The social essence of the shadow economic activity
The social essence and reasons for the emergence and reproduction of shadow economic practices have long been interpreted by researchers as poverty, economic and social backwardness, underdevelopment. The main region of the spread of the shadow economy was considered to be the countries of the Third World, its presence in the industrialized countries fell into the field of view of scientists and became the subject of study only in the 80's. XX century. Prior to this, analysts believed that the shadow forms of management are in our time concentrated, as in the traditional societies of the past, in the rural areas of the underdeveloped regions of Asia, Africa, and Latin America. They find a job for a low-skilled population, unable to work in modern industries, they also meet the needs of this population in cheap goods. The replenishment of urban marginal groups at the expense of the ruining peasants causes the preservation of shadow practices in cities, but it indicates the underdevelopment and even degradation of the urban social and economic environment.
A fundamental turn in understanding the social essence of shadow economic activity was the work of the Peruvian economist E. de Soto "Other way", published in 1989. Based on the study of state regulation of legal economic activity and the dynamics of shadow practices, the researcher came to the conclusion that resorting to informal, illegal, shadow forms of economy and entrepreneurship is a reaction on bureaucratic regulation. According to the generally accepted view of de Soto, the essence of shadow activity is determined by the "rational evaluation of the costs of law-abiding". Analysis of the Peruvian realities of the 80s. The last century, conducted by de Soto, shows that compliance with all the necessary formalities in the organization of the case would lead (depending on the type and scale of the enterprise) to the time losses from a few months to several years, and money, calculated by dozens of minimum wages. In existing enterprises, compliance with formalities requires up to 40% of the time of management personnel and reduces profits by several times.
Shadow activity is that social and economic niche in which the people's initiative can survive and develop beyond the constraints imposed on it by the state, and from there it is "natural" develops "popular capitalism". In this sense, according to de Soto, the development of the shadow economy is not so much a disease as a sign of society's health - the presence in it of sufficient independence, activity, energy, the ability to withstand pressure from the state, striving to strictly regulate economic activity in its favor.
At the same time, from the point of view of de Soto, the shadow sphere of management is not a niche of "wild capitalism", in which chaos reigns, there is no normative system, organization, all actions are purely situational. On the contrary, the shadow economy is a special "parallel world", with its organizational principles, a system of informal norms governing and ordering connections between entities.
The concept of de Soto was universally recognized, because it helps to answer a number of fundamental questions, in particular, not only to interpret the development of the informal sector in the economy of underdeveloped countries, but also to explain its continued presence in developed countries. At the same time, do not think that de Soto estimates shadow economic activity as an exceptionally positive phenomenon. He lists her own costs associated with the "price of illegality", which include weak legal protection of both property and business obligations; need to pay & quot; the price of evasion from punishment & quot; (this includes, in the first place, bribes to corrupt officials); impossibility to participate in some forms of economic activity; the inability to resort to the protection of state law enforcement agencies, etc. Another group of negative consequences of shadow economic activities include a decrease in productivity and a slowdown in technical progress in the economy as a whole, a reduction in investment, a decrease in the efficiency of the tax system, a rise in the cost of utilities, and so on. The only way to reduce the negative impact of the shadow economy on society is to improve laws, reduce state interference in economic life and simplify the practice of state regulation of the economy, enabling people to solve their problems on their own, based on recognition of the achievements they have achieved in the informal sector.
How to ...
We made your life easier with putting together a big number of articles and guidelines on how to plan and write different types of assignments (Essay, Research Paper, Dissertation etc)