Week 6: Economic Resources

What does a society’s economy consist of?

1. Production

2. Distribution/Exchange

3. Consumption

What are economics?

The study of production, distribution, exchange, and consumption of resources

What does economic anthropology focus on?

the activities through which people produce, circulate, and consume things

Can you explain Supply/Demand and Classic economic theory?

In a free market, the price of a good or service is determined by the quantity available (supply) and the desire of buyers for it (demand). Generally, if supply exceeds demand, prices tend to fall; conversely, if demand exceeds supply, prices tend to rise.

What is the assumption that classical economical theory makes?

individuals act rationally, by economizing to maximize their utility (i.e. profits or satisfaction)

Except...comparative data show that people frequently respond to other motivations than profit

The Trobriander Islanders used to produce far more yams than they can ever eat. Some they give to their sister’s husband and others they simply allow them to rot. Why?

• Social Prestige and Status

• Economic Reciprocity and Interdependence

• Kinship and social relations

-It’s better to have yams rot outside stomach than inside

What is the definition of Exchange according to Davis in 1992?

+“The act of giving or taking one thing in return for another”

+“The transfer of things between social actors

Why is exchange important?

It is key to social life. It is important for the establishment and maintenance of social relationships

How does gift exchange operate?

not according to market laws, but the social rules of power, symbol, convention, etiquette, ritual, role, class and status.

What are the 3 obligations according to Mauss?

1. to give

2. to receive

3. to reciprocate

Gifts create relationships not only between individuals but between groups

What is the principal of reciprocity?

The notion of a pure gift is simply ideology, in reality no one does anything for nothing. A return of some kind is expected

Society is created by an endless sequence of exchanges in which everyone pursues their own advantage, however that advantage is conceived

What is the potlatch?

A form of ceremonial gift exchange among indigenous groups on NW coast of BC in which material goods are exchanged for social recognition and power

What is the social significance of potlatch celebrations?

are a significant representation of the host's status and the display of rank and title

- In return for giving away food and wealth they get recognition of their status and that of their lineage.

- Marriages for one’s children and places in the brotherhoods are only won during the potlatch

What are some benefits of potlatch?

+Creating alliances

+Helping avoid conflicts

+Promoting altruism

(Helping others without expecting anything in return)

+Redistributing wealth

+Vanquishing rivals

+Showing off wealth

What are some important things Mauss has said?

Exchange = the most elementary form of all social relationships and hence of society itself; more complex societies are produced by more complex layers of exchanges

The function of exchange is to bind social actors into commitments which transcend their immediate self-interest (i.e. to make Others a part of them and to orient them to the future)

What are the 3 types of economies according to Karl Polyani?

Division according to dominant mode of distribution:

Reciprocity

Redistribution

Market

What are the 3 different types of reciprocity according to Marshall Sahlins?

• generalized reciprocity

• balanced reciprocity

• negative reciprocity

What is generalized reciprocity?

a form of exchange where goods, services, or favors are given without the expectation of an immediate or specific return. Usually happens between close kin and friends

What is generalized reciprocity correlated with?

rank, relative wealth and need, food and geographic distance

What is balanced reciprocity?

An exchange system in which goods, services, or favors are exchanged with the expectation of roughly equal value and with a reasonable timeframe for reciprocation

This maintains ties with more distant people

What is a kula ring?

vast inter-island system of exchange of ritual objects — men’s armbands and bracelets

What are some characteristics of a kula ring?

Owning them provides the owner with prestige and pride

Objects acquired, displayed, and then passed on

A man may gain fame for having possessed a particularly fine armband or necklace

Main principle underlying exchange is that of giving a ceremonial gift, which must later (months or years) be repaid by an equivalent counter-gift.

A form of credit – implies a high degree of trust and commercial honour.

 One transaction does not finish the kula relationship

 Once in the kula always in the kula = lifetime partnerships, also applies to valuables

 At each meeting, “visiting” partner bestows gift on home partner

 The same object that he received from his other partner a few months or years earlier

 Over time, value (rarity) of objects exchanged increases, as does renown of the partners

How does the Kula differ from classic economic ideas?

 Exchange is not done freely – hereditary partners

 Only two items

 Not based on need since the aim is to exchange articles that serve no utilitarian purpose

 No price mechanism

 Value not determined by supply and demand

 Never ends

 Highly ritualized

 Based on obligations

 Delayed exchange

 Associated with mythology

What is negative reciprocity?

