The moral economy of capitalist societies is based on the attempt to keep impersonal and personal spheres of social life separate (Hart 2005). The establishment of a formal public sphere entailed creating another one based on domestic privacy. The two constitute complementary halves of a single whole. Most people divide themselves every day between production and consumption, paid and unpaid work, submission to impersonal rules in the office and the free play of personality at home. Money links the two sides; their interaction is an endless process of separation and integration, division. The division of the sexes into male and female is the master metaphor for this dialectic of complementary unity.
For any rule to be translated into human action, something else must be brought into play, such as personal judgment. Informality is built into bureaucratic forms as unspecified content. Viable solutions to administrative problems always contain processes invisible to the formal order. For example, workers sometimes engage in a “work-to-rule”. They follow their job descriptions to the letter without any of the informal practices that allow these abstractions to function. Everything grinds to a halt. Or take a chain of commodities from production by a transnational corporation to final consumption in Africa. At several points, from the factories to the docks to the supermarkets and on the street, invisible actors fill gaps the bureaucracy cannot handle directly. Informal processes are indispensable to the trade.
Of course, some activities break the law, through a breach of health and safety regulations, tax evasion, smuggling, the use of child labour, selling without a license and so on. The third way that informal activities relate to formal organization is as its negation. Rule-breaking takes place both within bureaucracy and outside it; and so the informal is often illegal. This compromises attempts to promote the informal sector as a legitimate economic sphere, since it is hard to draw a line between colourful women selling oranges on the street and the gangsters (not to mention policemen!) who exact tribute from them. When the rule of law is weak, the forms that emerge in its place are often criminal in character.
The fourth category is not so obviously related to the formal order as the rest. Some informal activities exist in parallel, as residue. They are separate from bureaucracy. It would be stretching the logic of the formal/informal pair to include peasant economy, housework and so on within the rubric of “informality”. Yet the social forms endemic to these often shape informal economic practices and vice versa. Is society just one thing – one state with its rule of law – or can it tolerate legal pluralism, leaving some institutions to their own devices? European empires, faced with scarce administrative resources, once turned to “indirect rule” as a way of incorporating subject peoples into their systems of government on a semi-autonomous basis (Mamdani 1996). Supervision of indigenous customary forms was delegated to appointed chiefs and headmen, reserving the key levers of power to the colonial regime. Anthropologists played their part in this (Asad 1973). Any serious attempt to link formal and informal economies today would require a similar openness to plural forms.