The New Underground

...Aside from perpetuating already low living standards, such work is tremendously unstable...

...Another reciprocal arrangement is found in the pasanaku rotating credit system, which allows people with limited resources access to a small amount of capital...

...A common goal among these women is to become street vendors...

...Each loan is guaranteed by a solidarity group, made up of participants who agree to back each other's loans...

...I witnessed a dramatic example of this early one morning in the mining town of Llallagua...

...But he was unable to earn enough to make ends meet...

...Contraband has been an important vehicle for upward mobility," explains sociologist Jos6 Blanes...

...The social fabric is changing," explains economist Carlos Torranzo...

...We couldn't compete with contraband coming in from neighboring countries and the state subsidies which had propped up the factory were cut," explains Ramirez...

...When I started in 1975," says Ramfrez, "there were only 1,000 people employed in the whole factory...

...Roberto Casanovas Sainz, El sector informal urbano enBolivia: elementos para un diagndstico y lineamientos generales depoliticas (La Paz: CEDLA, 1989).4...

...In La Paz, some 167,000 enterprises provide work for 225,000 people, an average of 1.3 workers per business.' The number of women entering the labor market has skyrocketed...

...Besides farming, most formal economic activitiy in Bolivia has been in the realm of minerals export...

...Alongside factory closures and an undercapitalized uncompetitive artisan sector, booming micro-enterprises are placing Bolivia's long-cherished goal of industrialization ever farther out of reach.' Rather than depending on interaction with the formal economy as in many countries, Bolivia's urban commercial sector responds more closely to the dynamics of the country's dominant export activity, the cocalcocaine trade, whose profits are largely laundered through contraband...

...But the application of the NEP led to a mushrooming of small urban businesses...

...They argue that this approach overlooks the fact that com-mercedoes providejobs andcan serve as a stepping stone into serviceor productive activities.11...

...Bolivians are exemplary survivors...

...I thought the city permit and joining the union were enough...

...We don't want the humiliation of donations, we want tools to become productive and make a decent living...

...clothing...

...The moment the earth is turned on a new construction site, an improvised lunch counter appears nearby, set up by women who haul pots of cooked food from their homes to feed the workers...

...Current plans are to turn it into a shopping center...

...Finally, station personnel added on a box car and those of us left on the platform pushed and shoved our way in, elbows and curses flying...

...With more women doing a double shift, at least one study found that traditional expressions of machismo are gradually giving way, with more men and boys helping out at home.' 2 For rural girls and women, domestic service is still the traditional point of entry into the urban labor market...

...Another big problem we face," explains Jos6 Maria Herrera, a goldsmith belonging to the Confederation of Bolivian Artisans, "is getting raw materials...

...The factory's death knell began in 1985...

...In addition, unemployed workers have increased competition by rushing to set up their own tiny workshops...

...Below them comes a wide band of intermediaries, which in turn rests upon a mass of peddlers, who manage miniscule amounts of merchandise...

...This has brought a steady erosion of the gains won through decades of trade union struggle...

...FIE also offers basic training in administration and bookkeeping...

...2 The growth of such businesses, reflecting the formal economy's inability to absorb labor, has gone hand in hand with a steady drop in earnings among informal workers, now 37% lower than in 1985.3 Silvia Esc6bar of the Labor and Agrarian Development Studies Center (CEDLA) estimates that only half are able to cover their families' basic food costs...

...Industrialization has been held as a goal by every governmentsince the 1952 Revolution...

...The explosion of smuggling since the NEP was imposed benefits principally those with government ties who can bring in large shipments using false customs documents...

...Small businesses with close links between family and business earnings reflect a search for subsistence income rather than the rationale of accumulation...

...Many of those who channel large quantities of capital into contraband were originally working-class...

...Steady migration away from the countryside has converted what was twenty years ago a primarily rural society to one in whichjust over half the population lives in urban centers, the majority in conditions of extreme poverty...

...These new workers do not have the same tradition of struggle that the miners had...

...as the informal sector grows, instability has become the norm in employment...

...But "the informal sector does not represent an alternative development model for the country," he asserts...

...Silvia Esc6bar de Pab6n, "Small-scale Commerce in La Paz,Bolivia," in Marguerite Berger and Mayra Buvinic (eds...

...Women'sVentures: Assistance to the Informal Sector in Latin America, (W.Hartford, CT: Kumarian Press, 1989...

