The diamond trade’s production cycle structurally requires credit.

Evidence

There is a great need for credit in the diamond industry. As explained above, even the largest sight holders need credit to finance the purchase of their boxes of rough. Similarly, non-sight holders also acquire most of their stones on a cycle that follows, but lags behind, the schedule of sights. They therefore need credit to enable them to purchase enough stones to keep their cutters working until the next sight. Access to credit is also essential in the market for polished stones. Because polished stone sales are highly seasonal, with 30-40 percent occurring in November and December, access to credit is needed to avoid a cash shortfall. — Lisa Bernestein, Opting out of the Legal System, 113

Categorization

• XREF: Relevant to the reader’s argument: the deep credit dependence is what forces dealers into the closed community that enables network-based enforcement. — connects to: Tight cash-flow margins make reliance harms exceed simple owed amounts in the diamond trade — Lisa Bernestein, Opting out of the Legal System, 191; Transaction costs alone cannot explain the diamond industry’s rejection of legal contracts — Lisa Bernestein, Opting out of the Legal System, 137; Diamond dealers’ reliance on timely payment makes nonpayment harm exceed its face value. — Lisa Bernestein, Opting out of the Legal System, 191 (+3 more)

Related

• Diamond dealers’ reliance on timely payment makes nonpayment harm exceed its face value. (similarity 0.84)
• Tight cash-flow margins make reliance harms exceed simple owed amounts in the diamond trade (similarity 0.80)

Broader Connections

• Tight cash-flow margins make reliance harms exceed simple owed amounts in the diamond trade #expands (0.90) — Lisa Bernestein, Opting out of the Legal System, 191
• Diamond dealers’ reliance on timely payment makes nonpayment harm exceed its face value. #expands (0.90) — Lisa Bernestein, Opting out of the Legal System, 191
• Obligation-credit structures concentrate power in hierarchical and stratified settings. #expands (0.80) — Coleman, SocialCapitalCreation-1988, 92
• Transaction costs alone cannot explain the diamond industry’s rejection of legal contracts #corroborates (0.75) — Lisa Bernestein, Opting out of the Legal System, 137
• Hierarchical structures concentrate reusable credit slips of social obligation. #expands (0.75) — Coleman, SocialCapitalCreation-1988, 92
• Sanctions in credit markets scale proportionally with the amount of debt #contradicts (0.75)