing now is so very hard – most of us are trying to fit our gardening and canning and other work around our jobs, and our other projects. We’re stuck in the formal economy, unless it casts us out. But that is, I think a necessary transitional reality – again, don’t think I think it is easy, don’t think I think you aren’t tired – me too.

But the truth is that if we are going to rebuild public, communal, domestic and informal economies, that time and energy will have to come from where we can spare it best – and we’re going to have to push ourselves. For some of us, time will be forthcoming when lose our jobs, or when we get enough benefit from our activities to be able to take one earner out of the equation, or when we consolidate households and resources to need fewer earners. But in a world without growth – and whether growth ends now or as we come up to absolute limits of natural resources, it is ending – we have no choice but to rebuild the informal economy.

Full article here

See also Mendocino’s Local Economy: Weed, Wine, Wood, and Water

…and Muddling Toward Frugality

…and Mendo Time Bank