The Politics of Order in Informal Markets
How the State Shapes Private Governance

This book introduces a theory for how the state shapes private governance, leveraging data from informal markets in Lagos, Nigeria.

Shelby Grossman (Author)

9781108984713, Cambridge University Press

Paperback / softback, published 8 December 2022

165 pages
22.9 x 15.2 x 0.9 cm, 0.25 kg

'Can private governance promote trade and economic development? Shelby Grossman offers a persuasive theory that nonstate governance performs best precisely when states also regulate economic affairs. Meticulous survey and qualitative evidence from markets in Nigeria reveals how informal leaders promote cooperation and enforce property rights precisely when trying to avoid government meddling. The result is a fresh perspective on some of the most fundamental questions about state-society relations in political economy.' Alisha Caroline Holland, Harvard University

Property rights are important for economic exchange, but many governments don't protect them. Private market organizations can fill this gap by providing an institutional structure to enforce agreements, but with this power comes the ability to extort group members. Under what circumstances, then, will private organizations provide a stable environment for economic activity? Based on market case studies and a representative survey of traders in Lagos, Nigeria, this book argues that threats from the government can force an association to behave in ways that promote trade. The findings challenge the conventional wisdom that private good governance in developing countries thrives when the government keeps its hands off private group affairs. Instead, the author argues, leaders among traders behave in ways that promote trade primarily because of the threat of government intrusion.

1. Introduction
2. Market Associations: An Overview
3. Conducting a Representative Survey of Informal Traders
4. A Calm Sea Does Not Make a Good Sailor: A Theory of Private Good Governance
5. Government Threats and Group Leader Strength
6. Business is Secret: Government Threats and Within-Group Competition
7. Private Groups in Comparative Perspective
A. Appendix to Chapter 2 – Market Associations: An Overview
B. Appendix to Chapter 3 – Conducting a Representative Survey of Informal Traders
C. Appendix to Chapter 4 – A Calm Sea Does Not Make a Good Sailor – A Theory of Private Good Governance
D. Appendix to Chapter 6 – Government Threats and Within-Group Competition
E. Appendix to Chapter 7 – Private Groups in Comparative Perspective.

Subject Areas: Urban economics [KCU], Political economy [KCP], Economics [KC], Political science & theory [JPA], Politics & government [JP]