Class and Informal sector

Introduction
Weber on Class:
Marx and Weber: A comparison
Typologies of class in Weberian understanding:
The Indian experience

Introduction

The post on class and the informal sector would highlight the elusive nature of class (as Weber explains) and in particular how it is apprehended not only through the production matrix but now also through consumption variables. Further, how does the informal sector in India challenge and support some of these Weberian conceptions?

There is a large literature on the definition of class, with different sociological thinkers and schools of thought explaining different characteristics of class. This then makes the task of summarizing in a single term all the elements that appear in different versions tedious, which is therefore beyond the understanding of many.

However, to arrive at any form of distinction, Weber's interpretation of class as the fundamental form of stratification in society remains crucial, and this module therefore begins with an analysis of Weber's notion of class, which, when applied to the context of the Indian informal sector, applies, constant debate ensues for both support and rejection. To understand Weber, however, one must rely primarily on Marx, his idea of class as the basis of social stratification. For it is in the Marxist concept of class that Weber's understanding is deeply rooted and constantly contested. So here the module would both draw an analogy and highlight the differences between the two. And then he goes on to contextualize the concept in the Indian situation.

Weber on Class:

Historically, Weber first developed his theory of the emergence of the class between 1911 and 1920 while writing Economics and Society (Wittich & Roth, 1968). The term "class" refers to any group of people... who have the same typical possibility of a supply of goods, external living conditions and personal life experiences. The fundamental condition of class lies in the unequal distribution of economic power and therefore in the unequal distribution of opportunities (Bendix, 1960). Weber defines class as the designation of individuals according to the opportunities they may or may not have to assert their interests in the market. market (Poggi, 2005:72).

Weber explains that the fundamental fact that determines an individual's class is control over property (Tumin, 1919). To be precise, differences in property generate class and therefore economic interests take the place of class. To understand class as a category, however, it is essential to compare the Marxist conception of class with that of Weber. No understanding of Weber's class theory is possible without first considering Marx's conception of class antagonism and class conflict.

Marx and Weber: A comparison

To begin with, Marx located class in the relations of production that exist in a production system, emphasizing that a class dichotomy arises between those who owned the means of production and capital versus those who did not. So class is any set of people who play the same role in the production mechanism. In contrast, Weber argues that class is the market situation and that class relations exist between employers and employees, manager and employee, and not between the owner or possessor of labour-power. Class situation implies a market situation and thus indicates the typical likelihood of acquiring assets, gaining position in life and finding inner satisfactions, derived from relative control over assets and capabilities and from income-producing habits within a particular economic order ( Wittich & Roth, 1968).

The market situation of any asset is defined as all the possibilities of exchanging it for money that are known to the participants in exchange relations and help them to orient themselves in the competitive price struggle. That is, those who share the same market or class situation are subject to similar economic needs that usually affect both the material standards of their existence and the kinds of personal life experiences they can enjoy. A class designates a set of individuals who thus share the same class situation. Here, those who did not own goods but could only offer services in the market are classified according to the services they offer. Similarly, property owners are differentiated based on the type of property they own and how they use it for economic purposes. Weber therefore agrees with Marx that ownership versus non-ownership is the most important basis of class division in a competitive market (Wittich and Roth, op.cit.).

For Weber, class is a modern phenomenon that stems from and emerges from the rise of the market economy/market capitalism. Prior to market capitalism, group membership was based not only on class but on status, which in turn was based on the distribution of honor (W.G. Runciman, 1978).

Class struggle is another area where the two had different views. For Marx, the history of all mankind is the history of the class struggle. He proposed an overarching generic theory to try to cover all of human history, which is problematic. Class struggle, as Marx decodes it, intensifies over time, and the lower classes are expected to rise up and completely overthrow capitalism. Weber thinks that the class struggle is more intense in the early stages of capitalism and appears as soon as market capitalism consolidates and becomes bureaucratic (ibid.).

Weber's concept of class is based on his more general analysis of economic action in the market. Weber defines economic activity as behavior that attempts to gain control of desired benefits through peaceful means. In Weber's language, utilities include both goods and services. A market differs from direct mutual exchange (exchange) in that it is a speculative economic activity aimed at securing profits through competitive exchanges.

