Some Issues of Method

Any concept put forward as presumptively universal has its own particular history. The word ‘economy’ originates in the Ancient Greek oikonomia, where it referred to the management of a household, usually a manorial estate. A complex division of labour based on markets and money can be traced back much further, notably to Mesopotamia in the third millennium BCE; but, as we explain in the next chapter, oikonomia was conceived of as the antithesis of the market principle. Of course human beings have reproduced themselves in their environments and exchanged goods with other groups since the origins of our species, so in this sense we can say that the human economy is as old as humanity itself. Since modern ethnography can shed only very limited light on this history, we must look instead to other disciplines, especially to economic archaeology. Although archaeological studies of material traces – including the fossil record – yield rich clues to ancient modes of subsistence and exchange, inferences concerning how their members conceptualized and managed their material tasks remain problematic. Modern anthropologists have suggested that conceiving of early humanity’s economy as a continuous struggle for survival may be wide of the mark. The discovery of agriculture entailed an intensification of labour inputs and may have routinely involved what we think of as drudgery; but it is unlikely that early agriculturalists, let alone hunters and gatherers of the Palaeolithic, had an understanding of work resembling ours today.

The fact that ‘economy’ has a particular genealogy in the history of European social thought need not prevent anthropologists from investigating the human economies of groups with different material endowments and ways of perceiving them. One of the most fertile strands in economic anthropology in recent decades has been to explore ‘local models’ of economy, for example those of food collectors who see the forest where they live as a benevolent source of security (chapter 5). Western notions of work, scarcity and uncertainty are unfamiliar to them. To complicate matters further, the word economy has repeatedly been combined with other terms, such as political, moral, cultural, representational and even spiritual. In the next chapter we provide a historical outline of its changing referents from ancient times to now. Economy is one of the keywords of modern civilization. Knowledge of its historical trajectory should make us more aware when deploying it universally.

A more serious limitation follows from our decision to place economic anthropology in the context of Western intellectual history and this in turn within a particular view of world history. Our account is heavily skewed towards a North Atlantic perspective, reflecting European and American dominance of world society and its academic representation in the modern period. Economic anthropologists have worked around the globe for over a century, but a self-conscious intellectual community took shape initially in European countries with colonial empires, before its eventual consolidation in the United States. For a couple of decades these economic anthropologists had a high profile within anthropology (though none at all outside it). The point of our book is to call for a reinvigoration of this intellectual community as a self-conscious discipline. In doing so, we seek to define the field more carefully and comprehensively than before, but also more flexibly, since our aim is to build bridges to other disciplines and to provide a broad framework for charting the way ahead on a global basis. It should be noted that many of those Western scholars on whose work we draw and whom we thereby claim as founders of the embryonic discipline did not classify themselves as economic anthropologists, even after this label became available in the second half of the twentieth century. If we succeed in our aim, some readers will be able to identify similar forerunners in other, non-Western intellectual traditions.

A further, related issue concerns language. We focus primarily on English-language materials, reflecting its dominance in recent decades. We note major contributions in French and German, but, wherever possible, out of consideration for the reader who is not at home in other languages, even these are cited in English translation.

The Human Economy

The dominant usage of the term ‘economy’ since the late nineteenth century refers to the aggregate of goods and services bought and sold in a national territory: hence ‘the British economy’. Often the term is joined with one meaning ‘people’, such as German Volkswirtschaft or Hungarian népgazdaság. This economy is quantifiable and priority is usually assigned to production, as in key indicators such as ‘gross national product per capita’. Such modern economies depend crucially on consumer demand. While millions of people lack the means to make their demand for the necessities of life (e.g. clean water) effective, many others need no longer worry about survival. The challenge in the latter case is to explain why they are willing to endure the hardship of work to purchase goods which are not essential to life. The answer is that these goods are valued for social and personal ends. Scarcity is often highly valued for itself, but this scarcity is socially constructed rather than given in nature.

Production and consumption are linked by processes of distribution, which are often highly unequal. Sometimes the word ‘exchange’ is substituted for ‘distribution’, but we insist on a distinction. Exchange is a universal principle of economic life but it takes many forms and not all flows of resources should be categorized as exchanges. The payment of tribute to a ruler may be said to bring you his protection in exchange, but this is a misleading representation of an unequal relationship, while welfare payments by a modern state are better seen as transfers financed by taxation – a new form of sharing rather than exchange. Economists tend to be specialized in particular sub-sections of economic life, such as transport or energy markets, foreign exchange, health or housing. The modern Western economy is conventionally divided into private and public sectors, where the market and the state hold sway respectively, setting profits from sales against taxes and governmental redistribution. Property rights were at the core of disputes over competing models of economic organization that once defined the battle lines in the Cold War; but this familiar division has eroded in recent decades and the line between public and private sectors is now often blurred.

