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 Economic Anthropology

Economic anthropology, more than any other anthropological sub-disciplines, constantly questions and debates the practical motives of people as they go about their daily lives. As such, the authors of this book believe that business  anthropology can trace its deep roots to economic anthropology; in other words, economic anthropology helped business anthropology to come into being.  Economic anthropology, broadly defined, is the study of material processes in their social relations. It is a sub-discipline with blurred boundaries as it cross-cuts theoretical paradigms and other sub-fields within anthropology. As a field of study, it is as old as anthropological fieldwork itself.  The beginning of the study of economic anthropology can be traced far back into later eighteenth century. Bronislaw Malinowski's famous Argonauts of the Western Pacific, challenged the neo-classical assumptions of self-interested and rational motives by illustrating the social and symbolic nature of the Kula exchange system of the Trobriand Islanders.[i] Other early anthropologists, such as Firth, Goodfellow, and Herskovitz focused on the analysis of economic systems. Unlike the approach of Malinowski, these anthropologists employed aspects of neo-classical economics, portraying economic decisions as individual actions based on individual motivation.[ii]

For anthropologists, common property regimes rest on both cultural and institutional bases, although the institutional or organizational aspects are more often considered.[iii] Values are often treated as part of cultures, but they are usually assumed away in economic analysis through the circular formulation of treating behavior as revealing preferences, and inferring preferences from behavior, or else as deceptive or maybe even self deceptive, and not usable in formal analyses. This is not entirely unreasonable; no matter what people say, what they do may have additional effects. However, in the long run, economic analyses have just backed off from the problem of culture.  Fundamentally, the goal of economics, since the split from political economy and adoption of mathematical formalizations, has been to explore “the logic of choice” given the limited resources, taking choice as conveniently defined by the model.

After a very bitter struggle over how to treat economics and culture, economic anthropologists have made a different choice in what was called the "formalist-substantivist" debate, mainly over the arguments by Karl Polanyi and George Dalton. These critics of earlier economic anthropology declared that the material provision of society is embedded in culture, and that the economy as a separate category of life is really apparent only in modern market economies. It is not separable inside the family unit or inside societies that are otherwise organized. So, they argued, the search for economic analogues of market practices in all other societies and times is just misleading. Needless to say, this is quite interesting for those who are convinced that markets are insufficient as the only social organizing tools, or that markets must be limited or restrained in some ways, or perhaps not allowed to determine allocations in all cases. The anthropologists generally concluded that culture is powerful and important, and that economic exchanges and decisions are not always distinct from other relations, but that modern economic analysis is a powerful tool for considering how exchanges and relations are working. [iv]

Most of early economic anthropologists’ work was heavily descriptive, detailing the facts of economic activities in production, distribution, exchange and consumption. In 1957 Karl Polanyi published Trade and Market in the Early Empires spurring the huge formalist-substantivist debate which the sub-discipline is best known for and which, in many ways, solidified the field of economic anthropology.[v] Formalists, on the one hand, believed that the principles of rational choice were universal and thus were useful in analyzing even “primitive economies.” The substantivist, on the other hand, believed that the economies of different societies were based on different logical processes and hence, they should be understood on their own terms.

