Elmar Altvater / Birgit Mahnkopf

Informalisation of urban space

Urbanisation is industrialisation´s twin sister. For more than two centuries cities have been refuges for those who have been flushed out of country poverty to the anonymous work markets of big cities, or simply flee from the 'idiocy of country life' to try their luck where social life is more concentrated. However, it was only in the 20th century (which had seen a previously unimaginable growth in city population) that migration from the country coincided with the 'disappearance of the farmer' (Hobsbawm 1995): during the last 50 years the number of city inhabitants rose from 740 million to 2.9 billion people. Eric Hobsbawm describes the fact that at the end of the 20th century less than half of the population is occupied in agriculture as the only revolution which has occurred in the 'short 20th century'. In 1950 there was only one metropolis (New York) with more than 10 million inhabitants. At the turn of the Millennium there were already 19 cities. For 2015 it is estimated there will be more than 25. (Global Trends 2002: 104)

Cities always were and still are the home of the country leadership. This was already the case in the historical development of European capitalism. Venice, Genoa, Florence and later Amsterdam, Bruegge, Ghent and London dominated the early hegemonic systems of the capitalist world market. This has not changed at the beginning of the 21st century. City geography certainly changes in the course of neoliberal globalisation. Cities no longer develop and grow out of a specific historical structure of territorial space and are no longer permanently built like Rome, the 'eternal city'. Instead during the time of their prosperous growth, heyday and crisis they fulfil a function in the global network within the non-territorial 'space of flows' (Castells/ Mollenkopf 1991). The globalised city emerges where there are centres of global market relations. As trading centres for money and capital, for transport services, terminals for world merchandise, as drug trading places or centres of tourism. The functions may change and with them the character of the city. In the'nodalised', territorial and socially 'disembedded' city, rich and poor often lived in economic apartheid. The rich are highly mobile, included in global networks of relationships and thanks to their membership in a global society (which equally forms a global consumer class) are able to shield themselves from the great 'remainder' in their cities, who are tied to definite areas. If the indifference of the rich towards the contrast between rich and poor (which is experienced more extremely in cities than outside) is nothing new, previously, the territorial connection of both groups of city inhabitants used to form a joint base for city politics. This has changed under the conditions of deregulated and liberalised capital markets and before the background of the progressive privatisation of public businesses and public services in the spirit of neoliberal globalisation. The other side of private capital assets, which in part are in municipal bonds, are debts and the resulting unavoidable financial crisis of the cities.
Whilst one pays taxes, others connect interest income with their city papers and communal obligations. Communal tax is still being raised locally or the income comes from the nation state tax recovery. The communal debts take the form of a loan on the globalised finance markets. There the cities compete with conditions and securities to get creditors. The similarity in the experiences of creditors and debtors is divided through globalisation - and this has an effect on the communality of interest in the prosperity of a city.

Lack of human safety

Privatisation of public basic services and infrastructure is so far advanced in many cities that new social inequalities emerge in access to vital resources. Where public services (water supply, waste disposal, public transport, schools, hospitals, power supply) are subordinate to the market, that is, the principle of highest possible profit, cheap and adequate provision for everyone can no longer guaranteed. This is very dangerous, above all for the most vulnerable people (everywhere in the world these are children, women, sick and old people) and often leads to a lack of human security, even in the narrow sense of absence of direct, physical violence. (ref. Mahnkopf 2003). This danger is particularly large if cutbacks in the social welfare system and evasive manoeuvres are set into the shadow economy parallel to privatisation of public property (which should secure survival under conditions of shrinking acquisitions in the formal economy). If the universalistic values of state administration are also put out of action when the legitimation of politics is undermined through 'small corruptions', backhanders to (underpaid) police and customs officers (for example) and through 'large corruption' of politicians in leading positions in order to influence or buy their decisions . Where responsibility, confidence and security are no longer formally guaranteed (through the dependability of transparent procedures and decisions and through a selection of personnel following formalised rules) only those bound up in hierarchical networks can consider themselves safe. They can concern themselves with nepotism and favouring their clientele, whilst shutting others out. When security itself becomes a commodity through part privatisation of the state power monopoly, which is bought according to spending power (in the form of bodyguards,'black sherrifs', security guards or private armies)'more protection' for some individuals of property and personal well being, is transformed into a threat and rise in insecurity for many others. There are many reasons for this. With the disappearance of public security many social areas are defenceless, as the private security services often act against informal activities inîbetterì residential areas, as it can come to attacks where the attacker can only be sued through expensive legal proceedings. In some societies private authorities serve the acqusition of land, resources, the looting of labour forces, their enslaving and prostitution. The private resources acquired through private powers are used to finance client networks and to create loyalty in this way which carries a (so-called neo-patrimonial) system of private power. The undermining of human security increases in civil war economies, when subnational units become independent from the form of politics or even from the form of the state and secure their private financial monopoly through the use of global markets, where they sell raw materials or drugs, to get military security (weapons and soldiers). (ref. in detail Altvater/ Mahnkopf 2002: 290ff.).

