It was characteristic of the economic system of the nineteenth century that it was institutionally distinct from the rest of society. In a market economy, the production and distribution of material goods is carried on through a self-regulating system of markets, governed by laws of its own, the so-called laws of supply and demand, motivated in the last resort by two simple incentives, fear of hunger and hope of gain. This institutional arrangement is thus separate from the noneconomic institutions of society: its kinship organization and its political and religious systems. Neither the blood tie, nor legal compulsion, nor religious obligation, nor fealty, nor magic created the sociologically defined situations that insured the participation of individuals in the system. They were, rather, the creation of institutions like private property in the means of production and the wage system operating on purely economic incentives.
With this state of affairs we are, of course, fairly conversant – livelihood is secured primarily by economic institutions that are activated through economic motives and governed by economic laws. Institutions, motives, and laws are specifically economic. The whole system can be imagined as working without the conscious intervention of human authority, state, or government. No motives other than those of preservation from hunger and of legitimate gain need be invoked, no legal requirement other than protection of property and enforcement of contract is necessary; yet, given the distribution of resources and purchasing power, as well as the individual scale of preferences, the result is assumed to be an optimum of want satisfaction. This is the case of “separateness” established in the nineteenth century. Now let us proceed to the less familiar alternative of “embeddedness” where we meet a number of questions that need clarification.
We will give a brief history of the problem, first in terms of status and contractus, then in the more recent terms of cultural anthropology.
We begin with the discovery revealed by Sir Henry Summer Maine in his Ancient Law (1861) that many institutions of modern society were built on contract, whereas ancient society rested on status. Status, which is set by birth – by position of and in the family – determines the rights and duties of the person, which, in turn, are derived from kinship (or adoption), totem, and other sources. This status system persists under feudalism and, with some qualifications, right up to the age of equal citizenship as established in the nineteenth century. It was gradually replaced by contractus, i.e., by rights and duties fixed through consensual transactions, or contracts. The facts themselves were first noted by Maine in his investigation of Roman law and developed in his work on village communities in East India, to whose nonmarket economies Marx also pointed.
Maine's influence on the continent was sustained by Ferdinand Toennies, a German sociologist whose conception was epitomized in the title of his work, Community and Society (Gemeinschaft und Gesellschaft, 1888). The terminology may appear at first confusing, but basically it is not. Community corresponded to “status society,” society to “contract society.”
Maine, Toennies, and Marx exerted a deep influence on Continental sociology through Max Weber, who consistently used the terms Gemeinschaft and Gesellschaft in the Toenniesian sense, Gesellschaft for contract-type society, Gemeinschaft for status-type society.
Between Maine and Toennies the emotional connotation of status or community, on the one hand, and contractus or society, on the other, were very different. Maine thought of the precontractus condition of mankind as the dark ages of tribalism; the introduction of the contract, he felt, emancipated the individual from bondage to the tribe. Toennies’ sympathies, on the contrary, were rather with the warmth of the community against the impersonal business ties of society. He idealized “community” as a condition where human beings are linked together by the tissue of common experience, while ‘society’ was never far removed from the impersonality of the market and the “cash nexus,” as Thomas Carlyle dubbed the relationship of persons connected only by market ties.
Toennies’ ideal was the restoration of community – not, however, by returning to the preindustrial stage of society, but by advancing to a higher form of community that would follow upon our present civilization. He thought of it as a kind of cooperative phase of civilization that would retain the advantages of technological progress and individual freedom while restoring the wholeness of life. His position resembled, to some extent, that of Robert Owen or, among modern thinkers, that of Lewis Mumford. In Walt Whitman's Democratic Vistas (1871) one may discover prophetic analogies to this outlook.
Maine's and Toennies’ insights into the evolution of human civilization have been broadly accepted by many scholars as keys to the history of modern society. However, for a long time no advance was made along the trails they blazed. Maine dealt with the subject as one of the history of law, including its communal forms of surviving in the ancient villages of India. Toennies reconstructed the outlines of ancient and medieval civilization with the help of the “community-society” dichotomy. Neither of them attempted to apply the distinction to the actual history of economic institutions such as trade, money, and markets.
