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when even checks and legal documents are not honored, and the threat
of shaming and gossip is not a viable sanction. The refrain was ˜˜all the
checks bounce.™™ The social scientist in me doubted this nostalgic nar-
rative of a lost golden past and sought some form of independent, if not
direct, veri¬cation. Even though non-bazaaris and the secondary lit-
erature reaf¬rmed these narratives, I was still skeptical. Despite knowing
that Iran is not the best place for time series data, I decided to search for

1
Bronislaw Malinowski, Crime and Custom in Savage Society (Totowa, NJ: Little¬eld,
Adams, and Co., 1969), pp. 122“3.
2
Richard Rorty, Contingency, Irony, and Solidarity (Cambridge: Cambridge University
Press, 1989), p. 94.
3
The expression is sebil gero gozashtan (or tar-e sebil gero gozashtan). The mustache is used
as a symbol of integrity, manhood, and reputation. The English expression for ˜˜greasing
someone™s palms™™ in Persian is to ˜˜fatten (grease) someone™s mustache™™ and refers to
fattening their lot by paying respect to them.

74
Bazaar transformations 75

statistics. Surprisingly the Annual National Statistics (Salnameh-ye Amar-
e Keshvar) included statistics for the number of cases of bounced checks
settled in civil courts. I began with the 1965 volume and noted the
numbers in each subsequent edition. Indeed, despite some incon-
sistencies in measurement, there was a distinct and dramatic increase in
the national ¬gures. While there was a slight increase in the 1960s and
1970s, the major proliferation came after 1988, when the number
quadrupled in a ¬ve-year span. Then from 1995 to 1998 the number of
cases involving bounced checks almost doubled.4 And this occured
while the punishment for bounced checks was resolutely being enforced.
Reportedly, over 17,000 inmates in state prisons are serving time for
writing bad checks, the second largest group of prisoners after those
imprisoned for drug-related charges.5 The change was undeniable and
dramatic; I could not rebuff the bazaaris™ juxtaposition of the era of
placing mustaches as collateral with that of bounced checks.
Assuming that there were fewer cases of bounced checks in the 1960s
and 1970s because people either did not use checks or solved their
disputes outside the court of law, the data can be interpreted as showing
the rise of state-sanctioned exchange mechanisms and arbitration, and
the emergence of a more impersonal society in which face-to-face
relations and communal regulation are declining.6 Therefore, the gov-
ernance of commerce, or the means, monitoring, and enforcement of
exchange, has changed. The Bazaar, as an elaborate set of networks
tying merchants, wholesalers, brokers, and retailers, continually pro-
duces a political economy. These networks facilitate exchange by
identifying potential exchange partners and safeguarding agreements. In
the process these embedded actions create expectations and assign
reputations to actors who depend upon these networks for products,

4
The annual number of cases settled in court for bad checks was roughly 10,000 in the
1970s, remained at the same level in the 1980s and then began to increase in the late
1980s, reaching over 22,000 in 1991, 41,000 in 1993, and over 400,000 in 1997 and
1998. Supporting this trend, ¬gures for embezzlement, bribery, and forgery show an
equivalent increase.
5
Islamic Republic News Agency, November 27, 2001.
6
There are other interpretations; in particular the increase in bounced checks may be
caused by an increase in transactions or improvements in record keeping. While I cannot
categorically refute these views, I have certain reasons to prefer the governance
interpretation. First, the argument based on an increase in transactions suggests a
simultaneous gradual increase in transactions and bounced checks, and thus requires a
mechanism to link transactions to breaking agreements; therefore in the last instance the
rise in bad checks will have to rest on a governance-type analysis. The interpretation
based on the assumption of a more robust bureaucracy may in fact have some truth, but
it is unlikely that it would have led to such dramatic and persistent increases in the rate of
bounced checks. Also, neither of these interpretations is consistent with interviews
conducted in Iran.
76 Bazaar and State in Iran

