Glover on Richman, “Stateless Commerce”

On Friday, February 23rd, 2018 as a participant in the Spring 2018 Mellon Sawyer Seminar Guest Lectures, Barak Richman, Professor of Contracts and Antitrust at Duke University School of Law, presented his recently published novel entitled Stateless Commerce: The Diamond Network and the Persistance of Relational Exchange. His presentation focused upon chapters six and seven of the work which highlighted the implications of ethnic networks on policy and state regulation. The bulk of his work noted the efficiencies inherent in communities that do not need to rely on formal legal protections to operate effectively in the market, due to pre-modern spheres of influence that rely heavily on reputational and familial incentives. Richman opened his presentation by acknowledging the speculative nature of these chapters, written in response to questions that arose from the audiences of his earlier drafts.

Richman was quick to admit that he wrote the book as an economist, with an eye towards efficiency. Though the book focused primarily upon the Jewish and Jain ethnic networks’ grasps upon the diamond trade, he rejected the notion that the success of the industry was dependent upon something unique to either community. He was open to a dialogue about the translation of the ethnic network model to other communities, recognizing that other industries exhibit the same inherent efficiencies. Further discussion focused upon the ineffectiveness of courts in industries where enforcement is difficult and insider information is key to governance. This examination of the role of trust in ethnic networks that operate outside formal judicial oversight led to further exploration of the implications for emerging blockchain technology.

However, Richman acknowledged that stepping beyond the question of efficiency to engage in the deeper normative debate was an area of particular difficulty in this work. When pressed about the impact of these ethnic networks upon consumers, Richman evaded the question, deliberately avoiding any extensive qualitative analysis of whether stateless industries generate more or fewer net benefits than regulated trades. On more than one occasion, he made the claim that these ethnic networks can be beneficial where states exhibit ineffective governance, without addressing whether the existence of the stateless networks can in itself undermine the effectiveness of the state. Further questions and concerns about how modern forms of statelessness can and should respond to global human rights challenges received similarly unsatisfying responses. Private international governance was credited as focusing primarily on addressing the consumer credibility issue, casting aside concerns of unfavorable practices that have not yet come to public attention.

The presentation concluded with a number of lingering questions. Richman acknowledges that the statelessness of the diamond industry appears to be in decline and raises the question of whether there is still a space for statelessness in other industries. But what industries those will be and whether the stateless nature is a positive or negative quality are questions that remain to be answered. Richman’s work succeeds in starting a conversation around the unique structure of communities of commerce that operate independently of state regulation, but more extensive analysis will be necessary to draw deeper implications about the governance of such stateless networks and their impact upon consumers.

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