“EMBEDDING” TRUST IN A TRANSNATIONAL TRADE NETWORK:
CAPITALISM, THE MARKET AND SOCIALISM
Deniz Yükseker
Visiting Assistant Professor, Sociology Department
The Johns Hopkins University
(WORKING PAPER: PLEASE DO NOT CITE WITHOUT AUTHOR’S
PERMISSION)
Deniz Yükseker
“Embedding” Trust in a Transnational Trade Network:
Capitalism, the Market and Socialism
Deniz Yükseker*
When I set out to research the informal trade network between the former Soviet
Union (FSU) and Turkey in 1996, one of my research questions was based on the following.
Relations between co-ethnic groups in Turkey and Soviet republics had been quickly rebuilt
after a break of about 70 years, when travel restrictions on Soviet citizens were eased at the
turn of the decade. It was only natural to expect that the informal trade in consumer goods in
the region would be built around co-ethnic trading, given that a formal institutional
framework for international trade did not exist in the region. But I discovered over the course
of my fieldwork that the situation was precisely the opposite. In an important nodal point of
the network in Istanbul, namely the Laleli market, buyers and sellers were not co-ethnics nor
did they did not speak the same language or share the same culture. Moreover, most
transactions took place informally and the legal regulation of the trade was weak. Hence the
question arose: how did trade flourish in this marketplace where there was neither legal
regulation of transactions nor an overarching social structure within which exchange could be
embedded?
In my quest to answer this question in this article, I first describe the trade network
between Turkey and the former Soviet Union. Following that, I provide a historical
background of the regional economy that includes Turkey and the Soviet Union. Then, I draw
a conceptual framework to understand the prevalence of informality. My argument is that this
trade network is a transnational informal economy. Building on Braudel’s conceptual
*
Mellon Fellow, Institute for Global Studies in Culture, Power and History, The Johns Hopkins University. The
author wishes to thank MEAwards, the Middle East branch of the Population Council for a research grant in
1996-97 that supported the fieldwork for this study.
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framework, I situate this phenomenon at the level of the “market economy” in contrast to the
monopolistic top level of “capitalism,” the layer in which economic globalization is
considered to be taking place.
Finally, I examine exchange relations in the main node of the trade circuit in Istanbul,
the Laleli market. I focus on credit mechanisms, the cash flow and patterns of repeat trading.
I argue, first, that social relations are purposefully “invented” in the marketplace in order to
facilitate exchange. This entails both gendered trading practices and the creation of “trust”
among buyers and sellers. Trust here does not denote an enforceable principle, but is part of
an eclectic amalgam of ways of doing things in small-scale business in Turkey and Russia.
Second, I problematize the concept of trust in the new economic sociology by bringing a
temporal element. Specifically, I argue that the social relations within which exchange is
immersed in this trade network are further “embedded” in a broader structure, namely
regional and global economic conditions. Thus, intentionally invented social relations based
on “trust” are weak in the Laleli marketplace, not only because of the lack of previously
existing social ties; but more importantly, because of the ups and downs in the broader
economy within which this trade network is located.
In conclusion, I argue that the new economic sociology suffers from an exclusively
micro focus and that the field would benefit from situating its analyses within the framework
of the global economy. Specifically, I emphasize that attention should be paid to the
interactions between the top levels of the world economy and the layer of competitive
exchange relations that lie below it, namely between what Braudel calls “capitalism” and the
“market economy”.
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Shuttle Trade1
Istanbul and within it the neighborhood of Laleli became a thriving node of a trade
network during the 1990s that emanated from former Soviet republics. Every year, hundreds
of thousands of people “shuttle” between ex-Soviet cities and cities in the Middle East, North
Africa, Europe and South and Southeast Asia to purchase goods such as garments, shoes,
processed food and household goods for resale back at home. The shuttle trade that takes
place between Turkey and the FSU is unregistered for the most part, evading taxes and
customs duties, as the involved states are either unwilling or unable to regulate it. Home to
the majority of shuttle traders (chelnoki), Russia for instance allowed billions of dollars of
unrecorded imports2 when the production of consumer goods plummeted after the collapse of
the socialist economy at the turn of the decade, and private import companies could not
replace the centralized import and distribution network of the Soviet Union. Neither customs
duties, nor sales taxes were paid on the traded goods, since they were usually sold informally
in open-air markets or kiosks. The shuttle traders were common people, mostly jobless or
underemployed workers at various education and skill levels who took up trading when they
found that surviving on state sector incomes or pensions was impossible.
Turkey, on the other hand, did not regulate “suitcase trade” (bavul ticareti) – as
unregistered small-scale trade by foreigners is called in Turkish – since the government
perceived it as an effortless way to attract much needed foreign currency for the ailing
national economy. At a high point in the mid-1990s, suitcase trade “exports” were estimated
to be around $10 billion annually, a significant sum compared to Turkey’s official total
The discussion in this article draws on the findings of field research I carried out in Istanbul, Turkey’s Black
Sea coast and Moscow in 1996-1997, and back in Istanbul in summer 2001.
2
For instance, the OECD estimated that unregistered shuttle trade imports accounted for about one fourth of
Russia’s total imports of $84 billion in 1996 (OECD 1997).
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exports which ranged between $20 to $30 billion per annum over the decade.3 In Laleli,4
most transactions are unrecorded, many stores are not registered and much of employment is
off-the-books. The entrepreneurs and salespeople are predominantly rural migrants and
immigrants from the Balkans, who have set up shop here because entry was easy due to
informality. Much of the trade that goes on is not taxed; nor are the goods registered as
exports when they leave Turkish customs. Shuttle traders always pay for merchandise in cash
(in dollars) and therefore the money that comes to Laleli hardly enters the banking system.
Informality in the marketplace has backward linkages, too. A significant amount of
production of apparel, footwear and leatherwear for Laleli is undertaken off-the-books. The
fact that the state has turned a blind eye on pervasive informality in Laleli has had an
important repercussion from the perspective of doing business. Lack of documentation of the
transactions hinders legal safeguards against all kinds of malfeasance such as defective
merchandise deliveries and non-payment by the chelnoki. Uncertainty in the marketplace is
compounded by the lack of policing. Traders who have to carry large sums of money on them
are always susceptible to pickpockets and muggers.
Hence the question arises: how are fraud and malfeasance to be avoided in a
marketplace that is not formally regulated? But before attempting to answer that question, I
want to provide a historical background for the emergence of this trade network, and then
draw a conceptual framework to study it.
3
Since 1996, the Central Bank of Turkey makes estimations of shuttle trade exports based on surveys of
suitcase traders at Istanbul’s Atatürk Airport to be used in Balance of Payments accounting. In 1996, the Central
Bank figure was $8.8 billion, dropping to $5.8 billion in 1997. The Central Bank calculated shuttle trade exports
to be $3.7 billion in 1998 and $2.2 billion in 1999. As the Russian economy gradually stabilized in the wake of
the August 1998 crisis, Turkey’s suitcase trade earnings slightly recovered in 2000 to $2.9 billion (DPT 2001).