The first important signs of theoretical development along these lines are found in the discoveries made in the contiguous field of anthropology by Franz Boas, Bronislaw Malinowski, and Richard Thurnwald. Their insights implied a critique of the so-called “economic man” of classical theory and led to the establishment of the discipline of primitive economics as a branch of cultural anthropology.
By a freak of history, during World War I, a trained anthropologist was marooned in his own “field.” Bronislaw Malinowski was an Austrian subject, and thus technically an enemy alien, among the savages off the southwestern tip of New Guinea. For two years, the British authorities refused him permission to leave, and Malinowski ultimately returned from the Trobriand Islands with the material for “The Primitive Economics of the Trobriand Islanders” (1921), The Argonauts of the Western Pacific (1922), Crime and Custom in Savage Society (1926), The Sexual Life of Savages (1929), and Coral Gardens and Their Magic (1935). He died in the United States in 1942. His works have affected not only the study of anthropology but also the viewpoints and methods of economic history. Richard Thurnwald of Berlin, whose field was New Guinea, published his account of the Banaro in 1916 in the American Anthropologist. His influence was felt in the Anglo-Saxon world chiefly through its impact upon Malinowski. (Thurnwald himself, though praised as an anthropologist, was a pupil of Max Weber.)
Malinowski's account left the reader with the conviction that members of preliterate communities behaved, on the whole, understandably to us. Their seemingly exotic behavior could be explained in terms of institutions that stimulated motives different from those we usually act upon but not foreign to us in other ways. In regard to subsistence, there was a widespread practice of reciprocity, i.e., members of a group behaved toward members of another group as the members of that group, or a third group, were expected to behave, in turn, toward them. A man from a village subclan, for instance, provided his sister's family with garden produce, though the sister would usually dwell in her husband's village, sometimes at quite a distance form her brother's habitation – an arrangement that resulted in a great deal of uneconomical hiking on the part of a diligent brother. Of course, if the brother happened to be married, a similar service would be rendered to his family by his wife's brothers. Apart from this substantial contribution to matrilineal relatives’ households, a system of reciprocal gifts and countergifts was generated that appealed to economic self-interest only indirectly, the controlling motives being noneconomic, e.g., price in public recognition of civic virtues as a brother or gardener. The mechanism of reciprocity, effective in regard to the comparatively simple matter of food supplies, also accounted for the highly complex institution of the Kula, an esthetic variant of international trade. Kula transactions between inhabitants of the archipelago covered a number of years, dozens of miles of unsafe seas, and thousands of individual objects exchanged as gifts between individual partners living on distant islands. The whole institution acted to minimize rivalry and conflict and maximize the joy of giving and receiving gifts.
None of these facts recorded by Malinowski was especially new. Similar ones had been observed time and again in other spots. Although contrasting in tone and coloring with the potlatch of the Kwakiutl Indians, the Kula was no more peculiar than that hypersnobbistic display of wilful destruction, discovered and exhaustively described by the great American anthropologist, Franz Boas, in The Social Organization of the Secret Societies of the Kwakiutl “Potlatch” (1895).
Yet, Malinowski's brilliant attack on the concept of “economic man” that unconsciously underlay the traditional approach of ethnographers and anthropologists created, in primitive economics, a new branch of social anthropology of the greatest interest to economic historians.
The mystical “individualistic savage” was now dead and buried, as was his antipode, the “communistic savage.” It appeared that not so much the mind as the institutions of the savage differed from our own. Even widespread communal ownership turned out, under the anthropologist's microscope, to be different from what it was supposed to be. Although land did indeed belong to the tribe or sib, a network of individual rights was also found to exist that deprived the term “communal property” of most of its content. Margaret Mead has described this as the man “belonging” to the piece of land rather than the land to the man. Behavior is ruled not so much by rights of disposal vested in individuals as by commitments of individuals to cultivate definite plots of land. To speak of either individual or communal property in land, where the very notion of property is inapplicable, appears hardly meaningful. Among the Trobrianders themselves, distributors happened largely through gifts and countergifts.
