In this essay I try to reconceptualize informalization. I define it as a social process that produces normative disarray and marginalized or anomic behavior for a vast majority of members in the society. The sort of social change denoted as informalization entails the restructuring of access to — and ownership of — the material means for livelihood; but it is exclusionary for this vast majority of marginalized laborers and thereby compels them to contrive unorthodox methods of existence. I classify such persons as having been formalized, that is, removed from the formal structures and processes of the economy and politics. An informalized person lacks autonomy in making choices, because he or she lacks the material means to choose freely and with the confidence that his or her plans and goals are realizable. Life becomes a game of chance, largely unpredictable — a gamble. At the behavioral level, organization and rational planning become less valuable while tolerance for disorder and ‘adhocracy’ become virtues. Informalization manifests itself in a variety of structures: informal markets, informal banking and finance, informal organizations, informal politics — all operating at the periphery of the formal political and economic structures.

In what follows, I argue that informalization is the direct effect of a weak capitalist economy and state. The former is incapable of accumulating enough social wealth for distribution. And the latter is unable to ensure equitable access to, and enjoyment of, the little social wealth that is available. The political elite in charge of the state rather exploits the political weakness of the informalized sector to advance its own projects. I then show that the current process of globalization is merely another phase of a long historic movement of capital. It affects trends in informalization today just as its earlier phase did. Informalization is therefore not a recent social development. It derives its reality from the nature of the economy and the state, both of which are reflected in the kind of public policy that has evolved and been pursued in Ghana since colonial times. Finally I argue that both informalization and globalization are antithetical to the growth of a democratic culture and practice.

Post-Nkrumah governments have been unable to arrest the crisis of Ghana’s weak capitalist economy; and so the economic crisis worsened. They have not used state power to pursue an accumulation model that would safeguard the rights of labor. Therefore the position and value of labor have deteriorated progressively during the post-Nkrumah period. Since 1966 labor has become progressively cheaper on the labor market. It has been subjected to growing unemployment, under-employment, declining real income, poor quality primary and secondary education, as well as loss of access to health-delivery services and tertiary education. Public policy has been guided by neo-classical economic theory, which regards any investment to improve the quality, position and value of labor as a cost to capital; hence, a dramatic impact has been made by such policies as labor retrenchment, low wages, and limited access to education, social, and health services through either the withdrawal of subsidies or the increase in delivery charges. The severity of this impact is evident in the fact that between 1965 and the end of 1966, unemployment shot up by about 100 percent, and continued to increase by an average of 10 percent per annum from 1966 to 1968 (Merrit-Brown, 1972).

The neo-classical economic policies that led to such drastic cuts in employment and that induced other anti-labor effects were resumed in the 1980s, when the economic crisis became much worse. After almost ten years of structural adjustment policies, the social condition of the labor force could only be described as dehumanizing. The direct effect of adjustment policies on labor has been to induce widespread poverty and social decay. According to the Ghana Living Standards Survey published by the Ghana Statistical Service in 1995, about 31 percent of Ghanaians could be described as poor or very poor:

Absolute poverty is pervasive and not limited to a small minority. In this respect 34 percent of the people in the urban areas and another 28 percent in rural areas are found to be poor. . . . An examination of employment and . . . sources of income of Ghanaians shows that over 70 percent of the poor and the very poor are self-employed, predominantly in agricultural activities, and that about 40 percent of the total incomes of all Ghanaians is derived from agriculture. . . . Poverty is least among households where the principal economic earner is in formal employment, either in the private or public sector. (ISSER, 1996, 150)

 

The situation has been deteriorating progressively, especially with high population growth and massive increases in the labor force from year to year. In spite of the rather high mortality rate, the percentage of the country’s labor force in the total population has remained high: between 53 percent and 55 percent since 1960. This has been so because the birth rate is still high; about 250,000 young people enter the labor market annually. At the same time, this swelling labor force tends to contain more poorly educated and more illiterate individuals. It suffers diminishing access to life-enhancing services like health, education, job opportunities and good income. The following data illustrate this. In 1991 the levels of educational attainment for Ghanaians over 15 years old were:

(i) Those who had never been to school: 40.3 percent, 29.1 percent male, and 49.8 percent female.

(ii) Those with less than a middle school certificate: 27.8 percent, 29.2 percent male, and 26.6 percent female.

(iii) Those with a middle school certificate: 26.0 percent, 32.6 percent male, and 20.3 percent female.