...His wife took over the stall, and he set up a small folding table and typewriter on a downtown avenue where he now works filling out tax forms...

...Here we each depend on ourselves, so we have very little sympathy for each other...

...OVER 30,000 VENDORS, NEARLY ALL OF them women, fill the streets of La Paz daily, one vendor for every 30 people...

...For adiscussion of how they affect Bolivia, see Jose Blanes Jimenez,"Cocaine, Informality and the Urban Economy in La Paz, Bolivia,"in Alejandro Portes, Manuel Castells and Lauren A. Benton (eds...

...Hundreds of people fought tooth and nail to get into the few carriages available...

...However, the nature of commerce does little to promote solidarity among union members...

...See Hans Buechler, "Doiha Flora's Network: Work Relationsin Small Industries in La Paz, Bolivia," in George Gmelch, WalterP...

...Many policy makers, following de Soto's lead, have criticized government overinvolvement, promoting a vision of individual solutions to what are, in essence, structural problems...

...By then he realized that he had little chance of finding a steady job...

...The community values by which Bolivians weather the daily struggle may not constitute an alternative model for national development...

...Some two thirds of workers outside the One hundred thousand Bolivians, mostly women, took part in U.S.-funded "food for work" programs last year leader of the Committee of Food Aid Recipients made up of women from 60 projects in the El Alto shantytowns, "that's not a gift, that's exploitation...

...My husband earns six bolivianos a day ($1.75) when he can find temporary work on construction sites...

...6 Diversification is a strategy widely used to minimize risk...

...Recent migrants to the city often maintain a plot of land in their community of origin for basic foodstuffs...

...But perhaps most importantly, successful informal models in other countries have received considerable government support...

...I'm really not sure from Trading dollars on a La Paz sidewalk: even in remote villages, dollars are the preferred currency one day to the next if I'm going to be able to put food on the table for my five children," says Ana de Patifio, whose husband worked for 35 years in the Colquiri tin mine...

...Only a grassroots movement, it seems, could reconceive development on a more human scale...

...In the factory, we all depended on each other for the work to get done, and we knew we had the backup of the union to face our collective problems...

...We never have people asking for more money than they need...

...Today and Tomorrow: Children in Bolivia," Bolivia Bul-letin Vol...

...In times of shortage, consumers are assured that their regular vendors will put goods aside for them...

...According to Silvia Esc6bar, the work discipline of the labor force has been undermined by the lack of fixed jobs...

...Banks provide credit to those with collateral such as cars or houses, not to the urban poor...

...The contraband trade is built like a pyramid...

...If the informal sector is to maximize its potential, it will require innovative responses from the state rather than simple deregulation or rigid centralized planning...

...Smuggling is not only the domain of the poor...

...The most serious problem experienced by small businesses is their lack of access to credit...

...As a development strategy, the informal sector offers certain advantages...

...We never thought this could happen-that the mines would shut down and we would be left high and dry...

...Agency for International Development (AID), makes 2,000 loans yearly, averaging $150 each...

...For former union leader Rafael Ramirez, the contrast between factory and street is striking...

...The people in the box car immediately reached into their pockets and passed around a hat for her...

...The New UndergroundThanks to Jos6 Blanes for commenting on this article.1...

...4 Traditional concepts of reciprocity provide people with some protection against falling incomes...

...He explains, "People would rather deal with us than with banks-we're more accessible and more personal...

...Over 60% of the urban population now supports itself through this type of "informal" activity, characterized by ;re m ll f i lo loL I tJ I. ;ti l frIA tL ;n;n0 Onl i 111(111 . , LCr . / 1...

...The widely circulated position of Peruvian economist Hernmn de Soto that the informal sector can provide a solution to the impact of structural adjustment policies finds little resonance in Bolivia...

...Retiring workers were not replaced and the numbers slowly dropped...

...With so many now laboring in petty commerce or micro-enterprises, the character of the labor movement, and workers' basic values and roles are changing...

...The more established sell from fixed stalls, while many peddle miniscule quantities from wraps spread on the sidewalk...

...The minimal quantities of processed food and textiles produced for the local market never provided many jobs...

...In the face of acute political instability, an economy dependent on world market fluctuations, and the highest infant mortality rate on the continent, people like Rafael Ramfrez have developed a remarkable capacity to face economic insecurity...

...I. .OI L.( I l kl I.IO111111 , al-al low productivity...