Increase in insecure and informal work

At the beginning of the 21st century existential insecurity naturally had other forms of expression than at the end of the 19th and the beginning of the 20th century. Today this experience goes hand in hand with fear of the future and fear of a sharp fall in social status . This leads to physical and mental stress, condensing into real syndromes, with degradation, humiliation and poverty in the process. In this, informalisation and uncertainty of work may be decoded as graduated forms of expression of theîglobalisation of uncertaintyì (ref. ebd.: 81ff.) Research on the 'informal sector' in southern countries is mostly carried out in a context of development theory and seldom contextualised with theîcrisis of normal work relationsì in the western industrial countries. Obviously there are considerable economical, social and cultural differences between and within the individual world regions. Yet the dynamics of the process of global transformation takes care of structural similarities between the one person business of the informal sector in the countries of the southern hemisphere, the suitcase dealers in the transformation countries of middle eastern Europe, the dependent workers in sweat shops of the globally networked manufacturers of consumer goods and the development of insecure employment conditions and new forms of self employment in the Western industrial countries, in Germany cosmetically and almost cynically calledîIch-AGì (German form of individual company). All these are employment conditions without social and economic security. For the established street traders in Mexico city, who work 'on their own account' and support a whole family on their lean income, the young Chinese migrant in a sweat shop in Naples, sewing jeans for a large retailer, the single mother saleswoman in a Wal-Mart branch in Minneapolis/ Minnesota-or a Plus branch in Dortmund-have something in common. They are all confronted with a basic experience of existential uncertainty, which was characteristic for the pre-Ford times of capitalism without the protection of the social state which came into being in the 20th century (in the European states). Like informalisation the uncertainty of paid work must be interpreted as an element of a new form of governance, which builds up to a permanent state of insecurity. In other words, informalising work is not to be understood as an overlooked side effect of the socio-economic turnaround, (which is speeded up and controlled by globalisation) rather as a political project of a split modernisation. Social state redistribution systems certainly took care (at least in the Western democracies) of a comparatively high level of human security until now. This doesnít or only applies in a limited way to people who live as undocumented migrants in these countries, and there mostly live in the cities. Nevertheless the political force finds itself in a legitimations crisis even in the ìOECD-world ì This particularly grows out of the fact that following the neoliberal discourse ofînecessityì, restrictions on open trade, which affects the lower areas of society most of all, are justified with reference to the powerlessness of politics set against market development. Even in the welfare states of the European Union an increasing number of people are feeling betrayed by the promises of the welfare state. For Germany this counts the 10-15% of the workforce who are shut out of the formal job market, who cannot earn an income to support themselves, who have deficient educational experience and who are lacking theîsocial capitalì to have a future career. In addition there are the approx. 