Order in the Bazaar: The Transformation of Non-state Law in Afghanistan’s Premier Money Exchange Market

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.

Faithful Finance: Unlocking Banking Islamization in Afghanistan

“…Afghans have maintained an informal economic and financial sector at their disposal, to use whenever they require. The Sarai Shahzada, for instance, is a local, largely unregulated, yet influential, money and forex market that has been governed for decades by informal legal norms, where hundreds of millions of dollars circulate each day, making it the financial hub of the country (Choudhury 2022). In addition to the above, the collapse of the Kabul Bank in 2010 inflicted a fatal blow to people's trust in the banking sector.…”