Transition Economies, Trade and Mobility: Revisiting the Bazaar Economy Through Two Central Asian Bazaars

July 1, 2016

Talks & Interviews

Dr. Hasan Haider Karrar

:Dr. Hasan Haider Karrar, Assistant Professor of History at the Lahore University of Management Sciences (LUMS) was invited by the CPPG on January 28, 2015 to deliver a seminar titled Transition Economies, Trade and Mobility: Revisiting the Bazaar Economy Through Two Central Asian Bazaars.

Karrar began his talk by sharing the background and history of Kyrgyzstan where the two bazaars, Dordoy and Karasu were located. Kyrgyzstan was amongst the poorest countries in Asia, with a GDP of under $6.5 billion and a population of 5.5 million. The country’s manufacturing sector was almost negligible and unlike its neighbors Kazakhstan and Turkmenistan, it possessed no significant natural resources. Yet, two of Asia’s largest bazaars with commercial networks that stretched from Eastern Europe to Eastern China and where 75,000 people conducted businesses every day, could be found in Kyrgyzstan. The juxtaposition between a macro level impoverished state and an individual entrepreneurial agility raised three important questions. First, what historical processes accounted for the emergence of these sprawling bazaars? Second, how did these centres of commercial exchange nuance theoretical understandings of the bazaar, transitional geographies of the South and their place in a globalizing world? Finally, given that Central Asian bazaars were spaces that germinated in the wake of the Soviet collapse, what did Kyrgyzstan’s bazaars reveal about how people negotiated the transition from communism to globalization and circumvented economic marginality?

Karrar said that he had approached these questions with a focus on Kyrgyzstan’s Dordoy and Karasu bazaars. Dordoy was in the capital city of Bishkek and ranged from 5,000 to 20,000 container outlets, while Karasu was outside the southern city of Osh and had 3000-7000 container outlets. Both markets dealt with manufactured goods from a variety of countries like China, Turkey, Poland, India and the UAE. About 77% of the goods sold were from China and 8% from Turkey, as Kyrgyzs citizens did not need a visa for Turkey while the Chinese visa was easily acquirable through invitations of manufacturers.

Kyrgyzstan was an important trade destination because import tariffs on manufactured products were negligible. A major chunk of the turnover came from trade in large imported quantities which were re-exported out of the country to neighboring Kazakhstan, Tajikistan, Uzbekistan and Russia, making both bazaars essentially wholesale markets. A variety of products were sold including costume jewelry, hardware, electronics, carpets, clothes, shoes and linen to name a few, with non-Chinese goods portrayed as better. Given that the trade-taking place in the bazaars was undocumented, the volume of money changing hands was unknown. However, estimates suggested that both bazaars in addition to Madina in Bishkek had a yearly trade amounting to around $8-10 billion in 2010. 50-60,000 people worked in Dordoy and 15,000 in Karasu. In addition, these bazaars also provided services such as transport, money exchange, packing, and cargo services etc.

“A major chunk of the turnover came from trade in large imported quantities which were re-exported out of the country to neighboring Kazakhstan, Tajikistan, Uzbekistan and Russia,…”

The bazaars had a hierarchical administrative structure. They were headed by a director, and further divided into sub-bazaars with administrative staff overseeing everyday business. They were organized according to different lanes specializing in different items. Traders paid both rent and service charges of the bazaar. Under Soviet administration, bureaucrats managed the bazaars but after Independence these bureaucrats were able to use their patronage networks to buy land and establish the bazaars, becoming some of the richest people in Asia.

Dordoy and Karasu reflected two different transitional paths from communism. Established in 1983, Karasu Bazaar was the older of the two. It had started off as a state farm (Kolkhoz), in which 10% of the output, usually dairy products or poultry, was sold at market-determined prices. The Kolkhoz was managed by local Soviets and came under the USSR’s Ministry of Trade. Two aspects of these bazaars would become a legacy for post-Soviet bazaars. First, Kolkhoz bazaars responded to consumer needs. Second, the Kolkhoz bazaars allowed for slight profit making under a command economy. Karasu became privatized only in the year 2000. Dordoy followed a different path as in its initial transition period around 1992; it was a flea market selling used household items. Then it got metal stalls and eventually containers by 1998. The growth of the bazaar in the wake of the Soviet decline in 1991 signified the breakdown of the economic system. People from all strata became sellers at the bazaar as they had either lost employment or pensions. A diverse set of people from engineers and academics to manual labour became traders as a means of survival. It was at the bazaars that cash actually circulated.

“Almost half the sellers were female and couples staffed many of the stalls.”

