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state are an important factor, the preexisting fabric of social relations is a
crucial variable in collective action. The Tehran Bazaar demonstrates
this through its changing capacity to mobilize. The interconnected,
long-term, and socially embedded value chains engendered the bazaaris™
capacity to solve the ˜˜social™™ collective action problem. With that the
Bazaar could create sholughi. Because its mobilizing structure, under-
stood in terms of the form of governance, has been transformed, the
Bazaar is not ˜˜united.™™ Despite Hadi™s enthusiasm, his mother™s caution
is warranted and her calculation not to participate is the norm. There-
fore, the stores remain open and the Bazaar has been politically quiet.
7 Conclusions




If the ˜˜bazaar economy™™ is seen as an economic type rather than an evo-
lutionary step toward something more familiar to people used to other ways of
doing things, and, more importantly, if a deeper understanding of its nature
can be obtained, perhaps, just perhaps, some relevant and practicable sug-
gestions for improving it, for increasing its capacity to inform its participants,
might emerge and its power of growth be restored and strengthened.
Clifford Geertz1

Iranians say that the Tehran Bazaar is the ˜˜pulse of the city™™ or ˜˜the
pulse of the economy.™™ The metaphor is appropriate, for it evokes a
sense that the circulation of commodities, credit, and information in the
Bazaar™s networks is a palpable effect of the workings of Iran™s urban life
and political economy. By documenting the interaction between the two
recent regimes and the Bazaar, as well as tracing the process through
which state“society relations have been redesigned and renegotiated
since the 1979 revolution, this study extends this metaphor by arguing
that the Bazaar is an apt gauge of how state-level policies dialogue with
organizational-level politics. It is an initial foray into mapping how
visions of development set the parameters for the networks within this
group, and consequently their ability to turn their grievances into
collective claims against the state.
In order to create a coherent and analytically compelling narrative it
is necessary to recast a conception of the Bazaar, treating its organization
and solidarity as a conundrum. The bazaaris™ cooperation is a classic
problem from the perspective of those working within the individual
maximization paradigm. Social scientists working in this tradition
would expect individual-level preferences and conditions to in¬‚uence
prospects for cooperation. The moral economy perspective, meanwhile,
would expect the prevalence of an overarching normative order that is
carried by group members to be the basis of solidarity. By demonstrating
1
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), p. 234.

270
Conclusions 271

that cooperation and group solidarity are precarious and contingent upon
relational factors rather than group size and physical dispersion, this study
indicates that communal behavior such as multilateral sanctioning or
political mobilization is created by the quality and vibrancy of quotidian
social interactions. The argument presented by Rorty and other norma-
tive theorists who advocate a conception of human solidarity
˜˜constructed out of little pieces™™2 reminds empiricists that shared iden-
tities or meta-ideologies fail to sustain human cooperation; rather, when
we do discover solidarity we must search for the composite parts
that have created a sense of community in the face of disparities in power
and incentives to prioritize personal gain over collective sentiment.
Solidarity takes on meaning only in the context of difference, not
homogeneity.
Moreover, the persistence of the Bazaar™s social order and alleged
unity is curious given that the Shah™s development approach and poli-
tical machinations were fashioned very much in opposition to the Bazaar.
Why didn™t the Bazaar fade away given that it was deprived of direct
state tutelage? The Bazaar™s large, heterogeneous, and strati¬ed mem-
bership and its diverse relationship with the international and national
economy would suggest that a unifying corporate identity is dif¬cult to
forge and maintain; historically pertinent mechanisms are necessary to
create a semblance of solidarity and unity in the face of external
antipathy. This line of questioning is even more warranted given that
under the postrevolutionary regime, assumed to be pro-bazaari, the
Bazaar™s solidarity and self-help seem to be less pronounced and
inclusive.
I have attempted to show that these outcomes are not aberrations, but
expose deep contradictions in the political economies of the monarchy
and the Islamic Republic that can be best accounted for by a network
approach. First, bazaars are a collection of ongoing relations that are
mechanisms for the exchange of goods and services. Thus, my unit of
analysis has been the various value chains that connect different mem-
bers of the commercial hierarchy. Second, the con¬guration of these
networks (i.e. the relations within them and connections across them)
has resulted in the speci¬c form of governance within the Bazaar. The
variation in the form of governance of the Tehran Bazaar during the past
four decades is illustrated by the shifts in commercial, ¬nancial, and
social relations of members of the Bazaar. During the late Pahlavi era,
relations within the Bazaar were socially embedded, while value chains

