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Ibid., 485.
Granovetter points out, ˜˜Social in¬‚uence here [in the oversocialized account] is an
external force that, like the deist™s God, sets things in motion and has no further effects “ a
force that insinuates itself into the minds and bodies of individuals (as in the movie
Invasion of the Body Snatchers), altering their way of making decisions. Once we know in
just what way an individual has been affected, ongoing social relations and structures are
irrelevant™™ (486). Also see Robert H. Bates, ˜˜Contra Contractarianism: Some
Re¬‚ections on the New Institutionalism,™™ 18 (September 1988), 387“401.
Also see David Knoke, Political Networks: The Structural Perspective (Cambridge:
Cambridge University Press, 1990).
Conceptualizing the bazaar 69

preindustrial economies operate on principles of pro¬t maximization.89
Meanwhile, industrial societies are not as uniformly disembedded as
both approaches would have us believe “ many ¬rms are linked by
interlocking directorates, disputes among businesspeople are typically
solved informally, and subcontracting leads to long-term relations
among ¬rms. Granovetter argues ˜˜that the level of embeddedness of
economic behavior is lower in nonmarket societies than is claimed by
substantivists and development theorists, and it has changed less with
˜modernization™ than they believe.™™90 In other words, Polanyi overstates
the extent to which embeddedness applied to historical markets and
understates the extent to which it matters in modern markets.
Instead, the New Economic Sociologists argue that an approach to
economies that places actors within a web of networks shaping their
actions and situating markets in a particular time and place can help us
understand behavior that both seems to follow pro¬t maximization and
is driven by non-means“end logics. The central tenets of New Economic
Sociology are that economic action has noneconomic motives (e.g.
quest for approval, status, sociability, and power), the economy is
socially situated (i.e. not simply driven by supply and demand), and
economic institutions are socially constructed within a history, set of
power relations, and con¬guration of institutions.91 ˜˜Embedded
action,™™ Swedberg and Granovetter claim, ˜˜is socially situated and
cannot be explained by reference to individual motives alone. It is
embedded in ongoing networks of personal relationships rather than
being carried out by atomized actors. By network we mean a regular set
of contacts or similar social connections among individuals or groups.
An action by a member of a network is embedded, because it is expressed
in interaction with other people.™™92
This notion of embeddness helps us understand why patterns of social
relations are critical to exchange. The embedded approach to economic
activity views actions as constrained by ongoing and meaningful social
relations.93 On the one hand, economic actions are simply explainable
by identifying preferences and assigning strategic actions. Exchanges do
not take place in social and temporal vacuums, and once we begin to

Mark Granovetter, ˜˜The Nature of Economic Relationships,™™ in The Sociology of
Economic Life, ed. Richard Swedberg and Mark Granovetter (Boulder: Westview Press,
Granovetter, ˜˜Economic Action and Social Structure,™™ 482.
Richard Swedberg and Mark Granovetter, introduction to The Sociology of Economic
Life, p. 9.
By meaningful, I mean behavior has a logic beyond utility maximization and can have
expressive and experiential attributes.
70 Bazaar and State in Iran

place greater focus on patterns and contexts that transform isolated
buyer“seller dyads into component parts of chains of relations, many of
the puzzles introduced by new economic institutionalists become less
problematic. Networks are the ecology in which negotiating and dis-
covering prices, appraising and gathering information about reputations,
resolving con¬‚icts, and mobilizing assets occur in all economies.
In the subsequent chapters I investigate how the actions of individual
bazaaris and modes of exchange are fundamentally shaped by various
relational forces such as the longevity of relations, the multiplicity of
spheres of interaction, and the presence of third parties and entire
communities that may be privy to transactions. Neither informal insti-
tutions nor moral principles are created by isolated willing individuals.
However, neither are they preordained givens embedded into the psy-
ches of individual members of a community or class. These norms,
expectations of behavior, and symbolic structures are created by ongo-
ing relations and patterns of interaction that both teach (or invent)
traditions and devise means to enforce them. Preferences are as much
endogenous to the social process, as they are the independent causal
forces giving rise to them. As these practices are normalized and actions
are disciplined, group identities are forged. Thus, these ongoing rela-
tions create both bazaaris and bazaars.

