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reminded me that carpets are different from other commodities and
explained that not just anyone can enter the trade; you must ˜˜know
carpets,™™ as well as the past records, and hence reputations, of the many
˜˜hands™™ that are involved in a carpet™s production and trade. And this
makes experience and acquired practical knowledge necessary. To drive
the point home to an upstart researcher, one of them dryly added ˜˜You
can™t simply look up the information in a book.™™ And then he recounted
the proverb about Job, Croesus, and Noah. ˜˜You have to live a long life
like Noah and be patient like Job to learn the Bazaar [system] and become
an expert.™™ Croesus™ wealth was left unexplained, but it was understood
that some wealth was necessary for entry into this market and material
rewards are the well-earned dividends of patience and a long life.
The issue of expertise and reputation was mentioned by all bazaaris
(see Chapter 3), but discussions with those in the carpet trade were
especially centered on these credentials. Why this particular emphasis in
the carpet bazaar? As economic anthropologists and economists focus-
ing on information costs and asymmetries have pointed out, markets for
goods that are nonstandard (or nonsubstitutable) in terms of quality and
quantity operate differently than markets for goods that are standardized
through the manufacturing and packaging process, legal mechanisms
(e.g. trademarks and patents), and regulatory bureaucracies.2 Thus,
buyers and sellers of these heterogeneous goods face profound impe-
diments in acquiring and trusting information about the goods traded
and, by implication, trading partners. Hand-woven carpets are quin-
tessential nonstandard goods. A carpet™s value rests on its non-
substitutability, or its unique combination of design, craftsmanship, and
appeal to buyers. Within the carpet market, price is determined by
multiple and imprecise criteria: design (its execution, distinctiveness,
and authenticity), the quality and consistency of raw materials and skill
of labor (measured in terms of number and quality of knots), age, and
the tastes of possible buyers, including local consumers, exporters, and
export markets. The location of weave stands as an imperfect proxy for
quality, but even interpreting that information is not an exact science.
Thus, as in all markets for nonstandard commodities (e.g. used goods,
many agricultural staples, and antiques) and labor markets, in the carpet
bazaar information is scare, based on speculation, and unevenly dis-
tributed, with sellers generally enjoying a privileged position.

2
Frank Fanselow, ˜˜The Bazaar Economy or How Bizarre Is the Bazaar Really?™™ Man 25
(June 1990), 250“65. Also see sources related to information economics cited in Chapter 2.
190 Bazaar and State in Iran

In order to address these informational shortcomings, the Iranian
state and trade associations have repeatedly attempted to impose stan-
dards and control quality. The state has a pragmatic ¬nancial interest in
that the customs of¬ce must appraise the value of carpets based on
precise measurable categories such as carpet size, density of knots, and
production location. Thus, the customs of¬ce devises lists of duties and
values for categories of carpets. Iran™s governments have also had a
public mandate to protect the reputation of ˜˜Persian carpets™™ on the
world market by preventing the copying of Iranian patterns and the selling
of non-Iranian carpets as ˜˜Persian carpets™™ and by limiting the export of
poor-quality carpets from Iran. Successive governments have talked about
imposing an identity card system for all carpets woven in Iran as a means
to prevent copies by Indian, Chinese, and Pakistani weavers.3 Also, the
Association of Carpet Exporters of Iran issues export licenses only to
reputable individuals and has discussed measures to prevent the export of
low-quality carpets, which compromises the ˜˜authenticity™™ of all carpets
from Iran. However, these third-party bureaucratic measures have been
largely unsuccessful, for they are hard to enforce and open up other
avenues for forgery and dishonesty. As one carpet import“exporter in
Hamburg told me, the whole idea of an identity card for carpets is
˜˜ridiculous.™™ ˜˜Once you have an identity card, then Indian weavers can
simply copy the identity card to authenticate their rugs. How are they
going to ensure that the identity cards are authentic? If Nike has dif¬culty
doing it [preventing the unauthorized use of its trademark], what makes
us think that the Iranian government will be successful? Rather than
trying to devise schemes to trademark the carpets, the state must invest its
energies in marketing and supporting exporters.™™4 Implied in this state-
ment is that carpet sellers can do a reasonable job of regulating the quality
and preserving the reputation of ˜˜Persian carpets,™™ but the state must
provide ¬nancial aid.

