17 Reciprocity, calculation, and non-monetary exchange
The standard textbook version of economics describes the allocation of limited means among unlimited wants as the central problem of economics. By contrast, a long-standing tradition in economics, including major twentieth-century figures such as Ludwig von Mises, F. A. Hayek, and James Buchanan, put exchange at the center of its vision of the discipline. All three thinkers made use of some version or another of the words “catallactics” (the science of exchange) or “catallaxy” (the nexus of market exchanges). For this tradition, markets were first and foremost about exchange, and exchange, particularly in the work of Buchanan, was also seen as at the core of other social processes such as politics. When the task of economics is reoriented away from questions of optimal allocation to questions about the role of exchange, a variety of new perspectives become available. With a catallactic view of economics, the set of institutions within which those exchanges take place becomes a central factor in both understanding the exchanges that occur and whether they are likely to enhance or detract from human well-being. A purely allocation-focused economics is unlikely to have the same concern with institutions as does an exchange-focused economics, and this point is evident in the near absence of institutional analysis in so much of modern economics.
Seeing economics as centrally about exchange also enables us to see economic ideas at work in non-monetary exchange contexts. For example, as more careful biological study has revealed, contrary to Adam Smith’s claim that only humans have a propensity to truck, barter, and exchange, we now know that other animals do engage in forms of exchange. We also know that exchange and other forms of reciprocity more generally are important features of socializing processes in humans and other animals. Economists have long understood the way in which the division of labor and exchange create interdependencies among nations as well as individuals. Upon introducing the word “catallaxy” to describe the market order, Hayek wrote that the Greek root of that word meant “not only ‘to exchange,’ but also ‘to admit into the community’ and ‘to change from enemy to friend’” (1977, 108). Exchange is not just a way we obtain goods and services in anonymous markets, but can also be a way we create and sustain communities, both intimate and anonymous.
The various forms of reciprocity and exchange that are found in the animal world are often found as strategies for group survival in the face of severe resource constraints. For human communities, non-market exchange and reciprocity are important ways in which humans improve their lives and the lives of others. Although they are not sufficient to facilitate the economic coordination and prosperity we associate with what Smith and Hayek called “the Great Society,” non-market forms of exchange and production not only improve life in the Great Society, they have also been crucial tools for survival in difficult times. In what follows, I offer some theoretical underpinnings for understanding these issues of how exchange and reciprocity play out in intimate and anonymous orders through an extended discussion of Carol Stack’s (1974) classic ethnography of poor, urban, African-American families in the late 1960s, All Our Kin. Looking at Stack’s findings through the eyes of a more “catallactic” approach to economics suggests that exchange alone cannot be the distinguishing characteristic between more intimate communities and more anonymous market orders. Non-monetary exchange happens within the face-to-face world of small communities, and various forms of non-monetary exchange, reciprocity, and gift giving are important parts of the anonymous Great Society as well. Stack’s work helps us see the complexities of the ways in which multiple forms of exchange in various contexts are at play in the Great Society.
Reciprocity and exchange in nature
For decades the accepted view of animal behavior in an evolutionary context was to always think in terms of individual creatures struggling to survive against the pressures of the environment. Even as our understanding of genetics and natural selection improved, the focus was still on the level of the individual animal itself. In more recent years, the view of evolutionary biologists has broadened in two different directions. They have thought more completely about the ways in which animal behavior is really not about the survival of individual animals per se, but rather the passing on of genetic material. When seen in terms of ensuring the survival of genetic information, some previous behavior that did not seem to make sense in terms of individual survival was made intelligible in terms of the survival of parental genes. At the same time, and more important for the argument here, theories of group selection were developed as ways to account for what seemed to be altruistic behavior in some animals. Altruistic behavior was often reinterpreted as being an element of some form of reciprocity in animal societies, the result of which was to enhance the survival of the group. With the group better able to survive, the survival of any one member was that much more likely, suggesting that what looked like pure altruism was in fact reciprocal exchange that was good for both the individual animal and the group as a whole from an evolutionary perspective.
