Abstract
Based on fourteen months of ethnographic research on the central money exchange bazaar in Kabul, Afghanistan—Sarai Shahzada—this article examines the micro-dynamics of legal change within a close-knit community in a fragile setting. For most of its history, the bazaar has been governed by informal legal norms. New state-building measures after 2001 led to increased efforts by the state to regulate the bazaar, causing money exchangers to initiate internal transformations to protect their autonomy. While scholarship generally argues that state coercion substitutes for private legal norms, this study shows the centrality of the state in consolidating the bazaar legal system. Exchangers have cast their non-state legal system in the image of the state by formalizing new operating rules that have introduced a management structure and dispute resolution forum. New state licenses have also helped to safeguard the boundaries of the bazaar. This article contributes to private governance and legal pluralism scholarship by revealing that a private community, even in a fragile state, may be capable of maintaining an autonomous non-state legal system not in spite of, but rather by depending on, the state.
Highlights
Why do some non-state legal systems persist over time? In Afghanistan, money exchangers have played a central role in supporting the economy for over two hundred years
These changes can be traced to the actions of money exchangers who sought to strengthen the authority of the bazaar, thereby maintaining its operational autonomy, while transforming it through contact with the state and state actors
The money bazaar reveals the ability of an informal, non-state legal system to maintain its operational autonomy during a period of state encroachment by mimicking the state legal system and formalizing its own operating structure
Summary
Why do some non-state legal systems persist over time? In Afghanistan, money exchangers have played a central role in supporting the economy for over two hundred years. Two transformations are explored in detail—the formation of an internal management structure in the bazaar and the formalization of a dispute resolution forum These changes can be traced to the actions of money exchangers who sought to strengthen the authority of the bazaar, thereby maintaining its operational autonomy, while transforming it through contact with the state and state actors. These works, strongly influenced by the fields of new institutional economics (North 1990) as well as law and economics (Coase 1937; Ellickson 1991) became prominent in the 1990s when diverse studies emerged on the ways in which close-knit communities governed their activities based on their own rules rather than relying on public coercion These studies show how private communities may “opt out” of the state legal system (Bernstein 1992), despite the latter being fully functional within society. Exchangers have been able to maintain the autonomy of the legal system of the bazaar by mimicking legal forms originating in the state; the process of transformation has entailed new operations within the bazaar while continuing to draw from prior regulatory practice
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