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in focus from ˜˜the state™™ to the ˜˜state-in-society frame of reference.™™23
First, they posit that variation in state effectiveness is a function of
the scope and type of ties it enjoys with society. Second, they call
upon scholars to disaggregate the state and view it more as a diffuse set
of institutions with permeable boundaries. Also, the form and capacity
of social forces are dictated by empirical conditions. Finally, these
scholars claim that the relationship between state and society is not
zero-sum.


20
Theda Skocpol, States and Social Revolutions (Cambridge: Cambridge University Press,
1979).
21
Robert H. Bates, Markets and States in Tropical Africa: The Political Basis of Agricultural
Policies (Berkeley: University of California Press, 1981); Margaret Levi, Of Rule and
Revenue (Berkeley: University of California Press, 1988); Douglass C. North, Structure
and Change in Economic History (New York: Norton, 1981); and Douglass C. North,
Institutions, Institutional Change and Economic Performance (Cambridge: Cambridge
University Press, 1990).
22
Peter B. Evans, Dietrich Rueschemeyer, and Theda Skocpol, eds., Bringing the State
Back In (Cambridge: Cambridge University Press, 1985).
23
Joel Migdal, Atul Kohli, and Vivienne Shue, eds., State Power and Social Forces:
Domination and Transformation in the Third World (Cambridge: Cambridge University
Press, 1994).
12 Bazaar and State in Iran

This ˜˜state-in-society frame™™ is part of an emerging trend in social
science scholarship seeking to explain variation in policy choices,
success, and origins as a product of the form of engagement and mode
of interaction between state and society. Peter Evans devised the con-
cept of ˜˜embedded autonomy,™™ for instance, to explore the variation in
ability of states to industrialize and develop comparative advantage.24
For Evans ˜˜embedded autonomy™™ captures the institutional con¬g-
uration enjoyed by coherent autonomous states and their enabling
network of ties with knowledge- and resource-rich groups in society, a
coupling which is necessary for successful development. Like Evans,
Theda Skocpol has expanded and re¬ned her earlier state structuralist
perspective to what she more recently has called a ˜˜polity-centered™™
approach.25 While analyzing the development of welfare policies in the
post-Civil War United States, she argues that the origins of state policy
choices are contingent upon the ˜˜¬t™™ between politicized social groups
and the organization of states. In all these frameworks state“society
boundaries are neither ¬xed nor clearly demarcated, but are formations
of multiple, often competing, institutions.
My approach follows the outlook of recent works on state“society
relations by claiming that the transformation of the Tehran Bazaar is a
product of speci¬c state policies and the manner in which they interact
with the existing social order. I make this argument by incorporating two
critical addenda. (1) Not only do we need to disaggregate the state, but
we must also analyze state transformative projects as circumscribed,
incomplete, and nonomnipresent master plans. (2) Political scientists
must not treat the internal governance of groups as a black box, as
something that happens automatically or is static. If the state™s authority
is incomplete or partially effective “ what is referred to as the state
˜˜fail[ing] to penetrate™™26 or the state being ˜˜disengaged™™27 “ then the
contours of social order should not be treated as a given, but are
determined through a process of negotiation between existing social
institutions and state institutions.


24
Peter Evans, Embedded Autonomy: States and Industrial Transformation (Princeton:
Princeton University Press, 1995).
25
Theda Skocpol, Protecting Soldiers and Mothers: The Political Origins of Social Policy in the
United States (Cambridge: Harvard University Press, 1992).
26
Joel Migdal, ˜˜The State in Society: An Approach to Struggles for Domination,™™ in State
Power and Social Forces, ed. Joel Migdal, Atul Kohli, and Vivienne Shue (Cambridge:
Cambridge University Press, 1994).
27
Michael Bratton, ˜˜Peasant-State Relations in Postcolonial Africa: Patterns of
Engagement and Disengagement,™™ in State Power and Social Forces, ed. Joel Migdal,
Atul Kohli, and Vivienne Shue (Cambridge: Cambridge University Press, 1994).
The puzzle of the Tehran Bazaar under two regimes 13

