Precarization,Informalization,and Marx

1. Introduction

The concept of informalization has often been used in the explanation of labor relations in the Global South, whereas the concept of precarization has most usually been applied to those relations in the Global North. There are exceptions in the literature, however, and some authors, especially but not exclusively in the late 1980s and early 1990s, analyzed what they saw as informalization in developed countries. More recently, publications on the informal economy, especially those generated by the ILO (International Labor Organization) and Women in Informal Employment Globalizing and Organizing (WIEGO), have underscored the precarity of informal and informalized work. It has been suggested that developed countries show indices of informality, as the concept was applied to underdeveloped countries because of the exclusion of workers from protective labor legislation and the undermining of labor rights (Carré 2017). In the developed countries it is related to the recommodification of labor. In this article, I explore how precarization is indeed informalization, while relating this phenomenon to Marxian concepts. The questions that I seek to answer are the following: What are the similarities between precarization and informalization? Are they not identical concepts? How does Marx’s theory of the falling rate of profit, of absolute versus relative surplus value extraction, of formal versus real subsumption of labor, and of the maintenance and reproduction of the laborer, throw light on these questions? It is assumed that important types of informal/precarious work are subcontracting, as well as temporary and/or part-time work; as Castells and Portes (1989:12) point out, all forms of work, including these three, not protected by existent labor laws covering workers are in the formal economy. I show that “precarious work” existed as a reality and as a concept prior to the Fordist/Keynesian compact beginning after the 1930s and World War II. The erosion of the Keynesian social compact has been traced to financialization and globalization (e.g., Daguerre 2014) as well as the accompanying recommodification of labor (Greer 2016). It is also argued that the expansion of the reserve army of labor has fostered the recommodification and precarization/informalization of labor. Below, I first address the development of the ideas of precarious and informal employment. Second, I discuss the similarities between precarization and informalization. Third, I outline a Marxist approach to these phenomena. Fourth, I attempt to relate precarization/informalization and the concomitant re-commodification of labor to the existence of a growing reserve army of labor.

2. Precarious Employment/Work

Although many scholars identify the idea of precarious employment with trends in the labor market that occurred with the onset of neoliberal globalization in the 1970s, the concept has a much longer history. Quinlan (2012: 5–6) in his perusal of House of Commons debates in Britain from 1800 to 1940 and of Australian newspapers from 1804 to 1940, found that terms such as “precarious employment” and “employment that is precarious” were regularly used up until 1935. Quinlan (2012: 6) notes that:

In the period under review the term was used in two distinct but often overlapping contexts. They were used to describe particular categories of labor (and this use predominated), or to describe labor market conditions in a particular region or more widely. With regard to the first usage, reference is made to types of work which were casual, temporary or seasonal in nature, where pay was low and where hours of work were irregular (compounding low earnings and budgeting issues). Typically included in this group were temporary/casual workers such as dockworkers, construction laborers (often referred to as navies), agricultural laborers and ‘temporary’ government laborers. Also included were those engaged under fixed-term employment (like seamen) and self-employed contract workers, including fishermen and home-based women workers and children/family groups in the clothing trades. ¹

Unlike the contemporary usage, the concept of precarious employment was developed in a context in which there were no social benefits such as unemployment insurance or old age pensions (Quinlan 2012: 11).

After the Great Depression and World War II, developed countries adopted a Keynesian welfare state redistribution system and a Fordist large-scale organization of manufacturing work. There was an assumption that a male breadwinner would earn a wage sufficient to guarantee the maintenance and reproduction of his family. Yet these arrangements were only a blip in the history of capitalism. Neilson and Rossiter (2008: 54) argue that: “Precarity appears as an irregular phenomenon only when set against a Fordist or Keynesian norm… If we look at capitalism in a wider historical and geographical scope, it is precarity that is the norm and not Fordist economic organization.” It has been argued that Fordism was a “functional accumulation regime” and post-Fordism is a “dysfunctional accumulation regime,” with the latter having stagnation tendencies such as under-consumption, and also having implications for polarized job growth and the expanding precarity of labor (Vidal 2013).