(iv) Those with a secondary-school certificate or higher: 6.0 percent, 9.1 percent male, & 3.3 percent female. (ISSER, 1996, 154)

The available evidence suggests that the prospects for improving this situation are very slim. Enrollment at all levels of the education ladder has not improved for some time now. Enrollment in primary schools, for example, stood at 1987-88: 44.3 percent; 1988-89: 44.8 percent; 1989-90: 45.1 percent; 1990-91: 45.0 percent; and 1991-92: 45.5 percent (ibid., p. 154). Distance and increasing cost also hinder the majority’s access to basic health facilities. (Ibid., pp. 162-169). This is the real face of poverty.

Rural and urban poverty have been increasing with rural poverty increasing at a faster rate. Sowah (1991, 25), for example, has estimated that rural poverty increased from 43.0 percent in 1970 to 54.0 percent in 1986. Rural poverty increased from an average of 40-45 percent in the late 1970s to 67-72 percent in the mid-1980s, compared to an average growth rate of 30-35 percent in the late 1970s, and to 40-45 percent in the mid-1980s for urban areas. Consequently, a large chunk of the country’s growing labor force has tried to escape the scourge of rural poverty by migrating to the urban centers in a futile search for employment and social security. The movement has been either from rural to urban or from urban to urban areas. On the whole, rural-urban and urban-urban migration increased during the 1970s and 1980s. "Total movement into urban areas (rural-urban and urban-urban) increased from 28.5 percent in 1960 to 50.4 percent in 1984." Urban-urban migration increased by about 300 percent (ISSER, 1994, 144-145). Significantly, the number of urban settlements has also been growing even though a minority of them has attracted the greatest percentage of the total urban population. "[S]ettlements with populations of 5000 and over grew from 98 in 1960 to 135 in 1970 and to 189 in 1984. The urban proportion of the total population rose from 23 percent in 1960 to 28 percent in 1970 and to 32 percent in 1984." (ISSER, 1994, ibid.)

The large towns (with 50,000 and more population) — of which 13 existed 25 years ago — have increased their share of the total urban population from 38 percent in 1948 to 49 percent in 1984. Large towns now account for 14.86 percent of Ghana’s total population (ibid., pp. 145-146). The vast majority of the migrants to towns are illiterate, unskilled and poor; and employment in the formal sector of the economy is likely to evade them for the rest of their adult lives. Employment trends in the formal sector of the economy, as summarized in the following quotation, confirm this bleak assessment.

Formal sector employment, defined as the recorded employment in establishments employing five or more workers, grew steadily from 332,900 in 1960 to 483,500 in 1976; it remained stagnant between 1976 and 1979 and began to decline thereafter, reaching a low of 186,300 in 1991. That is, formal sector employment in 1991 was 44 percent less than it was in 1960, representing an average annual decrease of 1.4 percent — contrasting with the average annual growth rate of 2.3 percent in the labor force between 1960 and 1990. (ISSER, 1995, 138-139).

 

It is evident from the foregoing analyses that the structuring of Ghana’s labor market into formal and informal components has accompanied economic change and crisis since colonial times. The process has gained momentum during the last 20 years, especially from 1970 to the present when growth in unemployment has shot up an average of 19 percent per annum (ISSER, 1995, 143). Furthermore, masses of unemployed people have continued to migrate to the towns and cities, thereby fueling the process of rapid urbanization, and exacerbating the unemployment and poverty crises in the dense population centers. These processes underpin what I have defined as informalization in Ghana today.

Contemporary processes of informalization are closely linked to the worldwide movement and restructuring of capital that has been broadly denoted as ‘globalization’. There is a tendency to perceive this process of internationalization of capital in narrow economic terms, referring to the integration of the world’s financial structures and labor activities into a single global economic entity. The indices of globalization as economic integration are rapid increases in the volume of world trade, the transnational movement of capital and the rise of gigantic economic and financial conglomerates on a scale that is unprecedented.

The cumulative effect of over ten years of economic structural adjustment may be described as the decommodification of labor. I define decommodification as the erosion of the value of labor as a commodity, that is, as an object of exchange in the capitalist market. Declining real wages, the total or partial withdrawal of subsidies, labor retrenchment and the explosion in unemployment levels, underemployment and the steep rise in poverty levels have become the hallmark of the industrial relations regime of this period of structural readjustment. And the effect on labor may be described as mass emiseration; the incapacity of organized labor to struggle in defense of the rights of labor in general and to guarantee the capacity for self-reproduction. The result has been the cheapening of labor as a commodity.

