eco-anthro-polanyi

Karl Polanyi

Barry L. Isaac

Karl Polanyi (1886–1964) was a Hungarian lawyer turned journalist and economic historian who’s reading of anthropology, especially the work of Bronislaw Malinowski and Richard Thurnwald, led him to produce work that made major contributions to economic anthropology, classical Greek studies and post-Soviet eastern European social policy. In fact, the concepts he developed with the aid of anthropology, and for which he is known in that discipline and in classical studies, were intended as tools for analyzing industrial societies and especially for explaining the causes of the Great Depression and the fascism of the 1930s and 1940s (see Goldfrank 1990). His larger aim was to lay the groundwork for a general theory of comparative economics that would accommodate all economies; past and present (see Polanyi 1957; Halperin 1988, 1994a; Stanfield 1986, 1990). In anthropology, his influence was great during the 1960s and 1970s; subsequently, his work became strongly identified with the ‘substantivist’ side of the strident.

Polanyi’s master work was ‘The Great Transformation’ (1944), in which he analyzed the emergence and (in his view, disastrous) consequences of a new type of economy, market capitalism, first in England during the early nineteenth century and then in the rest of the industrializing world and its global extensions. This new economy was unique in being disembedded from the social matrix; in ideal form, at least, it commercialized and commoditized all goods and services in terms of a single standard, money, and set their prices through the self-adjusting mechanism of supply and demand. At all previous times, in contrast, ‘man’s economy … [was] submerged in his social relationships’ (Polanyi 1944: 46), and the factors of production were neither monetized nor commoditized. Instead, access to land and labour was gained through ties of kinship (birth, adoption, marriage) and community. Many pre-capitalist economies had marketplaces, but they did not have self-regulating, supply-and-demand market economies. Similarly, many employed money but only in transactions involving a limited range of goods and services. By commoditizing not only goods but also labour (‘another name for a human activity which goes with life itself’) and land (‘another name for nature’), the disembedded capitalist (market) economy of nineteenth-century England threatened to remove ‘the protective covering of cultural institutions’, leaving the common people to ‘perish from the effects of social exposure’ (Polanyi 1944: 72–3). Accordingly, the nineteenth and twentieth century saw a ‘double movement’: first, the disembedding of the economy under the self-regulating market, then the emergence of countermeasures ‘designed to check the action of the market relative to labor, land, and money’ (1944: 76). These countermeasures accomplished their purpose politically, by partially reembedding the economy, typically culminating in state socialism or the welfare state.

The Polanyi group’s major concepts

During the 1950s and 1960s, Polanyi and his academic followers, especially anthropologists, developed a set of conceptual tools for analyzing pre-capitalist, embedded economies. Their touchstone was Polanyi’s (1957: 243) specification of ‘two root meanings of “economic,” the substantive and the formal’:

The substantive meaning of economic derives from man’s dependence for his living upon nature and his fellows. It refers to the interchange with his natural and social environment, in so far as this result in supplying him with the means of material want satisfaction.

The formal meaning of economic derives from the logical character of the means–ends relationship, as apparent in such words as ‘economical’ or ‘economizing’. It refers to a definite situation of choice, namely, that between the different uses of means induced by an insufficiency of those means. Polanyi (1957: 243) argued that these two meanings of the term ‘have nothing in common’:

The latter [formal meaning] derives from logic, the former [substantive meaning] from fact. The formal meaning implies a set of rules referring to choice between the alternative uses of insufficient means. The substantive meaning implies neither choice nor insufficiency of means; man’s livelihood may or may not involve the necessity of choice and, if choice there be, it need not be induced by the limiting effect of a ‘scarcity’ of the means.

The substantive meaning alone is useful for comparative economics, Polanyi argued, because ‘formal economics’ is applicable only to ‘an economy of a definite type, namely, a market system’ (1957: 247), in which livelihood routinely involves choice arising from an insufficiency of means (economizing). ‘This is achieved by generalizing the use of price-making markets’ (1957: 247), on which almost all goods and services (including land, labour and capital) are purchasable and from which all income (including wages, rent and interest) is derived. Thus, livelihood in market economies necessarily involves both buying and selling, and economic means as well as ends are necessarily quantified as money prices. In short, such an economy is ‘a sequence of acts of economizing, that is, of choices induced by scarcity situations’ (1957: 247), and so is amenable to analysis by ‘formal economics’.

