The Editorial Board of Social Justice is pleased to introduce this double issue on "The Dynamics of the Informal Economy." Its emphasis on the changing structure of the late 20th-century world economy, the accommodation of peoples both in the East and West to the collapse of post-World War II modes of survival, and its criminal underside make it of interest to sociologists, criminologists, economists, and social scientists in general.

The role of the informal economy in advanced capitalist countries must be integral to an assessment of the domestic legacy of the Reagan presidency. We need to increase our understanding of how people on the bottom rungs in the U.S. -- the homeless, "discouraged workers," single mothers without childcare, minority teenagers without hope of employment, and the elderly without pensions -- have been able to survive the past eight years, in particular, the contraction of state assistance and their increased exclusion from the formal labor market. Some analysts predict that the 1987 income tax revision will tend to encourage the reporting of income and that "off-the-books" economic activity may therefore diminish. In contrast, the enormous international drugs/arms trade, which was revealed by the Iran-Contra hearings, shows no sign of abating.

Study of the informal economy in the socialist countries has recently gained official prominence. A Soviet trade union newspaper, Trud, recently acknowledged that the magnitude of informal service activities approaches 25% of the total services provided. Recent exposés of organized crime, and its links to party officials, have made this once taboo area of research front-page news in the USSR. Cooperative forms of economic activity are now legal and officially encouraged. It is widely recognized, however, that cooperatives face great hardships and bureaucratic opposition. The building of private single homes was recently legalized in the Russian Soviet Republic, spawning a new wave of demand for private house-building and skilled trades.

Informal means often overshadow the formal sector of the economy in Third World countries. In Mexico, millions make their livelihood through informal-sector activity by selling and reselling items throughout the barrios. In Nicaragua, it is estimated that the informal sector employs 60% of those working. With the deterioration of the formal economy, the majority of those on salary must combine formal and informal activities to survive. Recent natural disasters, such as the 1985 earthquake in Mexico City and the 1988 devastation of Hurricane Joan in Nicaragua, have only exacerbated the inability of the formal sectors in these countries to meet the basic needs of their populations.

As the distinguished contributors to this issue of Social Justice explain more fully, many theoretical questions arise from empirical studies:

Is the informal economy an artifact of underdevelopment, and hence will diminish with economic growth? Preliminary data refute this assertion. Instead, such underground activities tend to persist and grow in the face of economic development. As Portes and Borocz argue in this issue, informal-sector enterprises may arise out of different conditions under capitalism and state socialism, but share common features, such as high labor-intensity, which continue to be renewed as the formal economy expands.

Is the informal economy inevitable in socialist economies (as we have known them), or does its existence reflect past distortions and inequalities that call for structural change? The Galasi/Sik study in this issue indicates that the informal sector can perhaps be reduced, but the universality of informal processes in core, semiperipheral, and peripheral areas speaks against the notion that the informal sector can be eliminated.

How do the dynamics of the informal economy contribute to and influence social change? How can we better understand those dynamics and their potential direction? As Stuart Henry discusses, efforts to build alternative strategies may ultimately be co-opted, but they can and do have a lasting impact on formal activities.

We especially wish to thank our Guest Editor, Cyril Robinson, for his long and patient work on this issue. His tenacity, ongoing dialogue with authors, and ability to establish a serious working relationship with our Editorial Board are particularly appreciated. As a result, this issue reflects the highest quality of theoretical debate and competence.

-- B.B.