Wright (1993, 103-110) has argued that the class struggle is central to class formation and that the state plays a decisive role in its facilitation. This may be true in developed capitalist societies where the state is known to have intervened in order to increase the size of the labor force through such measures as the enclosure of agricultural land and immigration control (ibid.). More recently, in the 1940-1970 period, capitalist administrations have nourished the domestic labor force through various policies of the welfare state. In the periphery capitalist societies, on the other hand, the state rather intervenes to reduce the size of the labor force and in particular to decommodify it, especially when it is caught in a deep economic crisis — unless the state is guided by socialist ideas and norms as, for example, when state policies under the CPP government (Convention People’s Party of Nkrumah) sought to protect labor against capital. The CPP’s policies contrast sharply with those which have been pursued by successive governments since the fall of that regime, especially those pursued by the government of the Provisional National Defense Council (PNDC).

The decommodification of labor has negative consequences on the structural and organizational capacities of the working classes. Wright defines class capacities as the social relations within a class which to a greater or lesser extent unite the agents of that class into a class formation . . . [Class] capacities constitute the potential basis for the realization of class interests within the class struggle (italics are original; op.cit., p. 98).

In Ghana the expansion of capitalist industry since independence has provided the working class with a most objective environment to organize for collective action. The economic crisis of the post-1966 period has adversely affected the growth of the industrial sector and diminished the capacity of the economy to create more jobs. The decline in job availability coupled with rampant labor retrenchment considerably undermined the structural capacity of labor as fewer people entered the formal labor market. Consequently, the collective worker-consciousness that emanates from the struggle to constitute a class in the labor process also became weaker. An increasing number of formal sector workers became engaged in alternative employment activities — either small-scale farming or petty trading — to supplement their incomes. But even before the surge of the current economic crisis, Margaret Peil (1972) had found in her study, The Ghanaian Factory Worker, that the industrial worker was at the same time dependent on the land for subsistence. The deepening of the economic crisis during the 1970s and 1980s and the growing importance of the informal sector compounded the problem of the lower organizational capacity of labor.

The state’s mediation in class structuring is crucial for the success of capital and state in a periphery capitalist economy like Ghana’s. Two major victories are won. I have already alluded to the first of these: the decline in the structural and organizational capacities of the working class, which frees capital to pursue its mission of accumulation. The second is a victory in controlling ‘informalized labor’, which enables the ruling fraction of the political elite to wage a successful struggle against its political opponents. As I have argued above, informalized labor lacks the capacity to forge itself as an independent and self-conscious organization. Nor is it capable of acting as a class. To the same extent therefore I would argue that informal sector operators are incapable of functioning as "social capital" (Ottaway, 1997, 53) to facilitate the growth and consolidation of democratic politics. They lack both the organizational and structural capacities to engage as a body in democratic politics. Instead they become part of emerging populist movements and coalitions. This is what makes them strategic political material for Ghana’s petty-bourgeoisie political elite.

Informalized individuals and groups become strategic political material during periods when the state and economy are in severe crisis, when the legitimacy of government is being challenged, and when the need for government to locate itself among particular social forces becomes extremely important for survival. Two moments in Ghana’s recent political history illustrate this: the two-year period 1977-1979, and 1983 to the present.

Ghana National Chemical Sellers Association

Ghana National Tailors and Dressmakers Association

Musicians Union of Ghana

Phonogram Producers Association

National Tape Recorders Association

National Drinking Bar Operators Association

National Garage Owners Association

Secondhand Spare-parts Dealers Association

Refrigeration and Air-Conditioning Workshop Owners Association

Chop Bar Keepers and Cooked Food Sellers Association

Hair Dressers Association of Ghana

Susus Collectors Association

Traditional Healers, Fetish Priests, Mallams and Drug

Peddlers Association

Sandcrete Block Manufacturers Association

Ghana Gold and Silver Smiths Association

Second Hand Clothes Dealers Association

Radio and Television Repairers Association

Ghana cooperative Distillers Association

Cornmill Owners Association

Licensed Diamond Dealers Association

Ghana Association of Private Sports Papers

Ashiaman Livestock Breeding and Traders Association

Butchers Association

Ghana Livestock and Meat Marketing Association

Video Operators Association

Day Care Centers Association

Akpeteshie Distillers Association

Secondhand Car Dealers Association.

The range of informal sector associations named in this list is significant compared to what prevailed in 1977-1979. Firstly, it reveals the stupendous expansion of the informal sector in the wake of the deepening economic crisis since the 1970s and the considerable informalization of social life that has occurred since then. I quote at length an informed assessment of the unemployment situation in the country in the 1990s.

