Wednesday, January 25, 2006

Another dimension

It is truly wonderful to stumble upon a violent debate one did not even know existed:
The rules of the game: oikonomy or chrematistics?
In the 1960s and 1970s a debate took place in economic anthropology between two
schools, one of which called itself “formalist” and the other “substantivist.” The first school
argued that formal methods of economic analysis, involving price-maximisation, were
applicable to “primitive” (small-scale, pre-literate) societies, so long as non-material benefits
were appropriately quantified; although not using the term, the attitude might broadly be
described as what has come to be known as rational choice theory.8 The other school asserted
that such societies were inherently different from those capitalist societies whose behavior
could be described by formal economic analysis; such societies had to be analyzed in their own
terms, by reference to the prevailing mechanisms of distribution: the exchange of gifts,
centralized chief ly redistribution, and only in certain cases market transactions.9 (Click "Read..." to see more.)With
hindsight, both had their good points and their faults: while it is wrong to treat pre-capitalist
economies as any more “irrational” than capitalist ones, formal economics offers no insight
into why certain goods are thought valuable (in capitalist as much as in pre-capitalist ones, it
might be added); and while economic transactions have varying degrees of “embeddedness”
in social institutions, the profit motive is rarely absent from social life. One school runs the
risk of ignoring motivation, the other of ignoring competition. In anthropology, the debate
is largely over, but it continues in ancient history and more especially in classical archaeology.

The continuing Auseinandersetzung within Aegean studies should not be surprising, for
that is where the debate began. The predecessors of substantivism were the “primitivists,”
who asserted the radically different nature of the ancient Graeco-Roman economy, by
comparison with the “modernizers” who interpreted it in terms of conventional economic
motivations.10 The immediate ancestry of the 1960s debate goes back to Max Weber and
Johannes Hasebroek (primitivists) and Michael Rostovtzeff (modernizer) in the present
century, and beyond that into the 19th century with the oikos debate begun by Karl Rodbertus,
and continued by Karl Bücher and Eduard Meyer (primitivists and modernizer respectively).
At issue was the self-sufficiency (autarky) of the primary unit of consumption, the household
(oikos), as a model not only for the Roman estate but also for the national economy: for it was
on this model of prudent household management (oikonomia) that the discipline of
economics (then “political economy”) had its origins and to which it owed its name.
Nineteenth-century writers were captivated by evolutionary ideas:11 up to the medieval period,
Bücher believed, no community had progressed beyond the stage of geschlossene Hauswirtschaft.
That rulers had attempted to accumulate supplies of precious metal was not doubted, but this
belonged to a quite different sphere of activity, chrematistics — the negotiation of valuables,
which was seen as quite unrelated to subsistence (and hence the substantivist economists’
emphasis on separate “spheres of exchange” for food supplies and primitive valuables like
stone axes or shell bracelets). What we now regard as “the economy” was not thought of as
an integrated system of exchanges. The idea of a “commercial” production of commodities
such as textiles, wine or olive oil (in exchange, for instance, for metals or precious stones) was
not considered a possibility in the ancient world. With hindsight, we can now see that the
principle was an important one but the dating was wrong. Long-distance exchange does
indeed begin with rare and precious items, exchanged one for another; and in the course of
time there is indeed an increase in convertibility, through the differentiation of production
and the emergence of standard media of exchange (usually metals): but any urban economy
has a manufacturing component which requires some mobilization of commodities in
response to demand, and the primitivist description even of Bronze Age economies is quite
anachronistic. In principle, if not in scale, the modernizers were right.

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