25% who live in ìinsecure prosperityì. Who may however through a single blow of fate (separation from partner, illness, accident, unemployment) land in poverty, who are anxious about their job and professional future. In this way the sum of those who live in social deprivation or who have to count on losses in socio-economic security in the near future adds up to almost 60%. This corresponds roughly to the number of citizens who in studies on changes in the social structure in Germany are identified as ìpolitically disenchantedî Not only the absolute breadth of deterioration of living and working conditions is decisive for experience of socio-economic insecurity and for anxieties, rather the ìcontext-related povertyì. This is how Pierre Bordieu (1999) described the perceived rise and fall in relation to others with whom one compares oneself, or who one wishes to rise above and distance oneself from. Under the conditions of economic and medial globalisation both must not necessarily relate to the system of reference of societies in the boundaries of the nations. Even large parts of the middle class in the rich industrial countries have fallen prey to a politically paralysing ìDarwinistically determined survival angstì(Negt 2002). This reaches up into the ranks of specialists and new generation of qualified management (desired in the short term, but worn down prematurely due to too high expectations of achievement and too tight time frames). Data on informal work, informal economy or shadow economy (the terms partly describe identical circumstances) should certainly be interpreted with caution. However it doesn't matter how it is measured or estimated, the importance of informality is increasing, even more so since the beginning of the 1990s. (Altvater/ Mahnkopf 2002: 104ff.). This primarily applies to countries of the so-called Third World and since the collapse of the real existing socialism even in the transformation countries of Middle and Eastern Europe. In many world regions, in Latin America, Africa and Asia especially, more people are informally than formally employed. Yet also in the developed industrial counties of North America and Europe since the 1970s the socially legislated înormal work conditionsì have lost their empirical and normative dominance. Informality of work is becoming a historical fact, even if at least in Western Europe unlimited full time work is still the prevailing form of support. Yet the areas which are not normalised are growing. Socio-economic security in the comprehensive sense of decent work as it is summed up in the new texts of the International Work Organisation (ILO 2000; 2001), seems to have become a privilege of a social minority in most of the countries of the world at the beginning of the 21st century If informal work (with regard to its contribution to national economic net value as well as the number of people it supplies with income) is more underestimated in official statistics , this has a lot to do with the fact that women form the majority of that îinvisibleì and therefore statistically not at all or insufficiently recognised workforce of the informal sector. The unpaid care and support work done by women, (which is not counted in the calculations of national gross product) although it contributes substantially to improved quality of life, is along with many paid informal activities of women are withdrawn from official registration and evaluation through their vicinity to the home. On the other side of socially defined normality there is a broad field: informal work in the narrower sense (which in the industrial countries is equated with an avoidance of tax and social security payments), but also illegitimate work such as begging. Illegal and criminal work finds itself on the other side of the social norm, neither allow easy definition and are not sharply defined in contrast to informal work. As a rule the boundaries are drawn through state regularies. Yet what is legal and illegal in this sense can change over time. With informal work it concerns an extremely heterogenous phenomenon. Formality and informality are extremes on a continuum, which passes over from informality into illegality and criminality at its most extreme end.

