From ‘rishta aunties’ to realtors and arhtis; the middleman is everywhere

Karachi: It was in the year 2010 when I along with Arif Sahib, a noted architect and town planner was interviewing a real estate agent on the land use issues of Karachi. The qualitative interview was part of the larger research on land issues in Karachi. Quite smart, articulate and well-versed in his profession, he mentioned that in this city everything could be achieved by doling out money to the right quarters.

When I challenged him on his otherwise much obvious proposition, he laughed at me and said that he could lodge an FIR against me just on a telephone call to “his man”. His style and the aura of conversation were so chilling that we were left with no other option except, to believe in him. In the economic and social circuits, over the years, the role of middlemen and the associated network has become so powerful that it appears to be the lynchpin of our societal fabric.

In the literature, the term middleman is defined as an “informal word for an intermediary in a transaction or process chain who facilitates interaction between the involved parties”. An example could be right from “aunties” of marriage bureaus to arhtis in agriculture production and supply chain and real estate developers. It is often argued that the middlemen specialise in performing crucial activities involved in the purchase and sale of goods in their flow from producers to the ultimate buyers. They are often accused of not producing anything but virtue of the knowledge they have about the trade, they charge obnoxious amounts as a commission or a fee for their services.

Due to a variety of factors, a lot of people either willingly or unwillingly resort to middlemen for their objectives or tasks at hand. First and foremost is the incomplete information, sketchy information or complete lack of it on how and whom to approach for any task in hand. Information is available either in bits and pieces or if it is available, it’s in incomprehensible terminologies. For instance, if one has to get the mutation of the inherited property, the procedure and the process are so complicated that one resorts to an “expert” in the field and hires his or her services.

Second is the amount of time consumed in such processes. It is usually difficult for a commoner to spare that much time from his daily struggles of life that can correspond to the time required for complicated tasks to be accomplished through institutions. In the case of agriculture practices, the arhti acquires the role of a money lender and as someone who can transport their produce safely to the mandi as well. Another important issue relates to gender as well. Due to the restricted mobility of women and due to safety considerations it is usually not considered safe for women to go to dingy and male-dominated offices and hence they prefer a go-between to do the job for them. The above-mentioned reasons are some of the causes and not an exhaustive list of the triggering factors.

On the other side of the spectrum, despite all the positive connotations of the list (mentioned in the box), the middleman is often cursed, demonised and is referred to in Machiavellian terms. He or she is someone who thrives on the lack of knowledge of his subject, makes most personal gains out of the inefficiencies of the system, has a parasitic in contrast to a symbiotic equation with his subject, one who thrives on his social capital (read right connections) and above-all makes the extravagant amount of money on his or her “services”.

There is a constant struggle on how to curtail or eliminate the middlemen by producers/owners as well as the consumer of goods and services. Columbia law professor Kathryn Judge shows how overgrown middlemen became the backbone of modern capitalism and the cause of many of its ailments. Middlemen today shape what people do, how they invest, and what they consume. They use their troves of data to push people to buy more, and more expensive, products. The solution is how to go to the source. It is argued that middlemen have built complex webs and retail circuits capable of moving goods with much ease – transforming the economy and the lives of the people. It is often mentioned that the capitalist mode of the economy through middlemen is capable of providing the consumer with a wide range of choices but it comes with a steep price: inflation.

So do we have a choice? The answer in the short term is probably no, however, in the long term, user-friendly, human sensitive and poor friendly technology, can provide some relief here. Middlemen are the product of opportunity as carved out by the system and the onus lies on the system itself.

The digitisation of land records is an example of one such initiative, where the information is available to the users and where the system is impersonal. Before considering technology as a panacea, two things are important to be kept in view. First new technologies usually have an onslaught on traditional livelihood mechanisms and in the initial stages they are capital intensive as well, so, that needs to be catered to.

This could be achieved by investing in human development and upscaling human beings. Secondly, the replacing institutions should not be allowed to become another middleman. That will defeat the very objective of the interventions to remove the middlemen. The third option is to take the role of middlemen with a pinch of salt and establish regulatory bodies, free of political interference and should be allowed to function autonomously. The decision-makers need to take it seriously because, market mechanisms, as the only decision-maker, are not an option; as biased as they are and skewed towards the rich.

The writer is a PhD scholar, and board member of the Urban Resource Centre, Karachi. mansooraza@gmail.com

How he comes in the middle

Cursorily, the middlemen, on the behest of their client or “party” performs the following functions:  

They enable manufacturers to concentrate on the primary function of production by handling the ancillary functions of warehousing, distribution, advertising, insurance, etc. They promote the goods to the consumers on behalf of the producers.

Middlemen like banks and other financial institutions render financial services to manufacturers.

They make the goods and services available to consumers at the right place, at the right time, and in the right quantity.

Buyers and sellers are often unwilling to assume the market risk for fear of a possible loss. It is the middlemen in the process chain who assume the risks of theft, perishability, and other potential hazards.