Streetwise Professor

July 28, 2009

Medieval Fairs, Russian Style

Filed under: Economics,Financial crisis,Politics,Russia — The Professor @ 9:10 pm

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 — 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.

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  1. This is one of your best laughs yet. 😉

    The Cherkizovsky market was well known for its lawlessness and criminality (including the manufacturing and sale of falsely-branded clothing – which being the IP-fascist you are, you would surely condemn). There remain dozens of such markets around Moscow – by your logic the authorities should close them too.

    Comment by Sublime Oblivion — July 29, 2009 @ 2:46 am

  2. Even the ChiComs didn’t get as upset about the market closing as the Professor. 🙂

    Comment by Vic — July 29, 2009 @ 7:49 am

  3. Not upset . . . just disappointed as a scientist who sees a marvelous natural experiment, a living laboratory, destroyed.

    The ProfessorComment by The Professor — July 29, 2009 @ 10:12 am

  4. It’s rather sad that SUBLIME DURAK thinks it’s funny that tens of thousands of people have lost their livlihoods.

    Even sadder that he’s laughing at the Russian government’s inabilty to simply regulate and clean up the market, indicating total incompetence (and even more pathetic failure in waiting so long to shut it down, if indeed it was as dangerous as he says).

    And once again he proves his total illiteracy, ignoring the reports that the real reason the market was shut down was totalitarian politics, not concern for public welfare.

    Ape-like idiots laugh and scratch themselves as Russia descends into a morass of failure, poverty and suffering from which it cannot hope to extricate itself, just as they laughed when the USSR headed into the graveyard. These are Russia’s true enemies, feral and venal they are.

    Comment by La Russophobe — July 29, 2009 @ 11:39 am

  5. Oh, come on, S.O. “lawlessness” in selling cheap falsely labelled knock-offs, have you been to NYC or any large metropolitan area lately? This is Russia after all. And how about the alternative to cheaper priced food and other items gone now? Muscovites, especially the older pensioned people, lost on this one. That 100,000 people worked there speaks to how huge the customer base was.

    I’m with you professor that the market was a spontaneous city within the city where the merchants most likely in their own self interest served and protected the customer as best they could. When you are in direct contact with the people that provide your livelihood that’s the natural order of things if you want to stay in business.

    From statistics in 2007 “83 of every 100,000 people in Russia are infected with TB.” Adding asymptomatic syphilis which is only diagnosed with a blood draw to the mix is very dubious too.

    It’s pretty obvious that someone wanted the real estate. It’s also pretty sleazy how officials depicted the guestworkers at the market, isn’t it.

    Comment by penny — July 29, 2009 @ 2:54 pm

  6. 1. Practically all middle-income and poorer nations have plenty of outdoor markets and fairs.

    2. The lawlessness went well beyond IP-infringement. This market was well known even amongst other markets for its criminal razborki.

    3, No-body still bothers addressing that this was one market out of dozens around Moscow (although the largest one).

    4. Closing it is totalitarian politics? OK, totally lost me on this one by now.

    Comment by Sublime Oblivion — July 29, 2009 @ 8:36 pm

  7. Re-1. In that again SWP tries to portray this as uniquely bad in Russia, whereas in fact market fairs are traditional aspects of life everywhere outside the developed world.

    Comment by Sublime Oblivion — July 29, 2009 @ 8:37 pm

  8. S.O, no facts, no tickey, no laundry. Got to have links, my friend, to support your comments.

    Get a grip, we all love and are better off with spontaneous grassroots markets. Very few don’t do well by us which is no different in Russia. Be it Ebay, a flea market or a lone farmer selling off of his truck, the consumer is better off thanks to the choices they give us.

    You can do better than that.

    Comment by penny — July 29, 2009 @ 9:28 pm

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