As a general conclusion, it can be stated that the production and distribution of material goods was embedded in social relations of a noneconomic kind. No institutionally separate economic system – no network of economic institutions – could be said to exist. Neither labor nor the disposal of objects nor their distribution was carried on for economic motives, i.e., for the sake of gain or payment or for fear of otherwise going hungry as an individual. If we take economic system to mean the aggregate of behavior traits inspired by the individual motives of hunger and gain, there was no economic system in existence at all. If, however, as we should, we take that term to comprise the behavior traits relating to the production and distribution of material goods – the only meaning relevant to economic history – then we find that while there was, of course, an economic system in being, it was not institutionally separate. In effect, it was simply a by-product of the working of others, noneconomic institutions.
We might understand such a state of affairs more easily if we concentrate on the role of basic social organization in channeling individual motives. In studying the kinship system of the Banaro of New Guinea, Richard Thurnwald found a complicated system of exchange marriage. No fewer than four different couples had to be united in marriage at the same occasion – each partner standing in a definite relationship to some other person of the reciprocating group. For such a system to work, grouping had to be already in existence, splitting the sib artificially into subsibs. To this purpose, the goblin-hall (or men's house) was habitually divided; those squatting on the right (Bon) and those squatting on the left (Tan) formed subsections for the purpose of the exchange marriage system. Thurnwald wrote:
The symmetry in the arrangement of the ghost-hall is the expression of the principle of reciprocity – the principle of giving “like for like” – retaliation or requital. This seems to be the result of what is psychologically known as “adequate reaction,” which is deeply rooted in man. In fact, this principle pervades the thinking of primitive people and often finds its expression in social organization.1
This remark was taken by Malinowski in Crime and Custom in Savage Society. He suggested that symmetrical subdivisions in society, such as those Thurnwald had found in the goblin-hall, would be discovered to exist everywhere as the basis of reciprocity among savage peoples. Reciprocity, as a form of integration, and symmetrical organization went together. This may be the true explanation of the famous duality in social organizations. Indeed, we may ask in regard to preliterate society – ignorant of bookkeeping – how could reciprocity be practiced over long stretches of time by large numbers of peoples in the most varied positions unless social organization met the need halfway by providing ready-made, symmetrical groups, members of which could behave towards one another similarly? The suggestion carried important implications for the study of social organization. It explains, among other things, the role of the intricate kinship relations often found in savage societies where they function as the bearers of social organizations.
Since there is no separate economic organization and, instead, the economic system is embedded in social relations, there has to be an elaborate social organization to take care of such aspects of economic life as the division of labor, disposal of land, organization of work, inheritance, and so on. Kinship relations tend to be complicated because they have to provide the groundwork of a social organization that substitutes for a separate economic organization. (Incidentally, Thurnwald remarked that kinship relations tend to become simple as soon as separate political-economic organizations develop, since “there is no need for complicated kinship relations any more.”)2
We have an institutionally separate economic system in our society, and an important integrating concept in our economy is that of an aggregate of interchangeable economic units. Hence the quantitative aspect of economic life. If we possess ten dollars, we do not as a rule think of them as ten individual dollars with separate names but as units that can be substituted one for another. Without such a quantitative concept, the notion of an economy is hardly meaningful.
It is important to recognize that such quantitative concepts are not generally applicable to primitive societies. The Trobriand economy, for example, is organized on a continuous give-and-take basis; yet there is no possibility of setting up a balance or using the concept of a fund. The multifarious “transactions” cannot be grouped from the economic point of view, i.e., the manner in which they affect the satisfaction of material wants. Although the economic significance of the “transactions” may be great, there is no way of assessing their importance quantitatively.
To have shown this conclusively is another of the theoretical achievements of Malinowski. First, he listed the different kinds of economically significant give and take, from free gifts (as we would describe them) at the one extreme, to plain commercial barter (again, as we would describe it) at the other. Second, he grouped the sociologically defined relationships in which all of the different give-and-take relationships occur. He then related all the different types of gifts, payments, and transactions to those relationships.3
The category of “free gifts” Malinowski found to be altogether exceptional or, rather, anomalous. Charity is neither necessary nor encouraged, and the notion of gifts is invariably associated with that of countergift. Consequently, even obviously “free” gifts are usually construed as countergifts for some service rendered by the recipient. Most important, he found that “the natives would undoubtedly not think of free gifts as forming one class, as being all of the same nature.”4 Clearly, such an attitude would make it impossible for an individual to form the notion of such gifts comprising an economic sphere of activity in the sense of maintaining or increasing a fund.
