the nonprofit sector and the informal sector: a theoretical perspective

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0957-8765/99/0600-0131$16.00/1 C 1999 International Society for Third-Sector Research and The Johns Hopkins University

KEY WORDS: nonprofit sector; informal economy; theory; sectorization.

INTRODUCTION

If the social activities of nation-states were broken down into economic sec-tors (i.e., sectorized) solely for analytical purposes, we could challenge the de-marcations with the available evidence and demonstrate the paucity of such purelyintellectual endeavors. However, nation-states have a need to establish a sectoralsystem to refine regulation, taxation, and a wide range of public policies. Yet suchpartitioning of socioeconomic activity3 as an intellectual or regulatory exercise

1Milano Graduate School of Management and Urban Policy, New School, New York.2Correspondence should be directed to Rikki Abzug, Nonprofit Management Program, Milano Grad-uate School of Management and Urban Policy, New School University, 80 Fifth Avenue, Suite 405,New York, NY 10011; e-mail: abzugrAnewschool.edu.

3The concept "socioeconomic activity" is used to augment and extend the economist's traditional focusof human production (paid work) with an understanding of the social embeddedness of economicactivity (Granovetter, 1985) and the existence of unpaid, but no less valuable, work. This allows usto include within our domain activities that generate not only economic and human capital but socialcapital as well.

Voluntas: International Journal of Voluntary and Nonprofit Organizations, Vol. 10, No. 2, 1999

The Nonprofit Sector and the Informal Sector:A Theoretical Perspective

Rikki Abzug1,2

How do and why might different nations demarcate socioeconomic activity intodistinct societal sectors? In this review and critique of sector theories, we usethe case study of nonprofit sectors compared with informal economies to evidencethe difficulty of drawing separate conceptual spaces for economic, human, andsocial-capital-producing activities. Drawing upon international research on theorigins and characteristics of both nonprofit (voluntary, third, independent) andinformal (underground, black market) sectors, the conceptualizations of spheresof activity that are alternative to market and state are explored. Hypotheses aboutthe preconditions of different third sectors are generated and a basis for furthertheorizing about sector interdependence and overlap is provided.

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is an often-politicized process characterized by conflicting agendas and interests.That most economies do not divide up easily into coherent, well-theorized sectorshas not yet been fully seen as a deterrent to nation-state attempts to administersuch sectors. Rather, concepts of sectors have been legitimated from one countryto another, and planning and policy adoption have taken these legitimated forms asgiven. Researchers' attempts to understand where sectors come from thus may beused by political actors to modify preconditions and shape future economic struc-tures. In this paper, the exploration of sectoral demarcation involves an implicitcritique of taken-for-granted assumptions about the structuring of socioeconomicactivity.

In setting up a critique of sectorization logic in its global guise, this paperfocuses on the areas of activity that overlap extant sector definitions. We do this byway of a case study comparing two academically and popularly designated thirdsectors that are themselves overlapping yet rendered analytically distinct. From thiscase study, the paper builds upon the issue of sectoral overlap, introducing commonsector constructs (e.g., community, ethnicity, trust, civil society, and taxation) andoffering critiques on boundary issues. This leads to a model of sectoral overlap andthe generation of hypotheses for further empirical testing. This framework then ischallenged by the introduction of other overlapping sectors, and implications ofsuch complexity are suggested and supplemented by a discussion of directions forfurther research.

THE THIRD SECTORS

Students of both the informal (also known as the black or underground)economy and the nonprofit (or voluntary) sector consider their domain to be thenation-state's third sector. Our comparative case study explores the central tenetsof each literature and how the construction of basic mechanisms of these sectorsshare great similarities. We use the similarities in the discourse surrounding non-profits and the informal economy to suggest that neither sector is as independentlytheorized as its lobbyists and historians might think. This leads back into a ques-tioning of the value of sectorizing itself. We further substantiate this critique byintroducing other potential heirs to the title of third sector.

Introducing the Sectors

First, we compare and contrast research histories and conceptual underpin-nings of nonprofit and informal-economy sectors. However, before expoundingupon that which informal and nonprofit sectors have in common, it behooves usfirst to reiterate the popularly held definitions that distinguish the two. In eco-nomic terms, the informal-economy sector can be defined as the illicit production

Nonprofit Sector and Informal Sector 133

of private goods and services (Portes, 1992). This can be contrasted with the legalproduction of public goods or services in the nonprofit sector (Hansmann, 1980).Both the legality of production or delivery methods on the one hand and the natureof the goods and services produced on the other are different, given these economicdefinitions of sector. However, once we move away from the purely economic, wefind a great many analytical similarities (and overlaps) in the preconditions for,and operating mechanisms of, the two sectors.

