The informal economy dominates the economic landscape of many developing regions. Initially conceived as a residual sector, marginalised from processes of capitalist transformation, today this economy is finally recognised as a fundamental feature of these processes as well as a fundamental arena to understand the complexity of class structures in the developing world.

The process of globalization, far from erasing informal economic relations, has in many cases reinforced them and used them at its own advantage. In particular, the process of informalization of labour has gone hand in hand with globaliszing architectures of production. Today, this process entails at least two trends.

1. On the one hand, it entails the ‘informalisation of the formal’ (Chang, 2009), i.e.the progressive substitution of formal labour relations with informal ones. The differentcasualised and precarious forms of labour inhabiting the new global factories in manyparts of Africa, Asia or Latin America are clear examples of this trend.
2. On the otherhand, however, globalizing production has also entailed the subsumption of traditionalinformal production and labour structures into the global economy.

Due to a combination of these tendencies, In India, which this paper focuses on, informal labour today represents an astonishingly 93% of total labour (NCEUS, 2007). The ways in which this labour is organized and managed vary considerably; from region to region, from sector to sector and, within the same region and the same sector, according to different production realms. Increasingly, many export-oriented sectors, which are tightly connected to the global economy, work across different production realms, which link factory and non-factory production, as well as the urban and rural economy.

Crucial to the working of many of these fragmented production systems, defined by high levels of sub-contracting, is a heterogeneous category of actors, generally defined as ‘middlemen’, ‘contractors’ or ‘vendors’. The study of the behaviour of these actors is fundamental to understand how labour is organised at the very bottom of global production chains, in home-working and household networks.

This paper presents evidence coming from the peri-urban and rural areas around Bareilly, a town in the Indian state of Uttar Pradesh. The main garment export centres located in northern India - Delhi in particular - send here huge quantities of both finished and unfinished garments for embroidery activities. Local contractors distribute these items to homeworkers and households units, effectively managing their subsumption into the global production system.

In presenting the profile and behaviour of these actors, this study pays particular attention to two different aspects.

1. First, it shows the contractors’struggle to reproduce their links with exporters. These links, which have always beenprecarious and volatile, have become even more tenuous in the aftermath of the global financial crisis and its impact on export-oriented patterns of industrialisation.
2. Second, the study focuses on payment systems along the supply chain; from exporters tocontractors, and then from contractors to homeworkers and households.

Based on the analysis of these systems, this study argues that contractors are a form of disposable capital- ‘bonded capital’- whose strategies for survival are varied, risky and apt at reproducing the poverty of labouring classes. This point has several theoretical and policy implications, which the paper seeks to address in the conclusions.

Inspired by a political economy approach, this study is informed by empirical evidence collected in India between September 2004 and July 2005, and then between March and April 2010.
Methods of enquiry are mainly qualitative, based on open/semi-structured interviews, life histories and field observations.

Discussant

Susan Newman