During December 1998/January 1999 I spent three weeks in San Martin, El Salvador, a growing town on the outskirts of San Salvador. During these weeks I undertook interviews with women working in the informal sector. The stories I heard and the experiences I shared have grounded my theoretical thinking in the reality of what it is to have to rely on informal activity for survival. 

Ana Elizabeth Aleman has been baking bread in her house to sell in her neighborhood in San Martin, El Salvador for the past seven years. She operates her business primarily with the help of her husband and her children, and when business demands it, she pays two girls in the neighborhood to help her as well. 

When she began her business, it was very small, but it provided her with extra money to supplement the family's income, and more importantly, working from her house allowed her to simultaneously take care of her young children and manage the household. According to Ana Elizabeth, it is both the location of her bakery in her house and the accessibility of her family as labor that makes her business feasible.

Ana Elizabeth now must pay a license fee to the municipality for her business. She pays nothing in federal taxes. The municipal fee allows her to work freely and without regulation. Other women in San Martin who operate small stores in their homes, for example those who sell tortillas, sweets, eggs or cheese, are also made to pay a vendor fee. 

It became clear to me in my long interview with Ana Elizabeth that she is removed from any formal organization structure. "Work," she said, "is an individual thing. We have no official women's group in San Martin, no organizations, no unions. But we do have close community ties, and we help each other." That women in San Martin help each other in times of need is evident. During my two week stay with a family in San Martin, I was moved by the community cohesion. Doors stayed open, children wandered in and out, and women kept watch that friends and family were doing all right. The neighborhood was constantly a buzz. But, formal organizational structures are limited. 

In San Martin, a town about six miles outside of San Salvador with approximately 40,000 people, it is possible to get all of your basic supplies without leaving your specific neighborhood. Better said, it is possible, and more importantly, it is normal for families to buy all their provisions from informal sector vendors. My family bought their tortillas from the women next door, their bread from Ana Elizabeth, their eggs and cheese from the women up the street, and rice, beans, onions and tomatoes from another neighborhood vendor. Even the children are able to buy sweets, chips, and the traditional favorite, chocolate covered bananas, from neighborhood vendors. The important point here is that for locals, goods and services are cheaper and easier to buy from informal vendors who are working in San Martin's neighborhoods than from formal markets and businesses in the central town. 

Ana Elizabeth has dreams of expanding her business. She is driven by the desire to buy a truck for her son who is now studying electronics in San Salvador, and to be able to buy more material goods for her family. But this will be a struggle far into the future. "The economy," she says, "is worse and worse every day. Only the rich do well, while the government robs from us. Now the civil war is over but we suffer unemployment, violence, and delinquency. There is a lot of poverty, and it is only getting more difficult. The majority of the poor cannot go to school. Only the church provides some help." She is clearly conscious of the disparity in El Salvador, and of social and economic injustice, yet she focuses first and foremost on the well-being of her family and friends, and not on a broader movement for social change. 

Dona Francisca Hernandez Obispo lives in La Libertad, El Salvador, a small fishing community (now an acclaimed surfing spot) thirty miles outside of San Salvador. She has been the owner of a small comedor for forty years. She began selling rice, beans and tortillas from a table outside her house after her husband died from alcoholism. She had eight children and no money. "I had two cups, and two plates when I began working," she tells me. "It was very hard, but I had to find a way to make money." Now, forty years later, Dona Francisca's comedor is located in a large stall on the side of the beach. Her daughter and her grandchildren all work for her as cooks and servers. "After all this time I still have no money saved. Life is so hard." During our series of conversations that lasted over four days, Dona Francisca repeated this sentiment over and over. "La vida es dura. La vida es dura." 

As in the case of Ana Elizabeth, Dona Francisca must pay a fee to the municipality where she lives. She works long hours with the help of her children and grandchildren. When I asked her if there was organization among women in La Libertad, she shook her head. "I suppose you could say that I have friends. These are the women I see when I go to the market. But my life is here with my family. I work all the time, and they are who I spend my time with." 

