Topic 14: Economic Exchange and Distribution

Learning Objectives

• What are the three major types of economic exchange?

• How does each type of exchange operate in human societies?

Types of Economic Exchange

u Reciprocity

u Redistribution

u Market Exchange

All these exchange forms exist in modern industrial

societies, but not all preindustrial societies have all three.

Reciprocity—Definition from a Dictionary

A situation or relationship in which two people or groups

agree to do something similar for each other, to allow each

other to have the same rights, etc.

• A basic norm guiding human relationships

Reciprocity as a Type of Economic Exchange

The type of economic exchange in which goods, labor, or

service are distributed between two parties by following

reciprocal principles (do things similar for each other),

instead of through money or other social or political

mechanisms.

Not all societies use money to exchange

Types of Reciprocity (1)

Generalized Reciprocity /Reciprocal Sharing

The giving of goods without expectation of a return of

equal value at a definite future time, but still with some

expectation of reciprocal sharing in the future.

u Takes place among people with close relationships

u Expression of personal relationship/obligations

u The giving occurs on the basis of need

Types of Reciprocity (1)

Example of generalized reciprocity:

Support among family members

Types of Reciprocity (1)

Generalized Reciprocity/Reciprocal Sharing

Example of generalized reciprocity: among some small

communities

Reciprocal sharing ensures an equitable distribution of

food or other critical resources among foragers or

members of other small egalitarian communities, which

is important to the survival of a group

Sharing the fruits of production is a keystone of many egalitarian

communities. The villagers in Yunnan Province, Southwest China strive for

an equal distribution of meat.

“Insulting the Meat”

among the Ju/’hoansi

How would a Tsutsu (“old kinsman”)

expect a successful hunter to behave?

Say that a man has been hunting. He must

not come home and announce like a

braggart, “I have killed a big one in the

bush!”

He must first sit down in silence until I or

someone else comes up to his fire and

asks,” What did you see today?”

He replies quietly, “Ah, I am not good for

hunting. I saw nothing at all … maybe just a

tiny one.” Then I smile to myself because I

know he has killed something big.”

Types of Reciprocity (2)

Balanced Reciprocity

The giving of goods with an expectation of receiving

some sort of equivalence in which both parties will

benefit socially or economically.

Types of Reciprocity (2)

Balanced Reciprocity— Gifts as an Example

Principles guiding gift giving

• A gift has to be returned in the future if a social relationship needs to be maintained.

• The value of things exchanged should be close to equivalent

• No bargaining involved.

Types of Reciprocity (2)

Balanced Reciprocity

The purpose of giving gifts is more than exchanging

goods– gifts are material symbols that people use to

express positive social relations and create social bonds.

• says that you like or respect them.

“In the great scheme of human history, the gift was the

first social contract.”—Marcel Mausss (French sociologist)

Kula Exchange

A system of competitive ceremonial

exchange in Melanesia.

u Several thousand men from 18

communities take part in it,

stretching over 1300 kilometers,

using canoe

u Travel directions

u Counter-clockwise: arm shells

u Clockwise: necklaces

Types of Reciprocity (3)—Negative Reciprocity

Taking advantage of the expectation of reciprocity:

• Get something for as little as possible

• Being deceitful or cheating

• Get people to exchange things they may not want to give up 

Types of Economic Exchange

• Reciprocity

• Redistribution

• Market Exchange

All these exchange forms exist in modern industrial

societies, but not all preindustrial societies have all three.

Redistribution

The type of exchange through which goods or resources

are collected from a group and then are reallocated to the

group by a central authority.

uRedistribution requires a central leadership, and

therefore it doesn’t exist in foraging societies.

Redistribution in Preindustrial Societies

u Tribute: the rendering of goods to an authority such as a

chief (one type of political leadership). (the chief redistributes goods to be more fair)

Redistribution in Industrial Societies

u The main resource that is redistributed takes the form

of taxes on income and assets.

u Tax revenues are redistributed in two ways

uProviding public goods

uProviding assistance for people in need

Conflict over Redistribution in All Societies

u Who pays? Who gets what? And how much?

u Officeholders using public resources to further their own

interests

Market Exchange

Exchange by means of buying and selling using money

u In modern industrial societies, all 3 types of exchange

exist—reciprocity, redistribution, and market exchange.

Characteristics of Market Exchange (1)

Money serves as a generalized medium of exchange

What is money?

Objects that serve as media of exchange in

a wide range of transactions of goods,

services, and labor

Characteristics of Market Exchange (1)—Money

Common features/functions of money include:

• Divisible and can facilitate exchange ($1, $2, $5, $10, $20, $50, $100)

• Its supply must be controllable in order to serve as a standard of value (can’t have too much of it, you can’t use sand because then everyone would be rich, but you can use salt, conch shells, gold nuggets, etc)

• Storing value in a portable form

• Symbolic significances (money can serve as a symbol of national identity, dollars, rubens, looney and tooney)

The stone money of Yap in the Micronesia Islands

Characteristics of Market Exchange (1)

Money

u The range of goods acquired with

money varies among different

societies.

uLimited-purpose money in

many preindustrial economies

uMoney as a generalized

medium of exchange in the

market economy

Characteristics of Market Exchange (2)—Price

Prices—the rates at which particular goods and services

exchange for money—are determined by supply and

demand

Characteristics of Market Exchange (3)—Bargaining

The buyer and seller strive to maximize—to get their money’s worth

Characteristics of Market Exchange (4)—Private Property

Most property is privately owned and can be bought or sold.