Between 1960 and 1990 the estimated labor force increased from 2,694,000 to 5,686,000 — an increase of 111 percent. During that period formal sector employment declined from 333,000 to 229,000, indicating an employment failure in the formal sector. The loss of about 145,000 jobs in the formal sector during the late 1980s led to a decline in the importance of the formal sector and an increase in the importance of informal sector jobs in the economy. It is estimated that in 1990 the share of the informal sector in total . . . employment and in urban employment was about 45 percent and 60-84 percent, respectively. (ISSER, 1994, n. 141)

 

In contrast with the situation in the 1970s, a much larger segment of the labor force had been informalized. Whereas the threat of informalization was then a lower middle class problem, it had become far more generalized by the 1990s. In such circumstances informal economic pursuit was bound to become the mainstay of social life for most people. Consequently many more informal sector associations could be mobilized to bring together a variety of operators in this realm of the economy. Secondly, the political crisis had deepened correlatively with the economic crisis; and so had the imperative to construct alternative bases of legitimation — hence the dexterity and systematic way in which the PNDC organized such a myriad of urban informal sector operators.

Poulantzas has argued that the atomization of the working class is a function of the capitalist state (quoted in Wright 1978, 241-243). The problem of the capitalist state in Ghana is that it does not even represent the interest of the weak bourgeoisie. Nor does it embody the ideological imperative of this class — liberal democracy. For example, under the PNDC and NDC governments of J.J. Rawlings, the state has endeavored to undermine the growth, unity and strength of the country’s incipient bourgeoisie just as it has systematically disorganized and weakened the working class movement. The government used the state to strengthen non-bourgeois elements in Ghanaian society — informal sector elements comprising small property and penny capitalist factions within the lower middle class and labor force, respectively. The PNDC government’s preferential treatment of the Ghana Private Road Transportation Union (GPRTU) set the tone for the corporatist relationship that was to emerge between the government and informal sector organizations. Regarding the GPRTU the government used state funds to import buses for the use of members of this organization. The GPRTU reciprocated by providing political support to the government, especially during elections (Ninsin, 1991, 54); they also aided in collecting taxes on behalf of the government (Gyimah-Boadi and Essuman-Johnson, 1993, 204). By the time of the 1992 parliamentary and presidential elections, the government had systematized this relationship with informal sector operators into a corporatist one. The government inaugurated the Council of Indigenous Business Associations (CIBA) as an umbrella organization for the 30 or so informal sector organizations, most of which had been organizationally sponsored by the government in 1990. At its inauguration on March 13, 1992 CIBA was alleged to have enlisted over one million members. A Deputy Minister for Mobilization, Peter Vaughn Williams (himself an informal sector operator) was its chairman. CIBA and other associations were employed nationwide in support of 1992 election campaign of Rawlings and his party, the National Democratic Congress (NDC).

In the view of van de Walle (1997, 8-9), globalization is in the interest of African countries, because the continent’s integration into the world economy will enhance the growth of democratic politics. He adduces the following reasons: (i) Globalization promotes economic growth, which makes distributional politics possible. (ii) Economic growth reduces the external dependence of governments and makes them accountable to their electorate rather than to donor agencies and foreign powers. Such conclusions as these are based on a misunderstanding of the essence of globalization; that is, intrinsically, its inequality in the distribution of capital goods. Globalization inherently undermines the capacity of the nation-state and the welfare of citizens in economically weaker societies. If the outcome of imperialism in backward societies was, among other consequences, the imposition of undemocratic political institutions and practices — such as indirect rule, then the political effect of neo-imperialism could not be any different.

As already argued, even though the Ghanaian economy is already an integral part of the global economy, the current economic and class restructuring resulting from its Structural Adjustment Program is quite different from South Korea’s, for example. This is because the model of integration into the global economy is qualitatively different. Hence after 14 years of structural adjustment the Ghanaian economy has remained extroverted and internally incoherent. The economy’s continued fragility is evidenced by: (a) the high inflationary pressures which characterize it, (b) its dependence on the export of gold and other primary commodities for revenue, (c) the great contribution made by agriculture — especially food agriculture — to inflationary and growth tendencies.

Surely, setting theoretical principles aside, it is clear that globalization has not generated growth in the Ghanaian economy. Nor has globalization increased the national wealth, restored sovereignty and accountability to the nation-state, thereby promoting the growth of democratic politics. As argued above globalization seems rather to have had the reverse effects. As current political trends imply, globalization has undermined the very possibility of these beneficial trends. Also the classes that globalization has been generating are weak. They lack the capacity to engage in independent political activity. They seem to value and cultivate dependency and clientelist relationships with the political elite, especially those in power at any particular period. This is an expression of their parochial ideology of survival. Because of these structural attributes they are easy and ready material for populist politics which, by its nature, is highly undemocratic.