4
My focus on Laleli stems from the fact that this neighborhood has become both physically and symbolically
the center of suitcase trade in Turkey. In fact, shopkeeping has spread to other districts and manufacturing of
apparel and leatherwear for the traders takes place in peripheral areas of Istanbul. Still, Laleli is the hub of all
these activities.
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The People and the History
It has been argued that the Black Sea region constituted a Braudelian “world” with a
single economic division of labor during the long nineteenth century (akin to the
Mediterranean world in the sixteenth century) (Özveren 1997). The control exercised by the
Russian and Ottoman empires over the Black Sea trade was eased, as both countries were
preoccupied with imperial rivalries during this period. Thus, “political boundaries
increasingly yielded to the logic of economic exchanges” in the region (ibid.: 85-86). The
mobility of various ethnic groups within the region (such as Pontic Greeks, Ciscassians and
Tatars) bolstered trade relations beyond the control of the states. For instance, in the first half
of the nineteenth century, Trabzon’s resurgence as an important port city on the Eastern
Black Sea coast was possible thanks to the construction of ethnic networks among diaspora
communities such as Greeks, Armenians and Persians (ibid.: 92). Apart from the trade
networks organized by imperial powers or trade diasporas, various peoples around the Black
Sea were also in contact with each other culturally and economically. In the second half of
the nineteenth century, several million people emigrated to Turkey from the Caucasus,
Crimea as well as the Balkans due to wars, the Ottomans’ territorial losses and the creation of
new nation-states. These included Circassians, Daghestanis, Chechens, Georgians, Crimean
Tatars as well as Turks and Muslims from Bulgaria, Romania, Bosnia, Macedonia, Albania
and Greece (Karpat 1985; Tekeli 1990).
Communications between Turkey’s Black Sea coast, and the Crimea and the
Caucasus were cut off in the 1920s, with the formation of the Turkish Republic on the one
side and the USSR on the other. This abrupt change also severed the links between ethnic
groups that occupied the regions on the two sides of the Turkish border such as Georgians,
Circassians, Abkhazians, etc. When the Sarp border gate on the border between Soviet
Republic of Georgia and Turkey was opened in 1988, for the first time in nearly 70 years
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relatives and co-ethnics on the two sides of the border came together. Soon afterwards, a
border trade agreement between the then USSR and Turkey allowed small traders to bring in
and take back goods for resale. The opening of the border and the subsequent collapse of the
Soviet Union brought much hope that the historic regional Black Sea economy would
revitalize. In 1992, at the initiative of Turkey, the Black Sea Economic Cooperation (BSEC)
project was initiated for the purpose of bolstering trade and investment in the region. Signed
by eleven countries (Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova,
Romania, Russia, Turkey and the Ukraine), the BSEC project has not been very influential in
bringing about economic cooperation due to the lack of an international legal infrastructure in
the region and the depressed state of post-socialist economies (Gültekin and Mumcu 1996).
But on the other hand, shuttle trade flourished, which was much broader in its
geographical scope than the Black Sea region, and involved more people than just the ethnic
groups who lived on both sides of the borders in this region. Thus, when borders were
reopened, the broader transnational networks of shuttle trade enabled by air travel over vast
spaces quickly overshadowed the re-emerging Black Sea regional economy.
The Laleli district emerged as a transnational marketplace for shuttle traders from
Eastern Europe in the second half of the 1980s. Formerly a residential neighborhood, dozens
of hotels were built in Laleli in the 1980s, attracting tourists from Poland, Czechoslovakia,
Hungary and Yugoslavia who regularly visited Istanbul to buy leather coats and jewelry from
the historic Grand Bazaar in the adjacent area of Beyazıt. The removal of travel restrictions
and the ensuing collapse of the state-led economy resulted in a stream of shuttle traders from
the Soviet Union starting in 1990. By the mid 1990s, nearly 1.5 million people from the FSU
visited Turkey annually; most of them repeat comers to Istanbul (DIE 1997). Their onslaught
to Laleli brought about a mushrooming of stores which catered to their demands in much
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needed consumer goods such as clothing and shoes as well as much desired ones such as
leather and fur coats and golden jewelry.
In just a few years, Laleli turned into the center of suitcase trade in Istanbul. Stores
mediated between small-scale informal manufacturers of apparel and footwear in the city and
the Russian-speaking customers who shuttled back and forth from the FSU. Among the
shuttle traders who visited Istanbul regularly, the ones from Slavic republics – Russia, the
Ukraine and Belarus – were overwhelmingly5 women, while the ratio of men was higher
among those from Muslim republics. Women’s predominance was related to with their overrepresentation among the unemployed and underemployed (Rzhanitsyna 1995; Attwood
1996; also Yenal 2000), which had led them into informal income-earning strategies
including shuttle trade. Similar to the chelnoki, most of the shopkeepers and their workers in
Laleli were not “locals.” The majority were Kurds from Turkey’s eastern and southeastern
provinces, and immigrant groups from the Balkans, such as recent Turkish emigrants from
Bulgaria and second generation Bosnian and Macedonian immigrants. As opposed to the
shuttle traders, the shopkeepers and workers in Laleli were overwhelmingly male.
What brought Turkish and Muslim immigrants from the Balkans to Laleli was their
ability to speak Russian and other Slavic languages. The medium of transactions in Laleli is
Russian and all stores employ Russian-speaking salespeople. The pioneers in shopkeeping in
Laleli back in the 1980s were Bosnians, who had started as interpreters for Polish shopping
tourists. More importantly, by the mid-1990s, Kurdish migrants came to constitute the
majority of shopkeepers, many of whom pushed to the informal economy of Laleli because of
the dearth of meaningful income-earning opportunities in the city due to their lack of skills,
including Turkish language skills.
5
A survey by Blacher (1996) showed that 85 percent of the chelnoki were women. The results from my
unrepresentative survey of 168 chelnoki in Istanbul and my observations during the fieldwork were similar.
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In Laleli, I found very few members of ethnic groups that have populations both in
Turkey and in Russia and in the former Soviet Union. For instance, there appeared to be very
few Circassians, Osetians, Abhazians, Georgians, Azerbaijanies, etc., which are ethnic groups
native to the North Caucasus and the Transcaucasus, and have significant diasporic
communities in Turkey (Karpat 1985; Shami 1998, 2000). I met an Azerbaijani entrepreneur
in Laleli, who proudly claimed to be the only storeowner in the neighborhood from his
country. Ironically, his business partner in Istanbul was a Syriac Christian from the province
of Mardin; and all his business, he said, was with Russians. There were many salespeople
from Azerbaijan, but they worked as hawkers for shops located in upper floors of buildings
that could not catch shoppers’ attention.
As diasporic communities in Turkey rebuilt their relations with their homelands in
Southern Russia and Azerbaijan in the course of the 1990s, they also created economic ties.
However, those ties were usually in the form of direct investments and formal international
trade. In other words, these people were not involved in shuttle trade. If we look at where the
shuttle traders come from, the lack of co-ethnic trading becomes more obvious. The majority
of shuttle traders are from the Russian Federation. The majority of the respondents to my
survey were in fact from Moscow and Siberian towns. Ethnically, they were predominantly
Russian. In fact, the sheer number of people who shuttle to and fro foreign countries defies
any attempt to study suitcase trade as the reincarnation of historic trade routes in the region.