Information acquisition via cooperative hierarchies
There is some justi¬cation for this claim because carpet dealers in the
Tehran Bazaar were able to manage many of the dif¬culties associated

3
Immediately after World War II, the state also attempted to confront the use of aniline
and chrome dyes and inferior knots. Roger Savory, Encyclopdia Iranica, s.v. ˜˜Carpets:
Introductory Survey,™™ p. 838.
4
Much like commercial manufacturers that use trademarks, carpet producers also seek to
place particular markers or signatures as a means to authenticate their goods. These are
imperfect mechanisms. As brandname watches, purses, and shoes have ˜˜knock-offs,™™ so
do hand woven carpets. Also note that the trader did not mention support for producers.
Carpets, tea, and teacups 191

with information scarcity. Bazaaris used to have at their disposal a
number of methods to address the information costs facing them, and
this had a profound impact on the organization of relations. Many of
these practices and characteristics are discernible even today, but, as
discussed later in this section, their scope has signi¬cantly diminished.
As economists have theorized and anthropologists have illustrated,
many of the practices in the bazaar can be interpreted as means to protect
merchants from these uncertainties; after all, this ignorance is ˜˜known
ignorance.™™5 Historically, a number of methods have been used by
bazaaris to address these de¬ciencies “ spatial localization, specialization
and market segmentation, clientelism, and long-term and contingent
purchasing arrangements (i.e. partnerships and pro¬t-sharing schemes)
based on extensive use of a reputation system. All of these practices
depend on and regenerate relations that are more long term, multi-
faceted, and crosscutting; that is, they form cooperative hierarchies.
Spatial localization has been an essential aspect of the carpet bazaar.
Despite the hundreds, even thousands of carpet dealers in Tehran,
before the Revolution they were almost universally located in the Teh-
ran Bazaar.6 Overwhelmingly housed in the western region of the
Bazaar, about forty caravanserais surround the three main alleys of the
old shoesellers™, kebab makers, and ˜Abbas Abad bazaars (see Map 2.1).
Several large caravanserais (i.e. over ¬fty stores and of¬ces), such as the
famous Bu-˜Ali Sara, were built in the post-World War II era near the
old carpet arcades such as the Amir Sara. These multistory spaces
include their warehouses, repair workshops, and thousands of employ-
ees who arranged all aspects of the shipping process.
In this centralized physical setting it was common for bazaaris who
trusted one another to appraise each other™s wares, discuss their con-
tacts, and exchange information about market conditions. This large
bazaar within the greater marketplace included restaurants, mosques,
and areas that were frequented by carpet dealers and remained largely

5
Clifford Geertz, ˜˜The Bazaar Economy: Information and Search in Peasant Marketing,™™
American Economic Review 68 (May 1978), 29.
6
It is dif¬cult to know exactly how many carpet exporters, middlemen, retailers, and
brokers worked in Tehran, but it surely was well over 2,000. One indication of the large
number is that in 1982 (three years after the Revolution, when many merchants,
especially Jewish exporters, left) the Association of Carpet Exporters of Iran had 1,120
members, with the vast majority being based in the Tehran Bazaar. Islamic Republic of
Iran, Chamber of Commerce, Industry, and Mines, ˜˜Karnameh-ye seh saleh-ye
ettehadiyyeh-ye saderkonandegan-e farsh-e Iran,™™ Khordad 1361 (May-June 1982)
p. 17. A government study from 1987 uncovered 3,105 carpet stores in Tehran Province.
Islamic Republic of Iran, Organization of Planning the Budget, Center for Iranian
Statistics, ˜˜Tarh-e Amargiri az Kargahha-ye Bazargani: Amar-e Kargahha-ye kharid va
forush-e Kala,™™ 1366 (1987).
192 Bazaar and State in Iran

unknown to other bazaaris. For instance, there is one kebab house in the
back allies of the carpet bazaar that carpet dealers would take me to.
One day when I suggested that a glass seller and I go to what I thought
was a well-known bazaari haunt, this third-generation bazaari confessed
that he had never heard of this particular restaurant. He said, ˜˜This
must be a restaurant for carpet sellers.™™
Also, the highly diverse and fragmented nature of the production
system, which included contracts for raw materials (wool, cotton, and
designs) and the ¬nishing stage of production (washing and preparing
carpets), necessitated the coordination of capital and labor. This
extreme fragmentation, however, fostered high levels of concentration in
the area of wholesale trade for carpets and ustream products such as
wool. This concentration, moreover, operated out of the Bazaar.
Bazaaris ˜˜buy carpets directly or indirectly from villagers and nomads
and also from dealers and colleagues in the bazars; they also supply wool
¯¯
and yarn to weavers, take care of having the wool dyed, and engage in
other processing activities. . . . Tehran wholesalers also leave purchasing
and manufacturing arrangements to such middlemen. In addition, local
wholesalers may sell to Tehran or to agents of Tehran ¬rms.™™7 Given
that customs and transportation systems were highly centralized in
Tehran as Iran became increasingly integrated into the world economy
in the late nineteenth and twentieth centuries and carpet production was
directed to western markets, the Tehran Bazaar generally became the
focal point, coordinating and bringing together the numerous marketing
networks under one roof.
Outside the Tehran Bazaar there were only a few of carpet dealers in
other areas of the city in the 1960s. These few and minor actors were
concentrated in wealthier northern Tehran and around the Tajrish
Bazaar in Shemiran, but were often still tied to the carpet emporium in
the Bazaar for purchases, credit, and information. One notable con-
glomeration was a couple dozen shops near Ferdawsi Square. This
predominantly retail area, which was close to hotels, embassies, and
antique and souvenir stores, catered to western tourists, the ex-patriot
community, and visiting dignitaries. This secondary localization was
also culturally delineated; these merchants were predominantly Jewish,
often originally from Isfahan or Mashhad. Some of these retailers
focused exclusively on this lucrative domestic market, while others
headed important export operations from the Bazaar.
Beyond Iran™s borders, the largest single export site was the free port
in Hamburg. Beginning in the decade after World War II, Hamburg