Biologists who investigate reciprocity in animals distinguish between two forms of apparently altruistic behavior: kin selection and reciprocity. The difference is the degree to which those engaged in the altruism are related. So when we see parents favoring their own offspring, or those of a close relative, we are observing kin selection. Such behavior has a more obvious evolutionary explanation as it clearly promotes the survival of the parental genes, even if it might be harmful to the parent as an individual animal. Parents who give up food for their offspring are accepting the risk to their own survival to promote that of their, perhaps numerous, children. The net result is positive from an evolutionary standpoint. Reciprocity, by contrast, is altruistic behavior that shows no favoritism to one’s kin. It can include kin, but they are not treated any differently from non-kin. These latter forms of behavior are particularly interesting as they point toward the importance of group survival in the larger picture of the evolutionary process.
For forms of reciprocity in the animal kingdom to work, biologists have argued that several criteria have to be met, with three being of particular importance. One is that the role of donor and recipient must frequently reverse (i.e., there must be true reciprocity in pairs of animals). Second, “the short-term benefits to the recipient are greater than the costs to the donor” (Wilkinson 1990, 77). Finally, donors must be able to identify cheaters and have some mechanism for excluding them. In the language of economics, there must be an enforcement mechanism to eliminate free riders. As I will argue later, these three criteria are equally applicable to reciprocal non-monetary exchange processes among humans. Together, these three criteria distinguish reciprocal exchange from pure altruism. The first two together indicate that there is exchange taking place, though with the two halves being temporally distinct. If roles reverse and the benefits in each act are to one and not the other, over time we have mutually beneficial patterns of exchange. The third criterion helps to ensure that this is exchange and not altruism by identifying contributors and excluding free riders.
One example illustrating this in the animal kingdom is the practice of reciprocal food exchange among vampire bats (Wilkinson 1990). Vampire bats cannot make it through two consecutive nights without feeding. After about 60 hours, their lives will be seriously threatened without being able to ingest blood. The bats rely on larger animals as feeding sources and often those animals are able to fend them off before they can get a sufficient meal. As a result, some percentage of bats in any group of bats will go without food on any given night. Though some bats are more effective feeders than others, and young bats are often less capable, no bat is completely safe from the threat of starvation. Every bat therefore has an “interest” in making sure that the group as a whole has enough food. Bat societies that did not develop a way to share food would be at an evolutionary disadvantage as compared to ones that did, as such sharing would make it more likely that more bats would survive and procreate.
Vampire bats have developed a fairly sophisticated system of doing precisely that. Bats that have successful feedings will regurgitate the blood they have ingested as a way to feed other bats in the colony, and not just members of their kin. As Wilkinson (1990, 76) points out, sharing with non-kin is comparatively rare in the animal kingdom, so researchers had to be careful to demonstrate this was actually reciprocal exchange and not just kin selection. Wilkinson and his research team were able to do so through a complex process of observation, tagging, and tracking. They found that bats did indeed regurgitate for non-relatives, even preferring them sometimes. They also found that they preferred other bats who were frequent roost mates, with both kin and non-kin being recipients of regurgitated food. Blood sharing rarely took place among complete strangers and, in fact, tended to occur in a kind of “buddy system” of defined pairs. As Wilkinson points out, this is a “strong indication that their roles reverse on a regular basis” (80). In addition, they found that when sharing did take place, it almost always involved regurgitating for a bat with less than 24 hours to live. This suggests that bats were discriminating by the odds of dying, not by kin relation.
Wilkinson’s work could not definitively establish that the bats had an exclusion mechanism, but he did point to several pieces of evidence that are highly suggestive. First, the buddy system observation indicates that the bats must have some way of identifying one another, which is a necessary piece of having some exclusion process. The belief is that the social grooming that bats do is what enables them to identify each other, and the mutual grooming takes on patterns with respect to known bats versus strangers that are similar to the regurgitation. Finally, researchers believe that bats can identify each other through the unique auditory signals they emit. With the ability to identify individual members of the group, and the fact that the reciprocal food exchanges have proven to have survival value, the implication is that there must be some process by which free riders are excluded, even if it has not been observed in natural settings.
The vampire bats and other, though limited, examples among animals suggest that reciprocity can play a key role in helping animal communities survive when resources are not sufficient to assure that all can have enough to eat. This sort of reciprocity can be seen, in Matt Ridley’s (1998) words, as part of the “origins of virtue” in humans. As we learned the benefits of such exchange as a way to ensure survival, we also became accustomed to norms of sharing and reciprocity. Exchange continues to play a central role in human societies, but with one important difference: we exchange with both people we know and who are geographically proximate, and with anonymous other humans who can live thousands of miles away. Intimate and anonymous social orders involve different types of exchange with different consequences.