Russian authorities estimated in the late 1990s that more than one million people were
engaging in shuttle trade from abroad ((ITAR-TASS 1997). Hence, there were no trade
diasporas operating in the networks of shuttle trade, akin to the historic role of ethnic
minorities in long distance trade (Braudel 1982; Curtin 1984; for contemporary examples see
Kyle 2000 and Diouf 2000).
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How can we make sense of the development of this trade network in conceptual
terms? Specifically, I want to situate this phenomenon vis-à-vis economic globalization and
transnationalism.
A Conceptual Framework
In our age, capital, goods, money and images travel around the world faster than ever
before, thanks to space adjusting technologies in transportation and communications, and the
concomitant integration of world markets. Scholars analyze different facets of the operation
of this “global” economy. But usually, their focus is on the upper echelons, such as the
operations of multinational corporations, international economic institutions, the role of the
media, global financial flows and markets, global cities, and so on. However, when we
examine a phenomenon such as shuttle trade, we see that it does not belong to the top-level
circuits of capital, money and goods. On the contrary, the cross-border movements of
ordinary people weave this trade network.
I have found Fernand Braudel’s understanding of economic life useful in bridging the
gap between the lower and the upper echelons of the world economy. Braudel uses the
metaphor of a building with three floors in order to describe economic life. The first floor is
material life; the second level is the market6; and capitalism is located on the third floor. The
market has always been a zone of small profits and high competition, whereas capitalism is a
zone of extraordinary profits, high capital formation, concentration, and a high degree of
monopolization (Wallerstein 1991: 209-211). The market economy, “with its many horizontal
communications between the different markets” (Braudel 1982:229) predates the capitalist
world economy. As the anti-market, capitalism has always depended on state power for its
emergence and growth (Arrighi 1994:10). Studies on globalization, transnationalism and the
6
I italicize market economy as defined by Braudel in order to avoid confusion with other usages of the term
market, such as “market” as a marketplace, “a free market economy”, “a national market”, “transition to market
economy”, etc.
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ongoing transformation of the world economy usually scrutinize this top floor, such as the
activities of multinational corporations (MNCs), global financial and commodity flows, or
global cities (e.g. Hirst and Thompson 1996; Arrighi 1994; Sassen 1991; Castells 1996; Lash
and Urry 1994). Braudel argues that the recovery in European economies in the fifteenth
century, and later in the seventeenth century were largely the work of trading at lower levels,
such as markets, shops and peddling. In the sixteenth century, however, economic progress
was achieved “from above, under the impact of the top-level circulation of money and credit,
from one fair to another” (Braudel 1982:135). Beginning in the early eighteenth century, the
anti-market started to confront the market, i.e., warehouses and wholesale trade began to
replace fairs, and banks and the stock exchange increasingly took over credit functions.
Gradually capitalism imposed its rule over the entire economy of Europe, including the
infrastructures of everyday economic life, although the latter continued to have a degree of
autonomy from the top level (ibid.: 136). The market economy survived and continued to
flourish to this day in regions and during times when distribution systems did not work well
or when there were economic downturns.
I argue that, in the last three decades of the twentieth century, the restructuring of the
world economy has led to the growth of the Braudelian market at a transnational level. I
further argue that shuttle trade is an example of the operation of the market across national
borders. The Braudelian market has spread beyond borders as a result of two processes: (i)
the increasing transnational mobility of people, and (ii) the emergence of unregulated
economic spaces as a result of the declining regulatory capacities of nation-states.
(i) Cross-border interactions mediated through migration, refugee movements and
tourism are instances of what has come to be called transnationalism. Many scholars
underline that the same technological advances that have lead to the globalization of capital
and money flows also facilitate the formation of transnational social spaces, in which people,
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goods, ideas and images crisscross borders (for example, Portes et al. 1999; Guarnizo and
Smith 1998; Basch et al. 1994; Appadurai 1996; Hannerz 1996). Transnational connections
not only bring about cultural or material flows; more importantly, the goods and images that
circulate are immersed in transnational social relations (Glick-Schiller et al. 1992), rather
than being embedded in top-level circuits of capital and money. As such, people’s
movements have become conduits for the transnational reach of the Braudelian market
economy without necessarily being mediated by multinational capital.
(ii) Parallel to globalization, state regulation of national economies has been eroding
according some, and is being transformed according to others (Sassen 1998; Castells 1996;
Carnoy 1993). States thus become unable to control some financial flows in and out of their
territories, while they may deliberately relinquish regulation in some economic fields. My
argument is that the Braudelian market economy thrives in spheres where states have either
lost their grip and/or chosen to neglect, or where multinational capital has not yet asserted
itself.
How can we situate shuttle trade in light of this conceptual framework? The networks
of suitcase trade are woven by the constant shuttling of people in a geography where state
regulation has significantly weakened, but has not been replaced by global governance
institutions, either. Pervasive informality in suitcase trade is a symptom of the weakness of
regulation. However, what we observe here is not an “urban informal sector.” Shuttle trade is
a transnational informal economy in which the lack of statal regulation is not simply a matter
of bookkeeping. By virtue of its characteristics as highly competitive and relatively
autonomous from the activities of corporate and multinational capital, this informal economy
is located within the Braudelian market economy.
Two qualifications are in order here. One is that, shuttle trade in Eastern Europe is not
a unique phenomenon. Similar informal cross-border trade networks exist in Africa
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(MacGaffey 1991), between African states and Europe (MacGaffey and Bazenguissa 2000;
Marques et al. 2001; Diouf 2000), within the Americas (Freeman 2000; Kyle 2000), and in
East Asia (Womack and Zhao 1994). The fact that suitcase trade is not a singular
phenomenon actually lends support to my argument that the Braudelian market economy has
become transnationalized.
The second qualifier: there’s certainly a lot of interplay between shuttle trade and the
upper echelons of the regional economy. Indeed, Braudel tells us that capitalism thrives on
the dynamism of the market. In shuttle trade, this interaction between the different levels
takes several forms: First, corporate capital makes efforts to enter the market. Thus, some
multinationals and large-scale Turkish manufacturers have taken advantage of the
unregulated networks of suitcase trade in order to enter former Soviet republics’ national
markets. Second, some actors within the networks of suitcase trade (especially in
transportation and wholesaling in Russia) have concentrated capital to such a degree that they
strive to situate themselves in a higher plain of the regional economy. States selectively
support such monopolistic tendencies overtly or covertly (through corruption). Third, the
shuttle trade market is ultimately affected by developments that take place in the global
economy, such as changing world market conditions, financial crises and states’ responses to
such crises.
My focus in this article will be on the exchange relations between and among smalland medium-scale actors in shuttle trade, those who inhabit the transnational market
economy, based on my observations in Laleli. However, we will also see that developments
in the upper echelons, such as national economic policies and global economic conditions,
also impact upon exchange within the market.