Karl Paul Polanyi (October 21, 1886 – April 23, 1964) was a Hungarian intellectual known for his opposition to traditional economic thought and his influential book, The Great Transformation. He argued that prior to the 19th century, the economic system in human society was not based on market principles of exchange but rather on relationships of reciprocity and redistribution. His analysis, which was based on studies on many societies, while not accepted as valid within economics, made a significant contribution to anthropological inquiry, with its focus on the social and cultural environment. Polanyi's insight that economic processes are not causal but rather responsive to social change, though not entirely validated by his own somewhat flawed research, can be regarded as having merit.[vi]
The economy is defined broadly as livelihood, or the economic process of provisioning, that has been embedded in social relations throughout most of human history. Under certain situations, social ties usually limit the destructive effects of individual self-interest. It was only with 18th century experiments instituting self-regulating markets in England (beginning with the enclosure movement in the 16th century) that individual gain could become the dominant organizing principle in the economy. From this perspective, the economy could become autonomous from society and operates according to laws of demand and supply while society became subordinate to the economy, or embedded within the economy. It is Polanyi who discovered that the economy became disembedded from society. [vii]   He demonstrated that the historical transition from an embedded to a disembedded economy, and from the integration to the separation of economy and politics, did not reflect a natural evolutionary process inherent to the logic of markets.[viii]
It was argued that such formal principles were perhaps appropriate for economies that were embedded in the market but were useless for those non-market societies where the economy was embedded in other social institutions. The real concept of economy for substantivists was to be found in the notion of institutional transactions toward the satisfaction of wants. At its roots, the formalist-substantivist debate was essentially the long run universalist/relativist anthropological debate. Such formalist supporters as Harold Schneider, Edward Le Clair, and Scott Cook argued that substantivists were romanticizing the primitive and were rejecting economics based on ideological abhorrence of the market and capitalism. Substantivists such as Marshall Sahlins and George Dalton argued that the importation of neo-classical economic models was ethnocentric and inappropriate to the various societies. The debate climaxed in the 1960's and was drawn out, without resolution, until the early 1970's. [ix]

Strains of the old functionalist-substantivist debate in economic anthropology can be observed in the way economic geographers have responded to their cultural turn today. Some have attempted to apply existing notions of economic behavior and analysis to cultural life, by exploring, for example, the ways in which culture is “materialized in the economic” through the production, exchange and consumption of material goods. Others have argued instead, in Polanyian substantivist fashion, that economic processes are embedded in and represented through cultural media—symbols, signs, discourses, practices and institutions. Both approaches can be taken to extreme policy and political positions, to suggest on the one hand that capitalism increasingly colonizes cultural life, or on the other hand that economic competitiveness can be explained by the presence or absence of a particular “culture”, such as “manufacturing culture”, “business culture”, and “traditional Japanese culture”.[x]

Both literatures, the earlier economic anthropology inspired by Polanyi and the more recent “cultural turn” in economic geography, have thus been associated with practical applications, in justifying a role for planning in market societies and in considering the cultural determinants of regional economic competitiveness. These literatures also raise the possibility that non-capitalist economic activities in “peripheral” contexts as much as in the “core” can offer critical perspectives on capitalist economic arrangements and inspire the imagination of alternative futures. Thus, they  pose a potent challenge to the reigning neoliberal orthodoxy, and in particular to Hayekian and/or information-theoretic arguments about efficiency of naturally occurring self-regulating markets; the separation of “economic” from “political”, “social” and “cultural” spheres; the tyranny of planning; and the scope for social capital accumulating in civil society to foster economic growth and good governance.[xi]
Friedrich August von Hayek CH (8 May 1899 – 23 March 1992) was an Austrian-British economist and political philosopher known throughout the world for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought. He is considered to be one of the most important economists and political philosophers of the twentieth century.  As one  of the most influential members of the Austrian School of economics, he also made significant contributions in the fields of jurisprudence and cognitive science. He shared the 1974 Nobel Memorial Prize in Economics with Gunnar Myrdal “for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena.” He also received the U.S. Presidential Medal of Freedom in 1991.

Within Anthropology, the tradition of practice theory has been particularly committed to studying processes of cultural production, and therefore is engaged to explore the role of human agency in producing, maintaining and challenging the cultural norms and values within which economic practice occurs. For economic anthropologists, the emphasis on cultural production requires at the outset an understanding of economic value as culturally given, rather than as an inherent property of commodities or markets, as microeconomic theory would have it.  For example, David Graeber reexamines a century of anthropological thought about value and exchange, in large measure to find a way out of quandaries in current social theory, which have become critical at the present moment of ideological collapse in the face of Neoliberalism. Rooted in an engaged, dynamic realism, Graeber argues that projects of cultural comparison are in a sense necessarily revolutionary projects.  He attempts to synthesize the best insights of Karl Marx and Marcel Mauss, arguing that these figures represent two extreme, but ultimately complementary, possibilities in the shape such a project might take. Graeber breathes new life into the classic anthropological texts on exchange, value, and economy.  He rethinks the cases of Iroquois wampum, Pacific kula exchanges, and the Kwakiutl potlatch within the flow of world historical processes, and recasts value as a model of human meaning-making, which far exceeds rationalist/reductive economist paradigms. [xii]

