The (In)Formal Economy

Chapter 4

(1)

The condition of a bazaar is one of the most important economic and political indicators of the situation in the country. It reflects the fluctuations in the currency exchange rates, the welfare of the population, and the relationships with neighboring countries.

These factors affect prices, as well as the product range, its renewal, supply levels, the number of people employed in trade, their personal well-being and business growth, the turnover of goods, and the purchasing power of consumers.

Chorsu Market, Tashkent, 2019

This is also where the bazaar provides flexibility in times of crisis, when the formal economy and labor market are unable to respond.

In the 1990s and early 2000s, the bazaar became the only outlet for many Uzbek people who had lost their usual sources of income.

The bazaar provides work for everyone who needs it, including those groups of people who are not in demand in the formal labor market. Although there are some restrictions on occupations based on age and gender.

The trade system in Uzbekistan has become well-regulated, but even today, bazaar trade retains some informal characteristics and remains part of the gray economy.

For example, retirees often work as security guards or parking attendants, while teenagers engage in small-scale transportation or assist their parents behind the counter.

Chorsu market, Tashkent, 2019 and 2024

Chorsu market, Tashkent, 2019

Chorsu market, Tashkent, 2024

Chorsu Market, Tashkent, 2024

Andijan City Market, 2019

(2)

Sergey Abashin

Historian and anthropologist, Professor at the European University in St. Petersburg

In Soviet times, the bazaar in Central Asia occupied an important niche and directly influenced daily life, shaping the "informal" economy. It coexisted with the formal one, influencing and complementing each other. Cotton cultivation in Uzbekistan was strategically important for the entire state, and to ensure stable production, workers were assigned to their place of residence—for example, through a ban on moving to the city. However, since they paid little for hard work in the fields, the authorities turned a blind eye to villagers' "informal" economic activities, such as growing vegetables and fruits on their homesteads and raising livestock. The products of such household farms were sold in bazaars, forming the core of their assortment.

Nowadays, it is middlemen, not dehkans (peasants), who trade in the large bazaars, yet communication often remains informal. Trade with ordinary buyers in the bazaars is conducted mainly for cash.

In the middle of 2000 and in the second decade of the 21st century, there were some unsuccessful attempts to integrate the use of bank cards into daily life. However, such innovations came to a standstill due to the lack of the necessary infrastructure.

Settlements with vendors also often happen in cash or sometimes by a bank transfer. In the second case, the price is higher due to additional fees, so many people prefer cash. Cash settlements allow to speed up the delivery process and keep prices at a low level.

All cash settlements can only be trusted to a proven person. Therefore, almost no sellers working behind the counter are on payroll.

Chorsu Market, Tashkent, 2024

Boysun city market, 2019

Kunduzkhon

Sells halva and sweets at Chorsu market

I resell goods. We have a vendor from Ferghana, they sell us Kokand halva. And the rest of the sweets, for example, wedding halva, pismaniye, dried melon, Turkish delight, are produced in Tashkent. I buy all these first hand.

I have enough to live on because money comes into the family every day. My mother, brother and I are involved in trade, and we have two trading places here at Chorsu. I’ve been working in the market since 2014, at first, I helped mom, then I started trading on my own.

(3)

Chorsu Market, Tashkent, 2024

Another informal payment system in the bazaar is a credit of trust. The concept of so‘z (word) plays a crucial role as a guarantor of trade. If the buyer fulfills their obligations, then their so‘z will have more weight in the future trades.

In the long-standing, mutually beneficial relationship between seller and buyer, qarz (debt) emerges. A buyer can receive a product or service without paying in full—or sometimes paying only half—depending on the level of trust or their financial situation at the time of the transaction.

Women in acute need often use this credit. If the debt is not repaid eventually, the seller may consider it as a charity for the poor (sadaqa).

Swapping also occurs as a form of mutual settlement, either to acquire goods for personal use or for resale. Often, a handicraft product is involved in the exchange, with the craftsman trading it for another item, hoping to sell it at a higher profit.

Akram

Seller at Chorsu market, Tashkent

"I am already retired, and I have been selling my goods here all my conscious life. I worked as a tinsmith, making roofs. Now I make products from tin sheet waste, which I get for free. I make baking pans, they are more durable than Chinese or Turkish ones. When I’ve made enough, I either sell them or exchange them for other items I can sell, such as dough and cake supplies, candles, or silicone baking molds.

For me, the bazaar is, first and foremost, "tirikchilik" (a means of survival), and only after that a place for trade and a way of life. My children are also involved in trade: my son helps me, and my daughter makes dolls and toys to order. I want my grandchildren to trade as well, because it is a real and always necessary business. There is always a constant demand for products. The product is always in demand and you can get real money.

Chorsu Market, Tashkent, 2024

Artisan's Workshop, Tashkent, 2019

Chorsu Market, Tashkent, 2019

Chorsu is a spatial manifestation of a highly complex, often invisible network of local socio-economic ties. This is a place in the physical space where the participants of the process know each other, having lived in the same locus.

The priority of cash, so‘z, qarz, sadaqa, personalized trust, and other informal interactions typical of the market is largely a consequence of the 'physical presence' of its participants. The bazaar is mostly regulated by personal relationships, gifts, debts, and barter.

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Chapter 5

Market hierarchy