Even during the heyday of the Keynesian/Fordist compact, however, there were peripheral workers, identified by those endorsing dual labor market analyses that proposed a dichotomization between a primary and a secondary labor market (Reich, Gordon and Edwards 1973). Whereas the primary labor force was likely to be unionized, the secondary labor force was not. The primary labor market was characteristic of monopoly firms, and the secondary, populated by marginalized groups, characteristic of peripheral firms. Notably, since the 1970s, monopolistic firms have developed a dualistic structure internally, with core and peripheral workers, the former enjoyed employment stability, and the latter precariously employed. This was typical of the precarity experienced in the times analyzed by Quinlan (2012) as well. The putting-out system, much decried by Marx (1979: 554) as involving the super-exploitation of those workers who are paid piece rates, still exists today. Defining contemporary putting-out systems as involving “the transfer of work formerly done within a firm to another firm, an artisan workshop or to domestic outworkers,” Murray (1983: 79) finds all of these phenomena in various regions of Italy. Elsewhere, outsourcing to a subcontractor of a variety of productive or service tasks is common. The outsourcing to another firm or to an artisan workshop can be considered as a form of subcontracting to entities in which, “The exploitation of the laborer by capital is… effected through the exploitation of the laborer by the laborer” (Marx 1979: 554). Capital’s control over domestic outworkers (homeworkers) may be either direct or indirect (through subcontractors).

Prior to Standing’s (2011) popularization of the concept of the precariat, and prior even to the mention of “precarious and informal work” (without explaining, in many cases, whether those were the same phenomenon or different ones) in many publications sponsored by the ILO, there were scholars who conceptualized the changes in the US economy after the 1970s as being characterized by the growth of an informal economy. Fernández-Kelly and García (1987: 242), looking at Hispanic women who were home-based outworkers in Miami and Los Angeles, argue that informalization is “an integral part of advanced capitalist countries.” They suggest that informalization in developed countries may be a “recurring phenomenon” fostered by changes in the relations between capital and labor taking place as capital aims to undercut unionization in the interests of lowering its wage bill (Fernández-Kelly and García 1987: 249). Murray (1983: 92–93) argues that what he calls the “decentralization of labor” through such devices as the putting-out system was initiated primarily to combat the advances being made by organized labor. In a classic and much-cited work, Benería and Roldán (1987) map the exploitation of home-based assembly workers in Mexico City, contracted by national and multinational companies in an effort to lower their wage bills through piecework while taking advantage of gender norms in Mexico that often did not allow women to work outside the household. A WIEGO study of 447 home-based workers in India, Thailand, and Pakistan showed that women often choose to work from their homes because they can simultaneously care for children and the elderly. Working for piece rates and often subcontracted by women who do the same work and are subcontracted themselves, they complain of the insecurity in receiving raw materials and the instability of work (Chen 2014). The homeworkers must rent or buy their own sewing machines. Chinese immigrant women, among other immigrants, have been found working in garment sweatshops in urban areas as far-flung as New York City and Sydney (Ching Yoon Louie 2001; Sutherland 2016).

Concerning piece-rates, Marx (1990: 697) notes that they make it “easier for parasites to interpose themselves between the capitalist and the wage-laborer, thus giving rise to the ‘subletting of labor’.” Thus, there are chains in subcontracting, with the ultimate link often being home-based outworkers. Calling what would come to be known as sweatshops and/or home-based outwork, “domestic industries,” Marx (1990: 591) makes the following comment:

In the so-called domestic industries… exploitation is still more shameful than in modern manufacture, because the workers’ power of resistance declines with their dispersal; because a whole series of plundering parasites insinuate themselves between the actual employer and the worker he employs; because a domestic industry has always to compete either with the factory system, or with manufacturing in the same branch of production; because poverty robs the worker of the conditions most essential to his labor, of space, light and ventilation; because employment becomes more and more irregular; and, finally, because in these last places of refuge for the masses made ‘redundant’ by large-scale industry and agriculture, competition for work necessarily reaches its maximum.