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Exchange Relations
As stated earlier, the interface of the marketplace in Laleli is between groups of
people who, ethnically, culturally and linguistically, are usually not tied to each other. To
restate the question raised at the beginning of the article: what, then, holds together exchange
in this marketplace?
My interviews with both storeowners and shuttle traders showed that people usually
did business with regular customers. For example, many suppliers of apparel and leatherwear
expressed that the bulk of their sales was with repeat traders. Chelnoki likewise said that they
shopped from the same stores on each trip to Istanbul. In order to get a grasp of the
significance of repeat trading in Laleli, we should keep in mind what the marketplace looks
like.
Laleli is a neighborhood of six- to eight-story apartment buildings. During the boom
in shopkeeping in the 1990s, almost all residential apartments were turned into stores.
Shopkeepers use the uppermost flights of the buildings as storage, whereas cargo companies
that transport suitcase traders’ merchandise use the basements. There are no sound estimates
of the number of establishments in this densely built neighborhood that stretches half a
kilometer long and one kilometer wide – especially because many shops are not registered.
Nevertheless, it is believed that during the boom years there were more than 10,000 stores of
various sizes that exclusively catered to shopping tourists (ITO 1995).
Here, then, we have a very large number of shopkeepers who are in competition with
each other to attract customers, and a very large group of shuttle traders who might be in
competition with each other back at home to get the fastest selling models and the best
quality merchandise at the cheapest prices in Laleli.
This marketplace presents us with an unusual combination of situations. On the one
hand, it is highly competitive and characterized by easy entry (because it is informal),
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reminiscent of the perfectly competitive market of neoclassical economic theory. On the
other hand, the market is characterized by weak legal regulation, reminiscent of urban
informal sectors. Yet, it is not an “urban” informal economy where exchange relations are
usually embedded in social networks of kin or ethnic groups (Hart 1988).
It is in place here to recall one of the paradoxes of the informal economy, as
formulated by Alejandro Portes. “[T]he more it [the informal economy] approaches the
model of the true market, the more it is dependent on social ties for its effective functioning”
(1994: 430). In other words, as the state withdraws from regulating the activities in a market
– hence removing distortions to perfect competition – the likelihood of defaults, fraud and
foul play increases. For Portes:
The dynamics of economic action that Granovetter (1985) labeled “the problem of
embeddedness” are nowhere clearer than in transactions where the only recourse
against malfeasance is mutual trust by virtue of common membership in a group.
Trust in informal exchanges is generated both by shared identities and feelings and by
the expectation that fraudulent actions will be penalized by the exclusion of the
violator from key social networks. To the extent that economic resources flow
through such networks, the socially enforced penalty of exclusion can become more
threatening, and hence effective, than other types of sanctions (ibid.)
What Portes is referring to in this context is enforceable trust and trust generated
through bounded solidarity. Elsewhere, Portes and his associates describe these notions as
important elements of “social capital,” resources that can be used for facilitating investments
and transactions in informal economies or ethnic communities (Portes and Landolt 2000;
Portes 1995; Portes and Sensenbrenner 1993).
The seeming contradiction in the marketplace of shuttle trade is that, exchange takes
place smoothly despite the absence of enforceable trust or bounded solidarity. Exchange is
often in the form of repeat trading between pairs of buyers and sellers, and there is a constant
talk about “trust”. In this instance, the seeming paradox is that market exchange is embedded
in some kind of social relations despite the absence of an overarching social structure. In
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order to overcome this seeming paradox, I turn next to a discussion of “trust” in forming
repeat trading patterns in Laleli.
Trust and Distrust
Storeowners and traders in Laleli often talked about the same thing: the most
important trait of an entrepreneur is being trustworthy in the eyes of both suppliers and
customers. The owner of a large shoe store in Laleli thought that “Russians” (meaning people
from Slavic republics) were “perfect” people. “They are well educated, honest and sincere,”
he asserted. He had such faith in their honesty that he said, “I am Turkish, yet I am sorry to
say, I will not sell another Turk shoes on credit. But I will sell on credit to Russians.”
Sometimes when a customer was short of cash, he said he would let her pay after she sold the
shoes back home. A Kurdish apparel store owner (previously a cheese merchant in the
southeast) put the issue of trustworthiness in starker terms: “there are hardly any bad people
among Russians. They are much more honest than we are. Christians do not cheat. But
Muslims, such as Azerbaijanis, do.” He explained that sometimes his customers would pay
for half of the goods they bought, and pay the rest of the money once they sold the
merchandise and made another trip to Istanbul.
At the other extreme, I also met people who were hurt by too much faith in the
trustworthiness of their customers. For instance, a small women’s apparel store owner, a
Bulgarian Turk, was cheated by his regular clients. Trusting their word, he had given a whole
batch of goods to be paid later to a couple from the Siberian city of Tumen. The value of the
merchandise, 8,000 dollars, was equal to his working capital. The couple never came back.
When I talked to him in the winter of 1997, he had closed his store and was hoping to travel
to Siberia to find that couple. Wishful thinking, his friends thought.
But were the storeowners trustworthy themselves? Here again, stories of honesty and
dishonesty were intertwined. Some shopkeepers complained that during the formation of the
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Laleli marketplace in the early 1990s “dishonest” entrepreneurs regularly cheated shoppers
by selling defective clothing or overcharging after promising a lower price. It had become a
cliché that “bad” shopkeepers – parallel to the general social prejudices, who were seen as
Kurds or recent rural migrants lacking experience in shopkeeping and trade – were “ruining
Laleli.” For instance, the owner of a small leatherwear store, who had been in the garment
sector for two decades, made the following remarks: “There are some shopkeepers who have
come from the village and set up shop with their little savings. But they do not know the
business. That is, they try to sell defective merchandise to customers and scare them away.”
He stressed that for one to create a regular clientele, “trust” (güven) was indispensable.
Boasting that most of his business was with regular customers, he said: “If I hurt a customer
once, she will not come back again. Those who sell defective goods cannot survive in Laleli.”
Likewise, several Bosnian business owners in Laleli, who were among the first to open
apparel stores for shopping tourists in the mid 1980s and who had since turned their
establishments into large-scale export companies, asserted that their success was based on
honesty and trustworthiness towards their East European customers.
The comments of shuttle traders, too, ranged between full trust (doverie) in their
Turkish7 business partners and distrust towards cheaters. Chelnoki who said they completely
trusted their partners said that Turkish people are usually “fair”, “good” and “honest” people.
Some of them pointed out the importance of having shopped at the same store for a long time
as the reason why they trusted a particular shopkeeper. A woman I interviewed in Moscow in
1997 talked very strongly about the issue of trustworthiness: “Of course I trust my partners.
How else could I work with them?” But there were others who expressed less then full trust
in the shopkeepers, citing the sale of defective or low quality merchandise.
7
I use the word Turkish to denote citizens of Turkey, rather than people of Turkish ethnicity.
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Thus, the stress on the indispensability of trust for both the chelnoki and the
shopkeepers appeared to be entangled with the complaints about the lack of it. Does trust,
then, really exist in Laleli? And if so, what does it denote? It certainly is not enforceable trust.
