Economies and Cultures: The formalist- substantivist debate

1. Economies and Cultures: The formalist-substantivist debate Anthropology 531 Kristine Oliveira

2. 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”

3. 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)

4. 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 Cliggettp. 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)

5. 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

6. The Substantivist position and Karl Polanyi: The anthropologist’s economist • 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).

7. The Substantivist position and Karl Polanyi: The anthropologist’s economist • 3 ways that societies integrate economics: • Reciprocity: helping and sharing based on a mutual sense of obligation and identity (simplest; most “primitive”) • Redistribution: central authority collects and redistributes • 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

8. The Substantivist position and Karl Polanyi: The anthropologist’s economist • 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)

9. The Substantivist position and Karl Polanyi: The anthropologist’s economist George Dalton: Development and economic change (1971) Marshall Sahlins: Classification & evolution of “stone-age” economies (1960, 1965, 1972)

10. 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

11. Formalists strike back:Formalism and scientific inquiry • Key propositions of the formalists • “Maximizing” does not require money or markets–anything can be maximized • Substantivists are romantics • Formal tools can be adapted in order to observe the rational behavior of non-capitalist societies • Deduction is a better tool for explaining general laws of human behavior • Polanyi misunderstood early empires and “primitive” cultures; markets and exchange have always existed in one form or another, as far as we can tell.

12. Formalists strike back:Formalism and scientific inquiry • 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

13. Key ideas of the formalists and substantivists

14. Alternatives to the formalist-substantivist debate Alternatives to formalism 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 • 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)

15. 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”

16. 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

17. Emergence of diverse approaches to economic anthropology

18. Emergence of diverse approaches to economic anthropology

19. Emergence of diverse approaches to economic anthropology