Within continental Europe, some traditions of economics continue to emphasize political order and regulation. Another influential tradition was based upon centralized planning, but this disappeared with the fall of the Berlin Wall. The dominant tradition since the nineteenth century has grown out of English utilitarianism. It privileges free markets and individual maximization of ‘value’ within budgetary constraints. Value is usually conceived of in terms of costs and benefits expressed in monetary terms. Whenever individuals are evidently not maximizing value in the market sense, as when they make gifts to family and friends or to charity for example, they are still held to be making choices under conditions of scarcity to maximize utility, although economists do not shed further light on what this mysterious substance might be. Some economists have pushed ‘rational choice’ into the most intimate domains, such as the family, arguing that their theory can yield a satisfying account of all exchanges, including transfers between and within generations. If economics is defined as the study of the choices people make, and all action is held to follow from such rational choices, then this discipline evidently embraces the whole of human life and its evolution (perhaps also the evolution of much of the animal world). At the level of systemic rationality, economics would then explain not only our particular patterns of transacting with kin, but why we have the kinship systems we do as well as the rulers we obey and even the Gods we worship. Biology would be its only rival as a master discipline; and exchange between economics and biology is indeed flourishing today, for example in the field known as evolutionary economics, which analyses how socio-cultural selection interacts with natural selection in Darwinian ‘co-evolution’.

When defined in this way, an approach from economics is conducive to formal, mathematical treatment at a sophisticated level; but, to the extent that such rational choice approaches leave the preferences and underlying moral values of the actors unexplained, they are tautological. They dehumanize the economy, effectively removing the Volk from Volkswirtschaft. Our understanding of economy is very different, though no less broad in scope. The ‘human economy’ (Hart, Laville and Cattani 2010) refers to well-being, to the satisfaction of all human needs – not just those that can be met through private market transactions, but also the need for public goods, such as education, security and a healthy environment, and for intangible qualities such as dignity that cannot be reduced to dollars spent per capita. We live in an era when market mechanisms (always the result of social construction and never ‘free’) have been extended into new sectors, with the aim of increasing ‘economic efficiency’. But people are beginning to realize that making a market for a valued good such as education is not morally neutral. It often gives rise to misleading statistics, which obscure the reduction in quality that sets in when teachers and professors are treated like any other provider of commercial services. We may agree that economy does indeed shape kinship and religious institutions in the long run. But we are sceptical of evolutionary models grounded in notions of efficiency and abstract individual rationality, and argue instead for a more rounded approach to economic organization that does justice to the material, historical and ethnographic record.

An anthropological study of the human economy, then, must take a broader view of the standard of living and address a wide range of human needs and motivations. Markets are indispensable for the allocation of most goods in modern societies; the fate of ‘socialist’ planning in twentieth-century Eurasia shows this clearly (chapter 7). The expansion of ‘capitalist’ markets has brought substantial improvement in living standards to most parts of the world. True, this expansion has also brought much exploitation and suffering; the process has been very uneven, and unlimited markets threaten democracy itself. But before dismissing or curbing markets in favour of more regulation, we should ask why so many poor people seek greater involvement in markets, rather than less. In any case, study of the economy in our sense cannot be restricted to anonymous purchases in markets, since political institutions, social customs and moral rules establish the preconditions for market exchange. Whereas rational choice theorists emphasize the individual, in the tradition of Robinson Crusoe, and believe that even decisions to cooperate with others are ultimately to be explained as the outcomes of individual calculation, the emphasis in speaking of the ‘human economy’ is on persons, whose preferences and choices are sometimes shaped by calculation, but usually also by the familial, social and political contexts in which human beings are enmeshed or embedded.

Some voices inside academic economics acknowledge these concerns, but they tend to be marginal to the mainstream, neoclassical tradition. Like other people, economists disagree among themselves about how far it makes sense to extend market principles. There is not much hope for dialogue with those who define economics exclusively as the application of an individualistic logic of utility maximization to all domains of social life. But not many economists known to us subscribe to this position. We hope to persuade economists with real world concerns to take an interest in what anthropologists have discovered about the human economy, and in the kinds of theories we have advanced to understand it.