...The shift away from the employer-employee dynamic, while threatening traditional trade unionism, is reinforcing the family as the principal economic unit...

...In addition, most micro-enterprise manufacturing is almost exclusively based on the use of local resources rather than imports...

...Though artisans make up a quarter of the urban informal economy, the flood of contraband has cut into their markets, while mushrooming unemployment and frozen wages have reduced demand...

...ON MY STREET IN DOWNTOWN LA PAZ, THE two vendors of 1985 have now multiplied to eight...

...One Bolivian non-governmental organization, CEDLA, has been working with the artisans' union to lobby in favor of legislation regulating small productive and service enterprises...

...But the NEP, adopted in the midst of the country's worst economic crisis this century, has generated unprecedented levels of hardship...

...The 1989 closure of the SAID textile factory, high on a hill above La Paz's center, symbolizes the de-industrialization Bolivia has suffered during a decade of economic crisis, compounded by the New Economic Policy (NEP) implemented in 1985...

...Self-employment is one of the few options open to women who have small children and must organize their days around running their homes...

...My friends are almost all domestic workers from the countryside, " says Quispe...

...By 1988, there were only 200 workers left...

...When the factory finally shut down, its premises remained vacant for over a year...

...Those who work in this "contraband of the ants" have to haggle with wholesalers, haul heavy loads, and face hostile customs officials who often demand bribes or confiscate merchandise...

...At the last moment, one more woman squeezed on...

...Casanovas, El sector informal.7...

...I NFORMAL WORKERS ARE NOW THE RAGE among international aid and development experts, who often extol the entrepreneurial spirit they supposedly represent...

...But perhaps they point the way forward...

...Between 10 and 20 people each contribute a certain weekly or monthly quota and take turns receiving the total collected.' These types of relationships give income-generating activities in Bolivia a particular logic...

...They told me I should have gotten approval first from the local vendors, but I didn't know that...

...Roberto Casanovas Sainz, Seminario-Taller, "La Micro-Empresa y el sector informal en La Paz: una perspectiva actual," (LaPaz, Oct...

...Situacidn de la Nifiez (La Paz:SENPAS, 1990...

...The producers we work with are incredibly flexible and innovative, always finding new ways to adapt products to facilitate their sale in a highly competitive market...

...The problem is that the tendency towards informality provides a very poor base for the country's future...

...PRODEM, a non-governmental organization set up in 1986 and funded by the U.S...

...De Soto's emphasis on the removal of legal barriers that the informal sector faces makes little sense here," says Silvia Esc6bar...

...Zenner (eds...

...Francisco Figueroa of the Confederation of Artisans, Vendors and Meat Sellers prefers the term "micro-enterprise...

...Vivian Arteaga, and Noemi Larrazabal, La mujerpobre en lacrisis economica: las vendedoras ambulantes de La Paz (La Paz:FLACSO/Centro de Promoci6n de la Mujer "Gregoria Apaza"1988).12...

...These projects are in some sense formalizing the informal economy, according to sociologist Jos6 Blanes...

...We dream of saving enough money to be able to set up our own stalls...

...It is a transitional model only, towards what, we are not sure, but it is clear that the old models are now broken...

...With $1,000 borrowed from a relative, he bought ground coffee which he took to the eastern lowland city of Santa Cruz to sell, only to find VOLUME XXV, NUMBER I (JULY 1991) Linda Farthing is a Canadian journalist and consultant to community development projects, who lives in Bolivia...

...Although half of all informals remain unorganized, union membership is required to sell in fixed street stalls, and the Confederation of Artisans, Vendors and Meat Sellers has grown to 800,000 affiliates nationally...

...So we resent it when people call us informal...

...6, No.4, (La Paz, Aug, 1990...

...We are witnessing increasing marginalization and poverty on one hand, and the growth of a new wealthy mestizo class on the other...

...Whenever possible, I don't charge people who are very poor, or I charge them very little...

...1990).3...

...Since 1985, an estimated 45,000 jobs in state mining and public administration have been eliminated...

...These people may be poor, but they fulfill their obligations...

...Bolivia's small middle class has also resorted to such strategies to lessen the impact of the economic crunch...

...In the meantime, traditional community values continue to help low-income Bolvians survive the austerity policies which have fallen disproportionately on their shoulders...

...Today, even in isolated rural areas, peasants will ask foreigners to convert their bolivianos into dollars...