If someone runs away without paying for delivered merchandise or another person fails to
deliver goods that are paid for, there is no social network spanning buyers and sellers in
different countries within which sanctions against malfeasance can be enforced.
I argue that “trust” in Laleli is the product of the coming together of two different sets
of understandings of this notion, emanating respectively from small-scale business practices
in Turkey and informal economic activities in Russia8. As such, it lubricates market
exchange in Laleli by creating repetitive exchange among pairs of buyers and sellers. Yet,
this principle of “trust” is susceptible to abuse by both sides of the exchange relationship. In
order to demonstrate this argument, I first describe the notion of trust in small-scale trade in
Turkey. Within this context, I examine the credit and cash flows within the Laleli
marketplace. Then, I discuss the social relations within which informal activities take place in
Russia.
“Güven” in Small-scale Trade in Turkey
An apparel manufacturer who produced women’s wear for stores in Laleli remarked
on the notion of güven in small business in Turkey in the following way: “The apparel sector
depends on trust. There may be ebbs and flows. It is a risky business. Trust and risk-taking go
together.” In the chain from manufacturing apparel to wholesaling and retailing it, each
person counts on (trusts) the next one in line for successful sales. If there is failure at the final
loop of the chain, it trickles back down the line. In the language of small business in Turkey,
this is called operating on an “open account” (açık hesap) where payments always depend on
8
I confine this discussion to Russia, both because Russians are the majority among the chelnoki and since the
scholarly literature on that country is richer than other former Soviet republics.
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the overall performance of the market. This man explained that in Laleli, just as in the
domestic market, many storeowners operated on güven, and therefore on “open accounts”.
Trust, then, was a willingness to take a risk in establishing repeat trading with suppliers and
customers.
The following examples demonstrate this point. In 1997 I met several Bulgarian
Turks who had recently opened small stores in Laleli, after having worked as salespeople.
They did not have much start up capital; yet, not only had they earned the “trust” of
manufacturers, but they also had acquired regular customers among the chelnoki. One young
man was selling women’s t-shirts. He said that he had regular customers, women whom he
had met more than a year ago when he used to work as a salesperson. He had managed to
attract their business to his store. According to him, having a large start-up capital was not all
that important in Laleli. “It is possible to become rich even in two months, if you know
people and if you have customers, ” he asserted. Another man had opened a store with his
friends in 1995 when he was only twenty years old. They gathered their savings together
totaling DM 3,600 and rented a small store. The leather coats in the store were acquired on an
open account. This man explained that, while working as salespeople, they had come to know
a leatherwear manufacturer who agreed to give merchandise on credit to them.
Alluding to Portes (1994), in this informal economy, precisely because the market is
reminiscent of the theoretical model of the perfectly competitive market, actors need to get
into social relations. Since there are too many competitors and too little regulation of the
market, one wishes to hold on to a business partner, if the initial transaction between the two
is mutually gainful. Let us have a closer look at how such repeat trading – what Geertz has
called clientelization in the context of a “bazaar economy” (1992) – takes place.
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In the networks of shuttle trade between Turkey and the FSU, the predominant
medium of exchange is the American dollar, followed by the German mark.9 In Laleli, all
prices are posted in dollars; so much so that, people joke that even to buy a loaf of bread you
would have to pay in dollars. Shopkeepers pay manufacturers in dollars, too. Much of the
transactions take place in cash. But the very cash flow creates incentives for doing business
on credit. In a way, the cash flow and the credit mechanism are two sides of the same coin.
Analyzing exchange in a marketplace in Java, Geertz had argued that cash lubricates
transactions by means of helping one get credit (1963: 39). The same principle applies in
Laleli. A steady cash flow bolsters credit relations, thus establishing regular trading among
pairs of buyers and sellers. In turn, the credit mechanism integrates the market. When a
manufacturer gives goods on credit to a shopkeeper, a mutual dependency arises. If the
shopkeeper is able to pay back, he becomes able to ask for more goods on credit. Through the
same act, the manufacturer ties the shopkeeper to himself, securing a continued outlet for his
products. Through repeated trading, a pattern of transactions is established between them.
Likewise, credit given by a shopkeeper to a shuttle trader may create regular business among
the two. If the shuttle trader pays the money she owes to a storeowner, that payment, even if
partial, may secure for her another batch of goods on credit.
But in shuttle trade, there is a thin line between defaulting on credit payments and
being true to one’s word, since there is no enforcement against non-payments. Therefore, the
amount of credit is crucial in repeat trading. If the amount of credit a shopkeeper gives to a
suitcase trader is too high, that increases the likelihood of default; alternatively, if it is too
small, the chelnok will not feel obliged to come back to the same store during her next trip to
Istanbul. The words of a cautious small storeowner in Laleli echo the importance of this
9
In Russia, in marketplaces and kiosks where shuttle traded goods are sold, the ruble is used because laws
forbid the usage of foreign currency in all transactions. However, prices always reflect their dollar value.
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point: “If someone owes you even as little as 30 dollars, she will not come back to your store.
She will go somewhere else the next time. It is better to give her a 30-dollar gift. Then she
would come back.” Nevertheless, many storeowners conceded that they would normally give
credit up to 30 percent of the value of a batch of goods someone bought, provided that she
was a regular customer.
The incentive to give merchandise on credit arises from the need of the supplier to tie
a customer to himself, based on the assumption that there will be a steady cash flow if they
continue to do business with each other. And the incentive for a chelnok to return to the same
supplier is based on the following consideration. If the goods she buys from him initially are
of decent quality at a reasonable price and they sell well back at home, she will continue to
shop from his store, rather than plunge herself back into the hustle and bustle of the huge
marketplace on her next tour to Laleli, where information on prices, models and quality
always has a cost, in terms of time and money.
So, how do the shopkeepers try to get regular clients? In fact, one quickly notices in
Laleli that there is a big emphasis on hospitality towards the customers, which in a way, is an
extension of small-scale retailers’ practice in the domestic market of offering tea to a
potential shopper. Salespeople immediately offer soft drinks to chelnoki who examine the
merchandise with an eye to buying them. This must be such an important part of
entrepreneurship in Laleli, that a man whose small women’s clothing store I visited listed
Coca-Cola and Fanta among his operating costs. When a deal is concluded, the storeowner
might offer lunch to his customers, or better yet, take them to dinner out in the city. The
hospitality in some large stores goes so far as displaying in-house mini-bars where spirits
(including, of course, Russian vodka) are ready to be offered. Almost all storeowners I talked
to emphasized that they had friendly relations with regular customers. They helped customers
in Istanbul in various ways including finding dentists, dealing with the police, dealing with
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hotel managements or cargo companies. Some said that they had probed into the possibility
of opening stores in Russia or other republics in partnership with their suitcase trader
customers. This emphasis on friendly relations was indeed corroborated by many chelnoki.
Some even mentioned that they had hosted their Turkish business partners in their
hometowns.
