Beyond neo-classical economics

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POSTPRINT. SOURCE: Dwyer, R. & Moore, D. (2010). Beyond neoclassical economics: Social process, agency and the maintenance of order in an Australian illicit drug marketplace. The International Journal of Drug Policy. 21 (5): 390-398.

Beyond neoclassical economics: social process, agency and the maintenance of order in an Australian illicit drug marketplace

Abstract Background: The dominant Australian approaches to understanding illicit drug marketplaces are surveillance and criminological research. These approaches rely on the neoclassical economic model of the market which focuses primarily on supply and demand. In this paper, we draw on anthropological and sociological research to develop an alternative framework for understanding Australian illicit drug marketplaces that emphasises their constituent processes. Methods: The paper draws on two years of ethnographic research among heroin user/sellers of Vietnamese ethnicity in an Australian heroin marketplace. Results: Trade and barter were key modes of exchange in this marketplace. We identified active negotiation and bargaining over price on the basis of social relationships, with dealers and customers actively working to develop and maintain such ties. Dealers set price collectively and this was shaped by moral and cultural elements such as notions of a ‘fair’ price. Social processes and relations as well as shared cultural expectations helped to generate trust and maintain order in the marketplace. Conclusion: Our ethnographic research suggests that the dominant Australian approaches to the study of illicit drug markets, with their reliance on the elementary neoclassical economic market model, ignore the social processes and social relations through which such sites are made and remade. Nor do they adequately capture the complex character of the subjects who act within these sites. If we are to expand our

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understanding of illicit drug markets and marketplaces in Australia, we must look beyond the conceptions offered by surveillance and criminological approaches.

Keywords: illicit drug marketplaces, dealers, social relations, modes of exchange, agency

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Introduction In Australia, there are two dominant approaches to understanding illicit drug markets: surveillance research – such as the Illicit Drug Data Report (e.g. Australian Crime Commission 2009) and the Illicit Drug Reporting System (IDRS) (e.g. Stafford, Sindicich, Burns et al., 2009) – and law enforcement evaluation/criminological research – such as the work conducted by the NSW Bureau of Crime Statistics and Research (e.g. Weatherburn & Lind, 1997; Weatherburn, Jones, Freeman & Makkai, 2003), the Australasian Centre for Policing Research (Nicholas, 2003) and the Queensland Crime and Misconduct Commission (2004). These approaches suffer from several methodological, theoretical and analytical limitations. To begin to address some of these limitations, we present an anthropological analysis of the social and cultural processes constituting a street-based heroin marketplace in Footscray, a suburb of Melbourne, Australia’s second largest city. We argue that these constitutive (and therefore central) elements of illicit drug markets are ignored in the dominant contemporary understandings of Australian drug markets. We use the term ‘marketplace’ to distinguish concrete exchanges occuring at a regular time and place, and ‘embedded in localized cultural, social and political relationships’ (Slater & Tonkiss, 2001, p.13) from the abstract view of ‘markets’ as ‘any arrangement for bringing buyers and sellers together’ (Scott & Marshall, 2005).

Dominant Australian approaches to illicit drug markets and their limitations In a previous paper (Dwyer & Moore, 2010), we offered a detailed critique of surveillance and criminological approaches to Australian drug markets, which we summarise briefly here. First, they rely heavily on self-report data from drug users and/or impressionistic data from professionals working in the drug field. Second, 3

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there is conceptual slippage between the specific geographical and social locations of drug exchange and abstract conceptions of a single, homogenous ‘market’. For example, within each Australian state, the IDRS aggregates data across geographical locations and social locations (e.g. street-based drug marketplaces or friendship-based systems). In this way, diversity in the form, practices and social contexts of drug exchange is glossed over.

The third limitation of Australian surveillance and criminological approaches – the most significant for the ethnographic analysis presented later in this paper – is that they draw, implicitly or explicitly, on the assumptions of the neoclassical economic market model. In this model, markets are seen to conform to the ‘laws’ of supply and demand: demand falls as prices rise and increases when prices fall, and supply increases when price rises and decreases when prices fall (Moore et al., 2005). In Australian surveillance research, the neoclassical economic model’s emphasis on supply and demand is reflected in the primary focus on the ‘key market indicators’ of drug ‘price, purity and availability [i.e., supply]’ (Topp et al., 2004, p.190). Australian criminological research on drug markets also relies on the neoclassical economic model. For example, a comprehensive review of the literature on drug crime prevention (Weatherburn, Topp, Midford & Allsop, 2000) invoked the ‘risks and prices’ model of illicit drug markets (Reuter and Kleiman, 1986). According to this model, drug markets can be disrupted by increasing the risks and costs to drug traffickers/sellers, who will ‘seek to compensate themselves for these risks and costs by demanding a higher return on their investment’. The resulting increase in price will suppress consumer demand for drugs (Weatherburn et al., 2003, p.83; see also Crime and Misconduct Commission, 2004; Nicholas, 2003). 4

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Neoclassical economics is underpinned by methodological individualism – the idea that the individual is the basic unit of social analysis, the market is merely the aggregation of the behaviour of individuals and there is formal equality between all social actors (Arnsperger & Varoufakis, 2006; Slater & Tonkiss, 2001). The neoclassical market model rests on several further assumptions: that markets are comprised of anonymous buyers and sellers who compete for scarce resources; that markets reach a general equilibrium where prices stabilise at levels satisfactory to buyers and sellers and the market clears; that buyers and sellers possess the information necessary to make the best exchange in order to maximize their utility; and that buyers and sellers in the market are autonomous, atomised, risk averse, selfinterested individuals who act rationally to maximize their utility (see Bianchi & Henrekson, 2005; Granovetter, 2002; Mikl-Horke, 2008; Stewart, 1992; Tsakalotos, 2005; Wilk, 1996). This market agent is often referred to as homo economicus (Slater & Tonkiss, 2001).

