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cial heart of the capital. Tehran, moreover, was the economic epicenter of

Ibid., p. 48.
Habib Ladjevardi, Labor Union and Autocracy in Iran (Syracuse, NY: Syracuse
University Press, 1985), p. 236.
144 Bazaar and State in Iran

an unevenly growing economy. The bulk of large industrial establish-
ments and about a third of all industrial units were in Tehran. Meanwhile
in the mid-1970s, 40 percent of all national investment and 60 percent of
all industrial investment was in the capital.50 According to a survey con-
ducted in 1979, 40 percent of total employment in retail and 60 percent in
wholesale activities was in Tehran.51 Thus, the rapid urbanization in Iran
the expansion of infrastructure, and the primacy of Tehran, made the
capital an ideal nexus for foreign exporters and local wholesalers to reach
the bulk of the Iranian market.
The Bazaar™s domination of the wholesale market for consumer
goods occurred despite the reorganization of urban space and the
emergence of newer commercial areas. In the late Pahlavi era new
business districts extended north from the Bazaar along Ferdawsi,
Lalehezar, and Sa˜di streets and shopping districts around Takht-e
Tavus Street, which catered to the upper middle class and ex-patriot
communities that lived in Northern Tehran. While these new regions
provided new retail areas for consumers, they were dependent on the
Bazaar™s wholesalers and importers who had access to credit, whole-
saling facilities, and networks that ensured large operations.52 Thus,
like the European experience, older enterprises ¬‚ourished with the
urbanization-led capital accumulation, increasing consumerism, mon-
etization of wage labor, and expanding and improving distribution and
information systems. Evidence from late-nineteenth-century Europe
suggests that locational advantages and established client and supply
networks buffered ˜˜traditional™™ retailers and wholesalers from com-
petition with department stores.53 As in the case of the northeastern
industrial region in the United States, which has withstood new
migration ¬‚ows, demographic shifts, and technological changes to
maintain its preeminent role as a business and industrial corridor
through increasing returns from its location,54 through the 1970s the

On the primacy of Tehran see Ebrahim Razzaqi, Ashnaii ba Eqtesad-e Iran (Tehran:
Nashr-e Nay, 1376 [1997]), p. 55; Bahram Abdollah-Khan-Gorji, ˜˜Urban Form
Transformations™™; ˜Ali Asghar Musavi ˜Ebadi, Shahrdaran-e Tehran az ˜Asr-e Naseri ta
Dawlat-e Khatami (Qom: Nashr-e Khorram, 1378 [1999]), p. 105.
Hooshang Amirahmadi and Ali Kiafar, ˜˜Tehran: Growth and Contradictions,™™ Journal
of Planning Education and Research 6 (Spring 1987), 167“77.
Kazem Vadi˜i, ˜˜Bazar dar Baft-e Novin-e Shahri,™™ Yaghma 25 (Farvardeen 1351
[March“April 1972]), 9“19. Ahmad Ashraf, ˜˜Bazaar-Mosque Alliance: The Social
Basis of Revolts and Revolutions,™™ International Journal of Politics, Culture, and Society 1
(Summer 1988), 522.
Geoffrey Crossick and Heiz-Gerhard Haupt, The Petite Bourgeoisie in Europe 1780“1914
(London: Routledge, 1995).
Paul Krugman, ˜˜History and Industry Location: The Case of the Manufacturing Belt,™™
American Economic Review 81 (May 1991), 80“3.
Networks in the context of transformative agendas 145

Tehran Bazaar maintained its commercial supremacy because of its
historical and locational advantages.
Space is not only a physical location; it is also a relational force. The
spatial cohesion helped maintain cooperative hierarchies within the
Bazaar in a number of ways. The spatial homogeneity created a forum in
which the community monitored itself, exchanged information regard-
ing potential partners and clients, spread information about the latest
market conditions, and sought advice and arbitration from others in the
same ¬eld. The narrow alleyways allowed, and continue to allow, gos-
siping and public shaming of norm violators. One day when I was in a
carpet dealer™s shop, two merchants who were carrying on a conversa-
tion about the availability of a certain type of carpet began to discuss a
particular merchant who had reneged on a series of promises. They
agreed that the merchant had not been paying his debts to a number of
acquaintances. Also, together they counted that he had claimed bank-
ruptcy at least three times. One commented, ˜˜Now we have to put aside
friendship; we can™t keep forgiving him.™™ It was quietly suggested that
their mutual acquaintance was an opium addict, and with that the
matter was explained.55 This brief and almost casual encounter per-
mitted these bazaaris to verify information and evaluate their own
respective situations. The spatial ecology of the Bazaar, which com-
prised several social layers, enhanced relational depth as much as
breadth. Face-to-face interactions also created a potential for extra-
commercial relations to develop. In fact, personal interactions almost
necessitated exchange of pleasantries and small talk about families, the
weather, and politics before turning to business matters. Bazaaris were
together on a regular basis while they ate meals, drank tea, prayed, or sat
around in each other™s shops socializing. Potential contentious cleavages
along class, guild, and ethnic divisions were also blurred by social
interactions that did not completely map onto social segmentation.
In the midst of a recent interview, Fariborz Raiis Dana, an in¬‚uential
Iranian economist and outspoken reformist, mentioned that the Pahlavi
˜˜regime didn™t have anything to do with the guilds inside the bazaars
[and] with the Pahlavi reforms the guild bene¬ted from the cities and
the urban middle class expansion.™™56 In this section I have supported