If one end in the spectrum of social relations that sustained market exchange in Laleli
is simple hospitality towards clients, the other extreme is occupied by romantic involvement
between male suppliers and female chelnoki. I have examined elsewhere the consequences of
gendered trading in Laleli in a situation in which storeowners with traditional upbringing and
little education perceive Slavic women to be industrious, enterprising and very attractive
elsewhere (Yükseker, forthcoming). Here, I confine my remarks to how market exchange
may sometimes be “embedded” in romantic relationships. Although both men and women
were tight-lipped about this issue, my impression is that romantic relationships in Laleli help
build repeat trading patterns. A female trader might regularly shop from her boyfriend’s
store. A shopkeeper can provide his girlfriend with much needed connections in a foreign
environment. For example, he may help her bargain with other shopkeepers; he might help
her if she gets into trouble with the police or the customs.
More importantly from our perspective here, romantic involvement is likely to make
credit available for a female chelnok. A young shopkeeper conceded to me that he sometimes
gave merchandise on credit to his Russian girlfriend, “but it wouldn’t exceed several hundred
dollars,” he stressed. Yet, he said that he also lent money to other female customers when
they complained of having run out of money, “because, he is soft-hearted”. In fact, one often
hears stories migrant shopkeepers who get “fooled” by the female traders’ beauty. One man
expressed this in the following way: “Russian women are beautiful and too liberal. This has
an impact on Turkish men.” “Some shopkeepers give merchandise on credit to young and
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beautiful Russian women because the women sleep with them,” another man told me. He also
said that he know storeowners who had given substantial amounts of credit to female
customer/lovers and went bankrupt when the women did not pay back the money.
Still, we should be cautious about making a generalization regarding the link between
romance and business. Although the majority of shuttle traders are women, there are many
among them who are accompanied by husbands or boyfriends, who complain about unwanted
sexual approaches by men in Laleli, or who describe their interaction with the shopkeepers as
“based on mutual respect.” Likewise, many merchants speak critically of the harassment of
women on streets and some even attribute the decline in the numbers of chelnoki in the last
few years to the behavior of unruly men.
But the importance of gender in informal shuttle trade is very central to the discussion
in this article for an entirely different reason. Men and especially women have been
socialized in ways of doing things informally since the days of the socialist economy. And, it
is at this point in the discussion that we should examine the notion of “trust” from the
perspective of the chelnoki.
“Blat” Exchange and Trust in Russia
Although we are more likely to hear in the media about the predominance of the
mafia in Russia’s new capitalist economy, “trust” is an important tenet in small-scale
entrepreneurship. “Transition to market economy” in the former Soviet Union and
specifically in Russia has been a bifurcated process. On the one side are the “New Russians,”
a predominantly male group of entrepreneurs who have got the upper hand during the
privatization of state companies and/or had access to capital by virtue of their previous
positions within the Soviet system. To a great extent, big private business in Russia is
entangled with the mafia and protection rackets (Sterling 1994). Thus, far from a reliance on
trust, Russia’s new capitalism substitutes the lack of formal and informal (social) regulation
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with the use of force, that is, organized crime. On the other side are people who seek to
complement wages or earn a living by resorting to small- and medium-scale entrepreneurial
activities, ranging from selling small items at subway stations to shuttle trading abroad. Small
entrepreneurs usually evade taxation and therefore official regulation (Schroeder 1996), while
simultaneously struggling to stay away from protection rackets.
Small-scale exchange practices in Russia today are influenced by the ways of doing
things that people were accustomed to within the “second economy” (informal economy) of
the Soviet period. Here, one important practice stands out, namely, the blat system of
informal transactions. Blat is a form of exchange characterized by reciprocal dependence, and
it engenders mutual trust over the long term. It entails the exchange of “favors of access” to
public resources among people who have social relationships with each other. These social
relationships can be based on membership in a group (such as relatives or co-ethnics), but
they might also include loose networks of friends and acquaintances (Ledeneva 1996/7).
Given constant shortages in the Soviet economy, blat was used widely by people to exchange
anything from repairs to information about new deliveries in a supermarket. Reciprocity
based on blat exchange has survived the socialist economy. Women in Russia have been
crucial actors in the operation of the second (unofficial) economy under socialism, and hence
in blat exchange, and their role has also survived the Soviet economy. Cut off from access to
credit and business incentives and discriminated against in the labor market for waged work
(Bridger et al. 1996), women rely on habits and networks developed within the second
economy to earn a living for their families. It has been argued that women are creating a
“non-Western” understanding of entrepreneurship based on their own culture (Bruno 1997:
63). In an environment in which contract laws are de facto useless because of the
administrative chaos in Russia, people resort to other methods in order to do business. If big
entrepreneurs use protection rackets to enforce contracts, for the small business owner, one’s
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word is more important than a contract on paper. Under these conditions, women petty
entrepreneurs boast of their trustworthiness in business relations, a trait that they have
nurtured through barter and exchange relations in the Soviet period. My argument is that
chelnoki and especially the women embark into shuttle trading geared with certain habits and
norms about doing business in an informal environment.
Thus, when buyers and sellers face each other to engage in market exchange in Laleli,
they already have predispositions to do business based on “trust.” Although their
understandings of trust have different backgrounds, I argue that the common denominator is a
willingness to take risks in a marketplace where they cannot rely on legal regulation –
contracts, courts, and so on –
but also, where there exists a mutual expectation of profits to be made through exchange.
But does such “trust” work in practice? Here, we might recall the shoe store owner
quoted above, who said that he would sell merchandise on credit to “Russians”, but not to
Turkish citizens, because Russians were honest and trustworthy people. His business
principle made sense in 1996 when I talked to him. The Turkish economy was in constant
crisis in the 1990s (only to get worse since then). Since manufacturing and wholesaling
usually depends on bills of payment with three- to six-month maturity periods, doing business
for the domestic market meant susceptibility to exchange rate fluctuations, high inflation
rates and the ever-present danger of defaulted payments. Especially in the wake of the
devaluation of 1994, many manufacturers and wholesalers in Istanbul found a fresh
opportunity in the suitcase trade market to work with a relatively steady cash flow. Hence, it
made sense indeed to give credit to Russians but not to Turkish citizens. People operated on
güven in Laleli, but that precisely meant that one should not give credit to customers at such a
high amount that it would endanger his enterprise. This was the trick of being a “good”
entrepreneur in Laleli: taking risks, but not too much. The “bad” entrepreneur was a person
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who overstretched the principle of “trust” either by exposing himself to fraud or by cheating
others. Beyond this point we hear the stories of the inexperienced migrant entrepreneurs who
might be fooled by anything from “feminine guiles” to false promises by “friends” from
Siberia.