Contemporary economic analyses of markets and of market actors are considerably more sophisticated than the elementary neoclassical model described above. For example, criticisms of the assumptions of rationality and perfect information have led to the introduction of the notion of limited or bounded rationality. Contemporary analyses also incorporate considerations of collective behaviour (‘new institutional economics’) and of power (‘political economy’). International work on drug markets by economists has incorporated these more sophisticated considerations into analysis (e.g. Caulkins & Reuter, 2006; Reuter & Caulkins, 2004; Wilkins, 2001). However, analyses of Australian drug markets by economists are rare (for an exception, see 5

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Moore et al. 2005) and the elementary neoclassical model remains central to Australian surveillance and criminological approaches.

This is reflected in the focus on commercial exchanges and conceptualisation of buyers and sellers as utility maximizers. While ‘utility’ in economics may refer to a broad range of preference-satisfactions (Slater & Tonkiss, 2001), Australian surveillance and criminological research on drug markets generally measures utility in terms of price. Thus, the drug user wants to purchase at the cheapest price and the drug seller wants to sell at the highest price possible (Nicholas, 2003; Weatherburn et al., 2003). Consequently, drug exchanges tend to be measured in monetary terms and other possible forms of exchange are generally ignored.

A fourth limitation in Australian surveillance and criminological approaches is the reliance on ‘snapshot’, or static, data. This conceals the dynamic and complex social, cultural and economic processes that underlie the continual production and reproduction of drug markets. The market appears driven by the drugs themselves: it is these that are either available or scarce, pure or adulterated, expensive or cheap. Shifts in price, purity and availability, such as those noted in the IDRS reports (e.g. Stafford et al., 2009), thus appear to be the product of the ‘invisible hand of the market’ (Hayek, 1976, p.145 cited in Lubasz, 1992, p.38) rather than the product of complex social processes.

The final limitation of Australian surveillance and criminological approaches to drug markets concerns their depiction of drug market participants. In the IDRS, for example, the subjects of drug markets are homogenised as ‘drug users’ or rendered 6

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invisible by the focus on price, purity and availability. Criminological work assumes that instrumentally rational, risk-averse subjects respond to increasing risks and costs by acting to avoid them; they determine that their utility is compromised by remaining in an increasingly costly and risky environment (Weatherburn et al., 2000).

An alternative framework for understanding illicit drug markets Alternative conceptions of drug markets can be found in qualitative and ethnographic research on the social and cultural processes that produce and sustain them. International and Australian studies have documented rich diversity in the social relations and organisation constituting illicit drug markets. These include friendship or other socially-bonded distribution systems, independent ‘free-lance operators’ and large hierarchical organisations (e.g. Adler, 1985; Curtis & Wendel, 2007; Dorn, Murij & South, 1992; Maher, Dixon, Lynskey & Hall, 1998; May & Hough, 2004; Paoli, 2002). Studies have also distinguished between ‘open markets’, which are open to any buyer with ‘no requirement for prior introduction to the seller’, and ‘closed markets’, where participants only transact if they know and trust one another (May & Hough, 2004, pp.550-1; see also Fitzgerald, Broad & Dare,1999; Maher et al., 1998; Denton 2001). Even in ‘open’ drug markets, studies have shown how exchange arrangements are often shaped by social relationships between sellers and customers (e.g. Coomber & Maher, 2006; Maher et al., 1998); that drug market exchange processes are shaped by broader cultural processes (e.g. Fitzgerald et al., 1999); and that new forms of relationships may emerge as markets change (e.g. Dalton & Rowe, 2004).

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Our analysis draws on the frameworks and findings of these studies, and on anthropological studies of other commodity markets, to explore the social relations and cultural practices through which the Footscray drug marketplace is produced and reproduced. We provide a more nuanced account of commercial drug exchanges than those offered in Australian surveillance and criminological approaches, and examine the ways in which marketplace participants express agency. This last point is especially important given that drug market participants have traditionally been depicted as either lacking agency (in the case of ‘dependent’ drug users who are seen as having ceded agency to the drug) or as expressing agency only in a corrupted or malign form through immoral profit-seeking, criminality or both (in the case of drug sellers) (Brook & Stringer, 2005; Coomber, 2006; Elliot & Chapman, 2000; Keane, 2002).

Drawing on the anthropological work of Gregory and Altman (1989), we define drug economies as the social relations that govern the production, consumption and exchange of drugs. In the Footscray marketplace, there are six modes of heroin exchange: trade, barter, employment, service, gifts and theft. Following Gudeman (2001), we separate exchanges that may be categorised as ‘market-oriented’ from those that may be categorised as ‘community-oriented’. In this paper, we restrict our focus to heroin transactions that fall under the rubric of market-oriented exchange – that is, those involving trade and barter. Community-oriented exchanges – that is, those involving employment, service, gifts and theft – will be the subject of another paper. We begin by describing our research methods.

