Governance, marketplaces and social capital: the role of Batkhela bazaar in the evolving governance of the Malakand region of Pakistan

Marketplaces are frequently a key dimension of local governance in developing states. Yet to date, their role, and that of the social capital operating within them, in the evolution of formal and informal local governance structures has lacked systematic theoretical and empirical investigation. This is the case in the developing world in general, and in Pakistan specifically. This absence is of notable significance in the context of Pakistan and the Malakand region given that marketplaces, characterised by their complex formal and informal relationships, are centre-stage in the processes of local economic development and governance. This study addresses this gap by drawing together three streams of literature on decentralisation and local governance, social capital, and marketplaces, to explore the manner in which marketplaces generate social capital and the outcomes of this social capital for local governance.
Adopting a relational framework for social capital and local governance, the thesis argues that marketplaces, as an element of both formal and informal local governance, generate both individual and associational social capital. To understand the implications of this marketplace-generated social capital, the study examines how it is generated by the economically dynamic Batkhela bazaar, and how it impacts on the evolving local governance of the Malakand region. To unearth the complex interrelationships between social capital and local governance, a qualitative, multi-method case study of Batkhela bazaar in Malakand District was undertaken. Working within a critical realist tradition, a survey of market traders was followed by intensive qualitative data collection through semi-structured interviews conducted with bazaar traders, local political leaders and local administration officials. Relevant records from related government departments, social welfare associations and bazaar traders’ associations were also collected and analysed.
Theoretically, the thesis develops and applies an original meso-level analysis grounded in the Bourdieusian tradition, to improve understanding of the continuities and changes in the generation, operation and outcomes of social capital within marketplaces, and the relationship between social capital and local governance in developing state contexts. The results are presented in relation to the influence and impact of bazaar-generated social capital on citizens' empowerment and participation, the implementation of regulations, and social welfare provision. Although associations in Pakistan are weak, economic development is contributing to the development of associational life. The findings demonstrate that the individual and associational forms of social capital generated by the bazaar are frequently complementary and are linked in various ways to the political, regulatory and service provision activities of formal local government. Interpersonal networks of traders governed by the norms of trust and reciprocity have a dual role in a weak-state, low-trust environment: they stabilise the everyday governance of the marketplace, while simultaneously reinforcing formal institutional weakness by facilitating corruption and intercession. Neither individual nor associational social capital has a normatively “dark” or “bright” side: the major determinants of the outcomes of its use are rooted in the motives for which it is employed by differentially powerful actors, and in the domain in which it operates.