8 ‘ Real MaRkets ’ in RuRal Bangladesh : institutions , MaRket inteRactions and the RepRoduction of inequality

MArkets And reAl MArkets The notion of the market is at the centre of economic literature and is so strong that since the time of Adam Smith,2 the basic nature of the (economic) market has hardly changed. According to that notion, the traditional market is seen ‘as a flexible atomistic realm of impersonal exchange and dispersed competition, characterized by voluntary transactions on an equal basis between autonomous, usually private, entities with material motivations’ (White, 199 a: 1).Although there are differences in the definition of markets provided by several economists, the above definition appears to have reflected precisely and successfully the dominant trend of discussion of market in economics. Thus in economics the market is the supreme medium for the expression of individual choice (Hodgson, 1988). In most cases, the market in economic literature is perfectly competitive, though models of monopoly, oligopoly and other forms of distortion have also been discussed comprehensively in the literature. The notion of the market in economics is an abstract one, where exchange of commodities is in fact a simple process, rather than that which exists in reality. White (199 a:1) notes that: ‘this ‘ideal-type’ market has been elevated to the level of an ideological principle and an ethical ideal, providing a policy panacea which promises efficiency, prosperity and freedom’. Crow (2004:11) argues that ‘this appearance of simplicity may be reinforced by our ignorance of market histories and a powerful ideological trend in capitalism which suggests that markets are natural phenomena’, but the image of simplicity thus associated with the notion of the market often fails to capture the realities of existing markets, because markets or market-exchange is, in reality, neither a simple nor natural process. Real markets are very diverse and a complicated socio-economic phenomena, which is why it is difficult to define them (Harriss-White, 1996). Different academics have defined real markets in different ways. For the purpose of this paper two definitions are used to relate to the context of, and to analyse the characteristics of, real markets in Bangladesh. Harriss-White (1996: 21) has analysed real markets using the definition of Fourie (1991: 4 , 48) which describes a real market as ‘an economically qualified, purposeful interchange of commodities on the basis of quid pro quo obligations at a mutually agreed upon exchange rate... in a cluster of exchange and rivalry relations.’ In analysing this definition, two dimensions of the relationships between buyers and sellers have been discussed. On one hand there is a ‘horizontal’ and adversarial competition among multiple buyers and sellers and on the other there may be bilateral transactions between a buyer and a seller which are ‘vertical’, exclusive and mutualistic. This view of interlocking between horizontal competition and vertical transactions is somewhat similar to Acemoglu’s analysis of de jure and de facto political institutions, where the former can be seen as analogous to formal institutions and the latter to informal institutions (Acemoglu et al, 2004; Acemoglu and Robinson, 2006). The formal horizontal interactions are often influenced heavily by the informal vertical relationships. Crow (2004) on the other hand has used the definition provided by Mackintosh (1990: 43–53) in analysing real markets. ‘Real markets... have widely varying institutions and economic contexts, they operate on limited information, they involve and help to create a variety of social classes, power relations, and complex patterns of needs and responses.’ Thus in reality markets are diverse and the transactions in the markets have to be viewed in the context of wider socio-economic processes. The above definition of Mackintosh (1990) highlights power relations as an important issue in analysing real markets. In fact, although power has often been rather ignored in traditional economic literature (White 199 b), different scholars and researchers have, at different times, discussed the influence of power or political processes in markets. For example, according to Weber (1978), ‘money prices are the product of conflicts of interest and of compromises; they just result from power constellations’. Besides, in the context of agrarian rural social systems, many other scholars have related markets with power and politics (e.g. Bharadwaj, 1985; Bhaduri, 198 ; Evans, 199 ; Harriss-White, 199 ; Cawson, 199 ; Elmekki and Barker, 199 ; Janakarajan, 199 ; Olsen, 199 ). Elmekki and Barker (199 ) used the case of Sudan’s agricultural system to show that each of the essential agricultural markets (such as land, Ippg 1. Paddy is the main food crop produced in Bangladesh. After the harvest, paddy is usually sold by the farmers and then it is husked to produce rice which is the staple food of the people of Bangladesh. Often ‘paddy’ and ‘rice’ are used to mean the same product, but for the purpose of this paper, the two are distinguished. ‘Paddy’ will refer to the grain that the farmers get immediately after the harvest and ‘rice’ will refer to the product which is derived after husking the paddy and is ready for consumption. 