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Methods The data reported in this paper were collected by the first author (RD) following approval from two university human research ethics committees. Ethnographic fieldwork was conducted between January 2003 and December 2004. Footscray was chosen as the fieldsite as the research focus was Vietnamese-Australian heroin user/sellers (dealers) and the Footscray drug marketplace was one of several streetbased heroin marketplaces in Melbourne with a substantial Vietnamese presence. We also had pre-existing relationships with Vietnamese-speaking researchers based in the area who assisted RD as she sought to establish and maintain a research presence. As the Footscray drug marketplace operated mainly during daylight hours, RD visited during these hours, on average between four and six days per week for the two-year period. RD spent her days observing and conversing with the marketplace participants, recording her observations in extensive fieldnotes. As the social activities that were the focus of the research were illegal, RD never recorded fieldnotes while in Footscray because of concerns that these might then be accessible to other people. Data used in this paper consist of approximately 1200 A4 pages of typed fieldnotes made following participant observation.

Data analysis was inductive and iterative, in that interpretations were developed and assessed throughout observation, and used to guide the collection of further data (Hammersley & Atkinson, 1995). Fieldnotes were coded for themes, concepts and categories expressed in key words and phrases, events and practices. Categories and concepts emerged from the data but were, at the same time, shaped by initial research interests regarding exchange processes and the social relations and processes constituting the marketplace. Interpretations were discussed with informants. This 9

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generated further refinements and, on occasion, provided new data which allowed for the development of more concise definitions of categories and concepts.

Ethnographic understanding is always intersubjective, partial and fragmentary (Marcus, 1998; Scheper-Hughes, 1992). Our account is not independent of the ‘interactional processes’ (Maher, 1997, p.207) involved in its creation. As the researcher, RD is a ‘positioned subject’ (Rosaldo, 1989). Her age, gender, ethnicity and class background, all combine to make her ‘other’ to her informants, who ‘make sense’ of her just as she ‘makes sense’ of them (Maher, 1997). The sorts of conversations in which RD engaged, the accounts she was given and the practices that occurred in her presence, were all shaped by her perceived and ascribed role in the field. Our account is also partial and fragmentary because: social life is a process involving constant contestation, negotiation and transformation; the ‘facts’ RD recorded were ‘necessarily selected and interpreted’ from the moment one thing was counted and another ignored or one event attended but not another (Scheper-Hughes, 1992, p.23); and the social world of the drug marketplace is but one element in the social life of participants.

The marketplace Footscray is an ethnically diverse suburb with a substantial Vietnamese population. The Vietnamese have been present in the area for over 30 years and the suburb is richly populated with Vietnamese-owned restaurants and cafés, clothing stores, and markets and grocery stores. Embedded within Footscray’s thriving retail district is an equally thriving heroin marketplace. It, too, has a substantial history, operating in its current form since the early 1990s. 10

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The Footscray heroin marketplace may be characterised as an ‘open market’. Drug exchanges occurred in the streets and laneways of the central business district. While the specific locations of drug transactions have shifted in response to policing, to the time of writing the marketplace has proved resistant to all attempts to suppress it (Aitken, Moore, Higgs, Kelsall & Kerger, 2002; Byrne, 1992; Higgs, Dwyer et al., 2009).

During the fieldwork period, most drug transactions occurred in and around the openair pedestrian mall. These transactions were dominated by heroin-using dealers of Vietnamese ethnicity and their mainly Aussie customers (‘Aussie’ being the term used by Vietnamese dealers to describe people of Anglo-Celtic or southern/eastern European background). Over the two years of research, RD encountered around 300 drug users in the marketplace, of whom 123 were Vietnamese heroin dealers. The high proportion of sellers relative to customers reflects RD’s research focus on Vietnamese dealers.

The men and women who appear in this article were members of the core group of around 40 Vietnamese heroin dealers who, at some point during fieldwork, traded almost daily in the marketplace for a period of at least two months. They ranged in age from 18 to 38 years old, with the majority (31 dealers) aged 21 to 30 years. Seven members of the core group were women. While Vietnamese was the dealers’ preferred language, drug transactions and conversations with RD were conducted mainly in English. Most dealers had completed four years of secondary school. They were daily heroin users who met personal drug requirements through the street-based 11

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sale of heroin. Most had been involved in this trade for between five and 10 years. Dealers who regularly sold in the marketplace were not involved in other forms of employment. Past employment experience included unskilled work such as casual factory/farm work or piecework sewing for the clothing industry.

Trading heroin in Footscray In the marketplace, trade (i.e. commercial exchange of heroin for money) was the ideal form of exchange. People told RD that they “sell heroin” to “customers” and described themselves as “dealers”; thus, they defined their marketplace practices primarily in trade terms. Dealers also referred to their dealing activities as their “business” and, like other small-business operators, represented themselves as acting according to conceptions of good business practice: ensuring reliability of service and product, establishing goodwill and reputation amongst their customer base, and providing value for money. Similar representations and practices have been identified in other studies (e.g. Coomber & Maher, 2006; Curtis & Wendel, 2007; Denton, 2001; Paoli, 2002).

The two quantities of heroin most commonly sold by the dealers were caps and hundreds (named for the AU$100 price). A cap weighed “around a point” (i.e. 0.1g), although dealers readily admitted that it was usually much less than this (approx. 0.07g). A hundred weighed between two and three points. Throughout fieldwork, the standard price of a cap was AU$40. On a general trading day, the dealers would purchase a weight of heroin from their suppliers outside the marketplace (referred to as picking up), and then chop it (divide the larger weight) into sufficient caps or

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hundreds to sell in the marketplace in order to recoup their initial financial outlay. Any remaining heroin was available for their own use.