After one of the carpet dealers left, the other one turned to me and his brother and
added that ˜˜he had a gambling problem too.™™ Addiction among bazaaris is not rare and
often is brought up as an explanation for indebtedness. Based on anecdotal evidence, it
seems that among bazaaris social ills (opium addiction, gambling, and womanizing) are
more accepted for older established merchants than newcomers who have not
circulated a trustworthy reputation.
Sobh-e Emruz, 1 Shahrivar 1378 (August 23, 1999).
146 Bazaar and State in Iran

and extended this proposition by demonstrating that the Tehran
Bazaar™s organizational form was strengthened by monarchy, even as it
was shunned by high modernism. As the Pahlavi regime left the insti-
tutional setting of the Bazaar devoid of its transformative powers, the
Bazaar™s interconnected value chains and reputation system ensured
that the social order was maintained by cooperative hierarchies, and this
governance engineered a sense of solidarity.

The Islamic Republic and the Tehran Bazaar
In the past four decades, neither has Iran™s dependence on oil waned,
nor has its position in the world economy changed signi¬cantly. The
economy continues to be based on oil exports (over 90 percent of export
revenue comes from petroleum products) and the government budget
relies on these rents. Moreover, the indexes of modernity have followed
comparable trends to earlier decades (see Chapter 1). What has changed
since the Revolution, however, is the regime and its approach to the
Bazaar. Scholars and popular wisdom have alleged that the Islamic
Republic, especially the dominant conservative factions within it, have
established a close and mutually bene¬cial relationship with the bazaari
class.57 This argument has two strands. First, analysts argue that there
has existed a predilection for bazaar and clergy cooperation (˜˜mosque“
bazaar alliance™™), and thus surmise that ideological compatibility and
familial ties between the clergy and bazaaris would naturally continue
and develop into a cooperative relationship under a regime headed by
segments of the clergy and based on some interpretation of Islamic law.
Second, more economically oriented studies argue that the Islamic
Republic (at both the national and the municipal level) has implemented
pro-mercantile capital policies that are in the interests of the bazaar.58
Thus, under the Islamic Republic the state approximated a petty
bourgeois state.

See inter alia Wilfried Buchta, Who Rules Iran? The Structure of Power in the Islamic
Republic (Washington DC: The Washington Institute for Near East Policy and the
Konrad Adenauer Stiftung, 2000); Economic Intelligence Unit, Iran: Country Outlook,
various years; and Mozaffari, ˜˜Why the Bazaar Rebels,™™ 377“91.
Wolfgang Lautenschlager, ˜˜The Effects of an Overvalued Exchange Rate on the Iranian
Economy, 1979“84,™™ International Journal of Middle East Studies 18 (February 1986),
31“52; Anoushiravan Ehteshami, After Khomeini: The Iranian Second Republic (London:
Routledge, 1995), p. 90; Bahram Tehrani, Pazhuheshi dar Eqtesad-e Iran (1354“1364),
vol. 2 (Paris: Entesharat-e Khavaran 1986), pp. 384“60; Babak Dorbaygi, ˜˜For-
ushgahha-ye Zanjirehii-ye Refah,™™ Goft-o-Go 13 (Fall 1375 [1996]), 19“27; Kaveh
Ehsani, ˜˜Municipal Matters: The Urbanization of Consciousness and Political Change
in Tehran,™™ Middle East Report 209 (Fall 1999), 22“7.
Networks in the context of transformative agendas 147

This section paints a thoroughly different picture of state“bazaar
relations “ one that scrutinizes the implicit assumption in these for-
mulations that the Bazaar is a corporate unit that can bene¬t en masse
from patronage or economic policies. I turn to the network approach to
demonstrate that the cooperative hierarchies, which were essential in
creating the Bazaar™s corporate identity, have unraveled under and
owing to the policies of the Islamic Republic. Under the new regime the
mechanisms that bridged class, status, and sectoral divisions and created
a semblance of a corporate bazaari body have been increasingly absent.
The state incorporation of commercial activities through atomistic
patronage and institutional regulations has fragmented the networks,
made internal relations more short term, and accentuated the vertical
dimensions of interactions instead of horizontal ones. Thus, the Islamic
Republic™s development projects have not been pro-bazaar, if by that we
mean a set of policies that allowed for the persistence of the Bazaar™s
self-governance and autonomy from the state.

