On the other side of the fence is, however, philosophers like Montesquieu who treated traditional customs of communities as oppressors of human mind and conduct and identified market development as liberty. To Montesquieu, markets are medicines to misery. Thus, arguably, these two models share the common view that communities and markets are mutually exclusive. In fact, the pre-modern economic exchange of goods and services -- as espoused by eminent economist John Hicks and anthropologist Karl Polanyi -- also point to the rule of customs and norms as opposed to the rule of profit seeking devices.

Researchers engaged in institutional economics researches, in recent empirical evidences, tend to suggest the possibility of a happy coalition between the two arch rivals. They go to argue that community relationships can be important basis for market development, especially, in its early stage. The reason being that the major barrier to market development is the absence of an effective mechanism for the enforcement of contracts. The role of trust and cooperation that a community seeks to supply, seemingly, contributes to the mitigation of the problems. Community, market and government can go a long way with an appropriate mix of manoeuvring.

"The market is the organisation that coordinates profit seeking individuals through competition under the signals of parametric price change. The state is the organisation that forces people to adjust their resource allocation by the command of the government. On the other hand, the community is the organisation that guides community members to voluntary cooperation based upon close personal ties and mutual trust. In other words, the market by means of competition on egoism, the state by means of command based on legitimate coercive power, and the community by means of cooperation based on consent, coordinate division of labour among people towards a socially desirable direction".

In fact, the community supplies "local public goods", the market provides private goods and the state supplies global or pure public goods. The local public goods comprise three segments. First, safety nets where well-to-do people in the community come to the rescue of the poor in bad years. Even during the Zamindari system in Bengal, people heard of such help from the top and for the bottom. Second, the conservation of common pool or common property resources such as forests, grazing land, irrigation systems etc are key to the role of community. This role has increasingly been prescribed recently.

And finally, community helps market by helping in the fulfilment of contracts in exchanges. "The community has the power to suppress the incentive to be a free rider by means of cooperative spirit nurtured through intensive social interactions among members and their fear of being ostracised". In a small closed economy, the costs of being a free rider could be very high where exit options are severely limited. If the costs of free riding and the attended psychological costs of violating social norms remain prohibitive, the community could be free of free riders. The fact that farmers prefer to trade with same villagers or with those having kith and kin in the village, point to the role of community in enforcing the contract.

"The strength of such a community relationship to support market transactions has been demonstrated by the success in trade and finance of Jewish traders in medieval Europe and Chinese traders in modern Southeast Asia. They were able to establish dominant positions in commercial and financial activities, as they were successful in reducing transaction costs across distant trading posts among the traders and bankers bound by the ethnic community ties". Enpassant, in the context of Bangladesh, one could notice contract farming, and vegetable exports to ethnic markets based on long term links and common ties.

"Extensive field observations on agricultural product marketing as well as putting out operations for the manufacturer of labour intensive commodities in developing Asia have demonstrated the capability of rural entrepreneurs in hinterlands in organising efficient trade networks in support of peasant producers and cottage industries, with effective use of reputation and trust mechanism endowed to rural communities. Their activities resemble those of rural entrepreneurs that supported the modern economic growth of Japan in early stage".

Thus, we find communities and markets as friends, not foes, to each other. But what is lacking is the support to infrastructure that community needs to better serve the market or to the markets to get rid of market failures. The government should refrain from undue interventions in the market mechanism, rather, make markets work better through allowing communities to deliver their traditional ties and norms in a modern setting.

But there is also a danger that should not be overlooked. The danger of market distortions resulting from rent-seeking behaviour of community leaders is no less serious under the slogan of community participation. "It must be recognised that under competitive markets the community relationship existing in rural areas in low income economies can be a great asset for building channels to convey profitable opportunities created from globalisation to the rural poor".

There should be fine blend of community, market and government. Neither market nor government should under-cut the role of communities. The demarcation line should be set in such a fashion that the society attains its optimum welfare from the operation of these three agencies. Realising the role of communities would, perhaps, need further thoughts on rural development in a globalised regime.

Abdul Bayes is a Professor of Economics at Jahangirnagar University.