In the group of transactions where the gift must be returned in equivalent form, Malinowski encountered a surprising fact. Obviously, this is the group which, according to our notions, comes nearest to the exchange of equivalents and should be practically indistinguishable from trade. Far from it! Quite often the same object is exchanged back and forth between partners, thus depriving the transactions of any conceivable economic sense or meaning. Actually this simple device, equivalence, far from representing a step in the direction of economic rationality, becomes a safeguard against the intrusion of utilitarian elements into the transaction. The purpose of the exchange is to draw relationships closer and strengthen the ties between the partners. This purpose would obviously not be served by anything even approximating haggling over food between blood relatives.
Actual barter and trade among the Trobrianders is distinct from any other type of gift giving. Whereas in the ceremonial exchange of fish and yams a mutual sense of equivalence prevails between the two sides, in barter of fish for yams there is haggling. Such barter of useful articles is characterized by the absence of ceremonial forms and special exchange partners. In regard to manufactured goods, barter is restricted to new objects, second-hand goods, which may have personal value, being excluded.
In general, in all the forms of exchange excepting barter, the amounts and kinds of things given and taken in return are specifically related to the type of social relationship involved, whether that of family, clan, subclan, village community, district, or tribe. Each is distinct and separate in both terminology and native thought. Under such conditions, the aggregate concepts of fund or balance, of loss and gain, were obviously inapplicable.
The result of all these characteristics of primitive societies is the impossibility of organizing the economy, even in thought, as an entity distinct from the social relations in which its elements are embedded. There is, however, no need to organize it either, since the social relationships integrated in the noneconomic institutions of society automatically take care of the economic system. In tribal society the economic process is embedded in the kinship relations that formalize the situations out of which organized economic activities spring. What there is of production and distribution of goods, as well as organization of productive services, is therefore found instituted in terms of kinship. Various groups dispose of the grounds for hunting, fishing, trapping, and collecting and of pasture and arable land. Hoarding staples forms part of the corporate activities of the kin, whether engaged in hostilities or in ceremonial feasts. Treasure circulates by virtue of status or of religious or military requirements. Partial appropriation of the same physical units of land, trees, or timber to various strata of relatives fragmentizes the notion of property. Utilitarian needs often depend for their satisfaction not on the possession of things but rather on the claim to solicited services. In the absence of prices, acts of exchange lack the operational features essential to a quantitative approach; instead, the qualitative and prestige impact of the “valuables” steals the show. As a result, a man's practical orientation would be hampered rather than helped by an “economic” focus in a way of life that has its points of reference outside the economic sphere.
The solidarity of the tribe was cemented by an organization of the economy that acted to neutralize the disruptive effect of hunger and gain while exploiting to the full the socializing forces inherent in a common economic destiny. The social relations in which the economy was embedded sheltered the disposal over land and labor from the corrosive effects of antagonistic emotions. Thus the integration of man and nature into the economy was largely left to the working of the basic organization of society, which took care almost incidentally of the economic needs of the group, such as they were.
All this, of course, concerns only a subjective awareness of the economy. The objective process, as it actually unrolls, is given apart from any conceptual awareness on the part of the participants, for the causal sequence to which we owe the availability of the necessities of life is present no matter how men conceptualize their existence. The seasons bring around the harvest time with its strain and its relaxation; warlike trade has both the rhythm of preparation and foregathering and the concluding solemnity of the return of the ventures; all kinds of artifacts, whether canoes or ornaments, are produced and eventually used by various groups of persons; every day of the week, food is prepared at the family hearth. Yet, for all this, the unity and coherence of the economic activities may remain unconscious in the minds of the participants. For the accompanying series of interactions between men and their natural surroundings, whether centering on the physical moving of objects or on appropriational changes will, as a rule, carry meanings and reflect dependencies, of which the economic is only one. And even if the economic happens to stand out, there may be counteracting forces at work to prevent the institutionalized movements from forming a coherent whole. In effect, such counteracting forces are largely responsible for the absence of a concept of the economic in primitive society.