Classes can therefore only exist if such a market, which can take many concrete forms, has emerged, which in turn presupposes the development of a monetary economy. Money plays an extremely important role in this, because it allows the values exchanged to be estimated in quantitative and fixed rather than subjective terms. Economic relations are thus freed from the particular ties and obligations of local community structures, which are fluidly determined by the material opportunities that individuals have to use the goods, goods and services they possess to exchange them on the market. competitive. With this, Weber argues, “class struggles” begin (Giddens, 1971). And essentially, the class struggle in Marxist understanding is between two classes, between those who are at the forefront of ownership of the means of production and those who are not.

Class-Life chances

Another aspect that Weber emphasized is "life opportunity" as an important aspect of class formation and distinguishes that life opportunity is the sharing of economic and cultural goods that are differently available to different groups and that the life chance is largely determined by the market situation (Gerth & Mills, 1948) which in turn consolidates an individual's class situation and determines his fate in the market. They are, therefore, the chances that an individual gets during his life in different stages and all members of a given class appear to have similar life chances that are distinct from members of other classes. And class conflicts are more likely to arise only where the unequal distribution of life opportunities is not seen as an inevitable fact. Being born into a class no longer determines one's life chances, which in many historical moments was considered legitimate to easily accept one's inferiority as a consequence of one's life chances

For Weber, thus, class had two aspects-

-class is determined by control over productive property
-members of a particular class had similar life-chances which again are dependent on their market situation.

Typologies of class in Weberian understanding:

Weber refers to property classes as possession classes or trade classes (acquisition classes). The former are those who receive rents from the possession of land, mines, etc., called rentiers. This class is a positively favored class of goods due to the possession of goods that can be offered in a market exchange situation. While the commercial classes are either entrepreneurs who offer goods for sale in the market or those who finance such operations, for example bankers. Second, propertyless classes are those that only own services and goods (example: the declassed Roman proletarians) and are considered to be negatively favored in the market scenario. In the third, between the haves and the have-nots, there is a middle class, made up of those with small possessions of their own and those with skills that can be offered as market services.

To give an example, government or industry officials, craftsmen, farmers, etc. (Gerth & Mills, 1948) In his later account, in addition to distinguishing between property and trade classes, he also offers another formulation called "social class" which these insofar as individuals, decoded, could move freely within a common set of class situations, i.e. as long as the possibility of individual and intergenerational mobility exists, they form a social class. Compressing the divisions into market classes, Weber describes capitalism as constituted by the following social classes:
1. The manual working classes, characterized by the existence of skill differences between the skilled and semi-skilled categories due to increasing mechanization Of the industry.
2. The petty bourgeoisie
3. The ownership of a few employees, technicians and intelligentsia
4. The dominant entrepreneurial and property groups with access to educational privileges (Giddens, op.cit. p.304). historical era.

The Concept of Class consciousness

Class situation versus Status situation

Weber's class conception, which drew heavily on Marx, gave some prominence to class consciousness, which was central to Marxist theory. For Marx, a class could realize its interests as soon as it became aware of itself as a group. However, Weber differed in that class consciousness was not elementary to the existence of a group as a class. Instead, he posits the term "status" as a position in society determined by the social valuation of "honor," not economic power, and it is this category that appears to be class conscious. And unlike the class situation, the status situation is determined by a strict division of the economic order, i.e. the market sphere. While class status is characterized by life opportunities and patterns of employment and income, status group is simply a social grouping outside the market, characterized by patterns of consumption, the pursuit of lifestyles and habits of taste. Status status is related to the specific choices and lifestyle choices that individuals and groups make when surrounding themselves with furniture, cars,... as well as the status qualifications made in the choice of types of entertainment,... of leisure activities in which they can take part (Bourdieu, 1984), and consumption is not exclusively an individual affair but includes social aspects. There is an element of selection in consumption, and this criterion then supposes the choice of the way of life of a group. For example, Weber points out that 19th century Prussian army officers cultivated dueling skills by acquiring facial scars to claim lifestyles that indicated status in terms of social honor and military rank in research. opportunities and income and employment opportunities in life, action in status groups are limited to selections and options related to shaping one's lifestyle and claiming honor social

