“Written by an Economist”

One theme definitely pervaded the conversation about Barak Richman’s book Stateless Commerce: The Diamond Network and the Persistence of Relational Exchange, published in 2017-namely that this book was “written by an economist, explained through the lens of efficiency.” Many of the questions asked in the seminar on Friday, February 23 pointed out potential non-economist perspectives on the phenomena discussed by Richman in the book-what he deems “stateless commerce” and the community-based relational exchanges he observes in the diamond industry. These questions included ones ranging from the human rights implications of his findings to the potential religious bases of the behavior observed.

Richman introduced the discussion with several points of contextualization. First, he told us that the chapters we read for the class (6 and 7) were probably the weakest chapters of the book because they are the most speculative. He told us that he began the book with chapters 3 and 4. Chapter 3 asks how contracts (credit agreements) are enforced in the diamond industry. Classic transactions in the diamond industry (i.e. diamond credit sales) are remarkably difficult to enforce. Chapter 4 then asks why alternative enforcement mechanisms are not used. Part of that discussion centers on the emergence of the corporation as an organizational format that enabled certain transactions, markets, and trades to prosper, especially transnationally.

Chapters 6 and 7, on the other hand, examine the ways in which ethnic networks serve important governance functions. Furthermore, they ask what the role of the state is in globalization and transnational governance/trade. Overall, Richman explained, these chapters represent an effort to apply what he thinks he knows about the diamond industry to the global level (what he does not know), and thus, there is an inherently speculative nature about them.

It was the speculative nature of these chapters that seemed to drive those questions asked during the class that challenged the (purely) economist viewpoint on the issues tackled. One such question (asked by Bo Stewart) was: What human rights challenges are unique to these communities, and are there things that states can do to address the challenges unique to these structures? This question actually came up multiple times because the audience seemed dissatisfied with the original response. Richman explained that he shied away from unpacking the normative debate and normative issues surrounding the topics in his book. Yet there seemed to be a consensus in the room that these issues (including gender norm and discrimination issues) are extremely important to the way in which the diamond industry and other “stateless commerce” businesses conduct their work.

Another question that came up more than once (originally asked by Professor Stern) was about the role of religious beliefs in the establishment of industries like the diamond one. In other words, for the diamond industry, is there anything distinctly Jewish about these networks? Richman replied that an economist would say that the only useful thing about religion or belief (as club goods) is that they predict behavior, as in the communities discussed in his book. He also said that, to the degree that cities are centers of global commerce and to the degree that these communities are fit for global commerce, you will see instances of these throughout the world. What seemed clear from the questions, however, is that if religious beliefs do play a role, this would give a more nuanced explanation than the economic one presented in the book.

I posed yet another question that pushed back against the economist perspective applied by Richman. I asked whether he thought it would possible for these types of community-based businesses to persist for reasons other than efficiency? Using the example of Abacus Federal Savings Bank (a small, family-run bank established specifically to serve the Chinese immigrant community in New York City and the only bank that was indicted in connection with the 2008 financial crisis), I further asked whether these type of community businesses-ones not based on efficiency-are doomed to fail if they attempt to exist alongside healthy state apparatuses that distrust the way such businesses function. Although Richman could not answer this question fully since we were nearing the close of class, he explained that he thought the lawsuit against Abacus demonstrated the ways in which people with capital can affect the economy.

The discussion throughout the seminar was fascinating, but if there was one takeaway, it was the challenges offered in audience members’ questions to the purely economic vision of stateless commerce instances in which community-based relational exchanges rule. It seems perhaps that an interdisciplinary approach might help to elucidate both some of the underlying catalysts for the existence of these phenomena (e.g. religion), as well as the ways in which repercussions of these phenomena might be managed (e.g. human rights abuses).

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