This analysis is useful in the exploration of informalization and precarization of the labor force. Marx erred, however, in predicting that “domestic labor” would eventually be replaced by factory-based labor and move from a formal subsumption to a real subsumption of that commodity (see below).

Another type of work that can be seen as informalized and precarious is that in the building trades. They are also marked by chains of subcontractors, and architectural and engineering firms subcontract to, for example, bricklayers, plumbers, electricians, masons, etc., all of whom hire helpers as sub-subcontractors themselves. Undocumented immigrants in the North are often hired for these jobs, whether they are already present or recruited by network members from abroad (Blue and Drever 2010; Corcoran 1991; Fellini, Ferro, and Fullin 2003) and do not tend to be unionized. Calling construction work informalized, deregulated, and precarious, Torres et al. (2013) point out that the major dynamic in the exploitation within the industry is the drive to lower the costs of labor. Construction workers in Austin, Texas, most from Latin American countries, were paid wages below the federal minimum, had no workers’ compensation insurance, and were not protected by health and safety laws (Torres et al. 2013)—all indices of informalized and precarious work. Employers also, “frequently misclassified workers as independent contractors instead of employees, thus stripping them of their rights to overtime pay, as well as workers’ compensation coverage and benefits, and shifting the burden of payroll taxes to the worker” (Torres et al. 2013: 5). It can be added that construction work is unstable and seasonal, with peaks and troughs throughout the year, and differing by geographical location, often leading to a floating labor force.

Lack of permanency or predictability of employment is a hallmark of informal/precarious labor. Mexico has excellent labor laws offering medical care, housing, paid vacations, and pensions, among other perks. However, employers have an escape clause. According to a number of friends of mine who work or worked in the Mexicali Maquiladoras, these local, national, and multinational assembly plants may hire workers for three to six months before the laborers are eligible for the legislated benefits. They may also be supplied through temporary staffing agencies (see below). The result has been that assembly plants fire their workers before the benefits become due, often rehiring them later on while using the same patterns of fire-hire-fire. The national and multinational hotel chains in tourist centers in Mexico also do the same thing. In Cabo San Lucas, where I live, for example, there may often be a labor force floating from one hotel to another when workers are dismissed prior to the time required to receive the labor law benefits and are then hired by another hotel chain, sometimes just down the road. It is often broadcast on the local radio that two or more hotels are looking for housekeepers, guards, and secretaries/receptionists at the same time, essentially just switching personnel between themselves.

Portes and Sassen-Koob (1987: 41) maintain that both developed and developing countries have an informal economy, and that it is growing in the latter. They date the current rise of informalization to the recession of the 1970s, which led to increased competition both from other developed countries and Third World countries struggling to reduce trade deficits (Portes and Sassen-Koob 1987: 53–54). Situating this competition within the context of globalization, they hold (1987: 35) that informalization in the Third World is part of “an attempt to break out of economic stagnation through an export-oriented strategy” but tends to promote a similar informalization in the developed world where competition causes the affected industries to “struggle for survival.” Thus, early on, the phenomena today labeled as “precarization” was called “informalization,” or glossed as the growth of an “informal economy.” In the following section the similarities between the two is further explored.

3. The Similarities Between Precarization and Informalization

Precarity in its contemporary usage means the economic vulnerability and insecurity of the worker/precariat. It is related to: the lack of long-term employment, and hence the instability, unpredictability, and intermittency of income; the absence of benefits such as medical and unemployment insurance as well as pensions; and, in the lower segment of the precariat, low, often sub-subsistence wages. ² This contemporary precarization in the Global North is traced by most scholars to the 1970s, or the beginning of neoliberal globalization when economies across the globe were faced with increasing competition, and were driven to a “flexibilization” of their workforce (e.g., Harvey 1990; Kalleberg 2009, 2011; Standing 1989, 1999). As Standing (1999: 585) observes: “Firms have put a greater premium on workers prepared or forced to take low wage jobs. In industrialized and industrializing countries, firms have turned to forms of labor offering the prospect of minimizing fixed non-wage costs. As a result, they have turned increasingly to casual labor, contract labor, outsourcing, home-working, and other forms of subcontracting.”