Besides their sprawl, two other aspects created a strong visual impact. The first was the presence of women. Almost half the sellers were female and couples staffed many of the stalls. The day traders from neighboring Kazakhstan as well as shoppers coming off from the vans were also mostly women. Apparently gender did not pose as an impediment to do business or to mobility. Studies had shown that a disproportionate number of itinerant traders in the 1990s Soviet Union were women who took to trading to draw a second income at a time of financial austerity. The second visual observation was that both bazaars were multiethnic spaces. In Dordoy, majority of the sellers were Kyrgyz, followed by Russians, Han Chinese and Iranians while in Karasu, the sellers were mostly Uzbek followed by Kyrgyz and some Chinese. Thus, with a history of ethnic tension and violence between the Kyrgyz and Uzbeks in 1990 and 2010, the bazaars were an area where these ethnicities came together.

Karrar argued that besides people, information and capital also circulated in these bazaars. In fact most sellers had reached a point where they were comfortable placing orders through telephone or the Internet. Mobilities of people, merchandise, information and capital were a defining feature of these bazaars. These mobilities were a triple-signifier: they invited a reconsideration of how the bazaar was traditionally seen in post-war social sciences; they challenged meta-geographical scales; and provoked focused analysis of globalization in a region that was considered economically peripheral.

Discussing the significance of the term “bazaar”, he explained that James Scott described it as an informal setting of non-standardized exchange in the pre and early modern world, while standardized measures were essential to the emergence of what Adam Smith described as a mercantile system—the policy of enriching the state through a favorable balance of trade. State measurements or standardized measurements were a result of market exchange and long-distance trade where a consensus on value and quantity across two points of trade was essential. The transition from bazaar to market appeared as commercial structures spanning large parts of Eurasia emerged. Historians had described this emergence of markets in Europe as an entry to modernity. Thus “bazaar” had remained synonymous with non-standardized exchanges, local practices, and termed distinctively non-modern.

Further, Clifford Geertz considered the salient feature of the “bazaar” to be an impulse to personal profit-maximization that allowed the town’s entrepreneurs to rise above traditional pedaling. Paradoxically however, the impulse for personal gain was coupled with mistrust that existed within the bazaar, and prohibited sellers from developing firm-style economies. Revisiting the term “bazaareconomy” twenty years later, Geertz identified information, which was scarce, poor, mal-distributed, inefficiently communicated and intensely valued, as the defining feature of the bazaar. He further asserted that the search for information in its uncertainties and complexities was the central experience of life in the bazaar, while his earlier thesis that the bazaar continued to be characterized by interpersonal relations remained unchanged. Thus, Geertz claimed that bazaar economies were antithetical to rational transactions taking place in market places, the global capitalist system, because they were characterized by interpersonal exchanges.

However, Karrar considered Geertz’s view of the bazaar as framed by the modernization period of the time. He argued that Dordoy and Karasu were organic and devolving institutions, which responded positively to changes in political economy and transnational commercial practices across all of Eurasia, and their dynamic nature emerged from the impact of globalization across post-Soviet Central Asia. He described anthropologist Arjun Appadurai’s understanding of “trait geographies” as attributed by geographical, civilizational and cultural coherence on the basis of traits such as common practice, shared values, ecological adaption etc., and suggested that this characterized the evolution of states. On the other hand, “process geographies” was where human organization was shifting, determined by human processes of trade, warfare, pilgrimage, colonization and exile. Karrar argued that the mobility embedded in Kyrgyzstan’s bazaars that developed incongruously after the collapse of the Soviet Union and was scattered untidily across Eurasia was an example of the later ‘process geographies’. But rather than rejecting state thesis altogether, he stated that sellers were acutely aware of the sharp edges of state power; the necessities for passports and visas; bureaucrats who were expected to ignore regulations; officials who needed to be bribed, and most critically the closing of borders and on-going multilateral trade negotiations that were rumored to have the potential to cull trade in these bazaars.

Thus, ‘process geographies’ were not about to make meta-geographies irrelevant anytime soon. Instead, what was discernable was what geographer Neil Smith identified as social economies based on commodity exchange leading to “a crack in the unity of place and nature”. This alternative conception of space implied the possibility of extracting from immediate place and of conceiving spatial extension beyond immediate experience. Hence ‘process geographies’ of bazaar mobilities should be seen as representing dis-alignment between state regulation and commercial practices in the bazaar. While relative state power had not eroded since Perestroika, dis-alignments in regional dynamics had allowed people, goods, information and capital to slip through, occupying what Smith had described as “spatial extension”. This process created the new agencies represented through bazaar mobilities.

