Sari-sari Stores and the Free Market

Posted on Posted in 2014-2015
By Christian Dy

Popular capitalism is based on the notion that capitalism works best when every participant in the market endeavors to be a capitalist or to own property and invest. At least in theory, it approaches the idea of perfect competition. Capitalism, as its most ardent supporters would argue, best functions under entirely unregulated conditions or under an entirely free market. Government cannot intervene, it is argued, without favoring one demographic sector. It can be argued further that only liberty can be distributed equally (the complications in these arguments belong to an entirely distinct essay). Of course, these inch too closely to oversimplification, and as the almost-truism attributed to Richard Nixon would suggest that we are all Keynesians now, at least to some degree. That corporations have become too big to fail, too sizable that the mistakes they make have potentially disastrous political and social consequences, means that to some extent, government regulation and oversight must be conceded as necessary for the public good.

Let us concede then that in Macroeconomics, pure laissez-faire is now almost apocryphal. In Microeconomics; however, the laws of supply and demand are still dogma. Which markets then, are almost entirely free from government intervention that we need not render lines other than the intersecting supply and demand curves in reducing such markets to microeconomic models? The informal sector provides us with answers.

Laissez-faire enough

An ocular inspection of nearly every neighborhood in the Philippines would yield the observation that sari-sari stores are central to everyday community life. Whenever they do decide to go through the standard business processes specified by law, the only time sari-sari stores deal with government institutions is when they apply for local permits-to-operate, the occasional sanitary permit, and at best, permits with the Department of Trade and Industry and the Bureau of Internal Revenue. Many sari-sari stores see little need for being methodical, much less for government supervision. With or without permits, a good number of glass jars and makeshift shelves filled with merchandise, a coarsely built bench outside the window, and occasionally, a small refrigerator for soft drinks and beer would make a decent sari-sari store by most Filipino standards.


Niche-marketing would probably be a good approximation of the sari-sari store strategy. A seller, after all, only exists because there is a market to justify its existence, and in this case, one’s neighbors are also one’s customers. Nevertheless, sari-sari stores amalgamate the spirit of enterprise with the spirit of community. Economics is placed in a more complex web of human relations and diverse motivations.

An analysis of sari-sari stores then should not depart from some sociocultural platform. We must consider the concept of “suki,” or a sari-sari store’s frequent customers or patrons. One store-owner would probably be willing to let his suki take merchandise now and pay for it on next payday. In return, the suki would probably not renege on his promise to pay on the agreed date. The relationship is built on being good neighbors. A historical note relevant to this is that, in the country’s pre-colonial period, Chinese merchants would allow their native customers to take merchandise without the need for immediate payment. Is the suki system cultural, endemic to us Filipinos? Was it derived from history, or did it just find expression through history? Is it innate or acquired? Let us leave these questions for sociological research. For now, at least we know that the sari-sari store system has more nuances and complications and, despite these, is a system that nonetheless works.

The interaction between supply and demand is easy to graph. A realistic mathematical simulation of the complex set of human motivations and interactions is, at the very least, not yet possible. Still, all at once, the unschooled sari-sari store owner is not only an economizing individual by instinct; he is also an expert in human relations.

Talk about instinctive rationality.

Rain not on their parade

Sari-sari stores make more products accessible to more people by allowing consumers to buy in “tingi” or small quantities, instead of buying wholesale. Sari-sari stores perform vital functions that have little to do with economics. Any fan of the the band Eraserheads would know. As sari-sari stores are fixtures in the Filipino cultural psyche as well as to our economic structure, the best government could do to help Aling Nena and her tindahan is to make sure they are minimally taxed (if not entirely tax-exempt), and that microcredit is available to those who wish to start their own sari-sari stores. Government should ease the burden of having to apply for too many permits and paying too many dues to different agencies. This only discourages sari-sari stores from integrating into the formal sector.

It is said that when Jean-Baptiste Colbert, French finance minister in the seventeenth century, asked merchants what the ministry could do for them, the merchants were said to have replied “Laissez-nous faire” or “leave us alone.” We could debate all day about the merits of laissez-faire macroeconomics, but I would have to assert more strongly that sari-sari stores work as they are, that is, largely independent from government intervention. Economic systems may or may not require tinkering with every now and then, but it would be a shame to restrain laissez-faire capitalism in an economic sector where it already works. And we haven’t even talked about economic democracy yet!

Near our house, there is this sari-sari store with the benediction, “Diyos ko, iligtas Niyo po ako sa mga mangungutang.”

Let us not add “Iligtas Niyo po ako sa buwis at gobyerno” to that.


*The following might be interesting reads. I strongly suggest that the reader consider checking out:

Bethge, Wolfgang (2003). “Sari-Sari Stores,” (translated from German), [, accessed on 03/27/07].

Silverio, Simeon G. Jr. (1982). “The Neighborhood Sari-Sari Store,” in Marie S. Fernandez, ed., The Philippine Poor I: Two Monographs, Manila: Institute of Philippine Culture, Ateneo de Manila University

Journal Oeconomique 1751, Article by the French minister of finance.
Wickberg, Edgar (1962). “Early Chinese Economic Influence in the Philippines, 1850-1898,” Pacific Affairs 35(3): 275-285.

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