The favoured heroin weight purchased by dealers was a one-point-seven (1.7g), although, depending on available funds, dealers might purchase quarter- or half-gram weights when funds were low and 3.5g weights when funds were high. The purchase of a weight and its re-sale in smaller packages was referred to as a round and dealers would conduct between three and five rounds per day. In each round, a portion of the heroin would be retained and consumed by the dealer, with dealers injecting several times per day. At a conservative estimate, a dealer selling ten caps per round and conducting three rounds per day would engage in approximately 30 transactions. With an average of 20 dealers selling on any day, there were, at minimum, 600 heroin trades each day in the Footscray marketplace.

Despite the existence of standard prices in the marketplace, there remained room for manoeuvre on the part of both customers and dealers. For instance, customers might attempt to negotiate a lower price if buying a larger amount of heroin as in the following example. During a transaction between Nam, one of the dealers, and a customer, RD heard the customer telling Nam, “I only pay eighty [dollars] for a hundred”. Nam had already passed the heroin over, but then challenged the customer when he realised he had not received the required AU$100. The two bargained, with Nam explaining that his deals (a general term for drugs purchased) were “good size” and therefore he wanted AU$100 for a hundred. Eventually, the customer successfully bargained Nam down to AU$80. In this, the customer was operating through an established cultural lens that recognises that, in drug trades, there are 13

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mark-ups at each descending level of the supply-chain. The customer knew that Nam had purchased at a cheaper price-per-weight than the hundred price represented, and was claiming this opportunity for himself because he too was purchasing a larger weight.

Customers also benefitted when dealers sold caps for AU$15 on Sundays in the belief that customers had fewer opportunities to generate income for drugs. However, price variations could also work in the dealers’ favour, particularly if customers were unfamiliar with price and other features of the local marketplace and therefore ripe for exploitation. For example, Kiều explained to RD how she had deceived a customer who had come to Footscray for the first time: “He not from round here”, she said. “He ask, ‘What you give me for two hundred?’ I pretend to think about it ... ‘Four cap’, I tell him. He say ‘okay’”. Kiều then explained that customers in Footscray usually expected at least five caps, sometimes even six or seven, for an outlay of this amount.

We noted previously that the neoclassical economic market model assumes a general equilibrium (i.e. through the intersections of supply and demand, prices settle to a stable level and the market clears), underpinned by two further assumptions. First, buyers and sellers are equally well-informed about the available goods and, second, there is perfect competition between autonomous, anonymous, self-interested individuals (Mikl-Horke, 2008; Wilk, 1996). Neither of these assumptions holds in the Footscray heroin marketplace, where disequilibrium pertains (i.e. the market does not clear, Stewart, 1992) and price setting ‘takes place behind the scenes’ (Alexander, 1992, p.91).

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First, there are information asymmetries between customers and dealers. Customers do not know exactly how much the dealers pay for the heroin that they re-sell as caps. Dealers have expert knowledge regarding the quality and quantity of the heroin, information that is also unavailable to customers.1 This asymmetry of information, coupled with the presence of large numbers of customers relative to dealers, means that dealers have the power to set prices. Vietnamese dealers in the Footscray marketplace set prices collectively. They engaged in oligopolistic trade practices whereby they agreed not to compete over prices but appeared to compete with regard to quality, size and reliability – my heroin is “dynamite”; “I give you good size”. In reality, quality was generally the same because dealers obtained drugs from the same set of suppliers and sizes were also generally consistent between dealers. According to the dealers, their suppliers also set prices co-operatively for gram, 1.7g and 3.5g quantities (AU$270, $400 and $600, respectively).

Second, in the Footscray drug marketplace, as in many markets generally, buyers and sellers are far from autonomous, anonymous and atomised. As indicated above, dealers and customers are ‘linked by power relationships such that one partner is forced to take (within broad limits) whatever price is offered’ (Alexander, 1992, p.86). Furthermore, within any given round of heroin selling, dealers varied prices according to categorisations of customers as regulars, good customers (people who purchased regularly and always paid the asking price), locals (people who were in the marketplace regularly and were well-known) and blow-ins (people who came to the marketplace intermittently and were therefore unknown). Discounted prices were also available to other Vietnamese dealers who, for various reasons, were temporarily unable to procure a larger weight of heroin. This differential opportunity, based on 15

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shared ethnic identity, reproduced and reinforced the social distance between Vietnamese and Aussies in this marketplace.

The fluidity of price on the basis of social relationships is evident in the following example. One evening, as Kiều, Lộc, Tien and RD were on their way to a restaurant, Hùng approached, asking if he could purchase a cap for AU$20. Lộc complained, “Twenty! You always ask twenty! Last time, mate!”, as he handed over a cap. As the group walked away, Lộc muttered grumpily that Hùng would re-sell the cap for $40, the profit going towards helping him to accumulate enough money to purchase a larger weight of heroin to recommence dealing on his own. Hùng was given the discount because of their social relationship; firstly, he was Vietnamese and, secondly, he was known by Lộc to be in less fortunate circumstances than Lộc at the time. Other drug market studies have identified differential exchange opportunities based on the social relations between buyers and sellers (e.g. Coomber & Maher, 2006; Denton, 2001; Maher et al., 1998). Similar practices have also been observed in marketplaces more generally, with goods being sold at different prices depending on whether customers are family, friends or strangers (Kaneff, 2002; Davis, 1992).

The social relations implied in these categorisations are dynamic. Both customers and dealers worked to develop closer ties with each other, engaging in what Geertz (1978) has called ‘processes of clientelisation’. Examining the bazaar (marketplace) economy of two Indonesian towns, Geertz observed that, in the bazaar, information is poor, scarce, maldistributed, inefficiently communicated and intensely valued. He identified processes of clientelisation, where purchasers establish continuing relationships with particular vendors rather than search widely through the marketplace on each 16

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occasion of purchase. Clientelisation processes arise in circumstances of asymmetrical information and provide some resolution to problems of trust and malfeasance (see also Acheson, 1985; Alexander, 1987; Alexander, 1992).