A form of exchange characterized by competition, conflict, or exploitation, where one party aims to gain more than they give, often at the expense of the other party.

What are some characteristics of negative reciprocity?

 Less common

 Impersonal, distrustful

 Not based on ongoing social relations

 Exchange without money

 Taking items by force

What is redistribution?

centralized accumulation and reallocation of wealth (taxes, tributes, tithes, spoils)

What are some characteristics of redistribution?

–maintain power, superior status (internally)

–keep constituents happy, maintain standard of living

–use wealth to leverage power (externally)

–leveling mechanisms

–typical mode of exchange in chiefdoms and some non-industrial states

How does redistribution work in western society?

Collected taxes redistributed in services and welfare to those in need

Redistribution based on moral norms and cultural values about social justice and equal opportunity

What is market economy?

laws of supply and demand set formal prices; foundation of capitalism in which things, services, and ideas are commodities

What are some features of market economy?

-it is the dominant mode of integration in modern industrial societies

-Value preset by impersonal “market forces”

-Exchange occurs presumably independent of and uninfluenced by social relations

When did trade become global?

1st c. BCE - luxury products from China started to appear on the other edge of the Eurasian continent

Who were the first people to use paper money as their sole form of currency?

The mongols

What was the first paper money made out of?

from the inner bark of mulberry trees and, according to Marco Polo, was "sealed with the seal of the Great Lord.“

When was the first Industrial Revolution?

1760-1830

What happened during the first Industrial Revolution?

Steamships and trains could transport goods over thousands of miles, both within countries and across countries.

Industrialization allowed Britain to make products that were in demand all over the world, like iron, textiles and manufactured goods

Britain dominates international trade; GDP goes from 6% to 14% from exports; Rise of International investing

What is the gold standard?

A system in which the value of a country's currency was directly linked to a specific amount of gold.

• I.E. Paper money is exchanged for a set amount of gold

Why was the gold standard abandoned?

• Makes it hard to respond to economic challenges; inflexible

• Lack of sufficient gold reserves

• WW1, Great depression etc.

• Breton woods system collapsed

What is the Bretton woods conference?

A gathering of 44 nations meet to agree upon a series of new rules for post- WWII intl. monetary system

What happened at the Bretton’s Wood conference?

• An agreement under which gold was the basis for the US dollar and other currencies were pegged to the US’s dollar value.

• IMF and World Bank created

How and when did Bretton woods collapse?

in 1971 when President Richard Nixon announced the suspension of the U.S. dollar's convertibility into gold

What happened after Bretton woods collapsed?

+ Transition to FIAT currencies

+ IMF = monitor exchange rates and identify nations that needed global monetary support.

+ World Bank = established to manage funds available for providing assistance to countries that had been physically and financially devastated by World War II

What are reaganomics?

Economic policies implemented by US president Ronald Reagan

What are the main components of reagonomics?

incorporated elements of supply-side economics = tax cuts for businesses and high-income individuals

+ Reducing tax rates would incentivize investment, job creation, and economic expansion.

+ Reagan's administration pursued deregulation across various industries (reduction in government regulation of business)

+ Reductions in government spending (i.e. social programs) to control budget deficits but increase in military spending

+ Emphasis on maintaining a strong U.S. dollar in international markets

+ Based on “trickle-down” theory

What is neoliberalism?

Neo = new; Liberal = free from government intervention

What is the key idea of neoliberalism?

privatization + deregulation = free market > better use and allocation of resources > higher economic growth and development = everyone prospers (?)

What are the 3 central points of neoliberalism?

Individualism/individual responsibility; privatization; and, decentralization

What is consumption?

the set of practices related to the use of things produced by society

What are commodities?

items with value to consumers, measured by desire

items that are consumed by someone who is not its producer

How is the value of an object measured by?

the amount a person is willing to forfeit in order to have it

What is a value?

That which one acts to gain or keep – that which is important

Tell me about values

-Values are connected integrally to social change.

-individual values change over time as people assume different roles in life and as society changes

-every culture has a set of core values

What is commodity fetishism?

the appearance that the commodity has a natural and intrinsic value, apart from the labour bestowed on it

the exchange-value (what makes something a commodity) doesn’t relate in proportion to the use-value.