What about the difference between Christians (Slavic traders) and Muslims
(Azerbaijanis) in terms of trustworthiness? In fact, I repeatedly heard from Laleli
shopkeepers that Azerbaijanis to whom they sold merchandise on open accounts cheated
them. Some complained that Azerbaijanis were more likely to take advantage of their good
faith than Russians. I am unable to interpret this discrepancy between storeowners’
perceptions towards traders from different regions due to lack of ethnographic evidence. Still,
the very existence of this discrepancy lends support to my argument that there was a shared
ground between Turkish nationals and Russians when they operated on “trust.” But that
common denominator seems to be missing in the interactions between the shopkeepers and
Azerbaijanis despite the presence – ironically – of a perception of shared cultural and
historical heritage.10
Embedding “Trust” in the Global Economy
However, business relations based on “trust” are fragile at a more concrete and
general level than the honesty and trustworthiness of individual entrepreneurs or traders from
a certain region. The seasonal ups and downs of trade, and the economic downturns in the
10
Having raised the problem that Azerbaijanis are sometimes seen as cheaters, I must say a few words on this
issue in order to quell any impression of prejudice on my part. The whole issue of who is “trustworthy” and
“honest” among the peoples of the former Soviet Union certainly cannot be understood without considering the
subjugated relation of Caucasian, Muslim and Turkic peoples to the Russians. In this unequal relationship,
people from the Transcaucasus and Central Asia were tied to the second economy in Russia after the 1970s
through the organized smuggling and theft of agricultural produce, not surprisingly, in collusion with
Communist party officials (Sterling 1994). Disguised as a condemnation of black marketing under socialism, in
the popular imagination, the distrust of the “southerner” was probably combined with ethnic prejudice. On the
other hand, the disappointment of some Turkish nationals with Azerbaijanis should be examined within the
process of revitalization of cultural links between Turkey and the Turkic republics. Although common historical
and linguistic heritage is often hailed, ultimately, citizens of Turkey and Turkic people from the FSU are
members of very different nation-states. Here again, the culturally subjugated position of Turkic and Muslim
peoples in the USSR comes into play.
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region’s national economies might have a bigger impact in turning “trustworthy” business
relations sour in Laleli. More broadly, world economic events have a repercussion in the
networks of shuttle trade, too. Let me explain these three points through some examples.
The season of 1996-97 is a case in point to the impact of seasonal fluctuations in
shuttle trade. That year, the Russian government had not paid wages in the public sector for
months, thus leading to a contraction in demand for consumer goods. Chelnoki were finding
it hard to turn over their working capital. I met traders in Moscow who had been unable to
sell off merchandise they had bought on previous trips to Istanbul. For instance, one woman
who sold leather coats still had merchandise left over from the winter when I met her at the
beginning of the summer. Therefore, she put off her next trip to Istanbul. In the meantime,
she sent a message to her supplier in Istanbul through a Turkish friend in Moscow, promising
to pay her debt next fall. Back in Laleli during the same time, word was in the air that a chain
of bankruptcies had occurred among shopkeepers who relied heavily on lagged payments by
the shuttle traders. Rents for shop space were usually in dollars or D-Marks, therefore, if a
storeowner did not have steady sales, he would default on his rent payments and quickly go
under.
But certainly, the litmus test of doing business in an unregulated environment was the
economic crisis in Russia in summer 1998. In August, the Russian currency was sharply
devaluated, throwing the economy into chaos. When I visited Laleli a year later in 1999, I
observed that about one half of the stores had closed down. “For rent” signs were
everywhere. Some of the shopkeepers I had met two years before had left the market. Others
said their business volume had declined by two thirds. When I went back to Laleli in summer
2001 for more fieldwork, shuttle trading had already started to recover from the low point in
1998 and 1999. The following picture emerged from the accounts of the entrepreneurs I
interviewed this time. Chelnoki who had ruble holdings saw their working capital melt
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overnight in August 1998, thus preventing them from taking shopping trips abroad for
months. In Laleli, suppliers who had large “open accounts” with their Russian customers
were hurt the most. Bankruptcies ensued. Those who were less reliant on credit survived
1999 by diversifying their sales to East European customers. Some manufacturers likewise
survived by turning to the domestic market or reducing production. Suppliers told me that
during the course of the crisis, they had lost many of their regular customers, who either did
not pay back debts or simply had to discontinue shuttling. After six months to a year,
chelnoki started to return to Laleli. As business started to pick up, new patterns of repeat
trading were established. Shuttle traders and suppliers that I interviewed still stressed the
importance of doing regular business with the same people. But very interestingly, suppliers
said that their current “regular customers” were not the same people as before August 1998.
Thus, the renewed opportunity of making money had created a renewed incentive to engage
in repeat trading, yet with different people this time. I talked with the shoe store owner again
who had said in 1997 that he had more faith in Russians than Turks. He had suffered big
losses during the Russian crisis and got cheated by customers and workers alike because of
the unregistered and informal nature of his business. But he had survived by downscaling his
operations. When I reminded him of his comments on honesty, he said: “I still think that
Russians are trustworthy. That is, more trustworthy than Turks. But they are trustworthy only
if they are making money by doing business with you.” Hence, what tied a chelnok to a store
was the cash flow, as much as the same consideration ties a supplier to a manufacturer.
This brings us to the third aspect of the fragility of business relations based on “trust”;
namely, the impact of changing conditions in the world economy. We should remember that
ultimately, the transnational market of shuttle trade exists within the global economy where
prices, fashions, exchange rates, etc. are factors that are beyond the control of shuttle traders
and suppliers, individually and as groups of entrepreneurs. If t-shirts are cheaper in Indonesia
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and leather coats are cheaper in China, or if women’s clothing is of a better quality at the
same prices in Poland, many chelnoki would naturally change their shuttling itinerary in order
to take advantage of those opportunities. In fact, suitcase trade from Turkey has been exposed
to such centrifugal forces since the second half of the 1990s. The fixed exchange rate policy
pursued by the Turkish government, coupled with the impact of the Asian economic crisis in
terms of “cheapening” the price of Asian exports constantly ate away the competitiveness of
Turkish apparel and leatherwear production. In the folklore of Laleli, the numbers of shuttle
traders were decreasing because they were perceived to be sick and tired of “rural”
entrepreneurs who cheated them or harassed the female chelnoki. But more likely, shuttle
traders were drawn to countries where they could get “better deals.” Moreover, those who
never returned to Laleli after buying merchandise on credit could very well be investing that
money into buying consumer goods in another country.
In fact, in the responses to the survey I conducted among suitcase traders, being
cheated or harassed by Turkish suppliers was not a significant complaint. Chelnoki were
more concerned about the wage arrears problem in Russia, the declining purchasing power of
people, harassment by the mafia in the marketplaces where they sold goods, theft of their
goods at the customs warehouse, and so on. In my interviews with female traders, they had a
simple answer when I asked what they would do if they were cheated or harassed by a
shopkeeper in Laleli: “I would not do business with him again. I would go to another store.”
Moreover, the competition within the broader transnational market of shuttle trade
was translated into fiercer competition among the suppliers and manufacturers in Laleli. This
is an important point to underline, especially given the fact that it is only within the
community of Laleli entrepreneurs that we observe a degree of ethnic and regional
concentration. Immigrants from the Balkans talked about lending money to each other in
times of trouble or sharing a big business deal. But when I asked whether there was a great
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deal of solidarity among ethnic Turkish immigrants from Bulgaria in Laleli, the common
answer I received was, “there are good people and bad people among us. It all depends.” The
following case more clearly demonstrates the instability of co-ethnic solidarity. Kurdish
entrepreneurs from the province of Maraş were over-represented in the small-scale garment
sector in Istanbul and they commonly boasted of solidarity between apparel manufacturers
and Laleli merchants from Maraş. I once witnessed a quarrel between two men from Maraş,
who were playing behind each other’s backs to steal customers. The manufacturer had done
what shopkeepers dreaded the most: he had sold apparel directly to some shuttle traders,
undercutting the prices offered by his Laleli intermediary. This indicates that even when the
cultural bases for solidary networks exist, hometown and ethnic ties are as much susceptible
to the uncertainties and fierce competition of suitcase trade as business relations among
“strangers”. As a corollary, we might conjecture that previously existing social ties may not
necessarily be as important as the ones an actor nurtures through trading with foreigners.
