Examining the Legal Legitimacy of Informal Economic Activities
| Published date | 01 April 2022 |
| DOI | 10.1177/09646639211020817 |
| Author | Supriya Routh |
| Date | 01 April 2022 |
| Subject Matter | Articles |
Article
Examining the Legal
Legitimacy of Informal
Economic Activities
Supriya Routh
University of Victoria, Canada
Abstract
This article explains the disjuncture between formal parliamentary laws and norms of
informal economic activities on the basis of a contextual and layered idea of legitimacy.
This explanation clarifies a misunderstanding in certain scholarly and policy circles
characterising informal economic activities as extra-legal or illegal. The idea of legal
legitimacy helps explain divergent normative logics of formal and informal spaces while
indicating that informal activities are not performed in a regulatory void. In addition to
helping redefine the informal space, the idea also helps clarify the interaction between
formal and informal regulation. By employing Ju¨rgen Habermas’ analytical characterisa-
tion of society as constitutive of lifeworld(s) and system, and drawing on the empirical
literature, the article argues that a cautious interpretation of Habermas’ analytical
categorization helps explain the legality of the informal space. If formal laws need to
become legitimate for the informal context, they must integrate the contextual stan-
dards of legitimacy recognized in the informal space.
Keywords
Informal economic activities, informal law, Ju¨rgen Habermas, legitimacy
Introduction
In this article, I examine the idea of legal legitimacy of informal economic activities such
as street vending, domestic work, smallholder farming, home-based work, waste
Corresponding author:
Supriya Routh, Faculty of Law, University of Victoria, Murray and Anne Fraser Building, Room 228, McGill Road
at Ring Road, Victoria, British Columbia, Canada V8P 5C2.
Email: srouth@uvic.ca
Social & Legal Studies
ªThe Author(s) 2021
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DOI: 10.1177/09646639211020817
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2022, Vol. 31(2) 282–308
recycling, and a range of other work practices, which have generally been relegated by
international institutions and prominent legal scholars to the domain of illegality or, at
least, extra-legality because of the ostensible legal void in which these activities are
undertaken. Informal economic activities are legally organized, but the rationale of
informal laws organizing these activities is different from that of formally enacted laws.
The idea of legal legitimacy acts as a benchmark to clarify the authenticity of legal
regulation in the informal domain. Clarifying the idea of legal legitimacy in this context
is important because of the disjuncture between the logic of leg al rules in formally
organized economic activities and the logic through which informal activities are often
regulated. Informal economic activities primarily operate outside the (formal) institu-
tional structure (of property rights and formal contractual obligations) of industrial
capitalism, but not outside capitalist relations of production.
Unless the normative logic of informal modes of economic activity is properly
assessed, an integrated conceptualization of the production process (involving both
formal and informal activities), and concomitant legal regulation, will elude poli cy-
makers and scholars alike. The idea of legal legitimacy, I argue, offers an evaluative
tool through which regulation of this productive continuum (formal and informal) could
be rationalized. Legal legitimacy, in the sense I use it, is the claim that legal actors adhere
to certain norms because they accept the validity of (some sort of) normative reasoning
for approving or limiting their conduct and practices by those norms.
In elaborating this idea, Habermas’ insight of conceptually dividing society into two
levels and locating normative legitimacy in two different justifications is particularly
helpful. Habermas argues that formal enacted laws often have an ‘artificial character’
when they are justified only on the basis of the parliamentary procedure of law-making,
ignoring the authenticity of the substance of such laws that evolves through a discursive
dialogue among the citizenry (Habermas, 1996: 111). There is a legitimating force
without coercion in the ‘discursive process of opinion- and will-formation’, which brings
reason and will (i.e., choice) of the communicating participants together (Habermas,
1996: 103–104). Unless formal enacted legislation is able to integrate uncoerced insights
of social actors, formal laws remain illegitimate from the perspective of the informal
social spaces (while legitimate according to formal parliamentary procedure).
Employing this layered perspective-based insight of legitimacy and considering vign-
ettes of informal economic activities and their regulation, I argue that it is simplistic –
and overly positivist – to characteri ze informality as unaccounted for extra-l egal or
illegal space. Actors engaged in informal economic activities normatively organize their
activities on the basis of the norms of kinship, locality, friendship, community, class,
religion, ethnicity, caste, gender, and so forth. They adhere to these social norms, often at
the cost of bypassing formal legal standards, because of their contextual validity. To be
sure, these norms are not always unproblematic, but recognizing their proper role is
important for legal policy-making.
The diverse – and often competing – sph eres of normative regulation have been
recognized by the legal pluralism literature for some time now (Benda-Beckmann,
2002; Benton, 2012; Merry, 1988). Legal pluralism recognizes the ‘sustainable diversity
in law’, that is, the expansive and enduring nature of informal laws beyond state law
(Glenn, 2012: 96, 103–104). Legal pluralists have called for abandoning the definition of
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