The Reemergence of Self-Employment: A Comparative Study of Self-Employment Dynamics and Social Inequality

Chapter 1
SELF-EMPLOYMENT DYNAMICS IN ADVANCED ECONOMIES
Walter M�ller and Richard Arum
IN THE SECOND half of the twentieth century, social scientists typically viewed self-employment as an obsolete remnant of past forms of economic organization: its small-scale mode of production was expected to disappear under the dominating logic and competitive pressures of capital accumulation and mass production. Contrary to such predictions, recent developments have demonstrated that self-employment has resisted these pressures. Rather than diminishing its role in contemporary advanced societies, self-employment has grown in many national settings over recent decades. However, recent economic and social changes have not only reinvigorated self-employment, but also affected its character. Both developments require that social stratification researchers rethink their assumptions and reconceptualize their approach toward examining this activity.
Even if self-employment has merely persisted, it still represents a highly particular way to gain one's living in modern economic contexts. For most advanced societies, indeed, a cross-sectional picture immediately demonstrates that the self-employed constitute only a small fraction of the labor force. At any given time, only a minority fail to follow the normative practice of selling their labor capacity to an employer, but rather use their human, social, and economic capital for a business of their own and at their own risk. The first basic question then still is: What are the factors leading individuals into self-employment and then inducing them to remain active in these kinds of endeavors?
A self-employment rate of about 10 percent of the nonagricultural labor force is typically found in most advanced societies. However, in some societies this rate is much higher, in particular in the south of Europe and in Asian countries. In these countries, the rate of self-employment may be more than double the usual size, and in some national settings it accounts for 25 to 30 percent of the labor force. In earlier decades the high cross-national variation in the share of self-employment often was attributed to delays in economic development with convergence expected in the course of modernization. Today such explanations have lost much of their plausibility as even in economically highly advanced countries, such as Italy or Japan, self-employment has remained at very high levels. One should expect that societies with these widely varying levels of self-employment also vary in other ways, such as in the organization of work or even more generally in principles of social organization. How, then, can we account for the continued strong variation between countries in the presence of self-employment today? What are the implications of different economic and social contexts for the level and character of self-employment?
In the past, sociologists often assumed that self-employment to a large extent could be equated with the petty bourgeoisie, considered as a particular social class with its own specific social basis and principles of class formation and reproduction. Even though it has been characterized as the "uneasy stratum" (Bechhofer and Elliott 1981) and its internal heterogeneity has been widely acknowledged, it was assumed that this class mainly consisted of small proprietors, shopowners, skilled craftspeople, nonprofessional service providers, and others with similar working conditions who were running their own business. The bulk of the self-employed did indeed belong traditionally to these groups. Besides not working for wages or salaries, they shared a number of further common characteristics, notably a high level of intergenerational inheritance, a particular "moral economy" (Bechhofer and Elliott 1981:189), and specific political attitudes and orientations. Significant changes in the technology of production and the economic opportunity structure have recently occurred in many countries, including a revolution in computing and new communication technologies; expansion of female employment; the growth and persistence of mass unemployment; the decline in goods-producing industries and concentration of the distribution of goods in larger units; the rise of the service sector and increased professionalization; the growth of flexible production; and the spread of nontraditional work arrangements. For all these developments, arguments have been advanced that have repercussions on self-employment. What has been the impact of economic change on the character of self-employment, the composition of the group, its internal homogeneity, and its economic strength and stability?