Orders, organizations, and the role of economic calculation
Although exchange is ubiquitous among humans, how it takes place and its social consequences differ depending on the particular context. There are many ways one could carve up the social world to explore such differences, but for my purposes the relevant way is to distinguish between “intimate” and “anonymous” social orders. Exchange takes place in both, but intimate orders are most often characterized by forms of barter and relatively simple forms of implicit credit, along with very personal, informal forms of norm enforcement. By contrast, more anonymous orders are largely characterized by more geographically extensive, money-based indirect exchange, and more complex forms of explicit credit. Enforcement is not informal, but rather through formal legal processes.
The work of F. A. Hayek gives us a vocabulary for making these sorts of distinctions. Hayek is most known for his development of the concept of spontaneous order, which is the idea that many human practices and institutions evolved as the result of human action, but not intentional human design. That is, institutions such as money or language were not consciously invented by any one person, but are instead the products of processes of undesigned social evolution. Because of his emphasis on these forms of undesigned order, people frequently interpret him as saying that everything is a spontaneous order. In fact, Hayek’s work is clear that not all social institutions are spontaneous orders and that a good number are better described as “intentional” or “made” orders, or what he sometimes terms “organizations.”1 The relationship between the distinction between undesigned orders and intentional organizations and that between intimate and anonymous orders is a complex one, and is at the heart of understanding the issues in front of us.
The distinction between spontaneous orders and intentional or instrumental organizations is important because the spontaneous order of the “Great Society” (or what Adam Smith called the “commercial society”) comprises various instrumental organizations such as households/families, firms, and other made orders. These smaller made orders are characterized by strong elements of intentional planning, centralized direction of resources, and a unified goal. Their interaction within the broader social order, however, is unplanned and uncentralized. Individuals in the modern world must constantly move back and forth among a variety of social institutions and contexts, some of which more closely resemble made orders while others are spontaneous orders. Hayek argues that the challenge this poses is that the structure and moral rules of the two kinds of order are very different, requiring that we both recognize those differences and know how to behave appropriately in the relevant institutional environment.
Although, as I will argue later, there are problems seeing the distinction between spontaneous orders and instrumental organizations as a pure dichotomy, we can still identify a number of criteria that distinguish one from the other. One such criterion is the degree of complexity an institution entails. Made orders are sufficiently simple that the person(s) at the top can survey the entire institution and can thus structure it to serve whatever specific purposes they wish, hence the idea of an “instrumental organization” (Hayek 1973, 38). This contrasts with spontaneous orders, such as the market or the even more extended order that Hayek calls the Great Society, which can be of any degree of complexity, are rule-based, have structures that may not be obvious, and serve no particular purpose. Instead they serve as general processes by which the individuals who participate in them can achieve their myriad specific purposes. For example, a firm has a very specific purpose, which is to maximize profits, whereas something like a language or a market has no specific purpose; rather each exists to serve whatever purposes those who make use of them might wish.
At the core of the difference between the two types of order therefore is a difference in the scope of discretion possessed by individual actors. In made orders, where there is a unified goal or purpose determined by those who made the order, those at the top have the ability to ensure that other individuals are engaged in the pursuit of the order’s goal or purpose and not pursuing purposes of their own. Individuals who participate in made orders also understand that they do not have a wide scope of choice and must follow the commands or specific rules set down by those in charge. Consider the way that employees, soldiers, or athletes act within each of the made orders that define the institution of which they are a part. Firm managers can direct employees to one or the other part of the factory or a military commander can direct troops toward one objective or another, or a baseball manager can ask a player to sacrifice bunt in a particular situation. In none of these three situations do the individuals have the discretion to decide what to do other than on a very moment-to-moment basis. Such a structure is not incompatible with rules playing a role, though these rules will simply describe the proper procedures for engaging in a particular function or task. They are means to a specific end.