2
Richard Rorty, Contingency, Irony, and Solidarity (Cambridge: Cambridge University
Press, 1989).
272 Bazaar and State in Iran

and social circles were interconnected in ways that engendered long-
term, crosscutting, and multifaceted relations. These cooperative hier-
archies were able to appraise reputations and bridge sectoral, ethnic,
and class divisions. By the end of the second decade of the post-
revolutionary era, however, the Bazaar™s relations had become more
short term and detached from the bazaaris™ broader social lives; net-
works today are less encompassing and integrative. I argue that the
earlier form of governance, complete with an internal reputation system,
facilitated the exchange of resources and information and the regen-
eration of norms and self-governance. On the other hand, the current
form is designed to seek out resources beyond the Bazaar, with socio-
economic, cultural, and political cleavages segmenting the Bazaar™s
networks, isolating its members, and fragmenting clusters of bazaaris
wedded together through strong ties. Cooperative hierarchies, while
being far from democratic, are nevertheless better at representing group
interests than coercive hierarchies because of their built-in exchanges
and regenerating horizontal and vertical interactions. Finally, in the
prerevolutionary period the reputation system helped replace the price
mechanism. Ironically, in the postrevolutionary period the reputation
system has been undermined as the price mechanism has been rendered
meaningless since inconsistent and unstable state policies and mono-
polies have created market distortions.
Why have these forms of governance prevailed in these two eras and
why has transformation occurred in the past two decades? During the
Pahlavi era the Bazaar maintained its self-governance since it remained
beyond the vision of the regime™s top-down modernist plans and was not
incorporated into the regime™s bureaucratic structure. Thus, by seeking
a policy of replacement, rather than incorporation, the Pahlavi regime
created an autonomous zone for bazaaris, who ¬lled it with their existing
institutions. But also, the Tehran Bazaar prospered and maintained its
internal governance because of state policies. Under the Pahlavi regime
the bazaaris™ solidarity was reinforced by state rhetoric and policies that
created a bounded group identity that decidedly differentiated the
Bazaar from other social groupings. Meanwhile, state-sponsored urba-
nization, consumerism, and infrastructural development expanded
markets for the Bazaar™s value chains and credit system.
Under the Islamic Republic, while state rhetoric has spoken of a
special place for the bazaaris in the new Islamic order, the distribution of
rents has been based on individual, rather than corporate, identi¬ca-
tions. Unlike the distinction between ˜˜traditional bazaari™™ and ˜˜mod-
ern industrialist™™ that dominated of¬cial discourse in the 1960s and
1970s and rendered all bazaaris as one in the eyes of the state, the
Conclusions 273

postrevolutionary regime has differentiated between revolutionary or
˜˜committed™™ bazaaris and those who are supposedly not, with only the
former gaining access to resources controlled by the state. Thus,
individual-level patronage undermined the bazaaris™ relational web and
exposed and en¬‚amed internal divisions, and accordingly impoverished
their internal solidarity and group identity. In addition, the Islamic
Republic™s policies led to the Bazaar™s incorporation; bazaaris faced a
myriad of state institutions and organizations that restructured
commerce and repatterned economic power. This restructuring gave
birth to new value chains, some of which worked to manipulate new
patterns of commercial privilege while others struggled to elude the
commercial regime altogether. Hence, the simultaneous transformation
of political forces and the persisting evolution of the socioeconomy
altered the institutional and physical setting of networks. On the one
hand, external regulation replaced internal autonomy of networks, and,
on the other, concentration of commercial interactions in the Bazaar
was replaced by increased delocalization and diffusion of commercial
exchanges. The ingredients to maintain cooperative hierarchies became
absent and forces that nurtured fragmented coercive hierarchies came to
the forefront.
Therefore, it is not the ˜˜modernizing™™ regime of the Shah, but the
˜˜traditional™™ Islamic government that has transformed the Bazaar™s
organization in ways that have given rise to more modern qualities “
increased arm™s-length exchanges and contractually based exchanges,
and the shift to more manufactured and standardized goods. The Shah™s
supermarket building was based on wishful replacement; the Islamic
government™s passazh building was part of a more willful restructuring of
commerce. It may be argued that the Pahlavi regime simply failed to
implement its project to modernize Iran and the Bazaar, so the outcome
is a consequence of a failure in will rather than plan; but the point here is
that the relationship between objectives and outcomes is far from direct
and in order to trace this process the broader context and the concrete
and elaborate form of governance in the Tehran Bazaar must be studied
and expected to matter, even if it is not fully predicted.
The transformation from cooperative to coercive hierarchies would
predict that as the exchange of resources and information and sense of
solidarity were reduced, the political mobilization of the Bazaar would
decline. In Chapter 6 this hypothesis was evaluated and employed to
understand the dramatic decrease in mobilization of the Bazaar despite
the existence among the bazaaris of grievances, opportunities for
mobilization, and potential oppositional allies. Thus, the capacity
of social groups to resist state encroachment and broker political
274 Bazaar and State in Iran