Informal economist Bruno Dallago (1990) suggests that the phenomenonknown as the informal economy first came to scholarly prominence in the West inthe late 1970s as a focus on irregular phenomena in Western labor markets and taxand regulation evasion in other countries. Dallago attributes some of the scholarlyattention to this economy to the observation of recession-inspired state increases inspending without the concomitant increase in revenues through taxes. This wouldput the scholarly discovery of this sector a bit later than the postwar discoveryof a nonprofit sector, starting first in the United States. Nonprofit historian PeterDobkin Hall (1992) traces the scholarly concern with the nonprofit sector to theself-imposed defense of a foundation world that barely survived the un-Americanactivities quest of 1950s' Communist searches. With conservative forces applyingpressure to make the perceived liberal foundations pay for their unregulated status,the foundations, eager to forestall further inquiries, sought scholarly justificationfor their special regulated status. An argument might be suggested that, especiallyin the United States, both literatures were animated by investigations of shortfallsin the coffers of public sectors.

Although the discovery of the informal or underground sector is somewhatconsistent across Western nation accounts, the discovery of the nonprofit sectoris somewhat more varied outside of the United States. In the United Kingdom, as6 and Leat (1997) argue, the introduction of the nonprofit sector was also partlya bean-counter's trick. Although in this case, the argument is that the inventionof the sector met a defensive need for quantification of activities that contributedgreatly to GDP. Following the U.S. argument, 6 and Leat (1997, p. 39) maintainthat the committees and commissions that legitimated the voluntary sector in theUnited Kingdom came about during "periods of relative drift in government."

Observers of nonprofit activity in other Western contexts have been evenmore reticent about adopting the third-sector concept. In particular, Evers (1995)suggests that rather than constituting a distinct sector, nonprofit organizations arehybrid institutions that intermesh resources and rationales from the three actualsectors of state, market, and community/family. One commonality, though, remainsin historical accounts of activities by legal nonprofits—a relationship (adversarialor cooperative) with the state (and secondarily the legitimate market) seems tobe the starting point of defining the scope and propriety of activity. The samerelationship starting point can be observed in accounts of the discovery of theinformal economy.

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Community/Social Ties

Dallago (1990) defines the informal economy as activities performed withinthe family or in small communities based on relationships of kinship or friendship.Portes and Zhou (1992) conceptualize the community as the sanctioning powerof the informal economy with its responsibility for inclusion and exclusion ofeconomic players. In similar ways, community has been heralded as the actionarena for nonprofit institution development. Milofsky (1979, 1987), perhaps mostnotably, has led researchers on nonprofits to communities as a way to understandthe defining mechanisms of nonprofit activity. Milofsky (1987) notes that Marx,de Tocqueville, Durkheim, Toennies, and Simmel all focused on voluntary as-sociations (dominant organizational forms in nonprofit sectors) as embedded incommunities and essential to recreating those communities through social inter-action. Communities, then, are the site and the outcome of voluntary associationsin this conception.

Ethnicity/Ethnic Enclave

Neither literature has been content to leave the notion of community so broadand undefined. In both cases, certain types of communities are exalted to thestatus of arenas for either informal or nonprofit activity and hence, studies ofeconomic activity often are focused at this level. In both informal-economy andnonprofits research, a case can be made for the importance of ethnic, religious, andracial communities in the institution building of the third sectors. Portes (1992)suggests that community enforcement of informal-economy norms is effectivebecause of the bonds of common membership in the same group. Using examples ofDominican immigrant workers in New York, Cuban workers in South Florida, andthe Jewish consumer goods producers in the former Soviet Republic of Georgia,as well as others, Portes (1992) shifts from the term ethnic economy to informaleconomy, underlining the linkages between the two ideas. Portes goes on to suggestthat ethnic communities grow informal economies well because of state repressionand external threat, which serve to strengthen such ethnic solidarity.

Recent work on the cultures of trusteeship (Hall, 1992; Abzug, 1996) andreligious and ethnic roots and experiences of philanthropy (Ostrower, 1991) arebringing evidence to bear that nonprofit activity, especially in the United States,is organized and influenced by specific religious and ethnic imperatives. Light's(1972) groundbreaking work on ethnic enterprise noted mat Chinese and Japaneseimmigrants to the United States historically have supported voluntary organizationsas the voice of their communities. Studies of individual social service agenciesand mutual benefit societies as part of the nonprofit sector often are focused on theembeddedness of such institutions in the ethnic communities that they serve andfrom which they draw membership.