Spontaneous orders, by contrast, are structured by abstract rules that guide the behavior of the individuals and organizations that comprise them. Importantly, those rules are, as Hayek terms them, “ends-independent,” which means that they enable individuals to pursue a multiplicity of ends, rather than being geared toward a specific, agreed-upon end, as in organizations. These rules are most often framed negatively, as in “do not steal” or “do not coerce others.” Where framed positively, they are sufficiently abstract to permit them to serve a variety of purposes, e.g., “respect property and live up to contracts.” In neither of those cases does the rule specify what is to be done with the property or what is being contracted for. Ends-independent rules simply indicate that whatever ends one has, these are the rules one must follow to pursue them, i.e., the rules are independent of the particular ends that people have. The advantage of such a system is that it does not require the agreement of the participants on the value of any particular ends. Instead, we only need to agree on a smaller number of general rules in order for all of us to pursue our own ends. Spontaneous ordering processes work best when we have a large number of people with differing ends and no common purpose.
In contrast, in cases where a group is small and homogeneous and has an agreed-upon specific purpose in mind, making use of a made order might be more appropriate:
In any group of men of more than the smallest size, collaboration will always rest on both spontaneous order as well as on deliberate organization. There is no doubt that for many limited tasks organization is the most powerful method of effective coordination because it enables us to adapt the resulting order much more fully to our wishes.
(Hayek 1973, 46)
For the numerous limited and specific tasks that occupy most of our days, instrumental organizations work better than spontaneous ones because we are able to consciously construct them to achieve the agreed-upon goals. It is when coordination among these organizations, each having different purposes, is necessary that we must rely on spontaneous ordering processes. The Great Society, in Hayek’s view, is the spontaneous order that emerges from the mutual interaction of these deliberate organizations as each pursues its plans within the rules of the legal order.
This sharp distinction is useful for analytical purposes, but the real world presents us with complications. In general, within instrumental organizations, we tend to have fairly face-to-face relationships with other members and this provides a level of intimacy that allows us to be more able to determine what each other might know or might prefer. Finding agreement upon the ends and employing the intentionally cooperative (as opposed to rule-based) structures that often characterize made orders are much easier if individuals have some degree of familiarity with each other that results from the intimacy of repeated face-to-face contact. As a result, made orders are often built around belief systems or aspects of one’s identity that make the common goals of the organization more obvious and easier to agree on, e.g., a church or an ethnicity-based service organization. For non-monetary forms of exchange to be effective, actors must know a fair deal about the preferences of others or have some other effective (non-monetary) way of calculating the benefits and costs of their action. The more intimate the order, the more possible this is.
The market and other complex adaptive social systems, by contrast, are fundamentally processes of anonymous interaction. We do not know the vast majority of the “others” with whom we interact in sufficient depth in the Great Society to be able to appeal to their love for us or their knowledge of us when trying to get them to act in the ways we desire. We must rely on, as Adam Smith ([1776] 1976, 18) put it, their “self-love” and get them to cooperate through exchange. For example, the rules of the market, and the other institutions that comprise it, enable people to interact and cooperate without needing to know very much detail about others. The very nature of monetary exchange on the market is premised on the abstraction (or in sociological terms, the “ideal type”) of the “money user.” Money’s anonymity is key to extending the range of exchange from the barter of smaller, more homogeneous, intimate orders to the broader Great Society.2
In understanding the role that exchange plays in both intimate and anonymous orders, we need to address the question of how parties to the exchange assess the value of the objects of exchange. Actors need some way of calculating which exchanges are worth engaging in before the fact and then assessing whether the exchange was worth it after the fact. Actors can attempt to make use of their own subjective values, which is fine for simple bilateral exchanges. However, if goods are going to have some sort of publicly accessible value, what we might call, following Mises ([1912] 1980), their “objective exchange value,” then there has to be some common denominator of value that all can recognize. For any complex set of transactions where the ultimate exchange involves multiple parties, all must be able to have some value they can access. In the marketplace of the anonymous Great Society, money prices serve this function, as every good exchanging against money enables goods to have a single price reckoned in terms of that money. Money prices are the objective exchange values that facilitate complex, multiparty exchanges. If we wish to extend the benefits of comparative advantage and exchange and the social cooperation they promote to the widest range of people possible, markets, money, and money prices are necessary.