Critical Anthropology

Like ‘economy’, the word ‘anthropology’ is derived from Ancient Greek. An anthropology (anthropos = man) is any systematic study of humanity as a whole. The dominant modern usage refers to the discipline known in Britain as social anthropology and in the United States as cultural anthropology. In some American universities, cultural anthropology is taught within a four-field approach – the others being physical (or biological) anthropology, archaeology and linguistic anthropology – but we will not be engaging directly with these other branches, nor with those philosophical and theological enquiries into human nature that have, since Immanuel Kant, carried the label Anthropologie.

Social and cultural anthropology have been given numerous competing definitions and histories. Some of those who emphasize cultural diversity trace the story back to Ancient Greek perceptions of barbarian nomads, as recorded in the writings of Herodotus, or to the reactions of Catholic intellectuals to the first representations of indigenous peoples encountered by Hispanic colonists in the Americas. We argue here for a critical anthropology that has its roots in the democratic revolutions and rationalist philosophy of the eighteenth century. The question then was how the arbitrary inequality of the Old Regime might be replaced by an equal society founded on what all people have in common, their human nature. Enlightenment philosophers offered a revolutionary critique of the premise of inequality along with constructive proposals for a more equal future. Such a future was thought to be analogous to the kinship organization that preceded societies based on the state and class divisions. Contemporary savages were interpreted in the light of theories of stages, among which the one put forward by Montesquieu (1748) was particularly influential.

What then is ‘critique’? It is to examine the foundations of contemporary civilization by having recourse to judgement. Judgement in turn is the ability to form an opinion on the basis of careful consideration – beyond that, to discern relations linking particulars to more general principles. Jean-Jacques Rousseau (1712–78) is an outstanding source for critical anthropology, combining as he did a critique of corrupt civilization with a vision of how to address global inequality. He showed that a refusal to consider things as they are inevitably requires us to devise new methods of studying and writing about a transitory present. Rousseau’s Discourse on the Origins and Foundation of Inequality among Men (1754) has inspired anthropologists from Lewis Henry Morgan in the nineteenth century to Claude Lévi-Strauss in the twentieth. It is also a foundational work for economic anthropology.

Rousseau was not concerned with individual variations in natural endowments, but with artificial inequalities of wealth, honour and the capacity to command obedience that came from social convention. In order to construct a model of human equality, he imagined a pre-social state of nature, a phase of human evolution in which men were solitary, but healthy, happy and above all free. This freedom of the ‘noble savage’ was metaphysical, anarchic and personal: original human beings had free will, they were not subject to rules of any kind and they had no superiors. At some point humanity made the transition to what Rousseau calls ‘nascent society’, a prolonged period whose economic base can be summarized as hunter-gathering with huts. Why leave the state of nature at all? He speculated that disasters and economic shortage must have been responsible.

The rot set in with the invention of agriculture or, as Rousseau put it, of ‘wheat and iron’. Cultivation of the land led to incipient property institutions whose culmination required the development of political society. The formation of a civil order (the state) was preceded by a Hobbesian condition, a war of all against all marked by the absence of law. Rousseau believed that this new social contract to abide by the law was probably arrived at by consensus, but it was a fraudulent one in that the rich thereby gained legal sanction for transmitting unequal property rights in perpetuity. From this inauspicious beginning, political society then usually moved, via a series of revolutions, through three stages:

The establishment of law and the right of property was the first stage, the institution of magistrates the second and the transformation of legitimate into arbitrary power the third and last stage. Thus the status of rich and poor was authorized by the first epoch, that of strong and weak by the second and by the third that of master and slave, which is the last degree of inequality and the stage to which all the others finally lead, until new revolutions dissolve the government altogether and bring it back to legitimacy. (Rousseau 1984: 131)

One-man-rule closes the circle in that all individuals become equal again because they are now subjects with no law but the will of the master. For Rousseau, the growth of inequality was just one aspect of human alienation in civil society. We need to return from division of labour and dependence on the opinion of others to subjective self-sufficiency. His subversive parable ends with a ringing indictment of economic inequality which could well serve as a warning to our world:

It is manifestly contrary to the law of nature, however defined… that a handful of people should gorge themselves with superfluities while the hungry multitude goes in want of necessities. (ibid.: 137)

Marx and Engels made fertile use of this precedent in their own critique of the state and capitalism, while Morgan’s legacy as Rousseau’s principal successor in modern anthropology persisted well into the twentieth century. But it is no longer the leading anthropological paradigm, having been replaced by a relativist ethnography that is more consistent with a world society fragmented into nation-states.