'Grass roots Neoliberalism'

Why does the informal sector grow under the conditions of globalisation at the cost of the formal, particularly in city agglomeration areas? Dynamics of free trade ensure that the productivity achieved through intensified division of labour and increased specialization (which on the one hand results in better and cheaper goods for the consumers and on the other in a decrease in work expense per unit produced) leads to work forces being made redundant. If the people (made redundant in global measures or in a limited society) (Ricardo 1959) are not put back into economic circulation through a compensatory growth, unemployment is a result. Another result (which predominates in societies without unemployment) is the informalisation of work. Those areas of economy and employment grow in which the man made constraints of the world market are not fulfilled and therefore avoided, where socialization through work and money occurs at least partly outside formal structures. Seen in this way, informalism is the result of a failure of self-imposed rules, which are informally avoided, in order not to be excluded from society. It is the result of a conflict of standards. Where global, trans or supra national and norms clash against local standards the latter are put under pressure. On the other hand, the informal sector fulfils the function of a sort of 'sponge' for all those workforces which have become îsuperfluousì as a result of global competition. Therefore its flexibility is emphasised over its effect on socio-economic insecurity. It represents a shock absorber for globalisation, as it primarily ensures subsistence in urban households. In this function it makes an important contribution to the îfeminising of survival securityì and to cross-border migration in general. Secondly the informal sector contributes to a factual solution of the crisis of the labour market. This function may be explained in that it (despite considerable discrimination throughout the country) has a large effect on employment. Market access here is relatively easy, capital investment is low, the technology used is easy, work intensity is consequently high and income and profits are low. The high employment effect of the informal sector is thirdly based on the fact that local businesses (which could not compete with the social and ecological standards and should actually disappear from the market) compensate their lacking ability to compete through the over exploitation of their workforce, be it through their pay, or safety precautions. The same mechanism which in the case of a small or one person business forces them to disregard norms and standards, proves in the case of larger transnational businesses (which are tightly enmeshed with micro businesses and the self-employed in the informal sector of global production and delivery chains) as a means to increase their ability to compete. Therefore the informal sector fourthly represents to transnational businesses with their foreign agencies ( in which more than 125 million people work worldwide) an almost inexhaustible supply of cheap workforce. For transnational businesses the increased recourse to subcontractors, which on their side employ a myriad of informal workers, including many homeworkers, enables sinking costs and a rise in flexibility, as many risks can be handed over to the dependent suppliers. Subcontracting is simultaneously a suitable means to eliminate legal obligations and the responsibility for labour forces, which although economically dependent on the transnational businesses, are legally independent. The positive effects of the informal sector, to bind together work forces (among them many women) and to create income even where the formal economy is shrinking, are only possible at the price of higher and growing socio-economic insecurity. Unlike the ILO assumed at the beginning of the 1970s, as the informal sector was îdiscoveredì in Africa, this area of economy is not a passing stage of the process of modernisation, a fleeting appearance which will be integrated with increasing industrialisation or be integrated into the îmodern sectorì of economy. Neither is the informalisation of working conditions an answer to regulation, excessive tax burdens, and insufficiently institutionalised property rights, as the neoliberal Hernando de Sotos (1991; 2000), puts it, so that deregulation, tax breaks, property protection and privatisation of public property could be helped. Informalisation is rather an accompaniment to structure adaptation programs and deregulation. It has to be understood as an expression of structural changes in global, national and local economy under the demands of global competition, or more precisely as a consequence of external restrictions in the global system of reproduction. The informal sector is an expression of îgrass roots neoliberalismì (Wilpert 2003), which relies on the fact that people in their lack of alternatives take just that path and those measures which the neoliberal project offers: acceptance of individual responsibility and development of individual initiative as well as, conversely, the rejection of îcollectiveì social aid because of their îinefficiencyì and îcostlinessì even if the neoliberally inspired individualism fails. Neither the state or the îsystemì are responsible, each person carries their own responsibility.

'Survival of the fittest'