The feeling I got in my talks with Dona Francisca, with her daughter Marta, and in my playful chats with her young grandchildren was one of interminable struggle. Several times during our conversations Dona Francisca began to cry. She thanked God that she had survived and stressed her faith in being a good person and someday reaping a just reward. I wish my words could capture the love, hard work, and commitment Dona Francisca and her family emanated. As in the case of Ana Elizabeth in San Martin, the Obispo family works as a team. They rely completely on each other to make ends meet.

The streets, buses, and neighborhoods of Managua and San Salvador have left an indelible mark on me. I have been branded by the smells, the sights, and the sounds, but even more so, I have been inspired and also guided by the intense images of chaotic, yet creative survival that I saw everywhere during recent stays in Central America. While both Nicaragua and El Salvador are characterized by high unemployment and struggle provoked by economic austerity, even the poorest neighborhoods buzz with economic activity. This activity, which is marginalized from the formal economic sphere of large factories, multinational banks, and businesses, is immediately obvious as being critical to the maintenance of the poor, who are the majority of Central Americans.

Economic crisis is a defining feature of Central America. With strikingly high rates of formal unemployment, the informal economy is taking on increasing importance as a haven of economic survival for large segments of urban populations. This paper will examine the characterization of the urban informal economy; who is operating within it, how, and why. The main point is to determine whether beyond economic survival, the informal economy has the capacity as a space for organized (or unorganized) resistance. I conceptualize resistance as both a means of challenging dominant economic forces (either consciously or unconsciously) and proposing alternatives. Specifically, does the work of people within the informal economy support/propel capitalist structures, or does it challenge/threaten them, and what is the consciousness of the informal workers in this regard? While the theoretical base of this paper has broad applicability for urban centers throughout the global Capitalist system, the observations that inform this specific study are from Nicaragua and El Salvador. 

Throughout this study, I characterize the informal economy as marginal, but still connected to Capitalist structures. I thus explore the potential the informal economy has as a base for systemic change. Also, I pursue how grassroots organizing around basic/practical needs functions as a form of resistance.

The ultimate aim of this project is to bridge theory and practice in a manner which both informs and supports viable alternatives that are developing organically within the informal economy. My research is based on the notion that the informal economy increasingly serves as a sphere of survival for women and their families all over the world. Thus "alternatives" are the various ways that women have been able to create autonomous survival spaces that lie outside of the formal economy. 

Most writers on the informal economy agree that its primary defining feature is that it is not regulated by the state (Portes and Castells 1989; Perlman 1978; Roberts 1978; Soto 1989). This is not to say that the state is oblivious to its existence. On the contrary, it is often affirmed that while the state may harass workers in this sector in attempts to collect fees or penalties, it simultaneously acknowledges its importance as a social stabilizer and thus allows it to continue more or less without governmental repression (Portes and Castells 1989; Sassen-Koob 1989).

Informal economic activities range from the drug trade and prostitution, to micro-enterprise development, to street vendors, shoe shiners, home bakeries, and garbage collectors (Portes and Castells 1989). My research focuses primarily on the latter grouping, namely those who are working on the streets and in the neighborhoods in "non-criminal" activity. This is typically the lowest paid and most vulnerable segment of the informal sector. It is also the part, which is most disproportionately represented by women (Moser 1989; Rao 1996).

Informal economic activity is nothing new. There has always existed non-wage labor in the Capitalist system (Wallerstein 1979). Thus the informal sector is entwined with the formal sector. It is essentially the holding house of the reserve army of labor and thus an important mechanism for keeping wages down. According to Caroline Moser and David Satterthwaite in their study entitled "The Characteristics and Sociology of Poor Urban Communities":

In the cities of the Third World, this so called informal sector has been shown to be increasingly functional and useful to large scale enterprises and to cities' economies in general in a number of ways. For instancethe low cost of urban labour in most Third World cities (from which both national and multinational enterprises benefit) is underpinned by the fact that so many cheap goods and services are produced by this informal sector. The capacity of small scale enterprises to survive in an involuntary manner by means of self exploitation, resulting in an ability to persist even in downward swings of the business cycle, has implications in terms of its importance in maintaining the reserve army of labour and ensuring a flexible supply of labour which can be drawn into the capitalist system at different phases of the business cycle. The degree to which these informal enterprises collectively reduce wage costs and limit the bargaining power of organized labour are important constraints on lower income groups having the possibility of demanding more adequate incomes (Moser and Satterthwaite 1985, 15).