...The authors express concernthat the current aid programs' emphasis on artisanal production will negatively impact on women, who are largely employed in com-merce...

...In the end, the vendor' s union had to intervene...

...Flavio Chambi is one of scores of ex-factory workers who change currency on busy La Paz street corners...

...Two thirds of these involve commerce, which has been growing at a rate of 11% since 1985, contrasting sharply with overall slow and even negative economic growth...

...I used to make about $20 a trip," says 58-year-old Berta Calle, who travels regularly to Chile, "but now I earn as little as $6 each time...

...The decline of the traditional proletariat has caused considerable ideological change among the working class, shifting the locus of social and economic demands from the work place to the neighborhood, and from the search for structural change to single-issue stategies...

...Starting as young as seven years old, they earn small amounts as shoeshine boys, domestic workers, and market and street vendors, working an average of 15 hours a day...

...Artisan producers are increasingly undercapitalized, purchasing smaller quantities of supplies at higher prices, cutting down the amounts they earn...

...Marlene Rodriguez's job as a teacher is so poorly paid that every two weeks she leaves her teenage daughters at home and hires a substitute teacher so that she can to travel to Chile and smuggle back bundles of second-hand U.S...

...Interest rates are the same as thdse charged by commercial banks...

...About half are also registered with the nationalgovernment taxation system, but only about 10% actually pay.AntonioPerez Velasco, Roberto Casanovas Sainz, SilviaEsc6bardePab6n, Hemrnando LarrazAbal Cordova, Informalidad e ilegalidad:unafalsa identidad (La Paz: CEDLA, 1989).2...

...The next morning he began the rounds of the few factories remaining open in La Paz, only to find that despite his experience as a machinist, no jobs were available...

...A year later, having lost much of his capital, he began selling contraband goods in an open air market in El Alto, the sprawling shantytown city above La Paz...

...Urban Life: Readings in Urban Anthropology, 2ndedition (Prospect Heights, Illinois: Waveland Press, 1988).5...

...The links between contraband and the cocaine economy areparticularly hard to specify because of the illegality involved...

...The number of child workers in the street is estimated to have increased 60% since 1985, although Bolivian law prohibits children under 14 from entering the labor force...

...The word is said to come from pasa, Spanish for to pass, andnaku, a Quechua suffix denoting reciprocity.6...

...On La Paz's Buenos Aires Avenue, the clogged traffic provides one ex-miner with the chance to earn $2 a day changing bills into coin for slow-moving buses...

...Where the informal economy has become a motor for growth, as in central Italy, researchers have identified a series of factors in its success, such as the development of upscale market niches, strong internal integration and cohesion, and an entrepreneurial environment, all of which Bolivia lacks...

...Women's entry into the labor market is generally motivated by necessity, but once there they tend to appreciate the relative independence gained from having their own incomes...

...But could such small-scale activities constitute an alternative development model...

...The hyperinflation of 1983-1985, when savings in Bolivian currency could lose 10% of their value per day, further strengthened the move to dollars...

...LF formal economy have no state protection or social security benefits...

...When they finally get their goods to market, competition is fierce and profits low...

...That way I can decide what we most need at home...

...These women earn only 60% of the average wages of men doing similiar work, and they tend to have less schooling...

...But the trade also provides an income for hundreds of Bolivians who trek across the borders with some savings, and return with a variety of goods over rutted roads in the back of open trucks...

...Micro-enterprises often reproduce the complex network of relationships traditional in native culture...

...The law would provide artisans with access to credit and technical assistance, some tax benefits and market protection," explains Silvia Esc6bar...

...Factory closures resulting from free import policies caused the loss of at least another 35,000...

...La Paz micro-enterprises paid over $500,000 in municipaltaxes in 1989...

...The informal credit services which have sprung up often charge as much as 7% interest a month...

...The buses were on strike, so the train was packed...

...Although in many ways I like the freedom of working in the street, there's a lack of trust here," he says...

...I like earning my own money," says street vendor Margaret Laurente, who brings in about $2 a day...

...Once a prosperous mill which employed 3,000 workers, SAID's failure to modernize contributed to a steady decline...

...She was in tears, and explained she had been robbed on the platform...

...In the absence of government policy and support, the Center for the Promotion of Economic Initiatives (FIE) provided 1,800 loans to the artisan sector in 1988, almost all backed only by personal guarantees...