All economies have mechanisms of distribution, but only market (capitalist) economies are integrated (primarily) through ‘exchange’ on price-setting markets. All earlier economies were integrated, instead, mainly through reciprocity and redistribution, even if they had marketplaces. ‘Reciprocity denotes movements between correlative points of symmetrical groupings; redistribution designates appropriational movements toward a center and out of it again; exchange refers here to vice-versa movements … between “hands” under a market system’ (Polanyi 1957: 250). Market (capitalist) economies typically display all three mechanisms; chiefdoms and non-capitalist states, redistribution as well as reciprocity; acephalous primitive societies, only reciprocity. Polanyi (1944: 53–4) left largely undeveloped a fourth integrative principle, householding, ‘production for one’s [household’s] own use’, which occurs ‘only on a more advanced level of agriculture’ but before capitalism. It was prominent in such ‘archaic’ states as eighteenth-century Dahomey Polanyi and Rotstein 1966: 70ff.) and was still observable in the mainly selfprovisioning peasant economies of the early twentieth century. Although such peasants typically sold some goods on price-setting markets and periodically worked for wages, market principles fed back upon production decisions only weakly, ‘because [self-provisioning] labor and land do not enter the market and basic livelihood is acquired in non-market spheres’ (Dalton 1967b: 75; see also Halperin 1991, 1994b; Halperin and Dow 1977).

In short, the mere presence of marketplaces does not necessarily signal a market (capitalist) economy, nor does the mere presence of money. Many pre or non-capitalist economies had ‘money-stuff’, but it was special-purpose money, rather than the general-purpose money that serves as a uniform standard throughout market economies. Because special-purpose money (and the goods or services it purchased) circulated in only part of the economy, pre-capitalist economies were multicentric, having two or more ‘spheres of exchange’; in contrast, capitalist (market) economies are by definition unicentric, because everything, even the factors of production, circulates in an economy unified by the market principle and the universal solvent, general-purpose money.

The Trobriand substantive economy

Malinowski’s famous ethnographies of the Trobriand Islands were a major early influence on Polanyi (see Malinowski 1922, 1935; see also Weiner 1988; see Strathern and Stewart chap. 14 infra). The following outline of Trobriand economy shows why the Polanyi group felt that new, ‘substantive’ tools were needed for the analysis of pre- or non-capitalist economies, and the kinds of applications they proposed for these tools.

Trobriand economy had three spheres of exchange: subsistence, prestige and kula. The main item in the subsistence sphere was the ordinary yam, along with common crafts and pigs (although these last could arguably be placed in the prestige sphere). The yams served two money functions. Within the subsistence sphere, but not in the rest of the economy, they were a medium of exchange. More generally, they were a major mode of non-commercial payment for fulfilling kinship and political obligations, such as tax. The paramount chief had a wife from each village and was brother-in-law to its men, who collectively owed him an annual payment of yams, just as each did to his true sister’s husband. Yams also had to be presented at certain points in funerals and marriage arrangements. The stuffs of this sphere (yams, craft goods, pigs) periodically were converted upwards into the banana-leaf bundles of the women’s prestige sub-sphere, and pigs could occasionally be converted upward into relatively new, low-prestige kula shells.

The Trobriand prestige sphere can be divided into women’s and men’s sub-spheres. The former had only two items, bundles and skirts made from banana leaves. All adult women made both items, and both had money functions. Bundles were a medium of exchange in that they could be converted downward into the stuffs of the subsistence sphere, but not into the men’s prestige sub-sphere or upward into the kula sphere. Mainly, though, the bundles and skirts were a mode of non-commercial payment. A woman was obligated to give skirts to her brother’s wife upon the latter’s marriage, and both bundles and skirts were important mortuary (related to funeral) payments. Women of the deceased’s matrilineage competed with one another in giving huge quantities of these items to their affinal kin (especially to the deceased’s spouse, father and father’s sisters), who bore the main burden of public mourning. These latter had to dispel potential accusations of sorcery (thought to cause almost all deaths) through punctilious mourning, while the former wanted to make their matrilineage look strong in the face of the sorcerer’s success. ‘The key to finding large amounts of bundles is a woman’s husband … Because a woman and her husband receive yams from her brother every year, her husband must help her find bundles whenever someone [of her matrilineage] dies’ (Weiner 1988: 119–20). He did so by an upward conversion of his subsistence-sphere items (yams, pigs, craft goods) into bundles.

The men’s prestige sub-sphere contained stone axe blades, large clay pots, display yams, boars’ tusks (ivory), certain kinds of canoes (small and light boat), lime spatulas, shell belts, magical spells, sorcerers’ services, and perhaps more items prior to European contact. Their money function was limited to modes of non-commercial payment, mainly with the axe blades. These were used as a marriage payment (bride-wealth initially and sporadic gifts thereafter for the duration of the marriage), as blood compensation for homicide, as the final funerary payment to the deceased’s spouse and father, and as the annual prize given by the paramount chief to the grower of the largest yams. Some of the items of this sub-sphere could be converted downward into pigs, but they could not be traded for women’s skirts and bundles; whether any could be converted upward into kula valuables is unclear.