It follows from this analysis that the formal economy depends on the informal economy to maintain efficiency and maximum profits (Pardo, Castano and Soto 1989; Portes and Walton 1981). Simultaneously, the workers of the informal economy are held in a vulnerable, dependent, and exploited position. They receive low salaries, no benefits, and no protection against unemployment (Portes and Castells 1989). Yet while Marxists and neomarxists view the relationship between the formal and informal sectors as exploitative, they also believe, as do modernization theorists, that informal activities will disappear as modern capitalist enterprise advances (Wilson 1998).

Similar to the Marxists and neomarxists, world-systems theorists see the informal economy's growth as due to global economic restructuring. They add to the analysis that the informal economy is growing in core as well as peripheral countries due to globalization and ensuing cross-border migration (Sassen-Koob 1989). World-system theorists speak about the informal economy in terms of marginality. The accepted view among this school of thought is that contemporary marginality is irreversible; that industrialization cannot absorb the increase of the peripheral populations who are seeking work. Thus, the system has created surplus labor (Quijano 1974). In a structural sense, then, the informal economy is an example of how the Capitalist system is destroying itself. The logic according to Immanuel Wallerstein is as follows:

The point of marginalizationis that in peripheral countries wages are not both cost and revenue that creates demandbut on the contrary only cost, demand being found elsewhere: externally or in the revenue of the privileged social sectorsBut it also points to the long-run contradictions of the system as it presently exists: for one day, the "demand" of these marginalized workers will in fact be needed to maintain the profit rates. And when that comes, we will be faced, in a way, that we are not now, with the question of the transition (Wallerstein 1979, 83).

The informal economy has received increasing attention in the past ten to twenty years because of the economic crisis that has affected the majority of "Third World" countries. Structural adjustment programs imposed by the International Monetary Fund and World Bank have had the effect of raising formal sector unemployment as countries have been forced to cut their public sectors and privatize industry. Central America, Nicaragua in particular, has undergone some of the most rigorous structural adjustment in the world. While structural adjustment has lowered Nicaragua's inflation rate to almost 0%, unemployment in the country hovers around 65% on the Pacific Coast of the country, and 90% on the Atlantic Coast (Agurto 1998). 

How high unemployment has impacted the informal sector is disputed. Those that assert the dependency of the informal sector on the formal sector argue that while open unemployment has risen, informal activity has stayed the same. Portes, Dore-Cabral, and Landolt, in their studies in the Caribbean, assert that, "When formal firms cease to exist as during the economic crisis of the 1980s, demand for informal goods and services also drops. Although more people are available to engage in informal activities, their remuneration's rapidly approach zero as labor supply vastly outstrips demand" (Portes, Dore-Cabral, Landolt 1997, 21).

Yet others, such as Nicaraguan sociologist Sonia Agurto, suggest that informal economic activity has exploded as a result of the crisis, as the poor have no other means of survival outside of this sector (Agurto 1998). The thesis of this particular analysis is that while the majority of the populations have become poorer there is a small percentage that has increased their wealth tremendously. Within the polarized society, the latter group has become the most profitable market for the informal sector. At the same time, the poor rely on the informal economy to sell goods and to provide services to each other at below market rates. 

Studies have shown that economic crisis and the response of informal economic activity has even altered the spatial patterns of Third World cities, as the workers of the informal sector surround rich neighborhoods in order to tap into their market. They are thus geographically situated to serve the rich as domestics, shoe shiners, and venders. As a result cross-class mingling has occurred at a level never previously seen before (Portes, Dore-Cabral, Landolt 1997). 

The difference between those who claim that informal activity has remained the same during times of crisis, and those who suggest that it has increased, is perhaps one of definition, or more specifically, it is a result of to what part of the informal economy each is referring. Those who tout that the informal economy has not grown during the crisis are seemingly referring to micro-enterprise and subcontracting work, while the latter, who note the expansion of the informal sector, are referring to the lowest-paid and most vulnerable segment of the informal economy which includes the street vendors and service providers. While micro-enterprise and subcontracting activities are often tied to formal multi-national economic corporations either directly or indirectly, street vendors, domestics, and other informal service workers do not depend directly on other firms for their goods or for their buyers but on individuals within their neighborhoods or surrounding areas (Agurto 1998). Still, all informal activity is a product of the same global processes.