mobilization is related to the types of networks at their disposal. The
corresponding shift in the Bazaar™s capacity to mobilize against the
state serves as a compelling independent veri¬cation that the Bazaar™s
organization has been signi¬cantly altered in the past two decades. The
¬nding that the Bazaar™s capacity to mobilize is historically contingent
is built on the interpretation that less weight must be placed on the
mosque“bazaar alliance and on the bazaaris™ class interests, and more
emphasis needs to be placed on the structure of relations overcoming
social collective action problems. The irony is that the political
opportunity presented to bazaaris by the Revolution and the generally
more accommodating Islamic Republic has resulted in the whittling
away of its mobilization structures and collective self-understanding,
both of which are essential for initiating and sustaining collective
action.
There is yet another paradox presented by this analysis: the Tehran
Bazaar can be comprehended only as a collective entity and seemingly
coherent social space, but that metaphysical totality cannot be grasped
without investigating the fragments that compose it, although it is not
fully captured by these. The dialogical process of state and society
results in repositioning of institutions, but through highly personal and
textured exchanges and negotiations.

Insights from the Tehran Bazaar and the Iranian state
Throughout the analysis the timing and sequence of events demon-
strated that the transformation of the Bazaar was not an organic process
driven by socioeconomic factors, but was triggered and shaped by the
political economy and state policies. The persistence and demise of the
Bazaar is driven by the shifts associated with the revolutionary change
from a development agenda based on high modernism to one framed by
Islamic populism.
On the one hand, the durability and survival of the Bazaar™s practices
and organization were not due to the failure and inability of the Pahlavi
monarchy to transform Iran™s economy, social fabric, or its relationship
to the world economy. It must not be forgotten that on several
dimensions the Bazaar did in fact change. Small-scale manufacturing
and production that was based within the bazaars and tied to their credit
systems was increasingly dislodged by industrially manufactured goods
that were produced domestically or imported. By the end of the 1960s
production of leather and metal goods was in fact disappearing from the
Tehran Bazaar. Also, large segments of the retail commercial sectors,
such as the clothing, shoe, and book trades, relocated in order to
Conclusions 275

accommodate new urban demographic patterns and tastes. Instead, the
merchants in the Tehran Bazaar redirected their business activities into
wholesale and international trade to take advantage of increased con-
sumerism. It was the Pahlavi regime™s ˜˜successful™™ urbanization of Iran,
the creation of a mass consumer society and working class that helped
fuel consumerism (warts and all) that led to the growth of the Bazaar.
The Bazaar™s credit network and value chains were able to compete
effectively with state institutions that neither accommodated bazaaris
nor were functional equivalents for ˜˜informal™™ or ˜˜traditional™™ prac-
tices and norms.
On the other hand, the demise of the Bazaar was not a natural out-
come of modernization, for if it was, the realignment of networks would
have occurred prior to the Revolution. Therefore, cooperative hier-
archies did not pass because of inherent defects of the Bazaar or
incommensurability with modernity; rather they were refashioned
because they were incommensurate with the transformative agenda of
the Islamic Republic. Again, structural-functionalist interpretations are
inadequate because the dif¬culties of transacting owing to issues of
information scarcity and asymmetry and contract enforcement are per-
vasive even today, and thus should provide motivations for bazaaris to
develop the ingredients for cooperative hierarchies. Yet the postrevolu-
tionary experience demonstrates that this particular remedy is not
always structurally available or creatable by individuals. Forms of gov-
ernance are contingent on the institutional and physical setting of net-
works, and these outcomes are thus not mechanistic responses to demand
and motives.3
A third general point that emerges out of the narrative of the Bazaar™s
transformation is that path-dependency arguments that endogenize
culture by assuming that it is ˜˜in equilibrium™™ or is a symbolic structure
overstate the ¬xity of social norms and economic practices.4 Even in the
relatively short time span of two decades many bazaaris have adjusted
their trading routines, expectations of others, and expectations about
expectations. A certain sense of loss and a desire for a ˜˜better™™ system

3
See the debate between Jon Elster and Avner Greif, in which Greif responds to Elster™s
criticisms by stating that his analysis of late-medival-era Genovese political economy
addresses only motivations. John Elster, ˜˜Analytical Narratives by Bates, Greif, Levi,
Rosenthal and Weingast: A Review and Response,™™ American Political Science Review 94
(September 2000), 685“702.
4

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