Honesty, trust, and debt in Istria's wine industry

Thesis

This thesis asks how honesty and trust in economic relationships survive pervasive debt, and how debt and trust shape business relationships in post-socialism. It does so by examining the economic transition of Istria’s wine industry, and the changing relationships between various actors in the industry. It explains how production beliefs shape the industry and perceptions about how the local market is organized, and analyzes the roles of honesty, trust, and what I call reciprocal debt, in organizing business relationships.

Recent reforms impacting farmer livelihoods have led to decreasing trust in local governance institutions. This is compounded by the recent protracted recession, which has constrained state institutions from creating a healthy market economy within which small businesses may develop. Instead, winemakers and farmers have increasingly attempted to organize themselves into associations to both drive the industry’s professionalization and resolve systemic local market problems that the state has been unable to resolve. Meanwhile, the state is adopting European Union tax and accounting norms that strain small businesses. The state’s enforcement of these reforms is interpreted locally as predatory, compounding people’s disappointment with their government and transition in general.

Winemakers, grape-growers, and other small businessmen are increasingly turning to alternative modes of business to try to increase the likelihood of being paid in a business environment where contracts are rarely formalized and are anyway difficult to enforce. Instead, their reliance on trust and honesty make business decisions and to enforce payment unintentionally creates new problems. Large, national corporations take advantage of such informal payment systems to manipulate the liquidity of their clients, compounding the economic problems of winemakers. However, despite these problems, Istrians continue to organize business around trust and maintain long-term business relationships characterized by debt, revealing the strength of trust and the complex role of debt in society.

Authors: Smith, R

• DOI: 10.5287/ora-0zar6m8jm
• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford
• Language: English