For dealers, cultivating regular customers meant they could sell their caps faster and be less concerned about being ripped (e.g. customers stealing drugs or failing to provide the required money). They did this by seeking to attract the attention of potential customers before other dealers, explicitly asking potential customers if they wanted drugs and touting the size and purity of their deals. They also offered customers telephone numbers for direct contact or asked whether they might be interested in purchasing larger weights of heroin on a regular basis. Customers, too, would work to cultivate relations with dealers who provided heroin of consistent quality and who were reliable, friendly and discreet. They would greet them with friendly overtures, request telephone numbers and return consistently to the same dealer, thereby displaying loyalty. A dealing transaction involving Kosta provides an example: Kosta is currently helping Chiền sell […]. An Aussie man approaches. Kosta tells the customer his heroin is good, “better than the deals they’ve got” referring to the Vietnamese dealers (even though Kosta is selling for a Vietnamese dealer). He offers to show the man – “You can have a look. Sit down” – and proceeds to unwrap the foil. The customer says he hasn’t seen Kosta around before... [and] asks if Kosta has a telephone number because “walking around Footscray looking [for dealers] is not my idea of a good time”. (RD’s fieldnotes, 2004).

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Clientelisation processes were also apparent in the relationships that dealers negotiated with heroin suppliers. Like their customers, dealers wanted suppliers who were reliable, provided consistent quality, sold at a good price and provided credit if necessary. An example is provided by Lộc on an occasion when he changed his supplier. He chose a new supplier because, “The other one, he played God too much [flaunted his power]... When he say [he’ll be there in] five minutes, he take twenty. When he say twenty minutes, he mean one hour.”

A further response to situations of information asymmetry in marketplaces is the development of ‘middleman’ roles (see Dalton & Rowe, 2004; Furst, Curtis, Johnson & Goldsmith, 1999; Geertz, 1978; Preble & Casey, 1976). This strategy was pursued in the Footscray marketplace. One tactic was for dealers with exclusive access to a supplier to keep this information from other dealers and use it to generate money and/or drugs for themselves. For example, following her release from prison, Kiều was forced to access weights of heroin through Tan, another dealer, as Tan would not provide her with the contact details of the supplier. Tan had been “picking up” for her, “one time, maybe two time every day” but “he won’t give me boss [the dealers’ term for their suppliers] number”. However, during a conversation with Khuyen, another dealer, the name of Tan’s supplier was revealed. Kiều realised she already knew this supplier. She invoked this prior relationship and Khuyen agreed to provide the supplier’s name and current telephone number. Kiều made contact with the supplier and discovered that Tan had been ripping her. “Has he been taxing you, taking gear [heroin] out?” RD asked. “No, he not tax gear. I shout him [provide him with free heroin], I lend him cap. I pay for taxi [to meet up with the supplier]”. After speaking

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with the supplier, Kiều discovered that Tan had been adding AU$50 onto the price of the 1.7g weight, telling her it was AU$450 when he was only paying AU$400.

The effectiveness of strategies to protect information were generally short-lived as the links between Vietnamese dealers and their suppliers were sufficiently dense that people were unable to withhold contact details for long. The links were also dynamic, with dealers continually strategising and taking advantage of opportunities as they presented themselves – for example, when a dealer re-enters the marketplace following an extended period of incarceration. Middleman strategies, in relation to customers, were also pursued by those Vietnamese dealers who sold irregularly in the marketplace. These ‘irregular’ dealers made money by adding a premium to the supplier price before on-sale or by taking a portion of heroin as payment for organising the transaction. Phươc, for example, sometimes arranged for several potential customers to pool their money in order to purchase a gram of heroin. In exchange for organising and brokering the purchase, Phươc would keep a portion of the heroin. The customers also benefitted as they ended up with more heroin for their money than if they had purchased caps individually. These tactics were not appreciated by regular dealers who sold caps, as it deprived them of sales.

Bartering for heroin in Footscray Barter was another common form of exchange in the Footscray drug marketplace, with a range of goods being exchanged for heroin. For example, Huy once accepted six packets of cigarettes, and Lộc an expensive watch, in exchange for a cap of heroin, and Sơn received a relatively new laptop computer in exchange for a AU$100 deal. Mobile telephones were also a common medium of barter exchange, people 19

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either offering their own telephones or stealing telephones to then barter for heroin. Other goods bartered for heroin included clothes, DVD players and drugs such as methamphetamine and temazepam. Kiều, for example, told of an occasion when she was with an Aussie friend she knew from gaol. This friend liked to take “speed” (methamphetamine), so Kiều made a swap with another person – one of her caps of heroin for a point (0.1g) of speed – in order that she and her friend could take drugs together.

Barter attempts were not always successful as the offered good might not be desired. On one occasion when RD was sitting with Van and Hảo, they were approached by an Aussie man who asked Hảo whether he would swap one cap for an “ounce of choof” (cannabis). Hảo was not interested and told him so. The Aussie then attempted to negotiate with Van. Despite Van’s lack of interest, the Aussie persisted. “C’mon” he pleaded repeatedly. The offer increased to four ounces but Van remained uninterested, ceasing to even look at the Aussie as he repeated, “No, I don’t want it”. Eventually the Aussie gave up and departed.