Laleli is a marketplace characterized by heavy competition. But it is also an
unregulated and transnational marketplace. It can be argued that the conditions that would
simultaneously encourage and discourage fraud and malfeasance are created by the very
competition in the transnational market of shuttle trade. In this environment, the possibility
that an actor can move down to the next buyer or seller in the marketplace opens up the
opportunity for malfeasance, but the necessity to hold on to that buyer or seller creates and
incentive to build friendly and “trusting” business relations. Here, we might overstretch the
Hobbesian problem of creating social cohesion out of chaos to restate the point. “[I]t is
precisely anarchy which engenders trust…” (Gellner 1988: 143). At this point, the seeming
paradox that I had stated earlier, the fact that exchange is embedded in social relations despite
the absence of an overarching social structure, is also resolved. Because “trust” and market
exchange immersed in friendly (or romantic) relations are not strong principles in shuttle
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trade. They are not framed by generalized morality or bounded solidarity. Neither can they be
enforced by virtue of membership in a community. But “trust” and friendship are nurtured,
precisely because they help facilitate market exchange in a highly competitive and “noisy”
transnational marketplace where there is a steady cash flow. In the nodal locations of the
shuttle trade network, “trust” is thus “created intentionally” through personal interaction and
repetitive exchange among strangers (Lorenz 1988: 209) who are not tied to each other
through ethnicity, kinship or nationality.
Trust as a Temporally Changing Principle
In the above account of doing business through “trust” in Laleli, there is an implicit
temporal element that needs to be brought out in order to underline the embeddedness of
social relations underlying market exchange in a broader, more specifically, global economic
structure. It is my argument that nurturing “trust” became important in this transnational
marketplace by the mid-1990s, when competition became fierce. In the first years of its
operation, making money was easier for both sides. There were few suppliers and they felt
that anything they sold would be bought by the shuttle traders. In turn, suitcase traders had
less competition back at home, meaning that anything they offered for sale would be picked
up by the consumption hungry public. Stories about entire batches of defective goods and
shopkeepers running away with down payments belong to the first half of the past decade.
But once suppliers perceived that they were not alone in this game of profit making – not
alone in Laleli, but also not alone in the transnational networks woven by the chelnoki –
emphasis was laid on honesty, trustworthiness, offering good quality, building a regular
clientele, and so on. Hence, stories about honesty and trust refer to the second half of the
1990s. But simultaneously, chelnoki were pressed at home to be more competitive against
other shuttle traders in terms of popular apparel models, prices, faked Western brand names,
etc. Thus they started shuttling across a much broader geography, making it less costly for
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them to cheat on Turkish suppliers. Hence, stories about trust and distrust get entangled also
in the second half of the decade.
Once we draw a temporal picture of “trust” in business relations in this way, it
becomes clear that, ultimately, the “social embeddedness” of market exchange is itself
embedded in the framework of the global economy. The usefulness of our Braudelian
framework also becomes obvious at this point. In order to clarify this argument, I want to turn
to the field of the new economic sociology.
Spearheaded by Mark Granovetter (1985), the new economic sociology’s main thrust
is against the simplistic vision of economic life presented by neoclassical theory, which
presumes atomization of actors as a precondition for market exchange. What discourages
malfeasance and fraud in such a market, according to Granovetter, is neither institutional
arrangements nor generalized morality, but rather, the generation of trust within “concrete
personal relations and structures (or “networks”) of such relations” (ibid.: 490). The
embeddedness approach has been widely used in analyzing how exchange in various sorts of
markets, from industrial districts to subcontracting arrangements, from ethnic economies to
the informal sector, are immersed in social networks. In Granovetter’s scheme, because trust
is generated through personal relations, it is also susceptible to be abused by either side for
the same reason. Sociologists of immigration led by Portes have a somewhat different take on
this issue. If trust is generated within the framework of overarching solidarity in a group, it
becomes easier to enforce it. Though in this case, the “down side” of enforceable trust (as a
form of social capital) is that there are obligations to the community as much as resources to
be tapped from it, which may in the end stifle potential investments and profits (Portes and
Sensenbrenner 1993; Portes and Landolt 2000).
As the discussion in this article sought to demonstrate, exchange in a transnational
marketplace conforms to neither of these visions, although somewhat closer to the previous.
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What is missing in the new economic sociology is that analyses of business networks and
social networks in which economic action is immersed are not framed in the structure of the
world economy. Giovanni Arrighi (2001) has recently underscored this point when he
discusses the “double silence” of the new economic sociology on capitalism and Braudel. The
field of new economic sociology is so concerned with “micro” processes such as network
forms of business organizations, social networks, and so on, that it fails to have a “macro”,
structural and long-term perspective a la Braudel. Telling, in this respect, is Arrighi’s
observation that in The Handbook of Economic Sociology (Smelser and Swedberg 1994), the
word capitalism as a “minimally useful signifier” is used on only 14 pages and Braudel is
referenced on only 7, in a total of 797 pages (Arrighi 2001: 109, 110).
Conclusion
From our perspective in this article, the crucial issue is the interaction between
Braudel’s market economy and capitalism. We are faced with a double problem: on the one
hand, the actors in the transnational marketplace of Laleli lacked an overarching social
structure or a legal framework within which they could enforce “honest” business. On the
other hand, even when they fashioned an eclectic notion of “trust” in the absence of formal
and/or social regulation, ultimately, business relations were at the mercy of economic forces
beyond their control. As a corollary to this, we may argue that even if shuttle trade were
taking place through networks of ethnic trade diasporas, it would still be prone to falter in the
face of the dictates of the global market.
I can express this argument in the conceptual terminology I developed at the outset.
The networks of shuttle trade constitute a transnational informal economy, which I have
located at the level of the Braudelian market. It is characterized by high competition,
relatively small profits, but very significantly, also by the absence of upholding of
transactions by states; hence the weakness of statal regulation. As such, it is diametrically
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Deniz Yükseker
opposed to the top level of the economy, the anti-market, if not completely independent of it.
Although the creation of economic spaces by receding state regulation has created a breeding
ground for the transnational market economy, the market is affected by developments
occurring at the uppermost level. Changing state policies, world market prices, regional
economic crises created by global forces all have an impact upon the working of the
Braudelian market. In the case of shuttle trade between Turkey and the former Soviet Union,
the vagaries of the global economy are reflected in the everyday transactions of buyers and
sellers in a marketplace, both creating incentives for, and undercutting the necessary
conditions of, the engendering of social ties and “trust” that underlie market exchange.
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