The Dualistic Approach

The study of the informal sector began during the colonial times and continued to the 1960s. During that time, research tools and even analyses were dominated by anthropologists who did not use the term “informal”. Even women anthropologists, who were keen to study women’s economic activities did not have any idea of informal business. Instead, they used terms such as “traditional economy” and “traditional market”. Emphasis was put on how the traditional economies could have been incorporated into the “modern” economy. For instance, Rostow’s (1960) stages of economic growth did not consider the informal labour as important. As Arizpe (1977:26) puts it, the informal labour force was considered as a bridge on which “workers pass while shifting from one sector to another”. The theoretical background to this line of thought is that only the unemployed would get into this category of labour force. The agricultural labour force was assumed to normally shift from agriculture to the “modern” sector, which was considered as developed. With hindsight this was wrong, especially if we look at what is happening today with the development of new sophisticated technologies such as robots which do not need human labour force.

Perhaps the formal study of the informal sector originated from Lewis’s (1954) two sector model. The model emphasized a kind of dualism, in which the industrial sector located in capitalist towns or urban centres and a “subsistence” sector centred in the country side (Lewis 1967). Lacking a better terminology and understanding of other cultures, Anthropologists like Geertz (1963) dichotomized the two types of economies as “firm-centred economic sector” vis-a-vis “the bazaar economy.” According to Sinclair (1978:80), this dualistic approach to the study of the availability of labour force leads to the conclusion that there is either urban unemployment or rural under employment or hidden unemployment.

Geertz’s work on the “bazaar economy” (1963), based on his study of Indonesia towns, shows how market trade was a general mode of commercial activity which people do as an expression of their essential selves. Essentially these anthropologists and dualists are saying that they do not see this business as “informal” but rather as an intermediate sector “between the city and the countryside” (Sinclair 1978:80). They were not, however, able to see how this could play a positive role in the development of the people. From this modernist perspective you have to go big and industrialize in order to develop.