However, it is not only in the hegemonic project of neoliberalism that the loss of security as the price for more autonomy in career questions is in dispute. Under the influence of neoliberal thinking socio-economic securities of self-appointed îeconomic leadersì, from politicians, journalists and of the so-called îscientific eliteì are defamed as growth-inhibiting rigidities. Insecurity is raised up to the level of a political objective (Mahnkopf 2000). The neoliberal basic rules state that insecurity and substantial inequality are necessary for economic growth and therefore, if not directlydesirable, then unavoidable. Behind this acceptance hides a neo-Darwinist image of humanity, in which people are endangered by security as they become 'dependent'. Under the conditions of a welfare state the competition in 'survival of the fittest' is distorted. On the other hand the idea of a social democracy (which should supplement civil and political rights) takes its impetus from the fact that mutual dependencies existing in modern companies are recognised and made accessible to institutionalisation. Today the privileged try to do this by getting out of the obligations attatched to the idea of civil rights; they do this by letting the 'others' know that they are not 'dependent' and through self-help can free themselves out of the traps of their existence. Yet even in the rich societies of the North and West a growing group remains dependent on solidarity, protective mechanisms and state support. This must on no account be seen as a burden for those who are in a socially stronger position. Living democracies depend on people who follow a self-motivated sensible life plan, who act and make decisions responsibly. If people under the sign of 'flexibility' are robbed of their basic freedom and have to concentrate the majority of their energies on daily survival or are anxious about a fall in social status, this is a bad basis for thinking and acting in socially critical perspective. Whoever is afraid is receptive for conservative or even backwards decisions which avoid questioning the basics and the legitimacy of the given social order. It is difficult to form another, forward looking society. If neoconservative and populist right-wing strategies are in the situation to offer a symbolic stopgap for the deficit in social integration, then it is easy to awaken a îneed for politics ì in the ìpolitically disenchanted ì. This usually works when members of the popular right question the ìeconomic fatalismì supported by the decision makers throughout the party spectrum with xenophobic arguments, however abstruse Whoever lives in growing socio-economic insecurity or is already threatened by marginalisation is easy prey for self-appointed lawyers of the îworking classì, for those îpopulistsì with a fat briefcase, who turn the safety discourse in a direction dangerous for constitutional state and democracy. Whoever is presented over many years in an ostensibly rational discourse with the ruin of old industries, the migration of capital in fields with higher yield and the disappearance of jobs as a globalisation related practical necessity, is susceptible to presentations and proposals which reduce complexity and seem to restore lost individual and collective control. Above all this is attatched to the distorted idea that society could get back a little of the lost 'inner peace' through supervision and punishments. If then as a reaction to feared vote losses the political right -wing (and even the liberal and social democratic parties) try to surpass one another with law and order politics and the readiness grows in society to sacrifice rights of freedom to the (assumed) security, then the crisis of representative democracy is almost no longer to be avoided. Then the state gets the right to turn away 'undesirable' immigrants, as the European Union practices its asylum seekers policies to îprotectì its boundaries and individual European states with a rigid asylum policy, which do not even shirk from internment of asylum seekers. If the borders fail (as in the Italian ìCentri di permanenza temporanea ì or the English 'Immigration Detention Centres' or 'Removal Centres') in the centre of the states 'external spaces' where (guarded by private security companies like group4) respectable people lose their freedom in prison like structures. Video surveillance in public space can serve the same purpose, an expansion of the authorities of the secret service, listening and spying devices, how they are being tested in Germany together with new 'anti-terrorist law'. Yet also repression of 'noticeable individuals' and 'dangerous sections of society' belongs in the repertoire for example through uniformed maintenance men as in Graz, or the use of leisure time sheriffs (among them spying mailmen, colleagues of city enterprises, truck drivers, ship captains and train conductors) as they currently use in America as the first step towards a 'national report system' in connection with the Anti-terrorism-legislation developing 'home protection'.Basic principles of law are being brought into question in the name of security. Law and order politics to establish 'inner security' are now acceptable.
Whoever can afford it attempts to acquire security as club capital. Others are excluded from its use by gates, barriers, fences, video surveillance, guards, mobile commandoes and gated communities hermetically shielded from the outside world. Through private schools, health services, sport centres and shopping centres protected from unauthorised entry by private security services authorised even to use force. Above all, although not only in the USA, the events of the 11th of September 2001 are assessed through a militarisation of the world. City terrain as a whole, however the extremely noticeable skyscrapers in the soft focus city panorama ñ are perceived as the scene for military social and symbolic battles. Skyscraper architecture has adapted to this perception, by mobilising security features, not only taken from the arsenal of architecture and engineering rather equally from the military. In times of new wars the towers are rebuilt into fortresses, actually a form of building belonging to the pre-modern (ref. to the entries in ARCH+ Zeitschrift für Architektur und Städtebau Nr. 164/ 165). Yet this îprotectedì life is similar to a life of economic apartheid, at the same time the human insecurity of those who (because of sinking tax income) have to live in residential areas with an ailing infrastructure and bad schools, where poverty and social deprivation slug it out, in no go areas where even state law enforcers only dare to enter highly armed. Society dissolves from the margins. This doesnít however leave the 'zones of cohesion' untouched (Castel 2000). Firstly life in (physically) protected zones demands an ever-increasing financial, practical and personal means. The manufacture of 'interior security' for the few can be much more expensive than the manufacture of socio-economic security for all. Secondly the (in its poverty and hopelessness so threatening) 'outside world' does not allow itself to be banished fully: in the form of cleaner, child minder, gardener and above all private security personnel, it remains a 'risk factor' for the inhabitants of the guarded residential area.