7
Willem M. Floor, Encyclopdia Iranica, s.v. ˜˜Carpets: Pahlavi Period,™™ p. 884.
Carpets, tea, and teacups 193

became the world center for hand-woven carpets.8 Since Hamburg was
a free port, encouraged by West German policies to attract foreign
investment, a number of exporting families based in the Tehran and
Tabriz bazaars established warehouses in Hamburg™s port area. Typi-
cally, fathers sent their sons to establish warehouses representing the
family business, and thus these original dealers were directly connected
to the commercial networks in Iran. Over time, the number of import“
exporters and brokers who worked with carpet countries in Germany
and other European countries, reached close to eighty and attracted
traders from across Europe, as well as Iranian merchants who visited
Hamburg on business trips. The traders sold carpets to the booming
German market, but also used Hamburg as a port to export to all other
locations in Europe and North America. In the late 1950s, the Asso-
ciation of Iranian Merchants in Germany was established to represent
these traders™ interests in both Germany and Iran. (In the 1970s the
association divided into one representing carpet merchants and another
for other trades.) As a relatively small and tight-knit group of families,
many of whom had relationships dating back a number of generations,
they were able to utilize the same reputation system.
Physical localization was reinforced by specialization and market seg-
mentation that led to a high degree of product differentiation according
to quality. Trade was based on specialization in particular types of car-
pets, most commonly categorized by the place of origin of the trader and
carpet. Carpets from Isfahan and its environs were sold by Isfahanis,
Qomis sold carpets from Qom, Kermanis specialized in carpets from the
Kerman region, and so forth. Thus, regionalism, ethnicity, and kinship
acted as a guide for segmenting the market and integrating production
and commerce. In doing so, it embedded economic relations in a cultural
milieu de¬ned by language and dialect, shared histories and knowledge,
and cultural symbols. In the case of Azeri-speakers who specialize in
various popular Tabriz weaves, language has acted as a critical common
denominator and barrier to non-Azeri-speaking Iranians. Those who
did not have appropriate sociocultural networks tended to work through
partnerships or at the ends of the value chain as large exporters,
commissioners for foreign agents, and retailers who worked with various
types of carpets, or specialized in old and antique carpets and tribal
weaves.

8
Other than Iranians, there were also a few Turkish dealers, but the vast majority of
import“exporters were Iranians or Germans who specialized in Iranian carpets. Zurich,
Switzerland, has become another important import“export market of hand-woven
carpets.
194 Bazaar and State in Iran

In markets for nonstandard goods, the heightened need to guard against
the perils of information scarcity encourages clientelism.9 For sellers, a
steady stream of large transactions is obviously in their interest, but instead
of relying on the price as the only means to attract buyers, they rely on their
public reputations as honest traders to attract and maintain exchange
partners. From the perspective of buyers, the dif¬culty in assessing carpets
draws them to these bazaaris known to be honest and discourages trans-
actions with traders about whom they have no information. Therefore,
clientelization becomes one of the main mechanisms to limit information
scarcity and uncertainty about commodities. Historically it has trans-
formed a diffused, large array of anonymous potential trade partners into
categorized and rank-ordered potential partners. Buyers and sellers
turned to tested and proven trade partners for purchases “ ˜˜moving along
the grooved channels clientelization lays down.™™10 Similarly, relations in
other spheres and categories of life, such as kinship, ethnic bonds, religious
networks, and neighborhood af¬liations, mapped the terrain for these
grooved channels. The extensive use of credit that dominated the pre-
revolutionary Bazaar, the carpet market™s extreme localization and specia-
lization, and the existence of brokers enabled reputations to become ˜˜public
knowledge,™™ or more precisely Bazaar knowledge, by circulating this
information through the embedded social networks. This high level of cli-
entelization and long-term credit created especially protracted relations
among carpet merchants, ones that could even transcend generations.
Finally, the centrality of reputation can be used as a form of selective
incentive to limit dishonest behavior such as not paying debts and selling
low- and inconsistent-quality carpets.11 The very reputation system that
allowed traders to ¬nd each other through the maze of the Bazaar also
was turned against allegedly dishonest actors who reneged on contracts
or sold forged or otherwise defective goods.12 In such cases social net-
works that pooled and distributed information were redirected to pub-
licize, shame, and communally punish behavior that was deemed
reprehensible. Since all buyers were acknowledged to be ignorant, caveat
emptor was mediated by placing part of the burden of soured exchanges

9
Clifford Geertz, ˜˜Suq: The Bazaar Economy in Sefrou,™™ in Meaning and Order in
Moroccan Society, ed. Clifford Geertz, Hildred Geertz, and Lawrence Rosen
(Cambridge: Cambridge University Press, 1979).
10
Ibid., p. 218.
11

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