Cellarius (2000, p.74) argued that ‘barter may occur in several different circumstances including in the absence of money, alongside currency that people prefer not to use for whatever reason (e.g. to avoid taxes) and when there simply is not enough money to go around’. In Footscray, barter emerges in the drug marketplace because customers do not always have access to cash but are able to obtain goods (either their own or stolen) to exchange for heroin. However, even if customers have goods to exchange, barter only proceeds if, following the barter exchange, dealers remain

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likely to earn sufficient money from their remaining heroin transactions to be able to enter into another round of purchasing, chopping-up and re-selling.

Successful barter relies on both parties agreeing to the substitutability and/or commensurability of the objects to be exchanged. As such, barter entails more bargaining and is more uncertain than trade exchange. Additionally, in barter exchanges, power imbalances can be even more pronounced than those involving trade, as dealers are under little pressure to accept customer valuations of bartered goods. Barter therefore requires well-developed bargaining skills. The person offering the good in exchange for heroin must persuade the dealer of its desirability and commensurate value to that of the heroin. Dealers avoided displaying too much interest in the proffered item or attempted to redefine the transaction as one in which they were accepting a loss. Barter exchanges thus highlight the agency of actors in the marketplace as they identified and exploited its possibilities. Rather than passively accepting the market price, both customers and dealers actively intervened to ‘persuade one’s exchange partners to see the world as one sees it oneself’ (Stewart, 1992, p.100) – or at least as one pretends to see it.

Dealers as homo economicus? If dealers (and customers) are seen as active agents, making choices and decisions, what may be said of the reasoning upon which their decisions are made? Should we assume, as in the criminological approaches discussed earlier, that people who sell illicit drugs are motivated primarily by profit and guided by instrumental rationality? In Footscray, the opportunity to profit financially from the sale of heroin was certainly available to Vietnamese dealers. Throughout fieldwork, the price for 1.7g remained 21

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largely constant at AU$400. If dealers made up 24 caps of around 0.07g in size, then each cap is worth approximately AU$16.68. As described earlier, the standard price of a cap was AU$40, making a mark-up per cap of AU$23.32. Because the main purpose of selling heroin was to fund their own heroin use, dealers always kept some of the 1.7g aside for themselves. However, even retaining 0.7g for personal use and making 14 caps from the remainder to sell at AU$40 yields a potential AU$560. With AU$400 re-invested in the next weight of heroin, this leaves a profit of AU$160 each round of selling. Footscray heroin dealers usually conducted at least three rounds per day at a potential profit of AU$480.

Despite the potential for profit, and even though dealers framed their heroin selling as a “business”, rarely did they make and/or retain profit for any length of time. Kiều said that one day she made “one thousand [dollars] profit”. She gave AU$300 of this to her mother. Later in the same week, however, she had 15 caps and did not sell any, instead helping out (sharing with) other people and thus consuming all 15 caps without financial return. In order to continue selling she had to reclaim the AU$300 from her mother. As Hảo noted, while it was possible for street dealers to “build themselves up [expand their business]”, few did, with most of the people “you would see out in Footscray” unlikely to ever get further than supporting their own heroin use. “When you’re a [heroin] user”, Hảo explained, all the profit “goes back into your arm”.

Hảo’s account was representative of the emic explanation for a lack of profit. However, potential profit was also compromised because pricing was flexible and open to negotiation, and heroin that should have been sold was sometimes gifted to 22

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fulfil social obligations to others. Furthermore, the possibility of profit was constrained due to dealers’ regular encounters with police. These encounters frequently involved the confiscation by police of any money a dealer had in their possession, irrespective of whether the encounter resulted in an arrest.

While dealers rarely realised a profit, the question remains: were they profitmotivated? Securing a good price was, indeed, one important goal of dealing transactions and people expressed satisfaction when they made a profit. However, people would also accept different prices for the heroin they sold depending on other utilities. These included whether they had accumulated enough money to pick up their next weight of heroin, and whether they wanted to purchase food, cigarettes or other drugs. Importantly, dealers would sometimes sacrifice profit through acts of sharing heroin, as illustrated by Kiều in the example given above. Thus, while profit-making was one intended outcome of heroin exchanges, it was not the only one. These findings are consistent with arguments that the neoclassical economic assumption of maximization does not hold up empirically (Davis, 1992). The actions of the Footscray dealers – for example, accepting offers of lower prices for heroin once they had accumulated enough money to enable them to purchase another weight of heroin – were consistent with Simon’s (cited in Wilk, 1996) notion of ‘satisficing’ rather than maximizing goals. Satisficing refers to situations where people do not always seek the optimum solution (maximizing utility) but rather set a minimum goal and adopt the first strategy that meets the goal (see also May & Hough, 2004, p.559 on dealers as ‘profit satisficers’).

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Rather than relying on instrumental rationality alone, the decisions made by dealers around heroin exchanges were also shaped by moral and cultural elements. For example, the power held by dealers to set heroin prices was tempered by notions of a ‘fair price’. There was a shared expectation among dealers and customers that dealers should provide sufficient heroin in a cap for customers to achieve intoxication. In turn, customers understood that dealers were themselves users of heroin and sold in order to support this personal use. It was also common knowledge that dealers paid less for the heroin they picked up than its value when re-sold in caps. The mark-up built into the $AU40 cap price enabled dealers to subsidise their own heroin use, and this was understood by marketplace participants to be a ‘natural’ and acceptable feature of drug transactions. Moral attributions were revealed, by customers and dealers alike, when dealers were identified as being “greedy” for making smaller deals (therefore effectively selling at higher prices) or when dealers were described as “not taking care of” their customers. Expectations of fairness in selling practices were also apparent when Hung complained about two dealers. “They have caps and hundreds and half-grams. They’re selling everything so they’re taking all the customers. It’s bad for the people who aren’t doing well” because those people can only afford to buy small amounts and therefore can only sell caps. Hung was asserting that dealers who could afford to purchase larger amounts should confine themselves to selling larger deals and leave the selling of caps to the less successful dealers.

