How does the market operate under the condition of capital shortage? A study of social time mechanism of the textile industry of Pu Town

摘要

Abstract Based on the case of the textile industry of Pu Town, this paper brings in social time mechanism to illustrate how financial activities and continuous operations of the small and medium enterprises (SMEs) under the condition of capital shortage are realized through massive graduated debts and cost allocation in the production chain. Starting with the relational contract, this paper adds the time dimension of contract, which is called social time mechanism, to the dimensions of market power and social relations. Through this social time mechanism, the author expands the meaning of credit and highlights the restriction of repayment capacity and the repayment period on the trading process. The author then uses this model to explain how the two trading parties adopt the capital settlement period developed under this mechanism to adapt to and promote operations and development of the market in the absence of third-party credit guarantees.