The largest departure in the conceptualization of the informal economy is neoliberalism on the one hand, and neo-marxism(s) on the other. Proponents of neoliberalism see the informal sector as the most dynamic sector of the economy. Peruvian economist Hernando de Soto (1989), for example, sees the informal economy as "the people's spontaneous and creative response to the state's incapacity to satisfy the basic needs of the impoverished masses" (XIV). Similar to modernization theory, neoliberal theory sees the informal economy as a separate economy from the formal one, but one that if given the chance could be an "engine of development." In line with this mode of thinking, the World Bank, International Monetary Fund, and many non-governmental organizations have prioritized the creation of micro-credit projects. They see micro-credit as entrepreneurship at its very best and as an important means of building self-reliance among the poor. Far from being a marginalized mass, or a lumpen-proletariat, informal sector workers are viewed as the ideal model of petty-bourgeois Capitalists. They are not viewed as exploited, as they are by Marxists and world-system theorists, but as empowered and creative individuals. What is proposed in neoliberal theory, therefore, is that mercantilist policies are replaced by truly laissez-faire policies in order for this new Capitalist class to reach its fullest potential (Wilson 1998; Soto 1989). Micro-credit projects such as the Grameen Bank in Bangladesh are showcased by neoliberal economists as examples of the developmental potential of the informal sector. Interestingly, neoliberal policy has appropriated the language of "the left" in its push for entrepreneurial development within the informal economy. Words like "participation", "empowerment", and "autonomy" are now mainstays of the World Bank's vocabulary (Vilas 1996).

On the other divergent extreme is the theorizing of neomarxists who write about the informal economy primarily as a space of resistance. Ironically, these theorists share a bit of neoliberal's optimism, in that they see the informal economy as the sight where the most dynamic alternatives are likely to emerge (Burbach, Nunez, Kagarlitsky 1997; Esteva 1998). The difference, and it is a critical difference, is that these theorists see these alternatives as forms of resistance to the capitalist system, rather than as "engines of the system's development." Their logic is based on the notion that the growing masses of the marginalized poor will eventually overload the system by creating alternative survival mechanisms that lie outside of the formal Capitalist structure. Therefore, the Capitalist mode of production will eventually be replaced by an alternative mode of production created in the informal sector. Roger Burbach has termed the informal sector a "postmodern economy." 

As contradictory as it may seem, the very process of globalization is accelerating the emergence of alternative economic endeavors. The globalization process of transnational capital is both centripetal and centrifugal. It concentrates and integrates capital, commerce, and trade in and between the metropoles while at the same time casting off industries, peoples and even countries that it has no use for. In the parts of the world that capitalism discards, forms of production are taking hold that comprise what could be called postmodern economies. These economies do not and cannot compete head to head with transnational capitalism in the globalization process. Rather, they lurk on the sidelines, seizing those activities that the transnational world decides to dispose ofThe new postmodern economies are still incipient in much of the world, comprising highly differential activities and economic islands that rise phoenixlike out of what capitalism discards. The most extensive of the postmodern economies consists of the informal sector: ever more numerous street vendors, the flea markets, petty family business, and even garbage scavengers who recycle aluminum cans, cardboard, and bottles while consuming what they can of the refuse (Burbach, Nunez, and Kagarlitsky 1997, 60).

An important notion that follows from the above analysis is that workplace organizing is no longer a viable strategy for social change. The argument is that with high rates of unemployment, the masses are no longer brought together at work-sights but in places outside of the workplace. Thus neomarxists veer away from Marx's assertion that it would be the proletarian who would carry the revolution forward, touting instead that "it will be a much larger group of economic actors involved in an array of activities at the grassroots who will slowly shape a new alternative and carry out the new social revolution" (Burbach, Nunez, and Kagarlitsky 1997, 61).