Islamic populism: the pragmatism of a revolutionary regime
During the bitterly cold Tehran winter of 1978“9, Iranians from diverse
backgrounds took to the streets as part of the enormous demonstrations
that helped topple ˜˜the throne and crown.™™ On February 11, 1979, less
than a month after the Shah™s hurried departure and less than two weeks
after the return of Ayatollah Khomeini from exile, Tehran Radio
announced the of¬cial overthrow of the Pahlavi regime and the end of
˜˜2,500 years of monarchy.™™ While some distributed candies and pastries
to strangers, other people danced to the sounds of hooting car horns;
I imagine that for some it may have seemed that spring had arrived early.
Away from the festive mood in the streets a new state was being
established. As with other social revolutions, a new state was fashioned
based on the coalition that toppled the ancien regime. The 1977“9
coalition encompassed particularly disparate ideologies (including left-
ists, nationalists, Islamists, and hybrid permutations) and social groups
(e.g. university and high-school students, the urban working class,
bazaaris, the religious establishment, and the salaried middle class). In
order to maintain a degree of unity in their pursuit to topple the regime,
opposition forces that increasingly orbited around Khomeini developed
a rhetoric that was broad and malleable enough to capture the myriad
revolutionary logics and aspirations. It included negative statements
against monarchy, imperialism, and injustice, and universally appealing
slogans for justice, freedom, and independence. Khomeini ˜˜managed to
be all things to all people. Islamic fundamentalists and westernized
148 Bazaar and State in Iran

intellectuals, bazaar merchants and the urban masses, came to see in his
vision of an Islamic state the chance to realize their very disparate
aspiration.™™59 The success of the eventual rulers of the Islamic Republic
was in their ability to devise a message that appealed to a diverse
audience, while maintaining their leadership position until they were
able to create and seize the institutions of the state. And only then could
they systematically turn the coercive instruments of the state against
their opponents.60
Once in power, the Islamic Republic transformed the existing state
organizations and initiated new institutions based on a transformative
project to create an Islamic society and economy. The ˜˜Islamic™™ nature
of the new regime was not merely wrapped in the turbans worn by many
of its leaders, but was an essential objective of the new regime, and one
that is clearly stated, if not speci¬ed, in the opening to the epic preamble
of the Constitution of the Islamic Republic: ˜˜The Constitution of the
Islamic Republic of Iran advances the cultural, social, political, and
economic institutions of Iranian society based on Islamic principles and
precepts, which re¬‚ects the heartfelt aspiration of the Islamic commu-
nity [ommat].™™61 The Constitution goes on to specify the interests of
government: ˜˜In the view of Islam, government does not derive from the
interests of a class, nor does it serve the domination of an individual or a
group. Rather, it is the crystallization of the political ideal of a people
who bear a common faith and common ideology, and have organized
themselves in order to initiate the process of intellectual and ideological
development towards the ¬nal goal (movement towards God).™™ Kho-
meini™s goal was not only to smash idols, but also to erect state-sponsored
paths to the almighty.
On the face of it, the combination of anti-imperialism, Islamic legal
principles, and freedom presented the Bazaar community with both
opportunities and challenges. The state™s intention to ˜˜cleanse™™ the
economy of its ˜˜comprador™™ and Pahlavi elements opened up new
arenas for ownership and investment. The bazaaris were well positioned
to tap into oil revenues and more readily invest in manufacturing and
large-scale international trade. Also, most readings of Islam, especially
those among the high-ranking clergy, were consistent with the sanctity

Shaul Bakhash, The Reign of the Ayatollahs: Iran and the Islamic Revolution (New York:
Basic Books Inc., 1990), p. 19.
Revolutionaries ¬rst attacked monarchists and families allied to the Pahlavi family.
Next, the regime used the military and Revolutionary Guard against separatist groups in
Kurdistan, Azerbaijan, and Turkmenistan. By 1983 all other opposition groups were
outlawed and suppressed, the last of which was the pro-Soviet Tudeh Party.
Constitution of the Islamic Republic of Iran, author™s translation.
Networks in the context of transformative agendas 149

of private property. In the initial period several key members of the
Provisional Government, especially Mehdi Bazargan and others from
the Liberation Movement of Iran, which had strong support in the
Tehran Bazaar,62 and the Islamic Republican Party (founded in 1979),
such as Mohammad Beheshti and Hosayn-˜Ali Montazeri, made public
proclamations intended to alleviate the anxiety of a propertied class that
was witnessing labor militancy, industrial nationalization, and legal
actions against the ˜˜corrupt of the earth.™™63 On the other hand, the
prospects for a pro-capital economic system were made uncertain by
other prominent members of the revolutionary coalition (e.g. members
of the secular left, as well as Abol-Hasan Bani-Sadr and Mohammad-
˜Ali Rajaii). This more radical faction spoke of redistribution of wealth
and, a sweeping restructuring of the economy (including nationalization
and creation of cooperatives), and even singled out members of the
private sector who were labeled as antirevolutionaries and economic
The ˜˜dissonant institutionalization™™65 that is the Constitution of the
Islamic Republic re¬‚ects this duality. It acknowledges the right to pri-
vate property and a role for the private sector. Yet on balance it weighs
in on the radical side by including a section titled ˜˜The economy is a
means, not an end™™ as a general roadmap for the Islamic Republic that
is to include ˜˜general economic planning,™™ limiting the private sector to
˜˜supplementing the economic activities of the state and cooperative


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