This line of inquiry is not limited to studies of the United States. Van der Ploeg(1992) suggests that the diversity of religious groups in Dutch society resulted inan organizational "pillarization" that helped to account for the differentiation oforganizations in the delivery of nonprofit services in the Netherlands. Burger et al.(1997) elaborate on the pillarization concept, suggesting that this process by whichDutch citizens organized along religious and political lines began in the secondhalf of the 19th century and was crucial for influencing the current shape and size ofnonprofits in the Netherlands. Cheung (1992) reports that, in Singapore, nonprofitassociations of immigrants were encouraged by the colonial government so that thevarious ethnic and dialect groups could cater to their own needs. The comparisonto Japan's more homogeneous society and smaller nonprofit sector is instructivehere (Hodgkinson and McCarthy, 1992). James (1989) has suggested, after aninternational comparative inquiry, that nonprofits often are tied to interest-basedcommunities that often are defined by religious lines in countries with hetero-geneous populations and needs. In a review of national studies, Hodgkinson andMcCarthy (1992) argue that the degree of heterogeneity of the population is aprecondition of growing a nonprofit sector.

Trust

Ethnicity and community play such important roles in the literature of theinformal economy because they are linked inextricably with the notion of trust asthe basic social mechanism underpinning this third sector. Yet, it is also the notionof trust that stands out as the basic operative economic mechanism of the nonprofitsector.

Portes (1992) places enforceable trust as the central social mechanism under-girding informal economic exchange. He explains that, absent market and hierarchyas forms of economic exchange, trust remains the medium through which businessis conducted and supported in the realm of the informal. Altman (1983) notes that,because trust is the fundamental requirement for the operation of the economy,it often is solidified by solidarity rites and bonding events. Portes suggests thatbecause actors in the informal economy, by definition, bypass laws and regulatoryarms of the state they depend on mutual trust to avoid detection by authorities.

Economists of the nonprofit sector also make use of the concept of trust as abasic enabling mechanism. As such economists make clear, organizations of thenonprofit sector are not disciplined by the invisible hand of the market, nor arethey accountable to a voting public. To wit, Hansmann's (1980) market-failureconception of nonprofit activity claims that, because goods and services producedby nonprofits fail the test for profitability (goods cannot be readily compared,substituted, or evaluated), the market mechanism of competition among firmsbreaks down. Nonprofits are subject to a nondistribution constraint that invokesthe trust of the consumer that these organizations will not opportunistically take

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advantage of the asymmetrical knowledge distribution. Nonprofits provide goodsand services, not because they are threatened in a takeover market, and not becausethey can be voted out of office, but because the public has put their trust in them.Without this trust, supported by relaxed regulation and taxation, the nonprofitscould not exist.

Civil Society

As the former republics of the Soviet Union and the former Eastern Europeancommunist countries try to remake their economies, there is much talk aboutthe creation (or rehabilitation) of civil society to address the needs of a newlyenfranchised public. And as cities of industrialized capitalist economies becomeless habitable, at the same time that income differentials grow larger and socialproblems begin to verge on destroying economic order, there is also much talkabout the revitalization of a civil society there to attend to the public's needs.Both the informal economy and the nonprofit sector have emerged or reemerged,through their respective literatures, as the arenas for the reconstruction of civilsociety.

Los (1990) and other contributors to a volume on civil society in EasternEurope defines the concept of the second, or informal, economy in Marxist statesin ideological terms. They suggest that Marxist economies provoke and have pro-voked parallel economies that include all areas of economic activity that are viewedas inconsistent with the ideologically sanctioned dominant mode of organization.Los summarizes that the informal economy in Marxist states contributes to thestability of the dominant economic arrangements by improving efficiency of pro-duction and distribution over centralized planning while better satisfying consumerneeds. Yet, by this very activity, the informal economy reinforces the idea that cen-tral planning needs tweaking and thus leads to a subtle erosion of the state's controland management of the society.

Other researchers (e.g., Siegel and Yancey, 1992) add that it is at this boundarybetween command economy production and economic resistance by the publicthat fledgling civil society is to be found in these countries. As Portes (1992,p. 35) summarizes, "The paradoxes of informality reveal, above all, the capacityof resistance of civil society vis-a-vis a constraining official apparatus... the morestate policy prevents the satisfaction of individual needs and access to inputs byfirms, the wider the scope of informalization that they encourage..." Kraus (1991)reports a similar finding from the Chinese experience. The informal economy ofprivate business in China has broken down age-old solidarities and replaced themwith liberated energies and modern and adjusted structures. Kraus reports thatimprovements in the quality of life wrought by private business in China havepaved the way for satisfaction of spiritual and cultural needs and the dawn of achanging Chinese national character. Such scholarship implicitly places heroic

status on civil societies that are seen to bring forth measures of freedom, liberty,and the pursuit of happiness.