Informality and Solidarity

Yet also the barrios, the favelas, bidonvilles, shantytowns, the poor areas of the cities are organising themselves. First of all many people are following (lacking practical alternatives) a strategy of 'grass roots neoliberalism'. They are developing that îself governanceì of adaptation, a subordinate mentality which eases the leaders in the sense of Michel Foucaults concept of 'gouvernementality'. People choose a bad and insecure job over unemployment. They let themselves be integrated subordinately into society, by means of the market mechanism. The ideology of 'every man (or woman) for himself' supports the neoliberal ideology of the market and private property rights. Yet other ways out of the informality are researched: the development of alternative forms of economic and social co-operation. The old experiences of the unions are rediscovered, a 'moral' or 'solidaric' economic model develops. In many cases the solidaric economy and the unions are a child of necessity. If, as in Argentina 2001, formal money disappears, swap-markets emerge, co-operatives are formed to take care of the poor of the population, and companies are taken over by the personnel. In Chile the people also ensured survival through the bitter years of the Pinochet dictatorship in a co-operative manner. In Brasil collectives and co-operatives also emerged, which simultaneously represent a practical criticism of the neoliberally forced individualism and a social and political power. President Lula da Silva reacted to this new challenge and elected a delegate for the solidaric economy. So a contribution can be afforded towards the formalisation of the informal. This initiative is the opposite of the more cynical instrumentalising of the informal sector as a shock absorber of the negative effects of globalisation through Lulas' predecessor Fernando Henrique Cardoso. So the informal sector is not only an emergency solution or even a solution of the crisis of formal economy, as Vargas Llosa or Hernando donít tire of explaining. It is also the source of an alternative economy with unions, microcredit organisations to support small businesses and their networks. Together with the appropriate education efforts for capacity building and empowerment, a contribution can be made to 'economic literacy'(Pierre Bourdieu). This may be studied in the example of the distribution of the or 'amento participativo, the 'citizen households' established at he beginning of the 1990s in the Brasilian metropolis Porto Alegre, now practiced in more than 200 Latin American cities (ref. Pont 2003; Herzberg 2002). This instrument of basic democratic determination of priorities and a socially geared distribution of investion means on a communal level concerns a new style of making politics. The model for this is the 'inclusive city', one based on social integration, improvement of the material situation of the citizens and the îconstruction of citizenshipì through political education and voluntary participation of oriented democratisation of the (local) state. As the example of Porto Alegre shows, the direct and voluntary participation of the citizens in the assembly of the public budget can lead to a situation where even inhabitants of the favelas have access to health and education establishments, that a comprehensive rubbish collection programme and canalisation of sewage in public hands is possible, is totally efficient and doesnít have to be privatised. In this way at least a start can be made to break through the mesh of corruption and cartels. It is not strange therefore that the citizen budget is now integrated into UN-Habitat (the programme of the United Nations for human settlement and residence issues) in a global campaign for urban governance. (ref. www.unhabitat.org/campaigns/governance/campaign_overview.asp). Surely this all only works if formal institutions (universities, city administrations etc) give help and if non-government organisations are present with their experiences. Yet it is also clear that the more local initiative of an economy based on solidarity needs a supplement on a local level. For the crisis of national finances, which constricts the freedom of action of a community and the crisis of the formal labour market have a lot to do with globalisation, primarily (although not only) with the crisis state of the global financial markets. Without regulation many measures on a local or national level will run into the sand. So there is also hope. Possibly the informal sector is the germ of a joint economy, a counterweight against the destructive tendencies of Neoliberalism. Maybe new forms of socio-economic security will emerge to counteract the tendencies of the îglobalisation of insecurityì.


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