Within this particular set of dealers, price and dealing practices were also shaped by Vietnamese conceptions of luck. For example, Kiều never sold the first deal from the first round at a discounted rate, and preferred not to sell her last cap of the day, because she believed that these actions would bring her bad luck. If she had two caps 24

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remaining and someone wanted both, she would sell them; if there was only one cap left, she would leave without selling. While framing her explanation within conceptions of luck, Kiều simultaneously provided an instrumental rationale in that, because she was often tired and eager to leave after a long day of selling, she might be less vigilant when selling the last cap and therefore run the risk of having the transaction observed by police or selling to an undercover police officer. This example highlights that dealers draw on multiple and sometimes contradictory styles of reasoning when making decisions in the marketplace.

Notions of luck as a determinant of business success are shared among Vietnamese people more widely. In contrast to common Western conceptions of luck as coincidental and uncertain, Vietnamese understandings of luck entail intentionality in so far as one is able to perform specific actions to bring about good luck (Soucy, 2000). Vietnamese cultural constructions of ‘karma’ – the accumulated thoughts and actions of a person that ‘establish their specific destiny through the next rebirth’ (Ho, 2006, p.82) – also shaped dealer practices, as well as providing explanations for undesirable events. It should be noted, however, that among dealers, and indeed among Vietnamese Buddhists more generally (see Soucy, 2000), there were multiple and contradictory interpretations regarding what constituted karma-generating actions. Some dealers expressed the idea that dealing, in itself, generated bad karma as dealers were “making others addicted”. Others considered that dealing did not attract bad karma and that, through dealing, they were avoiding actions such as property crime that would produce bad karma. For some, helping out people who were suffering heroin withdrawal (expressed as “I feel sorry for them”), either by gifting them heroin or reducing price, was also an action that could generate good karma. 25

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The foregoing discussion highlights that heroin prices are established through the actions and decisions of marketplace actors – shaped by social relations, power differentials and cultural understandings and achieved through social negotiation (bargaining) – rather than entirely by an impersonal law of supply and demand. Furthermore, market processes, such as price-setting, are embedded in social, cultural and political contexts (Dilley, 1992; Granovetter, 1985).

Trust and malfeasance Of central concern in trade and barter exchanges, for both dealers and customers, is the problem of trust and malfeasance. Both parties must trust that the other will not resort to fraud, opportunism or violence in order to gain transactional advantage. In Western societies, the majority of licit consumer markets are regulated by complex institutional and legal arrangements to guard against possible malfeasance. Illicit drug markets, on the other hand, are free of such formal regulatory structures and, as a consequence, they are often understood as sites of disorder and violence (e.g. Goldstein, 1985; May & Hough, 2004; Topalli, Wright & Fornango, 2002).

Closer examination of the Footscray drug marketplace, however, reveals that it is, in fact, generally ordered despite the absence of formal regulation. Although heated arguments, altercations and instances of extreme violence did occur during fieldwork, they were infrequent. In general, the marketplace was a site in which hundreds of routine and mundane drug exchanges occurred daily to the satisfaction of both dealers and customers. If they did not, the marketplace could not be sustained, and dealers and customers would seek alternative arrangements for the circulation of heroin (see 26

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also Reuter & Caulkins, 2004). Similar findings of order have been observed in other drug marketplaces (e.g. Coomber, 2006; Coomber & Maher, 2006; Curtis & Wendel, 2007).

That the Footscray drug marketplace does, on the whole, proceed in an orderly fashion suggests that informal mechanisms of regulation are at work. We discuss two of these informal mechanisms. First, as suggested by our earlier discussion of the morality entailed in the notion of a ‘fair’ price, there are widely held expectations about appropriate forms of behaviour. A good example concerns the informal ordering of co-operation between drug sellers over customers. For the most part, dealers in Footscray did not compete with one another for customers. Occasionally, however, dealers might argue over a customer. The declared ‘rule’ structuring these interactions was that if a customer had approached a dealer, then it was inappropriate for another dealer to try to take that customer. The exception to this was to assert an existing relationship with the customer. Thus, the latter dealer would declare the customer to be a regular. An episode involving Hảo provides an example: A customer approaches. Hảo holds his hand out below the table, takes the money and then passes the deal to the customer who walks away. Van protests in Vietnamese, challenging Hảo but with little apparent anger. Hảo defends himself, [saying] “why’d he come up to me then?” Van rises and walks away. I ask Hảo whether Van was arguing that it was his customer. Hảo says “yes”, adding that Van had claimed him as a regular. “But he came straight up to me. You saw him didn’t you?” he asks me, defending his actions. (RD’s fieldnotes, 2003)

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The existence of a ‘rule’ indicates that people recognise the possibilities of disorder and conflict and actively develop cultural guides for managing such situations.

The second informal mechanism of regulation is the presence of trust. Dealers must trust that customers will provide money in exchange for heroin and that they will not seek to take the heroin by force. Customers must trust that dealers will provide heroin (of a reasonable quality) for the money they provide. Despite “You can’t trust anyone” being a common refrain and people staying alert to the possibility of untrustworthiness in others, the daily repetition of hundreds of satisfactory heroin exchanges indicates that dealers and customers do trust and that, in general, their actions are trustworthy. Trust is also apparent in the existence of credit arrangements (i.e. delayed trade exchanges) between dealers and suppliers, and extended by dealers to some regular customers.