Arjun Appadurai, a contemporary economic anthropologist focusing on modernity and globalization, has argued that objects circulate in different regimes of value, through which desire and demand, reciprocal sacrifice and power interact to create economic value in specific social situations.[xiii] By examining the contexts of exchange it is possible to think of capital not merely in the narrow (material) sense often reserved for money, machinery, and other physical assets, but as any form of wealth intended for exchange or investment. Through a well cited analysis of symbolic capital, for instance, Pierre Bourdieu extends economic analysis beyond material processes to encompass any form of symbolic value that may be in demand within specific social situations. [xiv]

Pierre Bourdieu (August 1, 1930January 23, 2002) was an acclaimed French anthropologist known for his outspoken political views and public engagement. One of the principal players in French intellectual life, Bourdieu became the “intellectual reference” for movements opposed to neo-liberalism and globalization that developed in France and elsewhere during the 1990s. He used methods drawn from a wide range of disciplines: from philosophy and literary theory to sociology and anthropology. He is best known for his book Distinction: A Social Critique of the Judgment of Taste, in which he argues that judgments of taste are related to social position. Bourdieu pioneered investigative frameworks and terminologies such as cultural, social, and symbolic capital, and the concepts of habitués, field or location, and symbolic violence to reveal the dynamics of power relations in social life. His work emphasized the role of practice and embodiment or forms in social dynamics and worldview construction, often in opposition to universalized Western philosophical traditions.

Encompassed within Bourdieu’s understanding of symbolic capital are the kinds of cultural recognition acquired through cultural knowledge, also termed as “cultural capital”, and through social relations (‘social capital’). Where honor is a central form of capital, then much of social practice must be interpreted in terms of producing and exchanging, hoarding or squandering honor. Thus, the markets encompass transactions not only in land, money, labor and commodities, but also in honor and other forms of social investment. The focus is not so much on the mechanics of supply, demand and the flow of information (although these are also worthy and important areas of ethnographic investigation) but on the cultural meanings that surround markets as a form of social production, on the ways in which social institutions and economies of practice interact.[xv]

After the great debate subsided, economic anthropology extended in a series of different directions. One approach to highlighting the diversity in economic anthropology would be to suggest that four principal theoretical paradigms continue to inform the modern anthropological analysis of economic phenomena. The first paradigm refers the phenomenon that aspects of Neo-classical economics are still integrated into anthropological work, such as the anthropological analysis of demand, anthropological study of game theory and risk, and anthropological research of production theory. The second paradigm refers to social and institutional approaches, which focus on the relationship between social structure and economic life, continue to inform much of economic anthropology. The third paradigm refers to political economy and Marxism, which focuses on the connection between power and material activities, has been highly influential in economic anthropology. The fourth refers to cultural economics, which uses the anthropological concepts of symbolic culture to understand economic behavior, explores economic phenomena through subjective and culturally determined indigenous perspectives. [xvi]

At the very beginning of the 21st century, economic anthropologist Stephen Gudeman published his book The Anthropology of Economy, in which he demonstrates how the economy is embedded in human life and society, as well as how the economy builds on community and the commons, as much as on individuality and the market.  Drawing from the work of earlier economic anthropologists, as well as from social scientists in other fields, Gudeman presents a new anthropological approach to economy that highlights the centrality of communal processes in the market.  He illustrates that, across cultures, economy can be understood as a combination of both community and market forces.  His contribution to economic anthropology furnishes us with  a new language for discussing and re-conceptualizing most important contemporary issues, such as the emergence and distribution of profit, the effects of expanding capital on marginalized people and the environment , and our shifting identities in response to the growth of globalized markets.[xvii]  