The majority of development theorists who analyze the informal economy from a gender perspective see the informal sector as an important sight of resistance, but they characterize resistance first and foremost as survival organizing. In their analysis, as in that of the neomarxists, because of high unemployment the formal workplace no longer has the capacity as the most important base of social change. This is not to suggest that work-place organizing has no role. Many young women in particular find employment in the garment or textile industries. They work in large factories that normally have poor working conditions and provide few, if any, benefits. Unions are critical to achieving women's political and economic rights within these factories and could potentially play a role in organizing within the informal sector. But because of the prominence of informal sector workers, gender theorists assert that increasingly social change will be propelled by women in the informal sector who comprise the poorest and most vulnerable category of workers: women who are organizing at the neighborhood level around their most basic needs. 

In Latin America and the Caribbean nationsthe vast majority (of women) respond to the breakdown of their subsistence economy by organizing collective meals, health cooperatives, mothers' clubs, neighborhood water-right groups, or their own textile and craft collectives, which produce goods both for street vending and for international markets. Thus, rather than privatizing their survival problems, these women collectivize them and form social change groups based on social reproduction concerns (Acoste-Belen and Bose 1995, 28).  Macroeconomic global restructuring- namely the removal of government subsidies on basic goods and the introduction of user fees for social services- has meant that women are carrying a heavier burden in providing basic needs for their families. Throughout the world women are the primary caretakers of the household, in charge of ensuring that its members remain healthy, fed, clothed, and schooled. In addition, studies show that women use their income almost exclusively to meet collective household needs (Elson 1991; Moser 1989; Stewart 1992; Chant 1994).

The need for higher household incomes inspired by macroeconomic restructuring has pushed women into the workforce. The majority of women find work in the lowest paid segments of the informal sector. Mercedes Gonzalez de la Rocha, in her studies of Mexico and Costa Rica, found the most common female informal-sector occupations to be in the areas of domestic service, catering, the production of foodstuffs from home or in the neighborhood, and washing and ironing for other individuals. (Gonzalez de la Rocha 1995). In this analysis, the informal sector has become a haven of last resort for women, a place to turn for survival that requires little education or skills training, while proffering the necessary though minuscule earnings. 

Lourdes Beneria, in her empirical work on the Mexican household, sights the informal economy as critical to the survival of poor households in times of economic crisis. Beneria's studies on the effects of structural adjustment programs in Mexico show that the majority of women earn some income during times of crisis and that two-thirds of women earn this income in the informal sector (Beneria 1991). Like Gonzalez de la Rocha, Beneria is not as euphoric as those who see the informal sector as a cradle of revolution. Beneria instead emphasizes that the insecurity and low earnings of this sector is a critical source of anxiety for poor women. The informal sector in her view is a means of survival, a place in which it is currently unfeasible to strategize for long-term structural change.

Counterposing the analysis of the informal economy as solely a sphere of survival, the informal sector has also been depicted as having the potential for the empowerment and organization of women (Hale 1996; Arunachalam, Srividhya, and Meera 1996; Rao 1996; Chant 1994). Theorists in this camp highlight the opportunities the informal sector provides for women in traditionally patriarchal societies to develop new friendships and networks, greater household status, and in some cases an independent income. It is acknowledged that women working twelve hours a day for their practical survival cannot realistically be called to organize beyond the immediate (Hale 1996). Yet, there are development projects underway that aim to build on the strong collective sensibilities of women in the informal sector by providing them the means to borrow money that is not controlled by the state or commercial banks in order to develop more profitable and sustainable informal enterprises.  Sonia Agurto, in her study on the informal economy in Nicaragua, found that in the urban zones due to economic crisis and structural adjustment, Nicaraguan women have increased their presence in the informal economy from 76% in 1985, to 80% in 1995-1996 (Agurto 1998). Agurto's findings detail the evolving characterization of the community of women working in the informal sector. "With 80% of the Nicaraguan population living in poverty, even women with education are now working in the informal sector. Women with degrees are now selling clothes on the streets" (Agurto 1998). Agurto concludes that women are not only cushioning Nicaraguan society from the worst of the crisis by creatively developing means of survival, but that they also represent an alternative future. She goes on to suggest that women need access to more credit and resources for this alternative future to be achieved (Agurto 1998). Thus, Agurto sees the potential for transformation emanating from the informal sector, but she acknowledge that this can only occur with access to appropriate financial resources which women are able to fully control. 

