What You've Been Told vs What Actually Happened

The Bazaar's Bill

by Iran Prism 9 min read

The Students and the Merchants

Habibollah Asgaroladi had spent thirteen years in prison for his role in assassinating Prime Minister Hassan-Ali Mansur in 1965. He was a co-founder of the Mo’talefeh — the Islamic Coalition Societies, bazaar merchants who were Khomeini’s most devoted supporters. Upon release under American pressure in the late 1970s, he immediately rejoined revolutionary operations. After the revolution, he served as Minister of Commerce.1

Asgaroladi knew who had chartered the plane that brought Khomeini home. He knew who had funded the revolution from the beginning. And he would live long enough to watch the regime he helped build take everything the bazaar had — and give it to the bonyads and the IRGC instead.

In the summer of 1975, the event that would radicalize merchants like Asgaroladi began. Ten thousand Rastakhiz Party recruits — most of them university students — marched into the Tehran Grand Bazaar carrying party posters identifying “dishonest merchants and unsavory members of the community.” Their assignment: enforce price controls on 16,000 goods, with a profit margin ceiling of 14 percent — roughly half the inflation rate.2

The Shah referred to bazaar shops as “worm-ridden.” He announced plans to demolish portions of the Tehran bazaar for a freeway. From his memoir: “I could not stop building supermarkets. I wanted a modern country.”3

Over two years, 250,000 fines were issued, 23,000 merchants were banned from their trades, and more than 600 shops were shut down. Young students lecturing elderly merchants about pricing was an inversion of every social hierarchy the bazaar recognized. The bazaar’s entire financial system — centuries of credit relationships built on personal reputation — depended on dignity. The Shah’s campaign destroyed that dignity systematically.4

The Softeh

To understand what the Shah destroyed, you need to understand what the bazaar was.

The Tehran Grand Bazaar was more than ten kilometers of covered passages — 82 distinct market sections organized by trade: carpets, copper, spices, gold, textiles, paper. It controlled roughly half of Iran’s handicraft production, two-thirds of retail trade, three-quarters of wholesale, and at least 30 percent of imports.5

By 1975, bazaar merchants handled an estimated $3 billion in foreign exchange and $2.1 billion in outstanding loans. Ahmad Ashraf’s surveys found that the traditional petty bourgeoisie — bazaaris and their dependents — constituted about 25 percent of all employed heads of households in Tehran.

The softeh was the bazaar’s primary credit instrument: an unsecured promissory note drawn for ninety days, with interest rates calibrated to the borrower’s standing. Three different rates for three tiers of trustworthiness. No collateral required. As late as the 1960s, bazaar moneylenders extended as much credit as all of Iran’s commercial banks combined. A merchant’s reputation was his creditworthiness — the entire system ran on personal standing.6

The anti-profiteering campaign hung those party posters in bazaar corridors, publicly naming merchants. The social capital that bazaar commerce required was destroyed by deliberate humiliation. Robert Graham’s assessment: “The price campaign was a failure. Official indices went down for six months but black-market prices for essential commodities rose sharply. The shortages were not relieved, and if anything became more pronounced.”7

The economic effect was negligible. The political effect was transformative.

The Bazaar Struck First

There is a critical finding buried in the scholarly literature that changes how we understand the revolution’s origins. Political scientist Benjamin Smith documented that the bazaar mobilized in spring 1977 — well before most social groups, including the clergy.8

The evidence is specific. On June 5, 1975 — the twelfth anniversary of Khomeini’s arrest — theological students staged a three-day protest at the Faizieh Seminary in Qom. Khomeini issued a supportive statement from exile. No bazaar support emerged. The Rastakhiz Party had existed for only three months and had not yet targeted the bazaar. “The bazaar was passive because it had not yet been provoked.”9

By 1977, with two years of anti-profiteering campaigns behind them, the bazaar was provoked. When police broke up a Writers’ Association poetry reading at Tehran’s Goethe Institute in October 1977, the entire Tehran bazaar closed in solidarity. When professors’ salaries were cut in retaliation, bazaar merchants established funds to compensate them. The ulama was “almost entirely absent” from these early mobilizations.10

The bazaaris, Smith concluded, “joined the revolutionary movement for diverse reasons and through a spectrum of political organizations” — Khomeini’s followers, the National Front, even Marxist groups. This was not a monolithically Islamist movement. It was an economic class that had been attacked, responded, and then found itself absorbed into a revolution it had helped to start but could not control.