Civil-society discussions within the nonprofits literature also seem to takeon a tone of boosterism. Diaz-Albertini (1993) notes that the Western scholarshipplaces nonprofit organizations as significant democratizing forces in societies. Hesuggests that nonprofit activity, in the form of advocacy, has its political actionbased in civil society. Calhoun (1998) notes that the notion of civil society wasfirst used in social discourse to describe the autonomous organization of politicalconstituents independent of state action. Calhoun suggests that this notion laydormant in the United States until the Eastern European democrats brought it backto describe the chinks in communist armor. From here, we can understand the shorttrip from informal economy to expression of civil society. Yet, Calhoun, and otherswith sympathy toward nonprofits, suggest that the public sphere of civil societyis revitalized to the extent that its institutions (the nonprofits) are supported andboosted.

Indeed, Hegyesi (1992) argues that the reform in politics and the strugglefor independent voluntary organizations worked together to break down the statemonopolies in Hungary. Hegyesi argues that this partnership of political reformand voluntary associations has caused nonprofit sectors (largely dominated by vol-untary associations) in Central and Eastern Europe to be more politically orientedthan their Western counterparts. Kapiszewski (1992, p. 324) argues directly thatnonprofit organizations in Poland have mushroomed because "in the extremelydifficult economic situation in most of the eastern European countries the civil so-ciety is forced to fill the growing gap being created by the withdrawal of the state'sfinancial and organizational support in areas such as social services, education,and culture."

Regulation and Taxation

Castells and Portes, in summarizing information gathered about informaleconomies in countries throughout the world, explain that the informal economyis characterized by one central feature: "It is unregulated by the institutions ofsociety, in a legal and social environment in which similar activities are regulated"(1989, p. 12). They further suggest that informal economy is a direct result ofattempts to avoid taxation. This, of course, shifts the defining elements of thesector to the realm of taxation and regulation.

Researchers of the informal economy are not alone in defining a third sectorby its relation to other extant sectors. John Simon has been the dean of researcherswho have looked at the nonprofit sector through the lens of tax treatment. Simon(1987) notes that the history of charity and nonprofit institutions has always beencaught up in controversy over taxation and state action. To scholars with a legalbent, then, insofar as the informal economy is the illegal avoidance of taxes and


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regulation, nonprofit activity is the legal avoidance of taxes and regulation. In bothcases, legal-minded scholars would suggest that it is the relation of institutionsto regulation and taxation that are the central features that set such organizationsapart from other sectors.

Sectoral Interdependence

How far apart are the sectors? Both the informal-economy literature andthe nonprofits literature start out with a sectorization hypothesis that posits theirrespective area of study as the third, or other, sector in contradistinction to the stateand market sectors. Yet, a growing critical literature developing in both veins isdedicated to deconstructing these concepts of sector. This is most simply done bypointing to the great interdependencies between the respective third sectors andthe market and government arenas of social activity.

Castells and Portes (1989) note strong evidence of linkage between the for-mal and informal sectors in cases in which profitability is valued more highly thanlegal compliance. For Portes (1992), formality is the state's obligation to organizemodern civilization through printing money, setting financial policy, controllinglabor, and so on. This formality is complemented by the informality that helpsto produce goods and services. Research by Roberts (1992) in Guadalajara, forexample, suggests that, in practice, most firms themselves operate both formallyand informally (depending upon the goods or services produced or the economicenvironment), pointing up the difficulty in assigning activities or units to specificsectors. Kraus (1991) suggests that the Chinese informal economy of private busi-ness has, at times, been sanctioned officially by the Chinese government. In Los'scompendium for a diverse group of studies of informal economies within Marxiststates, she states, "[g]iven the known inefficiency of the centralised model of thestate economy, it is expected that in all countries studied the ruling elites (parties)have been moved to accept extensive areas of the second economy as vital to secur-ing a minimum level of consumer needs satisfaction" (1990, p. 6). These studiesbeg the question: If the informal economy can be sanctioned officially by the formaleconomy in some countries at some times (complicating the idea of legality vs.illegality), can we everywhere draw a distinct analytical line separating the two?

Critical assessments of nonprofits have come to similar conclusions regardingthe usefulness of sectoral categories. Starting with Salamon's 1980s research on lo-cal nonprofit economies during periods of economic retrenchment, the researchersof nonprofit organizations have had to take seriously the practice of contractingand other linkages between the institutions they study and the institutions of thelarger society. Salamon (1987) has called nonprofits "partners in public service,"considering how much responsibility for delivery of public services that govern-ments have turned over to nonprofits. Wolch (1990) has labeled nonprofit deliveryservices a "shadow state" insofar as they provide an alternative to government in


the provision of public goods and services, oftentimes using the same governmentfunds. Ostrander and Langton (1987) suggest that the interpenetration of three in-terrelated sectors serves to blur any line between private nongovernmental sectorsand public governmental sectors.