Among the seven types of worker the ILO (2013: 3) defines as being in the informal economy, are: “Own-account (self-employed) workers in their own informal enterprises”; “Employees in informal enterprises”; and “Employees in formal enterprises not covered by social protection through their work.” Most scholars who use the concept of precarious work identify the following types of employment as being encompassed by it: part-time and/or temporary work, and subcontracted work. Subcontractors tend to be own-account workers hiring an informal labor force and part-time and/or temporary workers who are usually not covered by social protections. On the one hand, Valenzuela (2011), for example, considers that “informal employment” includes contingent, part-time, temporary staffing agency, short-term and on-call employment, independent contracting, and day labor. Subcontractors can work for a succession of capitalist enterprises but are the responsibility of none. Temporary help agencies exhibit the same dynamic as subcontractors, as do the individually self-employed who provide inputs into the production process. On the other hand, Standing (2016 [2011]: 15–18), for example, holds that among the precariat are temporary and part-time workers, and dependent contractors, as well as casual laborers.

In an earlier publication, the ILO (2002) argues that among other aspects of the informal economy:

There has also been increasing flexibilization and informalization of production and employment relationships in the context of global competition and information and communications technology (ICT)… More and more firms, instead of using a full-time, regular workforce based on a single, large registered factory or workplace, are decentralizing production and reorganizing work by forming more flexible and specialized production units, some of which remain unregistered and informal… As part of cost-cutting measures and efforts to enhance competitiveness, firms are increasingly operating with a small core of wage employees with regular terms and conditions of employment and a growing periphery of ‘non-standard’ or ‘atypical’ workers scattered over different locations and sometimes different countries. These measures often include outsourcing or subcontracting arrangements and more flexible and informal employment relationships. (italics in original)

Temporary and/or part-time work is also an index of precarity/informality. Observing that temporary staffing agencies are present in at least sixty countries, Peck, Theodore, and Ward (2005) write that multinational temporary staffing agencies such as Adeco, Kelly Girls, and Manpower have been spreading their presence around the world, especially since the 1990s, and function to aid in the flexibilization of labor. While especially common in Europe and North America, and increasing their presence in Japan, they have also had influence in countries such as China since 1998. One agency, Manpower, has been active in Argentina, Brazil, Chile, Costa Rica, Mexico, and other countries in Latin America since the 1970s (Peck, Theodore, and Ward 2005: 21) The authors observe that temporary staffing agencies have had a lesser presence in developing countries than in the developed ones because of the prevailing low wages and workforce flexibility [read precarization] in the former (Peck, Theodore, and Ward 2005: 22).

In the maquiladora assembly plants on the United States-Mexico border, precarious work has become institutionalized through these temporary employment agencies that supply workers on a month-to-month basis; such workers, in most cases, receive none of the benefits of Mexico’s labor legislation. Such temporary work contracts allow the assembly plants to vary the size of the labor force in accordance with changes in global demand (Sachetto and Cecchi 2016). In Ciudad Juárez (as in Mexicali), workers are paid between 600 and 800 pesos ($31.50 to $42) a week (Sachetto and Cecchi 2016: 26).

Notably, precarious labor and working in the informal economy, especially under conditions of informalization-cum-flexibilization, have much in common, an equivalency noted by a number of scholars (e.g., Munck 2013; Siegmann and Schiphorst 2016). Precarization and informalization are both aspects of the drive for capitalist accumulation based on the super-exploitation of labor, or an increase in absolute surplus value (see below). Those scholars addressing the informalization of labor in the Global South define the phenomenon in terms similar to those who analyze precarity in the Global North (see Munck 2013 for a development of this argument). They also show, in similar terms, how each subsidizes capital accumulation. For example, Thomas (1995: 58) underscores the benefits gained by the urban formal sector (UFS) by subcontracting work to the urban informal sector (sic) (UIS):