“While a Central Asian bazaar and a Chinese supplier were embedded in complex institutional worlds belonging to different spatio-temporal configurations, an interface economy had emerged at the intersection of these operations.”

Karrar further added that bazaar mobilities invited critical re-evaluation of globalization in regions that we might have considered economically and geographically marginalized, starting with reconsideration of tropes such as “core-and-periphery” used both as an economic class and spatial dimension. If turnover from the three largest bazaars of Kyrgyzstan’s could be up to 40% or more of the country’s formal GDP, then the formal economy was not a useful measure of peripherality. Similarly, if goods from Guangzhou, China ended up in wholesale markets of Moscow via Dordoy, then Kyrgyzstan might actually not be as peripheral as it traditionally appeared. Thus, rather than a center-periphery relation, he argued that Saskia Sassen’s framework of core-terminus systems of capital operation better explained how globalization worked in this case. While a Central Asian bazaar and a Chinese supplier were embedded in complex institutional worlds belonging to different spatio-temporal configurations, an interface economy had emerged at the intersection of these operations. These interface economies were as old as global interconnectivity except that the scale and power of these interface economies had changed. The interface of different capitalist systems had given rise to networks of global cities and global commodity value chains leading to bazaar mobilities that encompassed vast regions across which individuals, merchandise, information and capital circulated. Echoing Neil Smith’s notion of ‘spatial extension’, Sassen stated that these networks created new territorial geographies embedded in sub-national terrains such as cities and again as an extension, bazaars.

Lastly, Karrar discussed the unevenness in these core-terminus systems of capital operation. He argued that it was the dichotomy between the Chinese provincial economy and the twenty times smaller Kyrgyzstan national economy that formed a critical part of the interface. According to Edward Socha, capitalism had two spatial tendencies. First, increasing homogenization, arguably of the experience of the global North with comparatively less economic and spatial unevenness across states. However, this tendency was in a dialectical tension with systems where profit maximization fed off geographical unevenness, thus asserting that the very existence of capitalism presupposed a sustaining presence and vital instrumentality of geographically uneven development. It was in this realm of geographical unevenness that super-profits (higher than average rates) were made. Sassen had made a similar point that the sharper the differentiation had grown between the two temporal systems of capitalist operation, the more intense the worlds of new business opportunities would be.

Karrar then revisited the question on what type of mobility was taking place in the bazaars and why it was important for trade. The answer revolved around the experience of economic marginality. His research had revealed that existing family businesses belonging to Karasu found trading there most lucrative; commonly, others found the working conditions agreeable while some responded that there were no other options for work. The answers revealed reasons which were very different from the academy looking from afar. From the outside, the roots of the bazaars in Perestroika signified continuity, rupture and mobility of goods, capital and information. Further, bazaar mobilities challenged our understanding of regions viewed otherwise as peripheries. However, the view from the bazaar floor was a lot less analytical. He stated that it was crucial to imagine the dawn of independent Kyrgyzstan when Dordoy and Karasu were mostly empty lands on the margins of cities where people sold their used goods. Though they now ranked amongst the largest bazaars in Asia where enormous personal fortunes continued to be made, they remained foremost sites of survival in an economically repressed republic, landlocked deep within the heart of Eurasia. While understanding this reality did not bridge the gap between bazaar as a site of survival and bazaar as an analytical category, it did bring us a step closer to comprehend how wide the gap might be.

“…they remained foremost sites of survival in an economically repressed republic, landlocked deep within the heart of Eurasia.”

The talk was followed by a Q&A session. Answering a question regarding the importance of geography, and of the bazaar to Kyrgyzstan’s economy, Karrar stated that the country had gone through an aggressive privatization drive during the Akayev regime (1991-2005). Thus, the bazaars were now in the best commercial interest of the state as they played a significant role in creating employment eg. Dordoy bazaar employed 60,000 in a city of 800,000. Similarly, though the geography was important, the state’ allowance for the entry of duty free goods was a factor that was more important. He further added that in terms of geography, one also needed to look at the question of why modern trade routes seemed to shadow those of the past and how could one explain commercial logic in terms of geography?

Addressing a question on whether the bazaar marketplace dichotomy could be compared to informality versus formality of the economy, Karrar said that Geertz’s understanding didn’t necessarily relate to informality. Bazaars might be non-formal, however in the sense that the transactions taking place were deeply personal. For instance, price stickers might not be present and trade might be a result of haggling, while in a modern market place business would take place based on fixed exchanges.