What is beyond the state™s vision?
State ef¬cacy can be tempered by revenue and legitimacy constraints,
historical legacies, relations between central and local authorities, and
disjunctions between institutions and organizations, parties, and social
groups. Yet, most political scientists still assume that states™ transfor-
mative projects are all-encompassing. For instance, Migdal proposes that
transformative states seek to ˜˜dominate in every corner of society.™™28
However, it is apparent that states are selective in their engagements and
often leave many realms of social life to their own devices, however
limited or elaborate.29
Why do states, even highly authoritarian ones, have dif¬culty in
devising complete domination over all dimensions of society? In System
Effects, Robert Jervis helps us address this question in a more general
manner.30 He argues that political complexity and indeterminacy has its
roots in its systemic nature. We cannot understand systems (e.g. the
ecosystem, the international state system, a social system, or a system of
production) by examining the attributes and goals of individual ele-
ments of that system (e.g. species, states, individuals, or classes). This is
because many effects are delayed, indirect, and unintended, relations
between units of a system are determined by third parties, and decisions
and actions are based on multiple agendas. Therefore, Jervis concludes
that regulating the entire system is particularly dif¬cult, and this is espe-
cially true of highly complex and aggregate systems such as ˜˜political
systems.™™ More directly related to the nature of the state, James Scott™s
work on the failures of development projects considers the incompleteness
of state reach and vision. A state™s capacity to implement its schemes is
restricted by what Scott calls ˜˜tunnel vision.™™31 Modern nation-states,
argues Scott, focus on limited segments of an intricate and multifarious
reality. They simplify societies in order to make the world more ˜˜legible™™
and to ¬ne-tune their administrative methods, focusing on speci¬c sectors,
locations, and factors of production. These simpli¬cations are like maps.
˜˜That is, they are designed to summarize precisely those aspects of a
complex world that are of immediate interest to the mapmaker and to


28
Joel Migdal, State in Society: Studying How States and Societies Transform and Constitute
One Another (Cambridge: Cambridge University Press, 2001), p. 114.
29
Deborah J. Yashar, Contesting Citizenship in Latin America: The Rise of Indigenous and the
Postliberal Challenge (Cambridge: Cambridge University Press, 2005).
30
Robert Jervis, System Effects: Complexity in Political and Social Life (Princeton: Princeton
University Press, 1999).
31
James Scott, Seeing Like a State: How Certain Schemes to Improve the Human Condition
Have Failed (New Haven: Yale University Press, 1998).
14 Bazaar and State in Iran

ignore the rest.™™32 Scott is interested in what is of ˜˜immediate interest™™ to
the state cum mapmaker “ their projects for a better society, and their
failures. In addition, this portrayal is useful because it reminds us that even
the grandest state projects necessarily disregard some elements of social
life. What states ignore is just as important as the focus of their con-
centration; what is ignored is likely subsequently to haunt the planners.33
Just as Hausmann™s plans for Paris did not envision the vibrancy of Bell-
ville, the Brazilian government may have planned and built Brasilia, but
the unplanned ˜˜Free City™™ escaped its vision and has a larger population
than the planned city.
Framing the issue of state transformative projects in terms of scope
directs us to important new questions for the study of state“bazaar
relations in Iran and for understanding the consequences of state poli-
cies. What was the state™s developmental program during the respective
periods? What were the institutional instruments established to imple-
ment these visions? And ¬nally, what place did the Bazaar have in these
programs and what were the direct and indirect consequences of these
policies for the Bazaar?

What generates governance when a group is beyond the state™s vision?
Scholars focusing on state“society nexuses argue that power is dis-
tributed and operates beyond state institutions. Migdal states: ˜˜My
emphasis will be on process “ the ongoing struggles among shifting
coalitions over the rules for daily behavior. These processes determine
how societies and states create and maintain distinct ways of structuring day-
to-day life . . . .™™34 The bulk of Migdal™s collection of essays carefully
delineate the limits of the state™s transformative powers and illustrate
how social forces pattern state actions. The question of how quotidian
life is organized and how exactly societies might structure day-to-day life
in the absence of the state, however, is left unaddressed. Contrary to
Hobbesian outlooks, it is assumed that without the state, social order
spontaneously occurs. Questions about social order and governance are
deemed relevant only when the state is involved. In this sense the
approach continues to be state-centric, and politics remains the exclu-
sive domain of the state.
Area studies experts, especially those who have conducted ¬eld work
on marginal groups, have continually shown that the state“society
32
Ibid., p. 87. Emphasis added.
33
The increasing interest in informal sectors is an explicit acknowledgment of social
worlds outside the complete purview of states.
34
Migdal, State in Society, p. 11. Emphasis added.
The puzzle of the Tehran Bazaar under two regimes 15