Indeed, research on the other end of the nonprofit spectrum has raised ques-tions about the distinctiveness of nonprofit organizations from for-profit organi-zations. Literature in the health field (see, e.g., Gray, 1990) is rife with examplesof this, especially as hospitals and health maintenance organizations switch fromnonprofit to for-profit (and sometimes back again). A rising interest in the role andfunction of both corporate philanthropy (see, e.g., Navarro, 1988; Hall, 1989) andcorporate foundations (see, e.g., Smith, n.d.; Webb, 1994) also speaks to an aware-ness of the interdependence and blurring of sectoral distinctions. If nonprofits helpto promote and legitimate for-profits (Abzug and Webb, 1996) while for-profitshelp to fund nonprofits, than strict sectoral boundaries become less meaningful.

Some nonprofits scholars have gone even further. Van Til (1988) and Smith(1991) suggest other breakdowns of sectors in the society, which make room forgovernment, for-profit, nonprofit (Smith splits this in two), and perhaps household/reproduction. DiMaggio (1987) notes the ambiguity that a tripartite distinctionengenders and suggests that organizational legal status is the only legitimate dis-tinction between sectors. Alford (1992) elaborates on this ambiguity by declar-ing the distinctions between public, private, and nonprofit sectors to be fetishes.Alford argues that notions of a third, voluntary, or independent sector is a lin-guistic mystification to conceal nonprofit organizations' dependence on both thestate and capital. As such, this nonprofit sector as fetish or mystification conceptis reflected by Evers' (1995, p. 161) argument that the third sector is but a "tensionfield without clear boundaries" intermeshing with sectors of state, market, publiccivil sphere, and community/family. We take up this notion of multisectors in thediscussion below.

Putting It Together

Our review of the multifaceted literatures of sectorization should suggestthat our sympathies lie with Alford's notion of the fetishization of sectors aswell as Evers' ideas of component parts of the welfare mix. This review of theliteratures and especially the review of the similarities of the discourse surroundingthe informal economy and the nonprofit sector, and their relative isolation from oneanother, suggests to us the creation of "disparate assumptions and beliefs aboutthe social and political world rather than factual statements." (Edelman, 1988,p. 10, as quoted by Alford, 1992). Table I summarizes similarities in conceptualrenderings of the two "sectors" as found in literatures of both sectors. As such,Table I illustrates the core concepts that are shared by the sectors according to thediscourses reviewed earlier. That the same language is used to convey a different

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set of economic activities suggests that the discourses have not quite caught upwith the complex reality of society.

The exercise of demonstrating how the central tendencies of two literaturesoverlap was undertaken in part because these literatures have remained so isolatedfrom one another. What would we have gained by bringing them together? Wemight have questioned how concepts such as trust and community could lead tosuch different institution building. We know that the language used in both dis-courses is similar (and in many cases the same) and the underlying concepts andmechanisms are often equivalent, yet we also know that the literatures are describ-ing separate organizational phenomena, albeit with the same vocabulary. We mightthen have asked if national culture played into the distinct institution building em-anating from the same core tendencies. However, because nonprofit sectors existalongside informal economies within the same nation-states, we may instead askquestions about under which conditions informal economies or nonprofit-sectororganizations arise to give expression to, for example, civil society.

As a first take on the separation/complementarity between these sectors, wemay gather literature that speaks to preconditions for these sectors to compare theirpredictions. That is, what do prior cultural, social, and economic arrangementssuggest about the likelihood that a society will come to have one of our two thirdsectors? Table II uses the literature of both the nonprofit and informal-economysectors in comparative perspective to begin to outline preconditions of both.

What we notice from the review of the literature is that the 2 third sectorsreviewed here are expected to thrive on adequate private resources (commandeconomies may, at times, loosen restrictions on private property and thus may beeither more or less likely to allow either sector to grow) and population religiousand ethnic heterogeneity. Salamon and Anheier (1997) have claimed that certainother conditions have a chilling effect on the formation of nonprofit sectors in aglobal context. Specifically, they suggest that the presence of landed elites and

Table I. Common Concepts Between Sectors

Central concept

Community

Ethnicity

TrustCivil society

Regulation/taxationSectoral interdependence

Why important in the study of sectors?