First, an employer may avoid having to pay the legal minimum wage or, possibly, having to grant wages that are above the minimum wage as a result of strong trade union pressure, since the wages paid by the sub-contracting unit in the UIS are not the responsibility or concern of the UFS firm. Secondly, the UFS employer is not responsible for whether or not social security contributions and other fringe benefits are paid to the workers by employers in the UIS. Finally the UFS employer is able to adjust output to fluctuations in demand by varying the amount of sub-contracting undertaken, rather than through varying the size of his or her own labor force. The latter might involve costs of adjustment, such as the need to make redundancy payments when sacking workers during a recession and costs of finding and possibly having to train workers when demand expands. These may be avoided by allowing the subcontractor to bear the costs of adjustment (see also, Chant 1999).

Temporary help agencies provide the same benefits as, and can be seen as a type of, subcontractor. According to the ILO (2015: 13) globally, “Fewer than 40 per cent of wage and salaried workers are employed on a full-time, permanent basis and even that share appears to be declining. This means that 6 out of every 10 wage and salaried workers are either in part-time or temporary forms of wage and salaried employment.”

Among the similarities between the situation of the precariat and of informalized labor that can be found in the literature on precarious work/employment and the informal economy are the following:

The revival of sweatshops in New York and Los Angeles, of home work and ‘telecommuting,’ as well as the burgeoning growth of informal sector labor practices throughout the advanced capitalist world, does indeed represent a sobering vision of capitalism’s supposedly progressive history. Under conditions of flexible accumulation, it seems as if alternative labor systems can exist side by side within the same space in such a way as to enable capitalist entrepreneurs to choose at will between them…. The same shirt designs can be produced by large-scale factories in India, co-operative production in the ‘Third Italy,’ sweatshops in New York and London, or family labor systems in Hong Kong.

Given these multiple similarities, among many others, there is little doubt that analyses of precarization and of informalization are addressing the same phenomenon, whether found in advanced developed countries or in underdeveloped or transition countries. Based on a study of 711 companies, including 253 in emerging countries such as Brazil, Russia, India, and China (BRIC) and 453 in developed countries, Größler et al. (2013) found that both were motivated to: a) outsource domestically to increase flexibility in production, and b) outsource internationally in the interests of cost-cutting by lowering wages. It is notable that outsourcing to other countries has been increasing over time and that 18 of the largest US-based multinationals had, by 2008, more than 50 percent of their workforces located elsewhere. The following companies, for example, show this pattern of the employment of a foreign labor force outside of the country: General Electric (53 percent), Procter & gamble (73 percent), IBM (71 percent), Hewlett-Packard (65 percent), General Motors (52 percent), Johnson & Johnson (59 percent), and Coca-Cola (86 percent) (Foster, McChesney, and Jonna 2011b: 6, Table 1).

It is worth noting that what others describe as precarity, Magdoff and Magdoff (2004; see also Greer 2016) define as those who are affected by belonging to the reserve army of labor. This reserve, they write, includes the unemployed, those working part-time who would prefer full-time employment, the self-employed doing odd jobs (this might include subcontractors), and people working in jobs that may be lost due to economic downturn, mechanization, or outsourcing (Magdoff and Magdoff 2004: 4). They include among this reserve, the continually dispossessed peasantry. Bhalla (2017) advances the argument that Marx’s concept of the reserve army of labor has been replaced in the contemporary period by the concept of informal employment and informal enterprises.

Notably, there are differences as well as similarities between the dynamics of informalization/precarization in the Global North as compared with the Global South. One difference is that countries in the Global South were subject to imperialist influences from the Global North. Part of this imperialism entailed globalization that led to outsourcing to informalized/precarious labor, either directly as in the case of transnational firms or indirectly via value chains involving national firms. Another difference is that informalization in the Global South was related to the expansion of the reserve army of labor as peasants were driven off the land, whereas contemporarily in the Global North informalization was related to the rise of a reserve army of labor via migration as well as via the shedding of “core” workers into peripheral work as labor was recommodified. In both cases, however, informalized and precarious labor was subcontracted by formal firms, or by informal firms in a subordinate relationship to formal ones. Some forms of work such as that involved with temporary staffing agencies that were originally conceptualized as precarious, are spreading in the Global South; other forms of work, such as home-based outwork, originally conceptualized as informal, have reappeared in the Global North. One similarity in both the Global South and the Global North is that it is primarily jobs in the lower echelons of the labor force that are characterized by informalization/precarization, although subcontracted, home-based, and part-time and temporary labor also exists in the upper echelons as, for example, is the case for architects and engineers involved in construction, data analysis, accounting, or computer programming. The following section explores how Marxian concepts can be used in explaining some of the dynamics of precarization/informalization found in both sectors of the globe.