They Chartered the Plane

The bazaar-mosque financial channel was centuries old. Khums — one-fifth of annual surplus income — flowed to each merchant’s chosen marja-e taqlid. Zakat and waqf endowments funded mosques, madrasas, and clerical stipends. These transfers gave Iran’s Shia clergy financial independence from the state — a structural feature almost unique in the Muslim world. Khums payments channeled to Khomeini’s authorized representatives funded operations first in Najaf, then at Neauphle-le-Château.11

The Mo’talefeh — the Islamic Coalition Societies founded around April 1963 at Khomeini’s residence in Qom — were the organizational embodiment of this bazaar-mosque alliance. Their membership: non-clerical Muslim zealots, mostly bazaar merchants and traders. Their commitment was proven in blood — four members executed for the Mansur assassination, others imprisoned for over a decade.12

On February 1, 1979, the bazaar reportedly chartered the Air France Boeing 747 that carried Khomeini back to Tehran. Mohsen Rafiqdoust — who had joined the Mo’talefeh as a teenager while working in the vegetable bazaar — drove Khomeini from the airport. He earned the nickname “Imam’s driver.” He became the IRGC’s logistics chief.13

The bazaar had financed every major political upheaval in modern Iranian history — the Tobacco Revolt of 1891, the Constitutional Revolution of 1905, the Oil Nationalization Movement of 1951. Each time, it had operated as a partner. This time, it would discover what happens when a partner has no political ideology of its own.

There is a pattern worth naming before we see the bill come due. Scholars call it co-optation without representation. The bazaar’s role in financing the revolution is acknowledged in regime mythology — but reframed as religious devotion rather than political partnership. By absorbing the bazaar’s sacrifice into a narrative of Islamic solidarity, the regime makes the betrayal invisible. If the merchants funded the revolution out of faith, then there is no debt to repay. If they funded it as political partners expecting representation, then the regime’s seizure of their economy is a breach of contract. How the story is framed determines whether the bazaar’s current subordination looks natural — or criminal.

The Bonyads Ate the Bazaar

On February 24, 1979 — twenty-three days after Khomeini’s return — he issued a decree establishing the Foundation of the Oppressed. It inherited the Pahlavi Foundation’s approximately $3 billion in assets, then expanded by confiscating property of an estimated fifty millionaires and their associates. By the late 1980s, it controlled over $20 billion: 140 factories, 470 agribusinesses, 100 construction firms, 64 mines, 250 commercial companies. By 1994, its transactions reached 6 trillion rials — exceeding the government’s entire tax revenue of 5.5 trillion rials. It answered only to the Supreme Leader. No parliamentary oversight. Tax-exempt by Khamenei’s 1993 decree. As little as 7 percent of profits went to anti-poverty programs.14

The Astan-e Quds Razavi — managing the Imam Reza Shrine in Mashhad — employed 19,000 people and controlled over $20 billion in land: one in ten acres in Khorasan Razavi Province, spanning 150 companies in automotive, mining, energy, and pharmaceuticals. The IRGC’s Khatam al-Anbiya grew to 812 registered companies, 1,700 government contracts, and an estimated 800 front companies. Under Ahmadinejad, over $120 billion in state assets were transferred to IRGC-controlled entities. Their Mobin Trust Consortium acquired 51 percent of the Telecommunication Company of Iran for $7.8 billion — the largest Tehran Stock Exchange transaction in history, awarded without competitive bidding.15

On June 8, 1979, the Islamic Revolutionary Council nationalized all 28 private banks — nearly half of Iran’s banking operations — and consolidated them into ten state entities. Insurance companies followed. Article 44 of the new constitution placed banking, insurance, power generation, foreign trade, major minerals, telecommunications, aviation, and shipping under exclusive state ownership. By 1980, over 80 percent of Iran’s economy fell under government control.16

Real GDP per capita fell 46 percent between 1976 and 1989.