The Bazaar as networks
New Economic Sociology™s embedded networks approach to markets is
the source of my conceptualization of the Tehran Bazaar. I de¬ne bazaars
as bounded spaces containing a series of ongoing and socially embedded net-
works that are the mechanism for the exchange of speci¬c commodities.
This de¬nition may seem quite ubiquitous; nonetheless from it one
can probe for empirical complexities of the bazaar and delve into
broader political-economy issues. First, while this conceptualization is
similar to the class approach in that it privileges the economic role of the
bazaar, it does not disengage the economic from the social setting.
Instead, it seeks to specify the mechanisms that bring together the
economic and social factors in a manner that may foster unity, in spite of
diversity. Second, this de¬nition incorporates the observation found in
the informal economy literature and takes networks as the unit of ana-
lysis, yet leaves open the issue of whether these networks are informal,
formal, or a combination and creation of the two. Third, this broader
de¬nition based on ongoing relations implies that bazaars may vary over
time when the form of networks shifts. Finally, following the insights of
the informational scarcity paradigm, variations across sectors would be
Conceptualizing the bazaar 71

expected when the nature of the ˜˜speci¬c commodities™™ involved in
transactions differs.
The ¬rst term of the de¬nition “ a distinct space “ is what provides the
bazaar its sense of totality. Most de¬nitions literally begin with spatial
discussions. For example, the Encyclopaedia Iranica begins its entry on
the bazaar with one of the basic meanings of bazaar being ˜˜the physical
establishments, the shops, characterized by speci¬c morphology and
architectural design™™94 and continues with a description of the basic
architectural components that comprise the bazaar. And I have dis-
cussed how the physical space undergirds the conceptualizations of
several scholars. Space, however, has rarely been systematically incor-
porated into discussions about the bazaar. This is an important over-
sight since the bazaar™s essential meaning comes from its physical
characteristics “ narrow allies, vaulted ceilings, and historic structure. In
most Iranian cities, if you tell someone that you are going to the bazaar
the other person will know exactly where you are headed. In fact, in
Tehran, the shared taxis that transport passengers from major squares
and intersections often have a route to the bazaar. You hear drivers
calling out ˜˜bazaar, bazaar™™ from all of Tehran™s major squares (Azadi,
Shush, Tajrish, Vanak, and Resalat Squares). While this is the case in
other major cities in the Middle East (Istanbul, Damascus, and Aleppo),
it is most de¬nitely not the case in all urban centers. Despite having a
historic district and a contemporary tourist market, Cairo does not have
an equivalently well-speci¬ed locale. (A Cairen, for example, would not
fully understand your destination if you said you were headed to the suq.
They would simply conclude that you are going shopping.)
In my interviews with members of the Tehran Bazaar and retailers and
businessmen in the non-Bazaar areas, the spatial component was the
common denominator in the de¬nitions of the Bazaar. From the internal
perspective the primary de¬nition of the Bazaar is the physical space.
When I asked members of the Bazaar what bazaar or bazaari meant to
them, they almost uniformly ¬rst turned to physical de¬nitions “ com-
menting that it was under the shadow of the Shams al-˜Emareh (or the
Palace clock tower just north of the Tehran Bazaar) or simply described it
as what lies within Mawlavi, Khayyam, 15th of Khordad, and Mostafa
Khomeini streets (see Map 2.1). The historical continuity of the space
helps reinforce the spatial dimension differentiating the Tehran Bazaar
from other commercial units and public spaces. Finally, as illustrated in
subsequent chapters, the rooted nature of the market in a place helps
establish the necessary foundation for communal allegiance, with its

Bonine, Encyclopdia Iranica, s.v. ˜˜Bazar,™™ p. 20.
72 Bazaar and State in Iran

con¬ned nature fostering long-term and face-to-face interactions among
bazaaris. To put it more emphatically, if you do not spend enough time in
the Bazaar, you cannot become a bazaari, and if you do spend enough
time in the Bazaar, you very well may become a bazaari (as some feared
would happen to me). Thus, the Bazaar must be spatially, as well as simply
functionally, de¬ned “ it is not only a market; it is a marketplace.95
Finally, this conceptualization does not prohibit a political reading of
the conglomeration of socially embedded networks. Embedded network
analysis has shed light on the operation of economies and societies and is
a useful tool in considering bazaaris as a dynamic group. Nonetheless,
politics, state institutions, and policies are typically bracketed out of these
formulations.96 This is in part due to their choice of subjects, namely
studies of relatively stateless settings such as peasant and tribal commu-
nities in the developing world and private industrial sectors in advanced
industrial economies. In the process, these studies have largely ignored
vast swaths of economic experience where state policies and actors play a
fundamental role in capital accumulation and structuring market
opportunities. Most contemporary economies, especially those in the
developing world, are heavily regulated by states and contain state-owned
enterprises. Actors engage both private citizens and public of¬cials
though networks, while state institutions stipulate which actors comprise
economic networks. By extending economic sociology to more heavily
regulated economies, I hope to show that actors do not merely adopt or
establish relations within a network, but that types of relations and forms
of networks are dictated to them by the political economy. Politics
determines how networks, resources, and formal institutions are inter-
laced with one another.
Also, the embedded networks approach has remained con¬ned to
sociology, with political scientists slow to directly apply its concepts and
hypotheses in their empirical studies.97 This study, however, suggests
that this approach not only can be applied to a new setting (an urban
economy in the Middle East) and to an explicitly political question (the
con¬guring of state“society relation in revolutionary ties), but also can
be developed in directions that will contribute to our understanding of