dynamic is not a simple choice of whether to engage or disengage,
resist or acquiesce, dominate or be dominated, transform or fail to
transform. Rather, contingencies, strategic interactions, and incom-
plete or inaccurate information often lead to struggles and unintended
consequences surpassing planned goals being the main cause of out-
comes. Those who are economically marginal, ethnic and religious
minorities, women, and those who are on the legal margins have
developed multiple repertoires to pattern state“society relations, and to
negotiate their social position and political plight. The individual and
collective techniques include manipulation, avoidance, defensive
movements, and daily encroachment.35 As such, politics takes on
an ˜˜expanded form to signify the interactions that shape ideas, beha-
viors, constraints, and opportunities “ the realm of power relationships
on all levels, and not only the actions of governments or political
parties.™™36
Social groups confront state initiatives with a set of associations,
resources, and repertoires of action that complicate, and even subvert,
institutional designs. Thus, before understanding the dynamics of state“
society relations we must decipher the prevailing structures of given
groups and societies. The Bazaar™s practices and ongoing relations are
just as pertinent as the state™s policies and institutions. Therefore, our
investigation must ask: What is the Bazaar? How are transactions con-
ducted, contracts enforced, and credit distributed? Given that the
Bazaar was on the margins of the Shah™s plans and was cut off from
direct state patronage, why did the Bazaar survive and even prosper?
And how was it governed, given that the state did not see it and bazaaris
ignored state institutions (e.g. the Chamber of Commerce and the
Chamber of Guilds) designed to represent them and control commercial
activities? Conversely, since the Bazaar entered the vision of the state
under the Islamic Republic, how has the state in¬‚uenced it? How has it
transformed the Bazaar™s self-governance and the way bazaaris have
related to one another?

35
Since the 1970s this has been the bread and butter of most ˜˜area studies™™ work in the
social sciences, a rich literature has developed discussing subaltern resistance within
hegemony and under colonialism. In the context of the Middle East see Asef Bayat,
Street Politics: Poor People™s Movements in Iran (New York: Columbia University Press,
1997); Guilain Denoeux, Urban Unrest in the Middle East: A Comparative Study of
Informal Networks in Egypt, Iran, and Lebanon (Albany: State University of New York
Press, 1993); and Diane Singerman, Avenues of Participation: Family, Politics, and
Networks in Urban Quarters in Cairo (Princeton: Princeton University Press, 1995).
36
Arlene Elowe MacLeod, ˜˜The New Veiling and Urban Crisis: Symbolic Politics in
Cairo,™™ in Population, Poverty, and Politics in Middle East Cities, ed. Michael Bonine
(Gainesville: University Press of Florida, 1997), p. 305.
16 Bazaar and State in Iran

Variation in forms of governance
The discussion brings us to the question of how to specify the exact
meaning of ˜˜the social order of the Bazaar,™™ ˜˜transforming the Bazaar,™™
or ˜˜changing the economic structure of the Bazaar™™ “ that is, the central
dependent variable of this project. As I argue in Chapter 2, the Bazaar is
best conceptualized as a series of socially embedded networks within a
bounded space that is the mechanism for the exchange of speci¬c
commodities. This approach treats markets as constellations of eco-
nomic relations and roles and not mere aggregations of isolated and
interchangeable transactions. It also contends that actions in the Bazaar
are the results of relationships among multiple individuals who may or
may not share a common set of cultural attributes or structural posi-
tions. Thus, the bazaar™s structure is an articulation of ongoing, pat-
terned relations within the group, rather than the product of static
attributes and attitudes of entities or macrosocial structures.37
These networks aggregate actions of individuals, who have speci¬c roles
and statuses that emerge in relation to others in the group. These roles
and relationships connote duties, expectations, obligations, and powers.
Therefore, as capillaries that distribute power and situate individuals,
networks comprise a form of governance. By the ˜˜form of the govern-
ance of the Tehran Bazaar,™™ I mean the pattern of ongoing interactions
and distribution of authority and resources throughout the commercial
networks that comprise the Bazaar. The form can be de¬ned along a
continuum between communal and hierarchical relations.38
A group is said to have ˜˜communal governance™™ when it is character-
ized by long-term relations and multiplex interactions, and when the ties
within that group are crosscutting. Long-term, stable relations exist when
actors relate to one another repeatedly over time and believe that their
interactions will persist. In the language of game theory, play is iterated
and is not one-shot.39 Continuity in relations provides opportunities to
assess the actions of others in order to reward good behavior and punish
uncooperative behavior. This potential for sanctioning also helps even up
power relations because subordinates are given an opportunity to
admonish, if not punish, their superiors by resisting or exiting in the
37
For a discussion of the distinction between structures as relations and structures as
attributes see David Knoke, Political Networks: The Structural Perspective (Cambridge:
Cambridge University Press, 1990).
38
My typology is adopted from and parallels Michael Taylor, ˜˜Good Government: On
Hierarchy, Social Capital, and the Limitations of Rational Choice Theory,™™ Journal of
Political Philosophy 4 (1996), 1“28.
39
Note that in Prisoners™ Dilemma games a high probability for future interactions is a
necessary (not suf¬cient) condition for cooperative play.
The puzzle of the Tehran Bazaar under two regimes 17

future. Durable relations are especially important since in economies

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