The kula sphere comprised two kinds of men’s heirloom shell valuables, armshells and necklaces, which were exchanged by hereditary kula partners on a chain of islands about 700 miles in circumference. There was a parallel, secondary barter trade in utilitarian items (foodstuffs, raw materials, manufactures), made possible by the ceremonious kula linkages. The extent of the connection of the inter-island kula exchanges with Trobriand domestic economy is unclear, but it appears that kula shells were occasionally converted downward into pigs (subsistence sphere) or to meet men’s obligations (for example, bride-wealth, blood compensation) in the domestic prestige sphere. In sum, traditional Trobriand economy had three spheres of exchange, each with its own goods and (in two cases) money-stuffs. Goods moved mainly within their appointed spheres through reciprocity governed by the ethics of kinship and hereditary partnership. In addition, the paramount chief was the focal point of redistribution; some of the yams he received through formal taxation, as well as the pigs, coconut and betel he commandeered by right of eminent domain, were expended in public feasting or in supporting kula expeditions. Although goods of all types moved widely and frequently in Trobriand economy, there was no price-setting market principle; even fixed marketplaces seem to have been absent. Furthermore, neither land nor labour could be purchased or rented; these factors of production were inextricably embedded in the matrix of hereditary kinship, overseen lightly by chiefly eminent domain.

The formalist response

Starting in 1966, a formalist school of economic anthropology arose in opposition to the Polanyi group’s substantivist school (see Cook 1966a, 1966b, 1969; LeClair and Schneider 1968; Schneider 1974). The formalist attack was two-pronged: (1) that the models developed by microeconomics were universally applicable and, thus, superior to substantivism for both economic anthropology and comparative economics; and (2) that economic anthropology was no longer primarily concerned with the kinds of economies (primitive, ‘archaic’ state, peasant) for which the substantivists’ tools were developed.

Scott Cook, launching the formalist–substantivist debate, characterized economic anthropology as being split between formalists ‘who believe that the difference between Western-type market and primitive-subsistence economies is one of degree’ and substantivists ‘who believe it is one of kind’ (Cook 1966a: 327). Harold Schneider (1974: 9), who eventually became the dominant figure in the formalist school, stated it this way: ‘The unifying element among … formalists is, in contrast to substantivists, the partial or total acceptance of the cross-cultural applicability of formal [microeconomic] theory’. The underlying methodological question was that of the proper unit of analysis. Because the formalists focused upon choice, which is always individual, their approach necessarily entailed methodological individualism. The substantivists, on the other hand, focused upon the institutional matrix in which choice occurs (see Cancian 1966: 466).

Maximization was a key concept for the formalists, as microeconomic models assumed that the economic choices made by individuals were intended to maximize, or at least optimize, utility. Substantivists, on the other hand, dismissed maximization as irrelevant or inapplicable to a truly comparative economics. ‘Patterned responses (or processes) in cultural systems cannot be accounted for by methodological individualism … [which likewise] cannot explain why cross-cultural differences or similarities occur’ (Halperin 1994a: 13). Furthermore, ‘if we posit the same rational, utilitarian motives to individuals in all cultures … all economic processes in all cultures would appear to be identical’ (1994a: 13), leaving the patent cross-cultural differences in economic institutions unexplained (see Isaac 1993: 223–5, 1996: 314–17, 329–32). Why, for instance, does one society define and maximize wealth in terms of outstanding reciprocal obligations, whereas another does so in terms of purchasing power to acquire material possessions? More generally, all economies have certain common features – ‘exchanges, allocations, transfers, and appropriations of resources, labor, produce, and services’ – yet they differ in ‘how resources are directed to specific uses, how production is organized, and how goods are disposed of – in short, how the economy is instituted’ (Dalton 1968: xvi, after Polanyi 1957). Overlooking such differences leads us into the trap of false equations: ‘To call a cat a quadruped, and then to say that because cats and dogs are both quadrupeds I shall call them all cats, does not change the nature of cats. Neither does it confuse dogs; it merely confuses the reader’ (Dalton 1966: 733–4; also see Sahlins 1960).