Trust emerges through social ties and clientelisation processes are often directed toward developing trust. The extension of credit to a customer speaks to an implied relationship – that the customer will return to trade with the dealer in the future. During fieldwork, customers were often heard explicitly seeking to negotiate such relationships when they told dealers “if it’s good, I’ll come back to you”. Additionally, trust is embedded in social norms, values and identities. Trust between dealers, and between dealers and their suppliers, was constituted by shared ethnic identity. For example, Vietnamese heroin users were able to assist Vietnamese dealers for a round of selling. They were provided with caps and trusted to sell these and return the required money. In exchange for this service, at the end of the round the dealer would give them a taste (a single injection of heroin) or a few caps which they 28

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could use to begin selling for themselves. This opportunity was unavailable to Aussie marketplace participants as they were said to be “untrustworthy”, the implication being that Aussies would disappear with the caps they were meant to sell.

Even when trading parties do not know each other personally, they are embedded in a social and cultural context through which they share understandings of the appropriate ways for exchange to proceed. For example, dealers and customers drew on wider understandings of ‘good business practices’ and a ‘fair deal’. Assertions that “Asian dealers” were “good business people” were commonplace; though there was often ambiguity here in the implication that, although they gave a fair deal for the price, they were also canny opportunists exploiting a demand. This ambiguity speaks also to the symbolism and social meanings of exchange and the ways in which exchange creates and maintains social hierarchy (Davis, 1992). For example, the attitudes held by Aussie customers about the Vietnamese dealers were also framed by wider resentments over Vietnamese immigration (Jakubowicz, 2004; Thomas, 1999) and by the recognised power imbalances in this marketplace where Vietnamese dealers largely set the terms of trade.

While trust was apparent, it was never fixed. Trust always has to be negotiated and renegotiated, it is often imperfect and it may breakdown. Furthermore, close social ties may actually provide ‘occasion and means for malfeasance and conflict on a scale larger than in their absence’ (Granovetter, 1985, p.491). For example, dealers who were trusted by their suppliers occasionally stole large quantities of heroin. Trusted customers, or other dealers, also stole money or drugs from trusting dealers who had relaxed their guard. 29

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Dominant Australian approaches ignore the role of trust in sustaining illicit drug markets and maintaining order. Other studies of drug markets have recognised the centrality of trust – in analyses of friendship-based or other socially-bonded drug distribution systems (e.g. Adler, 1985; Dorn, Murji & South, 1992) and in ‘closed markets’ (e.g. Curtis & Wendel, 2007; Denton, 2001; May & Hough, 2004). Trust has also been observed in ‘open’ markets’ where it is not considered necessary for buyers and sellers to know one another (e.g. Coomber & Maher, 2006, Curtis & Wendel, 2007). However, its constituent processes and its role in sustaining open drug markets remains under-examined. Our findings suggest that the social processes, relations and identities, as well as shared cultural norms and expectations shaping the Footscray drug marketplace helped to generate trust and maintain order, while simultaneously creating possibilities for disorder.

Conclusion Our analysis suggests that, far from being the anonymous, autonomous and atomised buyers and sellers of Australian surveillance and criminological research, participants in the Footscray drug marketplace are embedded in complex and ever-shifting networks of personalised, reciprocal relationships. Furthermore, dealers and customers engage in processes of clientelisation in an environment where there are information asymmetries and problems of trust. We have also shown how people employ diverse styles of reasoning in negotiating drug exchanges, revealing the diversity of ways in which people express agency. While making profit was one goal of exchange, dealers also expressed agency through acts of sharing (for the purposes of sociality or altruism). 30

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Close examination of trade in this marketplace indicates that, in many ways, the illegal economic activity of drug dealing proceeds in the same manner as much legal economic activity and operates through similar cultural understandings of ‘good business practice’. Contrary to widespread images of drug markets and marketplaces as sites of disorder, and notwithstanding occasional arguments and violent incidents, the Footscray marketplace was generally a site of order. This order derived from the social relations people established and maintained and from the shared cultural understandings they produced and reproduced, such as those guiding the management of co-operation between dealers over access to customers.

Our ethnographic research suggests that the dominant Australian approaches to the study of illicit drug markets, with their reliance on the elementary neoclassical economic market model, ignore the social processes and social relations through which such sites are made and remade. Nor do they adequately capture the complex character of the subjects who act within these sites. If we are to expand our understanding of illicit drug markets and marketplaces in Australia, we must look beyond the conceptions offered by surveillance and criminological approaches.

Acknowledgements The research discussed in this paper was supported by a National Drug Research Institute Ph.D. Scholarship awarded to Robyn Dwyer. The National Drug Research Institute receives core funding from the Australian Government Department of Health and Ageing. Robyn offers her sincere thanks to the men and women who participate in the Footscray drug marketplace. Thank reviewers??? 31

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Endnote 1. Reuter and Caulkins (2004) suggest that heroin and cocaine dealers do not have expert knowledge as they are not the producers of the drugs they sell. While streetbased heroin dealers are unlikely to test purity through chemical analysis, they are able to assess quality subjectively. Coomber and Maher (2006, p.732-34), for example, describe a range of subjective ‘tests’ – such as the pharmacological effects, taste and smell of heroin As dealers in Footscray used the heroin they sold, they were able make a subjective assessment of its quality prior to selling it. Therefore, relative to customers, they did have ‘expert’ knowledge.

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