Economies and Cultures: The formalist- substantivist debate

Economies and Cultures: The formalist-substantivist debate

Anthropology 531Kristine Oliveira

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Introduction to the formalist-substantivist debate

• At the peak of the debate in the 1960s, most anthropologists were employed teaching anthropology in university departments in the United States and in Great Britain

• Early period of postmodernism– Moderate anthropologists’

opinion of science during early postmodernism:• Science is a mix of the objective

and subjective• Science is set within the

social/cultural/political context– The debate between the

formalists and subjectivists led to the creation of “economic anthropology”

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Introduction to the formalist-substantivist debate

• 1922– Malinowski criticizes Western economics’ ability to understand “primitive”

economies (Trobriand Islands)• 1941

– Melville Herskovitz (anthropologist)• Culture must be understood within its own terms

– Frank Knight (economist)• Universal laws that explain human behavior

• Up to the 1950s– Economic anthropology was descriptive, focusing on describing how people

made a living• Economic anthropologists saw economists as ethnocentric• Most economists ignored the economic anthropologists• Some economists began to argue for a diversity of economic systems (like the economic

anthropologists)

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Formalist-substantivist debate: Reflexivity and science

• Relativist position– “cultures are so different from

one another, especially primitives from moderns, that they cannot be understood with the tools of Western science, tools that are themselves fundamentally a product of modernity” (Wilk and Cliggett p. 6).

• Formalist position– “all human experience is

fundamentally the same and can be understood using objective tools that are universal. To the universalist, science is not bound by a single culture and therefore can make general comparative statements” (p. 6)

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The Substantivist position and Karl Polanyi: The anthropologist’s economist

• (1944) The Great Transformation– Modern capitalism (market capitalism)– Profit more important than human value– All things are a commodity– Economics is a servant of market

capitalism– Economics naturalized capitalism

• (1957) Trade and Market in the Early Empires– Edited volume; early empires built without

market capitalism, nonmarket economies– Questioned the naturalness of market

capitalism as an economic structure will

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• Two meanings of economics– Formal economics: the study of the

rational decision-maker– Substantive economics: the material

acts of making a living

• Only in the West is capitalism institutionalized through the marketplace and the flow of money– In the West, the economy is

submerged in the institution of the marketplace

– In other cultures, the economy is embedded in social institutions

• Substantivist economics:– Observe nonmarket institutions– Identify the rules of the logic of the

social and economic structures and how the systems hold each other together

– “Economics should seek to find out how the economy is embedded in the matrix of different societies” (p. 7).

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• 3 ways that societies integrate economics:1. Reciprocity: helping and sharing based on a mutual sense of obligation and

identity (simplest; most “primitive”)2. Redistribution: central authority collects and redistributes3. Exchange: calculated trade; modern market exchange using money and

bargaining is one example (most complex; most “modern”)• All societies use some combination of the 3 types of economic systems• Relativism to evolutionism

– Types form historical series

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• Substantivist model is relativist: economic rules are based on societal logic– “Therefore, the tools for understanding capitalism are as useless for studying

the ancient Aztecs as a flint knife would be for fixing a jet engine” (p. 8). • Social economics:

– Focus on economic institutions • social groups that moderate production, exchange, and consumption• Society is the unit of analysis (not the individual)

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George Dalton: Development and economic change (1971)

Marshall Sahlins: Classification & evolution of “stone-age” economies (1960, 1965, 1972)

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Formalists strike back:Formalism and scientific inquiry

• Connected to the 1960s’ focus on the scientific method

• Align anthropology with other sciences

• Fieldwork intended to test laws• Economics could help to explain

individual agency

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• Key propositions of the formalists1. “Maximizing” does not require money or markets–anything can be

maximized2. Substantivists are romantics3. Formal tools can be adapted in order to observe the rational

behavior of non-capitalist societies4. Deduction is a better tool for explaining general laws of human

behavior5. Polanyi misunderstood early empires and “primitive” cultures;

markets and exchange have always existed in one form or another, as far as we can tell.

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• Formalists demonstrated that economics could be applied to non-capitalist economies– game theory– linear programming– decision trees

• Behavior which seem strange to outsiders is indeed rational and understandable once a person comes to understand the cultural logic and real circumstances that frame people’s lives

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Key ideas of the formalists and substantivists

Formalists Substantivist

Economic rationality of the maximizing individual is to be found in all societies and in all kinds of behaviors.