This relativism too may be traced back to eighteenth-century sources. We owe much of the vocabulary of social and cultural anthropology, notably the terms ‘ethnography’ and ‘ethnology’, to German-speaking scholars of that time, who explored ‘otherness’ abroad in Siberia, as well as among the peasants at home. The works of Johann Gottfried Herder (1744–1803) established a counter-current to the confident universalism of Rousseau and Kant. These two currents persisted in productive tension throughout the extended period of anthropology’s formation as a discipline. In the nineteenth century, when the great colonial empires were formed, universalism predominated in the guise of evolutionist thinking. Most of the world’s peoples were classified as Naturvölker, as distinct from the Kulturvölker who had entered history by discovering civilization. Scholars such as Morgan and Engels upheld the notion of primitive communism, which they viewed positively, in contrast to later stages characterized by class struggle or by the stagnation of ‘Oriental despotism’.

In the twentieth century, anthropologists have abandoned such crude evolutionary models. Most have rejected the idea of evolution altogether. Rather, Bronislaw Malinowski, Franz Boas and their students devoted themselves to closeup studies of particular communities, tracing them back in time only to the limited extent that historical sources were available. These ethnographies broke new ground, but something was lost in the process. The major gain for economic anthropology was a much better understanding of complex motivations for behaviour in the domains of production, distribution, exchange and consumption, and of how this human economy was connected to behaviour in other domains. The downside was that anthropologists lost any perspective on the big picture, in both time and space. As a result, their work is often considered by other social scientists to be excessively microscopic and to rely on unrepresentative case studies. We strongly favour retaining ethnographic methods, but we argue that they must be complemented, not just by working at multiple field sites, but by a stronger commitment to the use of history at both middle-range and macroscopic levels. This means taking world history seriously once more.

Mainstream economics is also microscopic, but in a quite different way. Even when attempting to calculate and predict aggregate behaviour, the economists’ theories usually presume individual actors. While macro-level investigations lead critical anthropologists into conversations with archaeologists, social historians and political economists, work at the micro level is more likely to lead both anthropologists and economists into an engagement with psychologists and cognitive scientists. Every now and then, a micro theory is wheeled out as the key to explaining developments at the macro level. We are sceptical of such claims. Economic anthropologists have described and analysed individual decision-making long before the emergence of modern rational choice theory, but we need to address this work yet again because it is enormously influential and relevant to our central concerns. Does it involve an unwarranted projection of Western methodological individualism onto the people we study? Or are some behavioural principles valid in all economies? This tension between the universal (economists and cognitive psychologists) and the particular (anthropologists and historians) has shaped debates in our field from the beginning. Rather than follow the seductive shortcuts to general explanation offered by currently fashionable fields like evolutionary psychology or game theory, we argue that economic anthropologists need to engage again with wider historical frameworks.

Among all those who have contributed to the theoretical edifice of critical economic anthropology, we highlight the contributions of Marcel Mauss (chapter 3) and Karl Polanyi (chapter 4). Both took their lead from the economists in focusing on mechanisms of circulation (not just exchange), while vigorously opposing their assumptions and main conclusions. Mauss’s famous essay on The Gift (1925) has been interpreted too narrowly as a contribution to the theory of exchange, in which guise it has been taken up as one side of a contrast between ‘gifts and commodities’ that is often taken to be exemplary of the great divide between the West and the rest. In fact, Mauss’s aim was to dissolve the opposition between pure gifts and selfish contracts in order to reveal universal principles of mutual obligation and social integration. Karl Polanyi, on the other hand, did emphasize a moment in time, the industrial revolution, to set up a ‘great divide’ theory. This led him and his followers – mistakenly in our view – to abandon the study of modern economies to the economists. The crisis of neoliberal capitalism in the first decade of the twenty-first century has lent renewed relevance to Polanyi’s classical analysis in The Great Transformation (1944) of the dangers of over-extending the principle of the market. At the same time, sociologists have found that Polanyi’s central concepts of reciprocity and redistribution as ‘forms of integration’ of economy and society do not necessarily atrophy when the market principle grows stronger.