The formalists also argued that a deeper philosophical issue, induction versus deduction, lay behind the formalist–substantivist debate (Cook 1966b). Within this framework, Cook (1966a: 327) characterized the substantivists pejoratively as ‘romanticists’:

The Formalists … focus on abstractions unlimited by time and place, and … are prone to introspection or are synchronically oriented; they are scientific in outlook and mathematical in inclination, favor the deductive mode of inquiry, and are basically analytical in methodology … The Romanticists … focus on situations limited in time and space, and … are prone to retrospection or are diachronically oriented; they are humanistic in outlook and nonmathematical in inclination, favor the inductive mode of inquiry, and are basically synthetic in methodology … [T]he concern [here] will be to link Polanyi and his followers to the Romanticist tradition. That the debate could be cast in terms of humanists (substantivists) versus nomothetical scientists (formalists) reveals why it could not be resolved. In a nutshell, it involved philosophical issues that are larger than economic anthropology or even anthropology as a whole. The kinds of oppositions that structured the formalist–substantivist debate are irresolvable social science perennials. Tom Campbell (1981) delineated five of them: idealist–materialist, descriptive–normative, individualistic–holistic, conflict–consensus, positivist–interpretative. Elman Service (1987) pointed to eight such ‘bifurcations’ in the history of anthropology, including positivism–humanism, comparative method–holism, generalization – particularism and evolution–relativity. In economics, similar oppositions exist between institutionalists and conventional micro-economists (see Dowling 1979; Neale 1990; Stanfield 1986: 18, 132ff.). None of these tensions can be resolved in an either–or manner, whether philosophically, methodologically or analytically, except in relation to specific research problems or as a matter of personal preference. Cook’s use of the pejorative ‘romanticist’ to characterize the substantivists signals the debate’s second dimension, alluded to earlier. While Cook accepted substantivism as ‘one meaningful approach’ to the study of ‘extinct’ and ‘primitive’ economies, he rejected it on the grounds that economic anthropology no longer concerned itself primarily with such economies, which were ‘rapidly disappearing as ethnographic entities, being displaced by market-influenced or -dominated transitional and peasant economies’ (Cook 1966a: 325). The economic anthropology of the future, in contrast, ‘will be focused on development – the peasantization of the primitive and the proletarianization of the peasant’. Accordingly, it will require ‘the sophisticated model-building skills of the economist’ (1966a: 337–8). George Dalton, who became the leading substantivist spokesman after Polanyi’s death in 1964, largely agreed that substantivism was apposite only for ‘aboriginal (pre-colonial) economies in stateless societies’, ‘aboriginal (pre-colonial) economies in tribal kingdoms’ and ‘early, traditional, pre-modern sub-sets of peasantries in states’ (Dalton 1990: 166–7). Polanyi would have been deeply shocked that his leading acolyte took that position, because Polanyi’s motivation for studying ancient and non-Western economies was to construct a truly universal framework for comparative economics. As we shall see, Dalton’s constrictive outlook, echoing as it did the formalists’ position, contributed to substantivism’s decline in the 1980s and 1990s.

During the 1960s and 1970s, sociocultural anthropology’s core group was evolutionary (cross-temporal) and broadly comparative (cross-cultural) in outlook, and especially in the Americas was closely linked to ethnohistory and archaeology. This was the anthropological framework addressed by the interdisciplinary Polanyi group that coalesced around the master at Columbia University in New York in 1947–53 and issued the seminal Trade and market in the early empires (Polanyi, Arensberg and Pearson 1957). Following Polanyi’s death in 1964 and in the wake of the enormous success of the 1957 book, his followers continued to address that framework. In anthropology, his mantle was assumed by economist-turned-anthropologist Dalton, who collaborated both formally and informally throughout his career with anthropologist Paul Bohannan, his colleague at Northwestern University. Dalton ignored Polanyi’s larger purposes, perhaps because they involved a critique of capitalism and of industrial societies generally, and kept substantivism’s focus upon pre-industrial societies. This left substantivism largely stranded when sociocultural anthropology turned increasingly towards the study of contemporary populations during the 1980s and 1990s. Because these populations had economies that both the formalists and Dalton, the leading substantivist spokesman, agreed required ‘formal economics’ for their analysis, economic anthropology became predominantly formalist and virtually synonymous with studies of Third-World economic development (see Isaac 1993).