The economy is a type of human activity which is embedded in different social institutions in different kinds of societies.

The individual is the unit of analysis. The society is the unit of analysis.

Individual choice shapes the economic system.

The social structure shapes the individual.

Society is created from the patterned actions and decisions of individuals; society is changed by individual choices.

Society sets the rules of the game, and individuals have limited choices.

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Alternatives to the formalist-substantivist debate

Alternatives to formalism• People are also irrational or

nonrational• Rationality is not always based on

maximization• Economic rationality is not universal• Economic rationality “ as defined by

economists is meaningless, circular, or vague, because it can never be proven” (p. 12)

Alternatives to substantivism• The economy is not embedded but is

an autonomous subsector of society• Society is embedded in the economy• The economy is partially embedded

in social institutions• There are no “types” of economies

but the economy is embedded in every single society in different ways

• The economy is pervasive in all human activity

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The end of the formalist-substantivist debate: A whimper, not a bang

• Contemporary anthropologists in development and social change have adopted formal analytical methods with their ethnographic work

• (1973) Richard Salisbury: “postmortem spasms”

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The end of the formalist-substantivist debate: A whimper, not a bang

• The debate is important– It is unsolvable because it gets at the

core issues about selfishness and altruism, about the ability of humans to change their own lives and society, and about the merits of logical thought and of emotion.

– It initiated conversations about social change, evolution, and economy and how those things relate to other classic objects of an ecological study (ritual, kinship…).

• 1970s– The debate gave way to Marxism in

economic anthropology– The growth of applied anthropologists

in government agencies, foundations, and social service organizations

– Shift in focus towards nation-states and modern life.

• Emergence of diverse approaches to economic anthropology– Neo-Marxism– Feminism– Ecological Anthropology– Development Anthropology– Peasant Studies

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Emergence of diverse approaches to economic anthropology

Approach Description

Neo-Marxism • Economics describes the power relations of the structure; individuals are not free actors in an open marketplace.

• People linked together through colonialism and trade through the violence of power.

• Peasants, small scale industry, gender inequality, social stratification, land tenure, state intervention in markets.

Feminism • Economics is a powerful influence on modern patriarchy, universalizing force of 19th century Western cultural norms about gender; rejection of the gender binary as well as the domestic-economic binary

• Criticizes microeconomics for being a reproductive ideology for capitalism

• Uncover exploitation, inequality, and injustice in global society

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Ecological Anthropology

• “Overlaps considerably with economic anthropology, and at times they appear indistinguishable, especially in the work of archaeologists” (p. 20).

• Julian Steward and Leslie White from Franz Boas: variation in social organization among different groups. Analysis of subsistence systems. Ecosystem as a complex web of relationships that bind humans to other species in the natural environment.

• Roy Rappaport (1968) Pigs for the Ancestors: warfare regulates population density without participants’ knowledge. Systems theory, demography, evolutionary theory, biological ecology.

• (1980s) Societies are dynamic; focus on people’s perceptions and understandings of the natural environment. Formal methods for modeling human decision-making.

• Risk and Uncertainty in Tribal and Peasant Economies (1990); maximization questions and utility

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Development Anthropology

• (1970s and 1980s) Applied; concerned with economic and agricultural problems in ‘developing’ world. Cold War tensions, Peace Corps, Food for Peace, Green Revolution; anthropological knowledge to help smooth the process of development.

• Disillusionment with Vietnam War; anthropology misused.

• Government agencies, tax systems, urban squalor, mass migration, underground economies; dependency theory; ‘structural adjustment’ and neoliberalism. Ambivalence between agents and victims.

Peasant Studies • Largest single group of people on the planet.

• AV Chayanov: drudgery of work versus return; economic purpose of demand and production to explain why Russian peasants and Midwestern American corn farmers act differently–is it culture or individual economic behavior?

• Samuel Popkin (1979) The Rational Peasant “ creation of feudalism and capitalism”; state owned the land, peasants worked it, lord would collect taxes. Political economy; commoditization of land and labor.

Documents

Economies and Cultures: The formalist- substantivist debate