1. My encounter with Janet MacGaffey at an international conference at the Hebrew University of Jerusalem compelled me to start my own study into the phenomenon called the informal sector out of which emerged my book The Informal Sector in Ghana’s Political Economy (Accra: Freedom Publications, 1991). The papers of the Jerusalem conference were published as The Precarious Balance: State and Society in Africa (Boulder: Westview Press, 1988). See also my own contribution as well as MacGaffey’s in this collection.

2. For the latest criticism of these and other writers see Eyoh (1996).

3. See Brodie Cruickshank (1953) for a brief survey of this history of social change in Ghana.

4. The origins and dynamics of the informal sector is the subject of study in Ninsin (1991); see especially pp. 36-52.

5. See Yaw Graham (1989, 45-46) for the political import of this law.

6. For data on this revolutionary expansion in the country’s education system, refer to Ninsin (1991, 46-48).

7. A number of excellent scholarly works have been devoted to analyzing the structure of the Ghanaian economy and its internal dynamics. A few of the classics on the nature of the Ghanaian economy are Ahmad (1970); Birmingham (1966); Krassowski (1974); and Szerewszeski (1965).

8. For additional data describing this bleak situation, refer to ISSER (op, cit., pp. 135-148).

9. A few random instances are Andreff (1984); Hugo (1975); and Palliox (1977).

10. Dudley Seers and G. R. Ross, (1952) Report on Financial and Physical Problems of Development in The Gold Coast (Accra: Office of Government Statisticians). Sir Arthur Lewis (1953) wrote the Report on Industrialization and The Gold Coast (Accra: Government Printer).

11. See for example van de Walle (1997, 3-5) for a set of indices of globalization defined as economic integration.

12. Ensuring an enabling environment has also justified legislation that inhibits effective presidential campaigning by parties opposing the incumbent; cf. J. Osei, "Manipulation of the mass media in Ghana’s recent political experience," in this volume.

13. Of course, the processes leading to such restructuring of economies and classes is far more complex. A number of factors, including the nature of the economy and whether or not the state is a welfare state, the type of education system, etc. determine the outcome. For analyses of these trends in post-industrial societies, see the collection of case-studies in Esping-Andersen (1993).

14. See for example Hutchful (1995, 52-76) for an assessment of the validity of the position of Chazan and others. Eyoh (1997) has subjected what he rightly regards as the pitfalls of the new political sociology for Africa to incisive criticism.

15. Analysts of this phenomenon in post-industrial societies also hold a similar view but on purely economistic principles that have nothing to do with state-society relations. See for example Pahl (1981).

16. For a concise analysis of these processes of class restructuring, see Ninsin (1996, 32-39).

17. Wright sees the formation of contradictory locations as one of the outcomes of the class struggle. While I agree that the class struggle mediates class formation, generally the evidence from the Ghanaian experience suggests that the process is not entirely autonomous. The state aggressively intervenes to structure the outcome of the class struggle, of which informalization is only one peculiar outcome.

18. The information on the politics of this period is taken from (Ninsin, 1985, 50-52). For a detailed analysis of the politics of the 1977-79 period, refer to Chapter 4 of Ninsin (ibid.); also Oquaue (1980).

19. For a critical appraisal of the politics of the PNDC’s rise to power, and how it lost its original social base, see Yeebo (1991).

20. The list of informal sector organizations is from Ninsin (1991, 114-115).

21. The PNDC government used such organizations, among others, as the bases of representation in the Consultative Assembly (the body that wrote Ghana’s 1992 Constitution). For a list of informal sector organizations which were designated by the government as electoral bodies with the right to send representatives to the Consultative Assembly, see The Consultative Assembly: Register of Members (Accra: 1991). Further, as will be discussed presently, these associations and others were reconstituted as the Council of Indigenous Business Associations (CIBA) and co-opted into Rawlings’ new populist movement which piloted his regime back into power in the 1992 and 1996 elections.

22. Reported in Ottaway (1997, 6).

23. This point has been forcefully made in Ninsin (1998).

24. There is ample data on the strikes and other forms of political struggle embarked upon by various sections of organized labor during this period; cf. Ninsin (1985).

25. Ninsin (ibid.)

26. The other leading political parties also mobilized the support of associations formed by lower middle class and unemployed workers operating in the informal sector.