Informal sector

Arena for performingactivities

Economy based oncommon memberships

Central social mechanismEconomic activity as

ideological resistanceAvoidance defines sectorSystemic links between

formal and informal

Nonprofit sector

Where associations areembedded

Resource for enterpriseand voluntary action

Substitute for visible handVoluntary activity as

ideological resistanceSpecial rules define sectorThird-party government

and corporate giving

authoritarianism in government are antithetical to the growth of a nonprofit sector.The literature on informal economies suggests that these preconditions might pro-vide fertile ground for the establishment of underground economies. The reviewof this literature leads to the following testable hypotheses:

Hypothesis 1: If societies are characterized by adequate private resources,population heterogeneity, and/or religious values, then both nonprofit sectorsand informal economies are likely to develop as sectors complementary tomarket and state.

Hypothesis 2: If societies are characterized by adequate governmental re-sources, colonialist legal systems, and/or symbiosis between business, poli-tics, and voluntary associations, then nonprofit sectors are likely to developas complementary to market and state.

Hypothesis 3: If societies are characterized by rising tax rates and/or costlygovernment regulations, then informal economies are likely to develop assubstitutes for market and state.


Table II. Preconditions for Sector According to Scholarly Literature

Societalpreconditions

Governmental resources(laws, funding)

Available supply of privateresources

Population heterogeneity

Rising tax rates

Costly government regulation

Symbiosis betweenbusiness, politics,voluntary associations

Authoritarianism

Presence of landed elites

Colonialist legal systems

Religious and ethical values

Precondition fornonprofit sector?

Yes(Weisbrod, 1975; Hodgkinson

and McCarthy, 1992)

Yes(Hodgkinson and McCarthy, 1992)

Yes(James, 1989; Hodgkinson

and McCarthy, 1992)7

?Yes(Hall, 1996)

No(Salamon and Anheier, 1997)

No(Salamon and Anheier, 1997)

Yes(Salamon and Anheier, 1997)

Yes(Hodgkinson and McCarthy, 1992)(Salamon and Anheier, 1997)

Precondition forinformal economies?

7

Yes

Yes

Yes(Feige, 1989;

Frey, 1989)

Yes?

Yes

Yes

?

Yes

?

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Hypothesis 4: If societies are characterized by authoritarianism and/or thepresence of landed elites, then informal economies are likely to develop ascomplementary to market and state whereas nonprofit sectors are not likelyto so develop.

Although the preceding discussion and implicit model have accounted for a greatdeal of socioeconomic activity that is not captured by state or market transactions,it is not at all clear that we have captured all of the socioeconomic activity thatobtains in societies. We turn now to the question of whether our four sectors(market, state, nonprofit, and informal) are enough to model societies. This entailsa brief review of literatures that posit further alternatives to market, state, nonprofit,and informal activity. We start with the very notion of sector itself.

OTHER PEOPLE'S SECTORS

The latter-day Marxists were some of the first theorists to take seriously thenotion of sector. After isolating a sector of production, their next step was toidentify the mechanisms by which such a sector was supported. Estes and Alford(1990) pinpoint the beginning of this focus on sectors other than production as thepublication of O'Connor's (1973) Fiscal Crisis of the State. Although O'Connorbegins a conversation about interrelatedness of sectors, he assumes that functionsof accumulation and legitimation are based in the one public sector. O'Connor doesnot allow for maintenance functions to be carried out in arenas other than the stateand the private, profit-oriented monopoly sector. Habermas (1975), in exploringcrisis tendencies in advanced capitalism does offer the political and socioculturalarenas as complements to the economic system in the origination of legitimationcrises. Yet, as Estes and Alford (1990) point out, the crisis tendency theories donot pay much attention to a trifurcation of sectors.

Feminist Revisions

As early as 1966, Marxist feminists such as Juliet Mitchell used the experi-ences of women's work to rethink the Marxist categorizations of society. Mitchellwas perhaps the first feminist theorist to suggest that reproduction (with familyas the linchpin) constituted a separate sphere of activity in society as a "kind ofsad mimicry of production" (1984, p. 33). Once having established reproductionas a separate sphere of economic activity, Marxist feminists accorded to it notonly the physical labor of biological reproduction but "the entire maintenanceprocess that keeps workers functional; it is done mainly in the home by women."(Donovan, 1986, p. 76). Whereas the earlier feminist literature relied on bifurcatedcategories of activity as a way to recenter the previously neglected private sphere,later feminist theorists actively engaged the multisectoral view.