Imagine building the most successful business network in your country — a network so powerful it could shut down the national economy with a strike, so wealthy it could charter a plane for a revolutionary leader, so embedded it had survived every political upheaval for a century. Now imagine discovering that the revolution you financed had built an economic empire sixty times your size, answering to no one, exempt from taxes, competing with you using conscript labor and state funds — and that the man you drove from the airport had called your concerns about the cost of living evidence of insufficient revolutionary spirit.17

According to Iran’s own IRNA news agency, these foundations plus the IRGC now control 60 percent of Iran’s national wealth. None communicates with the administration or parliament.

When the bazaaris protested — as they did in October 2008 against Ahmadinejad’s VAT, in June 2018 as the rial lost 50 percent of its value, in 2022 during Woman, Life, Freedom, and in December 2025 when the rial plunged 7 percent in a single day and protests spread to 92 cities within ten days — each time the protests confirmed the same structural reality. The bazaar that exists today is not the bazaar that chartered the plane. Its pre-revolutionary governance structures have been, in Keshavarzian’s assessment, “rendered collectively fragile.”18

France’s bourgeoisie financed the 1789 revolution and — armed with Enlightenment ideology — took power. Russia’s merchant class financed nothing and was destroyed. Iran’s bazaar financed the revolution and was marginalized. The difference was not courage. It was that the French bourgeoisie had its own political philosophy. The Iranian bazaar had only its commercial interests — and commercial interests, without political ideology, are consumed by whoever has one.

This article is part of Everyone Thought They Were Using Khomeini. For the Left’s self-destruction, see The Left’s Fatal Miscalculation. For the guerrillas of the 1970s, see Cigarette-Paper Manuscripts.

Footnotes

  1. Asgaroladi from Mo’talefeh organizational records and Abrahamian; Mansur assassination from court records. ↩

  2. Anti-profiteering campaign launch from Abrahamian and multiple scholarly sources; student recruits from Rastakhiz Party records. ↩

  3. Shah’s rhetoric from Abrahamian; memoir quote from the Shah’s autobiography. ↩

  4. Fine and arrest statistics from government records documented in Abrahamian and Keshavarzian. ↩

  5. Bazaar economic statistics from Ashraf’s surveys and Keshavarzian, Bazaar and State in Iran (Cambridge University Press, 2007). ↩

  6. Softeh system from Keshavarzian; moneylender comparison from economic analysis of pre-revolution Iran. ↩

  7. Graham assessment from his published analysis of the Shah’s economic reforms. ↩

  8. Smith’s finding from his research on bazaar mobilization timing. ↩

  9. June 1975 seminary protest and bazaar inaction from multiple scholarly sources including Smith. ↩

  10. October 1977 Goethe Institute closing and bazaar solidarity from Smith and multiple documented accounts. ↩

  11. Khums and clerical financial independence from Ashraf, Keddie, and Floor; bazaar-mosque nexus documented in Keshavarzian. ↩

  12. Mo’talefeh founding from organizational records and Abrahamian. ↩

  13. Air France charter from multiple accounts; Rafiqdoust from Mo’talefeh records and IRGC history. ↩

  14. Foundation of the Oppressed from Amuzegar, Keddie, and multiple scholarly sources; 6 trillion rial figure from Iranian economic data; tax exemption from Khamenei’s 1993 decree. ↩

  15. Astan-e Quds Razavi from shrine administration records; Khatam al-Anbiya from economic analysis; Mobin Trust from Tehran Stock Exchange records. ↩

  16. Bank nationalization from Islamic Revolutionary Council records; Article 44 from 1979 constitution; 80 percent government control from economic analysis. ↩

  17. Khomeini’s melon quote from his speeches; IRNA 60 percent figure from September 2019 report. ↩

  18. Post-revolution bazaar protests from contemporary news reporting; Keshavarzian assessment from Bazaar and State in Iran. ↩