Empirical studies which focus on organized resistance within the US informal sector are helpful to envision the potential for resistive action within the informal economy in peripheral countries. This organizing is taking place primarily between labor unions and immigrant workers. The proposal for cross-border organizing by Jobs for Justice and UNITE has inspired much of my thinking on this issue. 

UNITE, which is a merger of the Amalgamated Clothing and Textile Workers (ACTWU) and the International Ladies Garment Workers (ILGWU), has been organizing immigrant workers in the garment and textile industry, light manufacturing, industrial laundries, and retail trades. UNITE also has a national campaign to abolish sweatshops in the garment industry. The program focus is to create awareness among the US public about the horrors of sweatshops and "to build pressure on retailers to take responsibility for conditions in their suppliers' factories in the United States and abroad" (Figueroa 1996, 22). While this study does not directly address the informal economy as such in Central America or other parts of the "Third World," it is an important example of the growing momentum of grassroots organizing for international economic justice. 

Stanley Aronowitz, in his latest book From the Ashes of the Old, suggests the need for traditional labor unions to reach out to workers in the US informal sector by embracing their struggles. This would include working in solidarity with grassroots groups who are struggling for immigrant rights and against exploitation in the areas of housing, education, and employment. Thus, his call is for an alliance among unions, radical intellectuals, activists, and community groups (Aronowitz 1998). I believe that Aronowitz' proposal is salient for organizing work within Third World cities, as well as for cross-border organizing.  What has been proposed by writers on the informal economy in the Third World is an international movement that bridges labor unions, the women's movement, micro-credit alternatives, and grassroots identity movements into a force that has both a practical (immediate) and strategic vision for social change. The work of UNITE, ACORN, and Jobs for Justice indicate momentum in this direction. 

The productive capacity of the informal economy has been demonstrated in multiple ways. Firstly, women who have little resources outside of their social networks/capital have been able to start micro-businesses that serve as the lifeline for their families. This creativity and resourcefulness could be the cornerstones for a new development paradigm. Secondly, the informal economy provides goods for both the rich and the poor at below market prices. For the rich this serves as little more than an added luxury of living in a polarized society. But for the poor, this allows for survival in a system that has removed subsidies from basic goods. And lastly, we must not ignore that the informal economy has historically been exploited by the formal sector as a source of low-cost subcontracting/outsourcing. In this sense it has contributed to the maximum profitability of capital markets. The point is paradoxical. As globalization and polarization intensify, the informal economy, while growing as an exploitative space, is also becoming a more critical sector for the survival of a growing mass of poor people. 

My time spent in El Salvador and Nicaragua alerted me to the danger of romanticizing the informal sector as an organic revolutionary base that will propel us into an alternative economic future. While it is easy to be seduced by predictions that the informal economy will spur new modes of production (Burbach, Nunez, and Kagarlitsky 1997), I believe it is essential to first heed the work of Beneria and Gonzalez de la Rocha, who characterize the informal sector as a truly harsh and competitive place where women turn first and foremost for survival. While I do believe that there is potential within the informal economy for the development of "alternatives," we must remember that the informal economy emerged principally as a result of exploitation, marginalization, poverty, disparity, and desperation. Essentially, it is an inherent component of the world Capitalist system. Most women currently working within the informal sector are not able to accumulate capital beyond that needed for taking care of their family's immediate needs. Most informal sector workers do not have the time or the luxury to think beyond the immediate and the personal.

Yet within this sector, women are finding ways to survive in the face of high levels of poverty. This is resistance. The endurance and capacity of women in the informal economy is unquestionable. Indeed, their work should inspire coordinated strategic action from multiple locations: the women's movement, labor, micro-credit, and cross-border solidarity groups. This would be action guided by the women workers in the neighborhoods and in the factories, as they know best what is necessary to make their work more profitable and thus to make their lives better. 

Yet, to isolate this sector as an autonomous space that can be restructured with the "right kind" of organizing and strategic support is to fall into a developmentalist trap. While projects can be developed to alleviate struggle in the short-term, the exploitative character of the informal economy will only disappear with the transition to a new global system that does not feed on the marginalization of growing masses of people. 

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