...The management offered payoffs to those who gave up their jobs voluntarily...

...Could a shift in government priorities, advocated by these same development specialists, transform informals into a springboard for sustained economic growth...

...Casanovas, El sector informal.10...

...A small hand-knit sweater business studied by anthropologist Hans Buechler, for example, is run with the labor of unpaid family members, capital from close kin, and the participation of distantly related kin...

...I moved my stall further away from hers, but I spent two years getting city hall permission and almost $300 to have the kiosk built, so I'm not leaving...

...With no state unemployment benefits and existing social services suffering severe cutbacks, shantytown dwellers in the principal cities of La Paz, Santa Cruz and Cochabamba rely on family and community networks and ingenious survival strategies...

...Word contract is still very strong in Bolivian society, stemming from a culture which places a high value on personal honesty," says director Pilar Velasco...

...Traditional mechanisms for moving up the social scale through the dominant political parties or through professional education are no longer operating...

...Defaults are rare...

...Many vendors knit for the handicraft market at their food stalls...

...While unregulated economic activities predate the emergence of the drug business, they were rapidly penetrated, expanded and strengthened by profits from cocaine.' The influx of cocaine money also spawned informal VOLUME XXV, NUMBER 1 (JULY 1991) 19 VOLUME XXV, NUMBER I (JULY 1991) 19RepBoliviat Wk Amc as Bolivia banking services, operating mostly in dollars...

...Family-run businesses now comprise 76% of the informal sector...

...17Bolivia the market flooded with cheaper coffee from Brazil...

...The average investment required to create a formal sector job has been estimated to be 26 times higher than that needed to create an informal one...

...The $300 severance pay Ramirez received lasted his family four months...

...The site is now used occasionally for fairs where small vendors and artisans sell their wares...

...When I first started to sell here," says Horencia Menduifia, "the woman in the next stall got 20 vendors from the area to come and tell me to leave because I was taking their business away...

...But I try not to forget what I learned in the union: the importance of solidarity with other working-class people...

...In the long term it promises to alter the face of Bolivian society in fundamental ways...

...They work an average of 11 hours daily selling and five more doing domestic chores...

...Following this trend, the conservative La Paz city government, with World Bank support, has developed a program for micro-enterprises which among other things reduces the number of steps needed to register with the municipality...

...We have constant problems with vendors fighting over space," admits confederation leader Francisco Figueroa...

...Small vendors lack legal protection, but we pay taxes both to the municipality and to the national government," he says...

...The Informal Economy: Studies in Advanced and Less DevelopedCountries, (Baltimore:Johns Hopkins University Press, 1989).9...

...Guillermo Vilela, a lawyer specializing in children's rights, estimates that the number of children who have given up school to add to their families' income has increased 45% since 1985.' Leaving school may address immediate survival needs, but does not bode well for the country's future needs for a literate workforce from which to draw skilled labor...

...I make about 15 bolivianos a day ($4.25) and with what my wife earns in the market, we just get by...

...A belt of prosperous merchants who market foreign goods is at the top...

...See James Dunkerley, Rebellion in theVeins (London: Verso, 1984).8...

...Most are shipped out of the country in bulk...

...Nearly all street vendors are female, reflecting Andean women's traditional role in commerce, and many of them support their families, despite the dominant view that they are "helping" to supplement their husbands' income.' 0 About one third are heads of houseVOLUME XXV, NUMBER I (JULY 1991) I _ 21Bolivia holds...

...Modesta Quispe, who works a 75-hour week for $40 a month as a live-in maid, says, "I started when I was twelve when a family from the city came to my community and took me back with them...

...With so many people out of work, how was I going to make a living...

...Among them are the apparently contradictory elements of fierce competition and cooperation...

...Our members aren't on any payroll, so they aren't covered by labor law," explains vendors leader Francisco Figueroa...

...Competition between them is fierce...

...Ibid.13...

...The government has traditionally ignored small businesses in favor of exportoriented industries and agribusiness...

...Such spontaneous sharing is inspiring, and it allows thousands to feed themselves and their families each day...

...And even if you remove the legal barriers, you still have not addressed the problems of lack of access to credit, low skill levels, low productivity and so on...

...Our default rate is very low-about 0.22%," explains credit manager Bernardo Santa Maria...

...In Bolivia, the legal registration of businesses is a lot less complicated than the one he describes in Peru...