4. A Marxist Approach to Precarization/Informalization

There are a number of concepts advanced by Marx that throw light on the dynamics of precarization/informalization. Among these are:

Marx (1981: 342) also notes, without developing the idea at any great length, that “one of the most important factors in stemming the tendency for the rate of profit to fall” was the reduction of wages below the value of labor. Notably, outsourcing to low-wage countries often means less constant capital and more variable capital is employed. Since the workers in outsourced plants in the periphery earn a wage much lower than core workers in the core capitalist countries (and even less than most peripheral workers in core capitalist countries), the absolute surplus value increases. Similarly, offshoring within the core capitalist country, to subcontractors and temporary or part-time workers, increases the rate of absolute surplus value. In some ways this means a regression to the formal subsumption of labor. It is also related to the presence of a global reserve army of labor that can be exploited both nationally and transnationally, as is touched upon below.

Marx (1864: 34) argues that formal and real subsumption can coexist—and formal subsumption is constantly being recreated in new enterprises: “New brands of business are constantly called into existence, and in these capital can again work on a small scale and again pass through the different developments outlined [moving from formal to real subsumption] until these new branches of business are also conducted on a social scale.” What Marx does not predict is that enterprises may shed some of their core labor force (those working under conditions of real subsumption) and constitute a peripheral labor force whose labor is again formally subsumed, especially under conditions of recommodification.

While some enterprises are moving from formal to real subsumption of labor, especially in the Global South (Munck 2013), other enterprises, which have been characterized by the real subsumption of their labor force, are shedding some of that labor force into conditions of formal subsumption through outsourcing and offshoring to part-time and/or temporary workers, and to subcontractors, the last of which may employ an informalized labor force. Through this shedding, employers return to the benefits of absolute surplus value extraction. With the masses of cheap labor available to capital worldwide, there is no need for capital to guarantee the reproduction of the labor force: the reserve army of labor is inundated. People become throw-away, trashed, disposable, and even homeless. As Bourdieu (1998: 34) points out, neoliberalism (with attendant globalization) has promoted the insecurity of employment “in a very smart and very modern repackaging of the oldest ideas of the oldest capitalists.” He precedes this observation by pointing out that, in Europe, the “discourse” of globalization:

is the main weapon in the battles against the gains of the welfare state. European workers, we are told, must compete with the least favored workers of the rest of the world. The workers of Europe are thus offered as a model countries which have no minimum wage, where factory workers work twelve hours a day for a wage which is between a quarter and a fifth of European wages, where there are no trade unions, where there is child labor, and so on. And it is in the name of this model that flexible working, another magic word of neoliberalism, is imposed, meaning night work, weekend work, irregular working hours, things which have always been part of the employers’ dreams. (Bourdieu 1998: 36)

In other words, the labor force of the Global North is placed in competition with the labor force of the Global South. This is especially the case as workers’ benefits are cut back with the retreat of the welfare state leading to the recommodification of labor. Central to this pattern is the growth of the reserve army of labor and the regress from real subsumption to formal subsumption.

