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How the other half lives

Most economists - and I include myself in this category - often wax eloquent about the need to uplift those living below the poverty line, to provide the poor and the underprivileged a very small portion of what the rich take for granted in their everyday lives.

But few of us seem to realise how the other half manages to survive on so little.

Six billion individuals inhabit this planet. Over one billion are between the ages fifteen and twenty-four. An estimated 85 per cent of the youth of the world live in developing countries where there are few opportunities for productive employment.

The August 2001 meeting of the World Youth Forum of the United Nations system at Dakar, Senegal, observed: "We are very concerned that 66 million young people are reported to be unemployed throughout the world representing more than 40 per cent of global unemployment and that hundreds of millions more work fewer hours than they wish and still others work long hours with little gain and no social protection in the informal economy."

In a recent interview, Britain-based sociologist Teodor Shanin offers some explanations as to how the majority of the poor live - and what the rest of society needs to learn from them.

The poor do not own land. They do not possess other assets. If conventional economics is to be believed, they should have died of hunger long ago - still, they not only survive, but have found a way of life that is diametrically opposite to the manner in which human beings live in industrial society.

Says Shanin: "They didn't have a job, pension, steady place to work or regular flow of income. Families held a range of occupations from farming and selling in the market to doing odd jobs or handicrafts. Their aim was survival rather than maximisation of profit. Rather than earn wages, labour was used within family enterprises or shared out among the village."

Shanin states that this way of life is common to poor people in most parts of the world, be they in Latin America, Africa, Russia, South Asia or even in an European country like Italy; in other words, a truly global phenomenon.

In many countries, the tax collector does not know about the informal economy. In some countries, it becomes part of the black (illegal) economy and merges into criminality. "But often it is perfectly legal; just people working with family and friends to get by," he states.

Shanin dismisses the traditional view that most countries operate along a continuum that is somewhere between capitalism and communism or socialism - most of mankind lives outside these economic models.

He argues that Russia is a developing country and that peasants survived and continue to survive in that country not through socialism but through the informal economy.

Shanin has come to the conclusions he has after many years of intensive research. "I don't believe in doing research by going to a village, filling in a questionnaire and driving away. They always laugh as you leave because of all the lies they've told. My researchers lived in their villages for eight months. They were under orders not to do anything for the first two months, just to be recognised as human beings."

Most villagers, he adds, are apprehensive of city-bred academics using information in a way that might prejudice them. Shanin and his researchers found that most villagers in Russia were unhappy with both collectivisation as well as private farms - but sought a middle path that would offer them the benefits of both.

He points out how the food stocks that arrived from Western countries to Russia after the collapse of the Soviet Union did not reach the rural areas but were appropriated by the mafia.

Ironically, the food situation improved after the value of the rouble collapsed, food imports came down and more local food started coming into the markets.

"The majority of Russian economists believed what they had been told by the West, that the only way to survive in the post-communist world was to take loans from the world community."

Shanin is extremely categorical in his views: "You have to control your frontiers before you can begin to control your own economies. It is a very important lesson - and the complete opposite of what the IMF (International Monetary Fund) or George Bush would tell you."

The academic is of the view that informal economics reflects the dominant way of living on the planet - the formal economy accounts for only a quarter of the global workforce, he says.

Shanin, who is often called the "father of peasantology," says the informal economy should not be seen as the "political economy of the margins." He claims the informal economy can "make you more a master of your destiny."

Who is Teodor Shanin and why are his views on the informal economy so important for a country like India? To answer the second question first, Shanin's views represent a departure from the dominant "Washington consensus" on economic policy issues; he argues that nurturing the informal economy is the only way forward for polarised, unjust societies in the Third World.

Shanin was born in Vilnius. Now which country is that in? His father was born when Vilnius was in Russia, his mother when it was in Germany and he was born when it was in Poland! Currently, Vilnius is the capital of Lithuania.

He studied in Jerusalem and Birmingham and taught in Manchester and Moscow where he conducted his research on the Russian peasantry.

Shanin's teachers always complained that he would choose "esoteric" subjects to study. He became a hero among a section of academics in the late-1960s when he was "able to explain why the Vietnamese peasants didn't want to be liberated by the Americans".

Having resisted most of the norms of Western scholarship that he says have been "imposed" on the developing world, Shanin says we can learn as much from the poor as they can learn from us.

His work is particularly relevant for India, a country in which 90 per cent work outside the "organised sector" and where employment opportunities in this sector are growing at a slower rate than the rate of growth of population.

The author is Director, School of Convergence @ International Management Institute, New Delhi and a journalist with 25 years of experience in various media - print, Internet, radio and television.

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