campaign against street vendors on 125th Street during the 1990’s, in order to understand
when, why and how crackdowns on street vending occur.
Regulation and the Informal Economy
The informal economic sector is by definition created by the state. The statemakes the laws, and laws determine what is legal economic activity and what is illegal.Before discussing how regulations and the state shape, define and create the informal
sector, it will be useful to clarify what exactly is meant by the term “informal economy”.
In its broadest sense, the informal economy means any economic transaction thattakes place outside the regulatory apparatus. Saskia Sassen refines the definition a bit,stating that informal economic activity involves
“the production and sale of goods that
are licit, but produced and/or sold outside the regulatory apparatus covering zoning, tax,
health and safety, minimum wage laws, and other types of standards”
(Sassen 1988, 1).The distinction made here by Sassen between licit and illicit goods in animportant one for both analytical and theoretical purposes. The informal economy,according to this line of thought is not the same as what has been termed the
“underground” or criminal economy (Gaber 1993)
. The key distinction between theinformal and criminal economy lies with the good being produced or sold. Unlike theinformal economy, whose goods are licit, the criminal or underground economy involvesthe production and/or sale of goods that are themselves illegal.Although the line is important to draw, it can become blurry when discussinginformal vending. First let us look at a cut and dry example: both the production and saleof cocaine is illegal in New York. There is no way (that I am aware of) that a person canpurchase legally produced cocaine in the city. The good itself is illegal and illegal under