credit, information, and their status. Thus, contrary to Avner Greif™s
provocative analysis of Maghribi and Genovese traders, cultural beliefs
are not the cause of particular commercial institutions and patterns of
relations, but the experience of Tehran™s bazaaris suggests that networks
lead to norms of behavior and coordinate expectations.7
The Bazaar is primarily an economic unit and, accordingly, this dis-
cussion privileges economic matters. Nevertheless, the empirical evi-
dence supports the theoretical contention posited by embedded
approaches to markets, that the realm of economics is not detached
from the social order. I will illustrate how economic, social, and political
factors were woven together like the ¬bers of a rope to create cooperative
hierarchies during the latter half of the Pahlavi rule and unraveled to generate
disparate coercive hierarchies during the Islamic Republic.
This chapter is largely descriptive and focuses on the internal patterns
of the Bazaar, but it is not meant to be an exhaustive and detailed
account of the Tehran Bazaar™s functioning or transformation. Rather, I
seek to identify the mechanisms that tie the various commercial levels
together and demonstrate how this pattern has signi¬cantly changed
since the Revolution. As opposed to conceptions of the bazaar discussed
in the previous chapter, I emphasize the objective heterogeneities of its
members.8 Once we accept economic, ethnic, religious, and political
diversities exist in the Bazaar, apparent solidarity becomes something
that must be explained and maintained.
Second, in providing a description of the Bazaar, the chapter argues
that social order, like tradition, is not an organic phenomenon that ¬‚ows
from primordial attributes or cultural af¬nities. Governance within
groups is inextricably connected to purposive actions within speci¬c
con¬gurations of relations and ties. In fact despite the presence of
multiplicities of class, status, ethnicity, religiosity, age, and trade in the
Tehran Bazaar, during the 1960s and 1970s Tehran™s central market-
place was characterized by long-term, multiplex, and crosscutting ties.
The demise of the cooperative hierarchies in the 1980s and 1990s
7
Greif refers to the ˜˜crystallization™™ of cultural beliefs without elaborating how and why
this occurs. The analysis in this chapter suggests that the structure of relations within
groups is the critical factor. Avner Greif, ˜˜Cultural Beliefs and the Organization of
Society: A Historical and Theoretical Re¬‚ection on Collectivist and Individualist
Societies,™™ Journal of Political Economy 102 (October 1994), 912“50.
8
Most secondary sources mentioned in Chapter 2 view bazaars as homogeneous entities.
For more heterogeneous conceptualizations see the work of Howard Rotblat, which
differentiates bazaaris on the basis of their economic role and sectors. Howard J. Rotblat,
˜˜Stability and Change in an Iranian Provincial Bazaar,™™ Ph.D. dissertation, University
of Chicago (1972). Ahmad Ashraf™s analysis divide bazaaris into merchants (tojjar) and
guilds (asnaf), and Misagh Parsa stresses political differences. See various articles by
Ahmad Ashraf and Misagh Parsa listed in bibliography.
Bazaar transformations 77

reinforces the argument that community is not primordially engrained
or established because of ef¬ciency concerns, but is produced through
actions and within relations that are subject to change and demise.
Although most observers continue to assume that the Bazaar™s solidarity
has lasted, I will conclude by arguing that although many individual
bazaaris may continue to prosper, the Bazaar™s form of governance has
changed and, with it, so have the interpersonal relations that are the
bedrock for feelings of solidarity.

The cooperative hierarchies of the prerevolutionary
Bazaar
The Bazaar of the late Pahlavi era was very much the quintessential
embedded economy described by anthropologists and sociologists.
Social, spatial, religious, and familial forces were inseparable from the
economic sphere and norms and institutions were mutually enforcing. A
religious gathering helped introduce bazaaris who might eventually
become trading partners, and a neighborhood engagement party was an
opportunity for fellow members of a trade to meet and gather the latest
news about prices. Meanwhile the price of a good was dependent upon
past relations, and credit-worthiness was contingent upon reputation
within the community, which was, in turn, based on generosity and
charity as much as commercial acumen. Exchange dyads could not be
isolated from either interpersonal ties or ties in the rest of the commu-
nity. Commercial exchange and social ties were grafted onto one
another through long-term, multifaceted, and crosscutting relations.

Stable ties and roles within value chains
Reliable and consistent estimates for the number of workers and com-
mercial units in the Tehran Bazaar during the Pahlavi era or today are
hard to come by. First, the Bazaar has never been a distinct administrative
unit, so government ¬gures are not reported for the Bazaar; instead they
are reported at the level of the larger districts (district 5 at the time of the
1966 census and district 12 after the Revolution). Second, it is not easy
to estimate the sheer number of employees working out of each retail
store or wholesale of¬ce. Most employees are family members or
informal apprentices, and often several members of the family launch
separate operations from a single establishment or various individuals
place goods on consignment with bazaaris. Also, many workshops and
commercial units were unregistered or did not maintain their registra-
tion. Given these limitations, estimates vary and are highly imprecise.
78 Bazaar and State in Iran

