The events surrounding the closing of the vast Cherkizovsky Market are fascinating. They present an intriguing illustration of the natural state in action, and the consequent intersection between the personal and the political. The New York Times has a story on the closing of the market that is worth reading. This paragraph was particularly illuminating:
Government agencies quickly took up the theme of the market’s seedy side â€” which was hard to deny. The powerful director of the Investigative Committee of the Prosecutor’s office, Aleksander Bastrykin, called the market a “hell-hole” that had become a “a state within a state” on the edge of Moscow. “It has its own police, its own customs service, its own courts, its own prosecutor and stand-alone infrastructure, including brothels,” he said.
State-within-a-state. Bug or feature? “Hell hole” or (relative) paradise?
Well, it appears that the traders thought it pointless to rely on the officially constituted authorities for protection, or contract enforcement. So they created their own system of third party enforcement, much as did the operators of fairs in Medieval Europe. That is, the market not only served as a convenient way place for people to congregate to buy and sell, it also facilitated the creation of an institutional infrastructure to support trade–an infrastructure sadly lacking in Russia. No doubt this is one reason that it presented a daunting competitive challenge to more conventional Russian retailers and wholesalers; the traders’ costs were lower because they had a functioning system of third party enforcement conspicuously lacking in the formal economy.
Thus, the market in a way was a living reproach to Russia’s institutional backwardness. Perhaps that is another reason it was the focus of such intense official antipathy and hostility.
There are some other jewels in the article. Here’s one:
Before the market was finally closed late last month, the authorities said that one in every 40 traders had an infectious disease like tuberculosis or syphilis.
The authorities’ concern for public health is touching, and distinctly out of character. How come it seems that public health is trotted out as a justification for state action primarily when that action serves to protect some economic interest (e.g., the periodic rows over food safety with Poland, the US, and Belarus; the swine flu silliness; and now, the Market)? I am quite curious to know how the rate of infectious disease in the Market differs from the rate in Russia at large, and how many communities in Russia have similar rates of incidence. I am also curious to know the source of the 1 in 40 figure.
From a purely scholarly perspective, it is very sad that the Cherkizovsky Market has closed. It would have provided a fascinating case study for institutional economists (and sociologists). A living laboratory to study the spontaneous evolution of self-enforcing rules and norms. I hope that before it closed, some enterprising Russian (or Central Asian, or Chinese) scholar had had the opportunity to study the market, its traders, the institutions that had developed, and the process of that evolution. Alas, that opportunity is now gone, another casualty of Putinism and the natural state.