Having deciphered the main concerns of Weber's class theory, the module now seeks to place them in the context of the Indian situation of the informal sector, which accounts for 90% of employment in India, as revealed by regular reports on employment and the unemployment rate. Surveys (EUS) conducted by the National Sample Survey Organization suggest that only a small proportion of employment occurs in the organized sector so defined. The informal economy represents more than 90% of the active population and about 50% of the national product. The most recent is the just released report on “The Informal Sector and Employment Conditions in India” based on the Employment and Unemployment Survey conducted under the 68th round of the NSS of India. July 2011 to June 2012, the "informal sector", which in the case of manufacturing is very different from the rest of the sector, which is exempt from the legal definition of organized manufacturing. The report identifies the informal sector as composed of owned and partnership enterprises (excluding those run by unincorporated entities such as cooperatives, trusts and charities), the non-agricultural sector and activities agriculture other than crop production. The terms unorganized sectors and informal sectors are often used interchangeably. The informal sector can broadly be characterized as consisting of units engaged in the production of goods or services with the main purpose of generating employment and income for the people involved (15 ICLS, ILO, 1993). These units typically operate at a low organizational level, with little or no separation of labor and capital as factors of production, and on a small scale. Employment relationships - where existing - are generally based on temporary employment, kinship or personal and social relationships rather than contractual agreements with formal guarantees

Thus, the class of activities that encompasses the informal economy is vast and offers a unique example of how social forces affect the organization of economic transactions. It is important to underline the paradoxical nature of the informal economy and the way in which social forces determine its birth and development. It is a question of understanding how these activities interact with the social structures existing in a given society, and it is in these interactions that the paradox emerges which forces us to distinguish the foundations of the informal economy, its ambiguous relationship to the regulation state, and its economic stakes. and the political functionality of the institutions it claims to undermine, and above all its immateriality. (Doors & Haller, 2005).

Well, over the years the debate over the large and heterogeneous informal economy has evolved

emerged in four dominant schools of thought regarding its nature and composition

what to understand:

According to the Dualist school, the informal sector of the economy consists of marginal activities that are separate from and unrelated to the formal sector and give the poor access to income and a safety net during times of crisis (Hart 1973; ILO 1972; Sethuraman 1976; Tokman 1978).
According to the structuralist school, the informal sector consists of smaller businesses and workers who help to lower labour and input costs, enhancing the competitiveness of large capitalist corporations (Moser 1978; Castells and Portes 1989).
According to the Legalist school, the informal economy is made up of "plucky" microbusiness owners who choose to operate without formal registration in order to save money, time, and effort. These individuals need property rights in order to transform their assets into legally recognised assets (de Soto 1989, 2000).
The Voluntarist school, unlike the Legalist school, places less emphasis on the burdensome registration processes and instead concentrates on informal entrepreneurs who consciously try to dodge laws and taxes.

Each school of thought adheres to a distinct causal theory that explains how the informal economy came to be.

