Bending the bars of the iron cage: Bureaucratization and informalization in capitalism and socialism (original) (raw)

AI-generated Abstract

Despite some important similarities, capitalism's informal economy and socialism's second economy are not functional equivalents or structural counterparts. Both informal economies are responses to bureaucratization; but because the sources, loci, and forms of rationalization differ across the two social systems, the consequences of informalization differ as well. In market economies, the classificatory codes of regulatory bureaucratization rationalize the relations between employers and workers and promote citizenship rights inside the firm. An informal economy is the product of efforts to circumvent accountability to the explicit rationalizations of bureaucratic conventions. It operates according to principles disparate from those of the rules of internal labor markets but congruent with the market principles that coordinate the formal economy. In the centrally planned economies of state socialism, by contrast, redistributive bureaucratization displaces rather than complements market processes. Where informalization responds to the contradictions of redistribution, the embryonic market relations of the second economy are incongruent with the bureaucratic principles that coordinate the formal economy and, in fact, stimulate the institutionalization of transactive market relations and the expansion of property rights inside the socialist enterprise. As a sphere of activity relatively autonomous from the state, the second economy is a source of fundamental change remaking the economic institutions of socialism.

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