More recently, Richard Wilk and Lisa Liggett, by tracing the history of the dialog between anthropology and economics, move economic anthropology beyond the narrow concerns of earlier debates and place the field directly at the center of current issues in the social sciences. They focus on the unique strengths of economic anthropology as a meeting place for symbolic and materialist approaches and for understanding human beings as both practical and cultural. In so doing, they argue for the wider relevance of economic anthropology to applied anthropology and identify other avenues for interaction with economics, sociology, as well as other social and behavioral sciences.[xviii] It is clear, through our discussion above, we can comfortably say that business anthropology can find its roots from economic anthropology.  However, as we will see clearer, the development of business anthropology has its own special characteristics that are not the same as those of economic anthropology. 

[i] Malinowski, Bronislaw. (1922, original 1961). Argonauts of the Western Pacific. New York, NY: Dutton.
[ii] Firth, R. (1967). Themes in economic anthropology. London: Tavistock; Goodfellow, D. (1939). Principles of Economic sociology: The Economics of Primitive Life as Illustrated from the Bantu Peoples of South and East Africa. London: G. Routledge and Sons; Herskovitz, M. (1940). The economic life of primitive peoples. New York, NY: Knopf.
[iii] Bromley, D. (1992, Ed.)  Making the Commons Work: Theory, Practice and Policy. San Francisco, CL: Institute for Contemporary Studies; Ostrom, E. (1990). Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge, UK: Cambridge University Press.
[iv] Plattner, S. (1989, Ed.). Economic Anthropology. Stanford, CA: Stanford University Press.
[v] Polanyi, K. Conrad Arensburg, and Harry Pearson, Eds. 1957. Trade and market in the early empires. New York: Free Press.
[vi] New World Encyclopedia contributors (2008). Karl Polanyi. New World Encyclopedia.  Accessed in January, 2009 from
[vii]The economy became disembedded within industrial capitalism when labor, land and money were turned into commodities, their supply was organized as if they were items produced for sale, and the price mechanism was allowed to determine their allocation and the income of their owners. The conversion of land, labor and money into commodities is the “Great Transformation”.
[viii] Polanyi, K. (1957, original 1944). The Great Transformation: The Political and Economic Origins of Our Time. Boston, MA: .Beacon Press by arrangement with Rinehart & Company Inc.
[ix] Rao, V. & Walton, M. (2004). Culture and Public Action. Palo Alto, CA: Stanford University Press. Jones; J. (1991). Economic Anthropology by Stuart Plattner, Economic Geography, Vol. 67, No. 2, pp. 161-164.
[x] Rankin, K. (2004).  The Cultural Politics of  Markets: Economic Liberalization and Social Change in Nepal. London: Pluto Press.
[xi] Rankin, K. (2004).  The Cultural Politics of  Markets: Economic Liberalization and Social Change in Nepal. London: Pluto Press.
[xii] Graeber, D. (2001). Toward an Anthropological Theory of Value: The False Coin of Our Own Dreams. New York, NY: Palgrave Macmillan.
[xiii] Appadurai , A. (1986, Ed.). The Social Life of Things: Commodities in Cultural Perspective. New York, NY: Cambridge University Press.
[xiv] Rankin, K. (2004).  The Cultural Politics of  Markets: Economic Liberalization and Social Change in Nepal. London: Pluto Press.
[xv] Ibid.
[xvi] Rao, V. & Walton, M. (2004). Culture and Public Action. Palo Alto, CA: Stanford University Press. 
[xvii] Gudeman, S. (2001). The Anthropology of Economy. Oxford, UK: Blackwell Publishing.
[xviii] Wilk, R. & Liggett, L. (2007). Economies and Cultures: Foundations of Economic Anthropology.  New York, NY:  Westview Press.