Due to differences in population growth rates and modern industrial employment, as well as a mismatch between people's skills and the structure of modern economic chances, the Dualists contend that informal operators are barred from modern economic opportunities.
According to the structuralists, attempts made by formal businesses to lower labour costs and boost competitiveness as well as those businesses' responses to the influence of organised labour, state regulation of the economy (particularly taxes and social legislation), international competition, and the industrialization process are what cause informality (notably, off-shore industries, subcontracting chains, and flexible specialization).
The Legalists contend that the self-employed operate informally and adhere to their own informal extra-legal norms as a result of the unfriendly legal system.
The Voluntarists contend that informal operators decide to conduct their business informally after assessing the costs and advantages of operating informally vs formally. Although some do not expressly distinguish between the two or appropriately address both, the prominent schools of thought have various viewpoints on this subject.
The dualists believe that the informal workforce—assumed to be largely self-employed—comprises the less advantageous sector of a dualistic or segmented labour market and that informal units and activities have few (if any) links to the formal economy but rather operate as a distinct separate sector of the economy. The connections between illegal businesses and governmental laws receive just a scant amount of attention. However, they advocate for governments to increase employment levels, offer informal operators access to financing and business development services, as well as basic infrastructure and social services for their families.
The informal and formal economies are viewed as being inextricably intertwined by structuralists. They consider unofficial businesses and unofficial wage earners as serving the needs of capitalist development by supplying low-cost goods and services. They contend that governments should regulate both commercial and employment ties in order to rectify the uneven relationship between "big business" and inferior producers and workers.
The informal wage employees and the formal economy as a whole are largely neglected by the Legalists' focus on informal companies and the formal regulatory framework. However, they do admit that formal businesses—what de Soto refers to as "mercantilist" interests—collaborate with the government to establish the "rules of the game" in bureaucracy (de Soto 1989). In order to unlock informal operators' productive potential and turn their assets into real capital, they contend that governments should introduce streamlined bureaucratic procedures to encourage informal enterprises to register and extend legal property rights for the assets held by informal operators.
The Voluntarists pay little attention to the economic connections between formal firms and informal businesses, but they believe that because informal businesses avoid formal rules, taxes, and other production costs, they unfairly compete with formal businesses. They contend that in order to broaden the tax base and lessen the unfair competition faced by formal businesses, informal enterprises should be subject to the formal regulatory framework.

In yet another approach – often aimed at developed or transition countries – the informal sector is seen as illicit or hidden/underhand production. Illegal manufacturing refers to manufacturing activities that are prohibited by law or made illegal if performed by unauthorized manufacturers; while underground production refers to productive activities that are legal if carried out in accordance with regulations, but are deliberately hidden from the authorities (United Nations Statistical Commission 1993). Any type of production unit (formal or informal) can engage in any type of production (illegal; legal, clandestine; legal, non-clandestine). The empirical and political question is what proportion and components of the informal economy, particularly in developing countries, are deliberately illegal or clandestine. (Chen, 2012). Having categorized the currents in the informal economy, one needs to focus on a shift towards the Indian situation.

The Indian experience

To begin with the Indian experience, it has a multi-structural economy in which pre-capitalist and capitalist production systems coexist and has been exposed to modern industry with the advent of colonial rule. In accordance with this, numerous modes of production, consumption and accumulation of surpluses arose, and with them a differentiated structure of the working class. This is further complicated by the presence of different local varieties. Hence, the working class is influenced by, among others, caste, tribe, ethnicity, gender, and related patriarchy. But the emergence and consolidation of a class structure in India is a relatively recent phenomenon which occurred mainly with the capitalist mode of production introduced by the colonial regime.

As industries grew, there was a reorganization of the population into different categories, and the concentration of the working class in urban centers became an important driving factor in the formation of workers as a class. Similar living conditions of the working class, shared interests in the urban environment offered similar life opportunities for all. Class as a category emerged in the late nineteenth century in the Indian context and bears some similarities to those in other parts of the world that have experienced industrialization. However, the Indian experience has to be viewed as vastly different from the others, given the far-reaching effects of the new production system on the Indian labor sector, which has led to a greater degree of differentiation in class formation, the configuration of classes in general. To give an example, the situation in Europe where capitalism has dispossessed traditional artisans and craftsmen and yet has generated employment in large industries. However, after the destruction of cottage industry, the growth of modern industry did not occur immediately, resulting in massive landlessness and disenfranchisement. (Sen, 1997)

This was further aggravated by the deskilling caused by the time it took for modern industry to replace all or part of traditional industry. Therefore, traditional performers did not even have the skills and services to offer in a new capitalist market scenario. This has consequently placed the working class in a negatively favored position that fits squarely within the contours of Weberian class understanding. This later led to the growth of the informal sector. Moreover, the sudden exposure of workers to modern industry after centuries of engagement in an agrarian economy cannot liberate them from backwardness long rooted in casteism and other forms of regressive ideas. This in turn has prevented any attempt at class consciousness, despite common interests. Thus, it presents an empirical critique of the Marxist understanding that common interests determine the genesis of class consciousness in the early stages of India's experience with the modern capitalist system of production, a colony under British rule. . The pace of capitalist development accelerated in the post-war period and later with the “neoliberal turn”5 that changed the face of the Indian economy. And the working class, exposed to great exploitation under capitalist production and imperialist domination, took its place in political struggle with class consciousness.

