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Imagining the Post-Industrial Economy
Posted by Sharon Astyk on November 10, 2011
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Here is the single biggest question to consider about the economic, energy and environmental unwinding we are facing – what will the economy look as we go? I get more questions about this than about anything else – what should people do for work, what should they do with savings, how should they begin to prepare themselves for a lower energy world. What I find, however, is that among both the prepared and the unprepared, there’s a whole lot of people kidding themselves. There are those who imagine that there is no economy outside the world of the stock market and formal jobs – that a crash in those things is the end of the world, which means to them either that it can’t happen or they should buy a bunker and some ammo. Others have imagined themselves “free’ of all economic structures larger than the neighborhood, cheerfully providing most of their needs or bartering and never again touching cash. Both ideas fall into the realm of fantasy.

Let us remind ourselves that the informal economy is, in fact, the larger part of the world’s total economy. When you add in the domestic and household economy of the world’s households, the subsistence economy, the barter economy, the volunteer economy, the “under the table” economy, the criminal economy and a few other smaller players, you get something that adds up to 3/4 of the world’s total economic activity. The formal economy – the territory of professional and paid work, of tax statements and GDP – is only 1/4 of the world’s total economic activity.

We know from peasant economist Teodor Shanin and others working in the field that when the formal economy fails people all over the world, they shift into the informal economy. This explains why, in the former Soviet Union, although conventional economic models showed that people “should” be starving to death, they weren’t. This is how people with functionally no income can still eat – although often not well.

The US has the smallest informal economy in the world as a percentage of economic activity, but is also one of the single largest informal economies in the world. Even here, as we all know, it is not at all uncommon to shift into the informal economy when cast out of the formal one – bartering with neighbors, doing under-the-table work, or returning to the domestic and household economy if someone else can provide economic means.

It stands to reason, then, that for many of us thrust out of the formal economy, or for those who cannot make ends meet in the formal economy, strengthening the informal economy is essential. We see this all over the world, in our own nation at present and historically. When times are hard, gardens flourish, criminalized enterprises spring up, black markets and barter get new life, people sell out of their homes and work intermittently.

http://scienceblogs.com/casaubonsbook/2011/11/10/what-does-a-largely-informal-e/