An interesting recent U.S. development, acknowledging the predominance ofthe private for-profit sector, has been the introduction of the notion of genderingwithin the tripartite (public, for-profit, nonprofit) sectorization. Odendahl (1994),Odendahl and Youmans (1994), and Steinberg and Jacobs (1994) have contributedthe idea that the nonprofit sector, at least in the United States, is gendered female asa result of the composition and relative standing of its workforce as well as the kindsof services provided. The linking of women's spheres of production, reproduction,and maintenance to the nonprofit sector is an idea that also is gaining currencyin international research, especially around developing economies. Researcherssuch as Fisher (1994) point to the tremendous involvement of women in nonprofitdevelopment activities in less developed countries. Fisher's work is nicely comple-mented by a volume of essays on women and social change, collected by Perlmutter(1994), which argues that societal problems and needs increasingly are addressedby women through nonprofit organization forms in different national contexts. Therecent literature, linking women's work to activities of the nonprofit sector, under-lines the distinction between this type of economic activity and that which is per-formed in the private for-profit sector and the governmental sector. This new genderthinking in the nonprofit literature implicitly allocates societal maintenance tasks toprivate households (which are not the specific focus of study) and private nonprofitorganizations. They diverge from their feminist predecessors in broadening the no-tion of household duties to include community maintenance and development.

Household Economics

As the early feminists noticed the productive and reproductive capacities ofthe household, so too did the economists. Starting perhaps with Becker's (1965)seminal work on the allocation of time, the new home economics came into beingwith an emphasis on topics such as marriage, fertility, and the use of time and goodswithin households. The application of neoclassical economic principles to privatehouseholds, inviting economists to deconstruct the privileged unitary householdunit of analysis, resulted in a symmetrical modeling of market and nonmarket ac-tivity (Amsden, 1980). Nonprofits researcher Smith (1991) notes that the work ofhousehold economists has influenced the way that some nonprofits scholars havemapped societal sectors; this most probably helped spur the interest of nonprofitsresearchers in the gendering of sectors. Smith points to Billis 's (1989) notion of the"personal world" and Van Til's (1988) inclusion of the household (or informal!)sector in his map of social activity, both predating the gendering arguments.

A Pause for Religious Identification

Often forgotten in modern-day social theorists' models of society are the struc-tural vestiges of more ancient regimes, including especially religion and religious

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organizations (Cormode, 1994; Hall and Williams, 1994). Certainly, premodernsocieties were divided between the state or ruling system, the economic system(often tied into the state or ruling system), and the church, as Weber, Marx, andDurkheim make clear to the sociology audience. The historian Peter Dobkin Hall(1993) notes that, by medieval times, the church as an exceptionally powerfuland wealthy institution was oftentimes more formidable than the government it-self. Political scientist James Douglas (1987, p. 43) reminds us that "[t]he fieldsof activity we most readily associate with nonprofit organizations include healthcare, education, religion, the arts, and a vast array of social welfare services. Inmedieval times, these activities would have come primarily within the jurisdictionof the church rather than the state."

Whether religion or the religious sector was antecedent to economic sectorsand structures or an epiphenomenon of such, continues to be a great debate insocial theory, one that is not recounted here. However, we note that historians andpolitical scientists remind us that the voluntary sector in modern societies is theprogeny of religion (see, e.g., Schlesinger, 1949; Douglas, 1987; and Hall, 1993).

DISCUSSION

The preceding explication of alternative third sectors (e.g., private household,women's work, religion) suggests agreement with Alford (1992) that the symbolsthat we use to draw distinctions between sectors tend to obscure links among sec-tors. However, his solution, based on Edelman's distinctions between capitalism,democracy, and the state, remains incomplete in the light of claims made by thefeminist revisionists, religion theorists, and the suggested debate between the non-profits and informal-economy scholars. Although Alford aligns various nonprofitorganizations into either a state, capital, or democratic orbit "depending upon theirrelations to the institutional logics of the capitalist economy, the bureaucratic state,and a democratic culture" (1992, p. 22) he does not suggest what to do with proto-organizations or emergent organizations—the spontaneous associations of peoplenot yet structured (Messer, 1994)—or other social activities beyond the scope oforganization. We may question the use of capitalism, democracy, and state to de-marcate all social activity in the United States, as well as developing nations in theSouth and transforming nations emerging from command economies. Bringing afresh (feminist) perspective into these debates, we can loop all the way back to ourother notions of sectorization if we take into account McCarthy's (1996) reviewof literature. That review suggests that weak states (small public sectors?) are as-sociated with strong maternalist agendas—which themselves may be correlated towomen's power in nonprofit (and perhaps, informal) activity.

One way to understand inherent problems in sectorization is to question theoverlap and support relationships that each sector (here defined, although othersmight be posited) has with each other. Table III arrays each sector in a crosswisepairing with each other sector to suggest how organizations and economic activities

can easily fall into more than one sector. This table suggests that many economicand social activities cannot be placed clearly in delineated sectors. Comparingacross economies, we add the observation that any one activity may appear in dif-ferent designated sectors in different economies. Sector boundaries are permeablecross sectionally, and historically variable within given economies.

