Neo-Dualism: Accumulation, Distress, and Proliferation of a Fissured Informality

Kasturi Sadhu and Saumya Chakrabarti

Review of Radical Political Economics, 2021, vol. 53, issue 4, 694-724

Abstract: A dominant strand of orthodoxy argues that the problem of the informal sector could be mitigated through the capitalistic growth process. But our observations on India are different—with an expansion of the capitalistic formal sector, as the economy grows, there is a proliferation of fissured informality. Using a structuralist macro-model, we provide certain explanations for this phenomenon, which are also tested empirically using Indian subnational-state and firm-level data. Thus, we explore both the short- and long-run effects of the expansion of the formal sector on the heterogeneous informal economy. While a section of the population is pulled into the advanced informal activities, a vast segment is pushed to petty production. Accordingly, the orthodox transition narrative is questioned and alternative policy and political possibilities are introduced. JEL Classification: O11, O13, O17, P48

Keywords: capital accumulation; income deflation; resource expropriation; push and pull effects; employment diversification; migration; informal sector; dualism; nontransition; formal-informal conflicts and complementarities; development macroeconomics; Kalecki; India (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:reorpe:v:53:y:2021:i:4:p:694-724

DOI: 10.1177/04866134211012134

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