Polanyi also would have been bemused by Dalton’s (1981) vehement insistence, long after the threat of censure against Marxists had vanished in Western countries, that Polanyi’s thinking had no intellectual connection whatsoever with Marxism. In retrospect, it is difficult to explain how Dalton, who claimed close intellectual kinship with Polanyi, could have held that position (Isaac 1984: 14–20). In a widely known paper, Rhoda Halperin (1975) had laid fully bare the Marxian origin of Polanyi’s basic ideas, such as economic embeddedness. She was unable to get her interpretation published for another nine years (Halperin 1984), though, because not only Dalton but also the whole surviving Polanyi group were adamantly set against drawing that connection. In the 1990s, Halperin’s position was fully vindicated (see, for example, Polanyi-Levitt 1990), but by then Marxism had become a rival third school within economic anthropology. Along with formalism, Marxism claimed a universality of application that substantivism was said to lack. Thus, Dalton’s inability or unwillingness to recognize either Polanyi’s basic intention, to develop a truly cross-cultural comparative economics by illuminating and critiquing Western economies through the study of ancient and non-Western cases, or his intellectual debt to Karl Marx, contributed to substantivism’s demise in economic anthropology.

The Polanyi school today

The Polanyi group was dominant in economic anthropology during the 1960s and 1970s (see Bohannan and Dalton 1962; Dalton 1967a, 1968; Dalton and Köcke 1983; Durrenberger 1998; Halperin and Dow 1977; Helm, Bohannan and Sahlins 1965; Polanyi 1977; Polanyi, Arensberg and Pearson 1957; Sahlins 1960, 1972; Somers 1990). Their influence was notable among anthropological archaeologists and ethnohistorians as well as socio-cultural anthropologists during that period: Paul Bohannan, Pedro Carrasco, Louis Dumont, Timothy Earle, Maurice Godelier, Claude Meillassoux, John Murra, Marshall Sahlins and Eric Wolf, among many others. By 1990, however, the substantivists had lost much of their visibility, and Polanyi’s work was little cited in anthropology subsequently, for the reasons given above. Nevertheless, some of Polanyi’s most basic concepts, especially reciprocity and redistribution, have become anthropological stock in trade. They are, in fact, so firmly entrenched that they are generally unattributed in their present usage. In that sense, the demise of substantivism was more apparent than real. It is probably no exaggeration to say that virtually all present-day anthropological analyses of prehistoric or non-Western economies that self-consciously avoid imposing market (capitalist or microeconomic) concepts and categories are carrying on the Polanyi tradition, even when his work is cited lightly or not at all (see Somers 1990), or even when today’s authors do not realize that Polanyi’s writings informed their professional preparation.

In assessing Polanyi’s legacy, it is important to look beyond anthropology. In the first place, he was an economic historian or political economist, not an anthropologist. Second, his goal was to improve the human condition by overcoming the deleterious precipitates of capitalism (especially fascism and economic depression), not to contribute to the growth of academic disciplines (see Goldfrank 1990). In other words, he used anthropology and classical studies only as vehicles to reach larger ends.

Were he alive today, Polanyi doubtless would be pleased by the diverse group of historians, classicists, economists, political scientists, sociologists, anthropologists and other social thinkers and activists who are using his work as the focus of their conferences (see Duncan and Tandy 1994; McRobbie and Polanyi-Levitt 2000; Mendell and Salée 1991; Polanyi-Levitt 1990). From their collections of papers, it is clear not only that Polanyi’s work remains influential but also that its utility is not restricted to ‘primitive’ or ‘archaic’ economies. Halperin (1991, 1994b, 1998) employs Polanyi’s concept of householding to illuminate resistance to capitalist subsumption among the poor of Cincinnati and its environs, while Lorissa Lomnitz (2000) reveals the great importance of reciprocity in the informal economy of all social classes in present-day Mexico and Chile. Walter Neale (1994) demonstrates the utility of Polanyi’s concept of the ‘double movement’, the emergence of disembedded capitalism followed by a protective social movement to reembed some important economic aspects in the political fabric, for understanding Indian modifications of and resistance to British colonial economic policy. In a similar vein, Fred Block (1991) argues that the United States reaped great economic benefits from capitalism in the 1850–1950 period only by maintaining low levels of ‘marketness’ and relatively high levels of social embeddedness in such important sectors as agriculture, manufacturing and professional services. Other contributors to the edited volumes cited above employ Polanyi’s ideas in analyzing contemporary Britain, Bulgaria, Germany, Hungary, Japan and Turkey. At a more general level, economist James Ronald Stanfield (1986, 1990; McClintock and Stanfield 1991) is forcefully championing a Polanyi-based comparative economics. Several contributors to the aforementioned collections also tie Polanyi’s work to early developments in world-systems theory and welfare state theory, as well as to post-Soviet social policy formation in Eastern Europe.

In short, while Karl Polanyi’s influence peaked over twenty years ago in anthropology, it is now building in the other social and policy sciences. ‘Polanyi is now coming into his own, perhaps, in the field of social policy’ (Somers 1990: 157).