5. The Global Reserve Army of Labor and the Devolution to Formal Subsumption

Central to the precarization/informalization of the labor force and the devolution to formal subsumption is the expansion of the global reserve army of labor, most of which struggles to survive through any economic activity that it can. Competition between workers leads to the expansion of informal and precarious jobs, as laborers are forced to take any available employment. Marx (1979: 632–33) holds that capitalist accumulation necessarily leads to the expansion of a surplus labor force, especially as technology replaces human labor, but that the surplus labor force also aids capitalist accumulation, partially by keeping wages down. It supplies, for another example, peripheral workers during times of economic expansion. Marx (1979: 641–44) divides the surplus labor force, also known as the reserve army of labor, into three categories: the floating, the latent, and the stagnant; he also considers the pauperized as the fourth and lowest level of the reserve army.

The floating reserve floats in and out of employment according to economic cycles of expansion and contraction. At any given time period, many are made redundant when advances in technology lead to lower demand for labor power. As capitalism expands, a greater proportion of the labor force comes to belong to this category. This portion of the reserve can also be seen to float from one employer to another and, perhaps, from one industry to another. Subcontracted as well as temporary work can be seen as the institutionalization of a floating reserve.

To the latent population belong the many peasants and small farmers who have been marginalized by capitalist agriculture, and who migrate (or intend to migrate) to urban centers to become part of the proletariat. Peasants continue to be displaced by industrial agriculture and by the spread of GMO crops that demand a package of herbicides and pesticides that small farmers cannot afford. In the developing countries of the south, there is much migration from the countryside into construction work in the cities. For example, rural to urban migration of what Marx would identify as a latent reserve army of labor is found among indigenous peasants in Mexico who move to work in Mexico City’s construction industry; the migration is sometimes seasonal, when the migrants retain a foot on the land, and sometimes permanent, when the peasants or their offspring are dispossessed (Bueno 1994). Primarily due to internal migration, the percentage of people living in urban centers (defined as having more than 2,500 inhabitants) climbed from 50.7 percent in 1960 to 77.8 percent in 2010 (INEGI 2010). There is still a latent reserve of peasants, however, and many of those who live in urban centers of 5,000 or less are small farmers.

With regard to the third portion:

Although Marx relates this stagnant reserve to “domestic industry” in which subcontracted out-working and the exploitation of women (and children) is common, the concept could be generalized to describe the condition of many of those working in the lower reaches of the precariat, or in informalized employment in manufacturing, especially in assembly plants around the world, in construction, or in services such as sub-contracted maintenance workers, as well as in the case of home-based workers.

The lowest level of the reserve army of labor is defined as pauperism and includes: those who are jobless but able to work and may be employed in times of economic expansion; orphans and children of the poverty-stricken who in times of capital expansion may be tapped as a labor force; and those who are aged, disabled (often because of work-related accidents), or sick (Marx 1979: 644). They could be said to be augmented by the population that has been discouraged in the search for formal employment. ⁷

Part of the recommodification of labor (hence precarization/informalization) takes place via the devolution to formal subsumption from real subsumption and a capital accumulation dynamic related to absolute surplus value rather than relative surplus value. This recommodification is possible and profitable due to the vast size of the global reserve army of labor. Under global capitalism all categories of the reserve army have expanded greatly. Foster, McChesney, and Jonna (2011a: 3) relate this expansion to two factors: first, the continuing de-peasantization in the periphery due to the expansion of agribusiness; and, second, because of the entry of the labor force of formerly (supposedly) socialist countries into the global labor force available to capitalism. In this vein the continuing dispossession of peasantries from China to India to Africa and Latin America must be understood. De-peasantization, or the differentiation of the peasantry into capitalist farmers and semi-proletarian proletarianized (in formal and informal work), has been accelerated since the introduction of, for example, Green Revolution technologies in Mexico after World War II, and has accelerated even more with new agricultural technology, including GMOs and their attendant inputs (Wilson 2017). NAFTA, the free-trade agreement, also led to de-peasantization as subsidized agricultural products from the United States outcompeted the grains grown on family farms. This can be predicted to continue under the USMCA trade agreement reached by the Trump administration.

Robinson and Santos (2014: 1) argue, for example, that neoliberalism and free-trade agreements, as well as state and private violence, have led to, “a virtually inexhaustible immigrant labor reserve for the global economy.” The situation of immigrant labor, especially that of the undocumented, has been labeled “hyper-precarious” because of their status as well as the lack of workers’ protections and benefits in the jobs they fill (Zou 2015).