The Organization for the Protection of Ancient Remains and the Teh-
ran Municipality conducted a survey a few months after the Revolution
and estimated that by the late 1970s the Bazaar contained some 30,000
commercial units in thirty-three sectors with an estimated 50,000
employees.9 Parsa states that by the time of the Revolution the number
of shops and workshops in Tehran™s Bazaar area reached 40,000, with
half of these located in the covered bazaar, and the remainder in the
immediate vicinity.10 As will be discussed in greater detail in the fol-
lowing chapter, we can be fairly certain that the size of the Tehran
Bazaar was steadily increasing in the post-World War II era.
Who composed this value chain in the Pahlavi era? The evidence
suggests that there were important inequalities and internal differ-
entiations within the Bazaar. This heterogeneity, however, was managed
by repeated exchanges between members of a rather well-de¬ned hier-
archy where the level of wealth translated into a speci¬c role and status.
An older bazaari recalled that ˜˜each person knew their own position and
the situation (mawqe˜iyyat) of those around them.™™ The commercial
distribution channel tied importers and exporters to various levels of
wholesalers, distributors, and retailers through brokers, middlemen,
and moneylenders acting as network makers who ensured smooth
transactions.11
The merchants (tajer, pl. tujjar) were economically the most powerful
group in the Tehran Bazaar. These ¬gures operated family-run trade
houses specializing in importing consumer and intermediate goods and
exporting agricultural goods and hand-woven carpets.12 While in the
¬rst half of the twentieth century importers dealt in a wide variety of
goods ranging from foodstuffs to machinery, by the 1960s importers and
exporters were specializing in a more select number of often related
commodities. Ideally, they would set up agreements with foreign ¬rms
establishing them as that ¬rm™s sole Iranian representative, thus creating
a monopoly over speci¬c brands of goods.13

9
Asar no. 2“4 (1359), 22 and 25. It is not clear from the text how commercial units are
de¬ned.
10
Misagh Parsa, Social Origins of the Iranian Revolution (New Brunswick, NJ: Rutgers
University Press, 1989), p. 92.
11
The Tehran Bazaar is not restricted to these actors, but they constitute the pillars of the
value chain. Other categories within the Bazaar are apprentices, bookkeepers, porters,
peddlers, those involved in food services, and customers.
12
I emphasize importers in this discussion since the majority of merchants in the Bazaar
were involved in import businesses, rather than export. The export of hand-woven
carpets will be discussed in Chapter 5.
13
˜Ali-Asghar Sa˜idi and Fereydun Shirinkam, Mawq˜iyyat-e Tojjar va Saheban-e Sanaye˜
dar Iran-e Dawreh-ye Pahlavi: Sarmayehdari-ye Khanevadegi-ye Khandan-e Lajevardi
(Tehran: Gam-e Naw, 1384 [2005]).
Bazaar transformations 79

Importers in the Bazaar almost universally prospered in the 1960s and
1970s. These importers controlled a large share of consumer and
intermediate imports prior to the Revolution. The rise in oil revenue and
consumer demand drove up imports of consumer goods from $124
million in 1963, to over $217 million in 1970, to a prerevolutionary peak
of $2,700 million in 1977. In relative terms, the ratio of consumer
imports to total imports declined in the 1960s since Iran was following
import-substitution industrialization; however, as the economy began to
overheat and the regime opened the gates to outside markets, the ratio
steadily climbed to reach almost a quarter of all imports by the end of
the 1970s.
Thanks to their wealth, the merchant class was the most socially
mobile bazaari group. As Iran™s economy began to grow in the post-
World War II era and the state established tariffs to protect nascent
industries, many of the most prominent merchant families in the Tehran
Bazaar, as well as others from larger cities, transferred their assets into
industry. Many industrialists came from trading and bazaari back-
grounds. The most high-pro¬le representative of this phenomenon is
Ahmad Khayyami, who was from a bazaari family from Mashhad that
specialized in exporting dried fruits. He ¬rst became a representative for
European car companies and later became the owner of Iran™s largest
automobile production ¬rm. With the patronage of the Shah he also
branched out to establish a small chain of department stores.14 Some of
the other well-known examples of bazaari merchants who moved from
importing operations into manufacturing were the Lajevardi family, the
Khosrawshahi family, the Mofarrah family, and Vahhabzadeh. In
addition, Vagheªs study of entrepreneurs shows that the vast majority
of fathers of entrepreneurs in the mid-1970s were involved in business
(as opposed to being landlords or government of¬cials).15 The mer-
chants were also one of the ¬rst groups to move to the lush northern
environs of Tehran and by the 1970s established of¬ces in smarter areas
of the new business districts north of the Bazaar. Yet, most maintained
their of¬ces in the Bazaar™s large vaulted warehouse areas known as
timchehs and saras, and they maintained relatively close contact with the
Bazaar neighborhood.
Although wholesale establishments were a relatively small percentage
of all the units in the marketplace, in terms of volume of activity they
played the most active role, with their commercial activities reaching
14
Robert Graham, Iran: The Illusion of Power, rev. edn. (New York: St. Martin Press,
1980), pp. 47“8.
15
Mohammad Reza Vaghe¬, Entrepreneurs of Iran: The Role of Business Leaders in the
Development of Iran (Palo Alto, CA: Altoan Press, 1975), pp. 81“3.
80 Bazaar and State in Iran

across the entire country.16 As merchants cultivated relations with
multinational companies and entered industry, the distribution of
imported goods was undertaken by a multilayered wholesale class.
National-level wholesalers (˜omdeh-forush) were based in the Tehran
Bazaar and operated with a large volume of goods. Often before the
goods arrived in Iran, they would sell them to several intermediary
distributors (bonakdar) who operated warehousing facilities and had an
established and stable network of smaller bulkers and jobbers working at

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