What we take from Mauss and Polanyi is a concern with how society is founded on a combination of economic principles that are distributed widely in geography and history, but may be variably combined to give a new impetus and direction to our common affairs. Both of them took a close interest in contemporary social experiments carried out in the name of Marxism, which they felt distorted that tradition’s promise of a fully emancipated human economy. Like Marx, they rejected the utopian project of reducing society to capitalist markets. They saw the economy as being pulled in two directions at once: inwards to secure local guarantees of a community’s rights and interests, and outwards to make good deficiencies of local supply by engaging more inclusively with others through the medium of money and markets. Mauss and Polanyi each developed principles of great generality which throw much light on everyday life, without ever taking up ethnography as a personal vocation; in doing so they made intellectual bridges between history, ethnography and critique. Both reached out to the great political questions of their day, questions that have not gone away and need to be reviewed from the perspective of our own moment in history.

Organization of the Book

We aim to place the emerging discipline of economic anthropology within a wider historical and theoretical framework.Chapter 2 traces the history of the idea of ‘economy’ from its roots in the Ancient Mediterranean to the contemporary world, where a large proportion of economic transactions now take place online. The following chapters address the history of economic anthropology in three stages.

Chapter 3 takes the story from the 1870s up to the Second World War. In the years when a bureaucratic revolution concentrated power in strong states and corporate monopolies, political economy reinvented itself as the study of individual decision-making in competitive markets by a creature dubbed Homo economicus, who began to appear in the textbooks around the turn of the century. While a rapidly urbanizing twentieth-century world was consumed by war and economic disaster, anthropologists published ethnographies of remote peoples presented as being outside modern history. In this phase, neither economics nor anthropology had much of a public impact. The period after the Second World War saw the rise of economics to the public prominence it enjoys today. Chapter 4 examines how economic anthropologists sustained a lively debate among themselves in the 1950s and 1960s, when the welfare-state consensus was at its peak, the Cold War was raging, and European empires were being dismantled. In chapter 5 we review the main currents of subsequent decades, when several theoretical approaches vied for influence in a field that became more fragmented and peripheral to mainstream anthropology. The neo-Marxist and feminist approaches that flourished in the 1970s may be viewed either as the culmination of economic anthropology’s golden age or as evidence of its demise. Since the 1970s the dispute over whether to follow the economists’ lead or to reject it out of hand has persisted in a diluted form, but the coherence of the post-war decades has been lost. The era of neoliberalism presented economic anthropology with new challenges and opportunities. If the work of the last three decades has been theoretically diverse, that is also true of contemporary anthropology in general.

In the second half of the book we examine three themes that are central to economic anthropology’s claim to illuminate the key social questions of our era. This loosely follows a scheme that divided humanity into three worlds in the early stages of the Cold War: the ‘first world’ was the United States and its allies; the ‘second world’ was the Soviet Union and its allies; while the ‘Third World’ consisted of non-aligned nations in Africa, Asia and Latin America. The global conceptual map has moved on since then, especially since the end of the Cold War. Now commentators speak of the ‘Global South’ rather than the ‘Third World’ and much of Asia has enjoyed sustained economic growth to the point that world hegemony is perceptibly shifting eastwards. Nonetheless, we take from that earlier tripartite division the principal objects of economic anthropology in the last half-century: capitalism, socialism and development.

We begin in chapter 6 by examining ‘unequal development’ in a world divided into rich and poor regions which once aspired to work together to lift the latter out of poverty, but do so no longer. The anthropology of development is a burgeoning specialism that overlaps with economic anthropology but is not coterminous with it. Chapter 7 offers a critical anthropological perspective on socialist societies before and after the end of the Cold War and in China today. The big question of the last two centuries concerning the relative merits of capitalism and a socialist rival has not gone away, despite their unlikely convergence in certain respects. Chapter 8 focuses on the most significant development in economic anthropology during recent decades: a willingness to study capitalism in its Western homelands and in the world as a whole. This has happened at a time when opening up the world to unification by capitalism was the explicit aim of neoliberal policy, known for a time as the ‘Washington Consensus’. We conclude this chapter with a brief reference to the historical circumstances in which we wrote this book, the economic crisis precipitated by the financial collapse of 2008. In chapter 9 we summarize how our review of economic anthropology’s history might inform its future.