Notably, Das (2012) challenges Marx’s implication that the transition from formal to real subsumption (and thus from absolute to relative surplus value) is automatic. He relates the transition to real subsumption—via the introduction of technology to enhance the productivity of each worker—to the class struggle; in other words, the introduction of technology is meant to discipline the labor force. This discipline becomes unnecessary in the face of a vast reserve army of labor. Meanwhile, the unbridled competition for survival leads to unions being further eroded.

The retention (or return) to formal subsumption is enabled and reinforced by employing women and migrants (Das 2012: 191, 196). These segments of the labor force are sourced in order to combat such events as strikes by the male workforce for higher wages—part of the class struggle—and as an alternative to mechanization, or real subsumption. In sum, “Whether the transition to real subsumption of labor under capitalistic relations, with associated technological change, happens depends on, although it is not reducible to, the balance of power between capital and labor” (Das 2012: 196). Das (2012: 197–98) examines the “huge industrial reserve army of labor” in less-developed countries and holds that its existence, a) “provides capital an ample opportunity for formal subsumption of labor”; and b) “adversely affects the bargaining power of employed labor and makes the class struggle against formal subsumption more difficult.” Although Das is focused on the internal dynamics in less-developed countries, the employment of women, migrants, and even the homeless also occurs in the North.

Noting that there are three billion people involved in peasant activities in Asia, Africa, and Latin America, Amin (2003: 2) expands on this in the following passage: “What will become of these billions of human beings, the majority of which are already poor among the poor, who feed themselves with great difficulty. In fifty years’ time, industrial development, even in the fanciful hypothesis of a continued growth of 7 percent annually, could not absorb even one-third of this reserve.” The competition for survival can only increase as this latent labor reserve enters the active labor market, and precarization/informalization can only spread.

6. Conclusions

Analyses of precarization and of informalization are looking at essentially the same phenomenon, and are concerned with the same aspects of labor market dynamics, among them de-unionization and the recommodification of labor attendant on this and the decline of the welfare state. One could easily look at precarity as definitional of labor markets in the Global South and informalization of labor as occurring in the Global North, as some, in the latter case, have done (e.g., Portes, Castells, and Benton 1989; Portes and Sassen-Koob 1987; Sassen 1998: chapter. 8). Although not all categories of people identified as working in the informal economy by the ILO (2013: 3) have been considered in this paper—for example domestic workers without social protections and family members working without a wage in informal enterprises—all can be found in both the Global North and the Global South.

There are differences in the face of precarity in the time of Marx and in the post-1970s economy in the Global North and throughout the past century in the Global South. These have mainly to do with technological advances, the spread of the service sector and the erosion of the manufacturing sector in the Global North and its export to the Global South, the internationalization of the labor force, the growth of multinational corporations, and the de-commodification followed by the recommodification of labor. Yet some of Marx’s insights are applicable to the current state of capitalist accumulation. Capitalist enterprises still want to combat any falling rate of profit and the exploitation of living labor is the font of these profits. First, having a “peripheral” labor force cuts down on the constant capital that has to be provided in the case of a larger “core” labor force. Second, “peripheral” workers can easily be discarded in times of economic contraction. Third, workers in the low-wage tiers of the precarious/informalized provide an absolute surplus value without the costs of their maintenance and reproduction necessarily being provided. They thus contribute to capitalist accumulation. They form a portion of all sectors of the reserve army of labor. Meanwhile, there is a regression to a formal subsumption of labor through the processes of home-based work, subcontracting, and temporary and part-time work, any of which may overlap. Retreat to formal subsumption is also related to the recommodification of labor in the face of a growing reserve army accompanied by the decline in unions and the Keynesian welfare state. In the case of subcontracting, profits are increasingly made as the peripheralized portions of the labor force are expected to provide their own tools, and only certain technologies remain in the hands of the firm and its core workers. Meanwhile, through temporary work agencies, precarization/informalization is in some cases becoming institutionalized.