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How Community Institutions Create Economic Advantage: Jewish Diamond Merchants in New York

In: The Global Diamond Industry

Author

Listed:
  • Barak D. Richman

    (Duke University)

Abstract

This article argues that Jewish merchants have historically dominated the diamond industry because of their ability to reliably implement diamond credit sales. Success in the industry requires enforcing executory agreements that are beyond the reach of public courts, and Jewish diamond merchants enforce such contracts with a reputation mechanism supported by a dis tinctive set of industry, family, and community institutions. An industry arbitration system publicizes promises that are not kept. Intergenerational legacies induce merchants to deal honestly through their very last trans action, so that their children may inherit valuable livelihoods. And ultra-Orthodox Jews, for whom participation in their communities is paramount, provide important value-added services to the industry without posing the threat of theft and flight.

Suggested Citation

  • Barak D. Richman, 2006. "How Community Institutions Create Economic Advantage: Jewish Diamond Merchants in New York," Palgrave Macmillan Books, in: Roman Grynberg & Letsema Mbayi (ed.), The Global Diamond Industry, chapter 2, pages 44-86, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-53761-4_3
    DOI: 10.1057/9781137537614_3
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    Citations

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    Cited by:

    1. Janet Landa, 2008. "The bioeconomics of homogeneous middleman groups as adaptive units: Theory and empirical evidence viewed from a group selection framework," Journal of Bioeconomics, Springer, vol. 10(3), pages 259-278, December.
    2. Janet Landa, 2009. "Homogeneous middleman groups as superorganisms, endogamous ethnic groups, and trust networks: Reply to comments on Janet Landa’s target article, ‘The bioeconomics of homogeneous middleman groups as ad," Journal of Bioeconomics, Springer, vol. 11(2), pages 191-199, August.
    3. Munshi, K., 2017. "Caste and the Indian Economy," Cambridge Working Papers in Economics 1759, Faculty of Economics, University of Cambridge.
    4. Sanchez-Pages Santiago & Straub Stéphane, 2010. "The Emergence of Institutions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-38, September.
    5. Ruffle Bradley J. & Sosis Richard, 2007. "Does It Pay To Pray? Costly Ritual and Cooperation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-37, March.
    6. Egger, Peter H. & Ehrlich, Maximilian v. & Nelson, Douglas R., 2020. "The trade effects of skilled versus unskilled migration," Journal of Comparative Economics, Elsevier, vol. 48(2), pages 448-464.
    7. Kaivan Munshi, 2014. "Community Networks and the Process of Development," Journal of Economic Perspectives, American Economic Association, vol. 28(4), pages 49-76, Fall.
    8. Jérôme Sgard, 2019. "The Private Governance of a Global Market: The London Corn Trade Association, 1885-1914," SciencePo Working papers Main hal-03594359, HAL.
    9. Leeson,Peter T., 2014. "Anarchy Unbound," Cambridge Books, Cambridge University Press, number 9781107629707, September.
    10. Wim Naudé, 2007. "Peace, Prosperity, and Pro-Growth Entrepreneurship," WIDER Working Paper Series DP2007-02, World Institute for Development Economic Research (UNU-WIDER).
    11. Brian Cevallos Fujiy & Gaurav Khanna & Hiroshi Toma, 2022. "Cultural Proximity and Production Networks," Working Papers 686, Research Seminar in International Economics, University of Michigan.
    12. Sebastian Henn & Eric Laureys, 2010. "Bridging Ruptures: The Re-emergence of the Antwerp Diamond District After World War II and the Role of Strategic Action," Chapters, in: Dirk Fornahl & Sebastian Henn & Max-Peter Menzel (ed.), Emerging Clusters, chapter 4, Edward Elgar Publishing.
    13. Jérôme Sgard, 2019. "The Private Governance of a Global Market: The London Corn Trade Association, 1885-1914," Working Papers hal-03594359, HAL.
    14. Smita Srinivas, 2023. "India and ‘European’ evolutionary political economy," Review of Evolutionary Political Economy, Springer, vol. 4(2), pages 415-443, July.
    15. Palagashvili,Liya & Piano,Ennio & Skarbek,David, 2017. "The Decline and Rise of Institutions," Cambridge Books, Cambridge University Press, number 9781316649176, January.
    16. Andrén, Daniela, 2012. "Romanians, Hungarians and their wages, in transition, in Romania," Economic Modelling, Elsevier, vol. 29(6), pages 2673-2685.
    17. Dalhia Mani, 2021. "Who controls the Indian economy: The role of families and communities in the Indian economy," Asia Pacific Journal of Management, Springer, vol. 38(1), pages 121-149, March.
    18. Kahanec, Martin, 2007. "Ethnic Competition and Specialization," IZA Discussion Papers 3167, Institute of Labor Economics (IZA).
    19. Andrén, Daniela, 2010. ""In every rank, or great or small, ’Tis industry supports us all": Romanians and ethnic Hungarians, and their wages, in transition," Working Papers 2010:1, Örebro University, School of Business.
    20. Pablo T. Spiller, 2009. "An Institutional Theory of Public Contracts: Regulatory Implications," Chapters, in: Claude Ménard & Michel Ghertman (ed.), Regulation, Deregulation, Reregulation, chapter 3, Edward Elgar Publishing.
    21. Agata Adamska & Tomasz J. Dabrowski, 2017. "Reputacja jako instytucja: proba konceptualizacji i problemy pomiaru / Reputation as an Institution: An Attempt to Conceptualize and Measure Issues," Annales. Ethics in Economic Life, University of Lodz, Faculty of Economics and Sociology, vol. 20(2), pages 77-88, February.
    22. Colleen E. H. Berndt, 2007. "Hostile Territory: High‐Tension Religion and the Jewish Peddler," American Journal of Economics and Sociology, Wiley Blackwell, vol. 66(5), pages 1005-1027, November.
    23. Roth, M. Garrett & Skarbek, David, 2014. "Prison Gangs and the Community Responsibility System," Review of Behavioral Economics, now publishers, vol. 1(3), pages 223-243, May.
    24. Henningsen, Geraldine & Henningsen, Arne & Henning, Christian H.C.A., 2011. "Measuring the Influence of Information Networks on Transaction Costs Using a Non-parametric Regression Technique," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114547, European Association of Agricultural Economists.
    25. Cochrane, David Troy, 2015. "What’s Love Got to Do with It? Diamonds and the Accumulation of De Beers, 1935-55," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 157995, March.

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