Daniel Kemmis, Community and the Politics of Place (Norman: University of Oklahoma
Press, 1990).
Neil Fligstein, ˜˜Markets as Politics: A Political-Cultural Approach to Market
Institutions,™™ American Sociological Review 61(August 1996), 657.
Granovetter™s essays are often referenced in discussions about theories of institutions,
especially as a critique of rational choice approaches to institutions, and also in some
discussions of the importance of networks of social movements. But more extended
applications of the of New Economic Sociology are rare.
Conceptualizing the bazaar 73

how institutions matter, how social actors negotiate state policies, how
states govern, and why group organization changes over time.
Third, while analyses of inter- and intra¬rm organization have cri-
tiqued the sharp distinction between market and hierarchy, the implicit
differentiation between community and hierarchy remains accepted. By
resituating the concerns of scholars interested in governance within
social groups98 in terms of understanding how societies are composed of
networks, I propose that community and hierarchy are often fused into
forms of governance that shape authority and power relations in various
ways “ allowing us to differentiate between cooperative and coercive
hierarchies. I use the concept of embedded networks as a lens with
which to study microlevel politics, with the forms of governance of the
Tehran Bazaar being the creation of these patterned relations.

By summarizing the prevailing conceptualizations of the bazaar, I have
called attention to the tendency of scholars to treat the bazaar as an
undifferentiated, static, and collective entity. Integrating the empirical
observations of past research into a framework that allows us to address
the central questions of the project “ and discussions about markets more
generally “ proves fruitful. An embedded networks approach encourages
us to study norms of behavior, social customs, and economic practices
as products of ongoing relationships that are continuously constructed
and reproduced by interactions with their community, shaping it as
much as being shaped by it. Thus, the Tehran Bazaar™s corporate
identity or apparent homogeneity is problematized. It is not something
that organically springs from shared traditional culture or psychology as
suggested by modernization theory. Nor is it a product of a shared
position in the mode of production, as assumed by class analysis. Rather
the Bazaar™s capability to act collectively, maintain institutions, and
forge a group identity develops from concrete historical space with
particular constellations of relations. Bazaars consist of actors tied to
one another in ongoing relations that help reinforce codes of conduct by
practice and expectation, not functional utility calculation or socializa-
tion. We must now apply and elaborate these formulations and begin to
contemplate the impact of state policies on various network parameters.

Michael Taylor, Community, Anarchy and Liberty (Cambridge: Cambridge University
Press, 1982); Michael Taylor, The Possibility of Cooperation (Cambridge: Cambridge
University Press, 1987); Elinor Ostrom, Governing the Commons (Cambridge: Cam-
bridge University Press, 1990); and Robert C. Ellickson, Order without Law: How
Neighbors Settle Disputes (Cambridge, MA: Harvard University Press, 1991).
3 Bazaar transformations: networks,
reputations, and solidarities

Law and order arise out of the very processes they govern. But they are not
rigid, nor due to any inertia or permanent mould.
Bronislaw Malinowski1

Solidarity has to be constructed out of little pieces, rather than found already
waiting, in the form of an ur-langauge which all of us recognize when we
hear it.
Richard Rorty2

I cannot remember the number of times that bazaaris complained to me
that they could not trust their exchange partners, but it seemed to me to
be the grandest of tropes. Their protests were articulated through a
comparison between the past and the present. ˜˜The past™™ was a time
when a man™s word was as good as gold. It was a time when the maxim
that a truly honest bazaari ˜˜places his mustache as collateral™™ (or even
˜˜places a strand of his mustache as collateral™™)3 was a fact of daily life.
No contracts or checks were signed. Instead a handshake was exchanged
and honor was placed as a security deposit. Then came ˜˜the present,™™


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