From the standpoint of any one sectorization, therefore, some social activi-ties slip through the classificatory net. The nonprofits literature itself is dominatedby organizational classifications that have left religious bodies woefully under-theorized (DiMaggio, 1992). At the same time, a growing literature on emergentorganizations (e.g., Messer, 1994) also speaks to the issue of what this tripartitesectorization of the economy has missed. This is the same critique that can belodged at the feminist revisionists for not taking enough account of religious or-ganizations, and it is the same critique that may be pointed at the religion theoristswho have not adequately theorized social activity in the family or the informaleconomy. Yet, pointing out how literature that fetishizes sectors misses most ofthe organizations and social activities on the edge is just the first step.


Table III. Cross-National Examples of Organizations and Economic Activities that Fallon the Boundaries of Sectors

Household

Government

Religion

For-profit

Nonprofit

Informal

Household

—

—

—

—

—

—

Government

Socializedhealth/child care

—

—

—

—

—

Religion

Familyreligiousobservance

Religiousstates (e.g.,Israel,Iran)

—

—

—

—

For-profit

FamilyBusiness

Partiallyprivatizedfirms

Spirituallyinfusedfirms (e.g.,MormonsandMarriott)

—

—

—

Nonprofit

NonprofitGroup-livingHomes

Contracting/shadow state

Churches

Corporatefoundations/giving

—

—

Informal

FamilyInformalBusiness

For-profitactivity incommandeconomies

Undergroundreligiousobservance(Judaism inSovietUnion)

Privatebusiness incommandeconomies(Farms inSovietPoland)

RussiancharitiesunderTsaristpoliticalsystems

—

146 Abzug

Whether the construction of an alternative classification of organizationsbased on different orbits of social activities is itself a useful enterprise remains anempirical question. Certainly, historians can look at present-day sectoral fetishesand explore preconditions as a way to understand how socioeconomic activitygets structurated (Giddens, 1979) in different societies. Identifying preconditionsof a host of different sectors (along the lines suggested earlier) can lead us topredictions about what kinds of socioeconomic activities societies may be likelyto support (Table II is a step in this direction). Such predictions themselves canbe used to stimulate change (modification in preconditions) toward or away frompredicted outcomes.

Further, as stated in the introduction, nation-states allocate time and resourcesamong units of activities and long have relied upon sectorization for guidance. Itis because allocation and regulatory decisions are based on these sectoral con-structions that they are of interest to politically motivated actors. Disposing of thesector categories currently used will not solve taxation and regulation problems,but rather will complicate such processes. Broadening sectoral definitions mayrope in more activity, but at the risk of misclassification. Deconstructing the sec-tors into units that logically match a nation-state's competitive priorities might beanother use for this critique, one that contextualizes all socioeconomic activity ofthe state in an environmentally broader (comparative) and more goal-oriented (mo-tivational) manner. At this point, more field research is needed to determine howsocial activity is organized in different societies depending upon characteristics ofstates, market systems, civil societies, family units, nonprofit or nongovernmentalinstitutions, religious institutions, and other undertheorized units.

Typologies of sector outcomes may be based on whether states are weak orstrong (laissez-faire or interventionist), centralized or decentralized, democratic ordictatorial all along continuums; whether market systems are centrally controlledor relatively unregulated and to what extent they are separated from the other arenasof social activity; whether intrafamily or intrahousehold activity is privatized orstate regulated and to what extent such activity is separate from the other spheres ofsocial activity; whether religion is state sponsored, state protected, or state attackedand how religion is dependent upon the other units of social activity; whetherinformality of exchange flourishes, is repressed, or exists at all and to what extentit is tied to the other areas of social activity; and what is the extent of nonprofitor nongovernmental activity and how independent is it from the institutions andproto-organizations of other fields of social activity. Social systems then could beclassified according to where they fit into such schema and, conceivably, policyinitiatives could be informed by such a mapping. The task of specifically outliningthis framework is left to the next paper.

This review is the starting point of a greater project of establishing a frame-work for the regulation (even taxation) and classification of social activity withinsocieties. If it raises questions to begin discussion of this issue in an internationalcontext, it has succeeded.


ACKNOWLEDGMENTS

A previous version of this paper was presented at the 1994 American Soci-ological Association Annual Conference. The author would like to thank HaroldPollack, Carl Milofsky, Peter Dobkin Hall, and D. Scott Cormode for guidanceat the conceptual stage of this project. The author also thanks Helmut K. Anheierand Jeremy Kendall for expert editorial advice throughout.

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