Consequently, unionization followed with the formation of the All India Trade Union Congress (AITUC) in 1920 and large scale protests were held. The simmering dissatisfaction was rooted not only in the exploitative nature of capitalism, but also in the fact that such a mode of production affected the consumption patterns of the population, dangerously reducing the purchasing and bargaining capacities. Thus, the plight of the Indian class has to be understood through both the production matrix and the consumption variables as a whole. Moving forward, after the neoliberal phase of the 1990s which exacerbated the case of the informalization of the economy, the informal sector needs to be analyzed more critically. With the informal economy far outstripping the formal sector with an employment dividend of over ninety percent (90%), the situation of the people employed in it is only getting worse. While a formal sector enabled the growth of class consciousness through unionization, the highly dispersed and widespread informal sector prevented such emergence.

As mentioned above, India is a case of class society with different preferences based on caste, tribe, gender, etc. Apart from these differences, wage differences have also created numerous rifts within a working class. Some were employed in the public sector, while others constituted a manpower reserve working in informal systems of producing goods, petty trade, collecting rags among many, fighting daily for the minimum living wage. In addition to wage differences, working conditions varied. While the formal sector had better wages and job security, the situation of workers in the informal economy was not made worse by low wages, but also made worse by other forms of coercion that emerged in the form of patriarchal biases in employment, which prevented women from participating in the economic process and contributing to their impoverishment. Given the huge differences within the working class, one might think that there will be mobility from the informal to the formal sector. However, this was not the case, as recruitment was highly dependent on the social network, resulting from a person's ties to certain status situations (Gerth and Mills, op.cit). So here too the Weberian interpretation fits perfectly. Therefore, it would not be entirely wrong to state that one's inclusion in a specific work culture of a particular sector is actually determined by the cultural and social set of behaviors expected from a particular sector. class, with an intrinsic lifestyle and honor that limit social relationships.

In support of this argument, one could cite caste affiliations, which have a decisive influence in all areas of the world of work. For example, there is a wage gap between upper caste workers, who would receive a higher wage segment than lower caste workers. So, lower castes, depressed classes, Dalits, Adivasi are all relegated to a working position to earn a living. (Nathan, 1987). Caste plays a crucial role in placing workers in the labor market, but also ensures a continuous pool of social relations for the supply of different types of labor for the capitalist mode of production. This new caste principle works both ways: it keeps the lower strata away from the upper circles of the working class, it also ensures that those in the upper strata do not take up 'lower class fancy jobs' (ibid. ).

Hence one section is placed in a positively advantaged class position relative to others, and hence the prevalence of disadvantaged groups of the working class who are denied access to better life chances – wages, employment. This also largely confirms Weber's idea. For example, the status affiliation of a person who evolves into a closed caste group plays an important role not only in employment but also in securing a position in the salary scale. A study from Kerala supported this point, finding that upper-caste workers predominated in the higher positions, while lower-caste workers (Dalits/Adivasis) got low-paying jobs in a dead end. As if a caste-based division of labour, based on qualifications such as education and land ownership, was still decisive for inclusion in the labor market. The class relationship is therefore between the employer and the worker and not just one's position in the production system. (Gerth & Mills, op.cit.) In India, therefore, the category of class needs a much more nuanced deconstruction, especially in the largely informal sphere. economy that drives economic growth that makes up more than 90 percent of the workforce. The situation in India is complex and characterized and amplified by a capitalist mode of production imposed by the colonial regime, the existence of multiple relations of production and modes of consumption, mainly characterized by numerous statutory affiliations based on caste, religion , etc., all affected by both local and international events of an economic and political nature. In conclusion, it is only by considering these idiosyncrasies and particularities that the Indian class situation in today's scenario can be properly understood, having historically been subject to both forced capitalism and neoliberalism led by the 'State.