2. Adam Smith (172 –90), author of The Wealth of Nations (1776), regarded as the fountainhead of current economic thought by virtue of his explanation of how rational self-interest in a free-market economy leads to economic well-being. (See the Concise Encyclopedia of Economics – http://www.econlib.org/Library.Enc/Bios/Smith.html). labour, inputs, crop and consumables) has a strong political dimension. In light of the above discussions and analyses, the market for staple crops – in this case, paddymarkets in rural Bangladesh – are characterized by the following features. • Paddy markets (and the nature of exchange in them) are wide and diverse; there are diversities in the forms of various relationships among market players, types of produce, different systems of production and marketing, seasonality and regional variations. • The market players are not only buyers and sellers, rather they have various social and political (power) relations among them that influence the process and outcomes of market interactions. • The paddy markets are linked very closely a number of other markets such as rice markets, labour markets, input markets and credit markets. • The socio-economic status of the market players is unequal and discriminatory. MArkets And InequAlIty: experIences froM rurAl bAnglAdesh It is evident from the above discussion that there are inequalities among those who participate in market exchange in terms of the differences in their wealth, socio-economic status and political power and influence. As stated earlier, the main focus of this paper is the process of reproduction of that inequality through market interactions in such unequal societies. Specifically, this paper will concentrate on the paddy-markets currently operating in two villages in Dinajpur, a northern district in Bangladesh, which is one of the major paddy-producing districts in the country. Before examining how the unequal socio-economic status of the villagers is reproduced through market interactions among them, it is important to introduce the two villages. The two villages are Telkupigaon (almost 15 kilometres away from the district town) and Shantipur (about 4 kilometres away). Although both the villages are agricultural, the lives and livelihood of the people of Telkupigaon depend relatively heavily on agricultural activities – the majority (5 %) of the 507 households in the village depends directly on agriculture, with half of these households living on agricultural wage labour. The other half consists of the farmers, including those who cultivate their own land, and the sharecroppers.4 The influence of these farmers rests largely on how much paddy they produce, which is in turn determined by the amount of land owned by them. The distribution of land in the village also reflects sharp inequalities: about two thirds (64%) of the households do not have any cultivable land and of the remaining 6%, only a little over % (17 out of 507 households) have more than five acres of cultivable land each. About 11% of the households have cultivable land between one and five acres and 22% of the households have less than one acre of cultivable land. There are two paddy harvests in the village: during the wet season, various high yielding varieties of paddy are cultivated alongside the traditional local variety called aman; and during dry season it is only the high yielding varieties which are cultivated all over the village. Relatively speaking, there are fewer people directly engaged in agriculture in Shantipur, since the village is located near the district town. However, a significant number of people are engaged in the business of agricultural produce: more than one third ( 6%) of the 750 households in Shantipur are directly engaged in agricultural activities and half of these households earn their livelihoods through day labour while the remaining half consists of the farmers or producers of agricultural produce. The extent of landlessness is also very high, with more than 60% of the households not having any cultivable land. Although the distribution of land is unequal in this village, the inequality is relatively less than that in Telkupigaon. Only one household has more than five acres of land and, of the remaining 92 households, 12% have cultivable land between one and five acres, with 198 households (26%) having less than one acre each. Although two major harvesting seasons are followed in this village as well, immediately after the cultivation of the high yielding variety (IRRI) in the dry season, there is another minor harvest known as ‘late IRRI’. Apart from paddy, potato is also another important crop in this village. The socio-economic inequality in the two villages, as evident above, is reproduced through the market interactions among the villagers who have unequal socio-economic backgrounds. Some of the processes that facilitate the reproduction of inequality are as follows. • Market price of paddy The market price of paddy does not remain the same over the entire year. The price goes down to its lowest immediately after harvest when the markets are flooded with newly harvested paddy, rising gradually until it reaches its peak just before the next harvest. Crow (2004) used his research findings on South Asian countries including Bangladesh, to show that poor farmers sell their crops immediately after harvest when the price is usually the lowest, whereas rich farmers can afford to wait and sell their crop just before the next harvest and, as ‘a result, there is a statistically significant relation between class and grain saleprice. The rich get the best price and the poor get the worst’ (Crow 2004: 25). The marginal and poor farmers in the two villages are compelled to sell their paddy immediately after the harvest mainly for three reasons. First, as the only main income of these farmers is the one from the sale of paddy, they sell whatever they produce immediately after harvest to meet the rudimentary needs of the household. Second, most of the poor