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Making Do A Living Organism
One advanced form of vertical linkages is subcontracting.54 The informal sector is a source of cheap, unregulated labor, so formal businesses often contract out parts to microenterprises. For a microenterprise to be able to take on a job, it must have appropriate labor, tools, and skills to produce at a high and consistent quality. Subcontracting is an important way of promoting linkages between the informal sector and the formal and public sectors since it allows capital to trickle down and forces microenterprises to build their skills. The late industrializers of East Asia recognized this, and their government policies encouraged and enforced the practice. The principles of collective efficiency can also be applied in the global North, where technological integration is the dominant modus operandi and corporations have lost a sense of place and community.55 The jua kali sector has demonstrated that efficiency is possible among clusters of small, cooperative enterprises. Horizontal linkages can be enacted in the developed world, particularly in the creative economy, where businesses tend to be smaller and embed themselves in the community. Providence, Rhode Island, for example, has recently made strides in building profitable “cottage industries” like print shops, electronics labs, and wood studios which provide co-working space, offer services to the public, and coordinate operations through referrals and subcontracting in a way that achieves collective efficiency. For example, Providence’s Steel Yard—a metalworking collaborative—offers space and subcontracts jobs to its network of artists. Clustering in the North has been further enhanced by the rapid expansion of ICT and social media, which further reduces transaction costs. This way of working signals an important postindustrial shift, whereby new modes of production mimic pre-industrial clusters of Africa.
Figure 4.3 Mary’s hardware shop at Racecourse.