In reciprocal exchanges in intimate orders, something has to substitute for the role played by money prices. If the community is homogeneous enough, the problem can be solved by everyone having similar assessments of the value of various goods and services. If we think about a group of close friends who occasionally care for each other’s kids or invite the adults over to dinner, we can imagine them having a pretty good consensus on the value of those two activities, especially if they find themselves in similar life situations, such as all being dual-income households. A similar process might be at work in a larger, slightly less homogeneous group. Admittedly, these common community evaluations will be notably less precise than what can be attained through monetary exchange. However, they can still be more than sufficient for the kinds of reciprocal non-monetary exchanges that take place in more intimate orders, particularly if actors are not that concerned with the ability to precisely measure the degree of their “profit” and “loss.” In more informal systems, common community assessments of the subjective value of goods and services can provide a rough and ready objective exchange value. Similar “balance keeping” is true of gift exchanges as well.
The prior argument indicates that some process of economic calculation must be available if people really wish to engage in reciprocal exchange. An intimate order greater than the size of a family will, again, need something that approximates the role of money prices. In the debate in the interwar years over whether a planned economy that lacked private property, exchange, and money prices could rationally allocate resources, Ludwig von Mises (1920) argued that private property, specifically in the means of production, was a necessary condition for economic coordination and rational resource allocation. Mises’ key point was that without monetary exchange and money prices, there was no way for producers in any economy beyond the size of the household to determine which inputs to use to produce a given output, or which outputs to produce from a given set of inputs. Does this mean that all production in a monetary economy must require monetary exchange and money prices? As noted earlier, the extended order of the Great Society comprises a whole variety of smaller-scale intentional organizations in which various forms of production take place. Of particular interest in the context of thinking about community responses to poverty and disaster are the group of activities normally labeled “household production.”
Household production encompasses all of the tasks necessary for a household to function. These include cooking, cleaning, doing laundry, caring for children, mowing the lawn, and so forth. As Mises recognized in the context of the debate over economic calculation, the head(s) of the household are able to survey all of the various means and ends and decide what ends to pursue and how best to pursue them without the need for money prices. What happens in households, which are often (though not always) co-extensive with the social institution of the family, is certainly a core part of the extended order of the Great Society. The anonymous parts of that extended order will not function if, for example, children are not sufficiently fed and well-raised. Even beyond kids, the other things done by households do not have perfect substitutes on the market. Finally, the role played by parents in socializing children into the norms of the extended order is one, I have argued (Horwitz 2005), for which there is no sufficiently close substitute.
If households are sufficiently simple such that the heads of household can directly solve the problem of resource allocation without recourse to money prices, the broader concept of “the community” is not as fortunate. Communities are characterized by more intimate knowledge of other residents than would be true of a large city or a whole nation. However, most communities are not “top-down” in the way that the ideal type of a made order is, and they are still governed by rules that give individuals a great deal of latitude. As a consequence, we tend to see within communities more actions that look like what a household or a firm might engage in as the increased personal knowledge of other members allows for more altruism or other forms of interaction that are normally not seen in the anonymous marketplace. Communities thereby challenge the strict dichotomy of intimate versus anonymous orders. Instead, communities are frequently defined by their members as having a history or symbols that generate a common identity, which in turn generates a sense of what has been called “collective intentionality” (Lewis 2009). This shared identity, along with the greater intimacy that communities tend to have, might explain why it is often easier, for example, to get people to donate time and money to local causes, particularly if they are to help known neighbors, than it is for national or international causes with more anonymous recipients.3
Communities therefore have a degree of complexity greater than that of households but not of the degree that characterizes the market or Great Society. As such it will be difficult, if not impossible, to allocate resources in a rational way without the assistance of what Mises (1920) terms “aids to the mind” such as money prices. If communities are going to attempt to allocate resources by some form of non-monetary exchange, they will have to develop some substitute for the money prices of the market. Those substitutes will not be as powerful and precise as money prices (and the calculation of budgets and profits and losses they make possible), but they might be sufficient for fairly effective resource allocation in reasonably intimate communities, and particularly in fairly limited contexts. In examining how communities attempt to allocate resources outside of formal, monetary exchange, we should be looking for these analogues of prices, profits, and losses to understand how such non-monetary exchange systems could be sustainable.
This discussion of households and communities has another important implication: these institutions make the anonymous/intimate and extended order/organization distinctions much less clear. Often framed as a continuum from intimate to anonymous, these distinctions might be better conceived of as a series of concentric circles.4 At the center might be the individual, with the next circle being the household, followed by the community, followed by the full extended order.
This way of conceptualizing matters allows us to see two important things. The first is that this enables us to see how individual action ripples outward to the household, community, and Great Society. Within those ripples will be the potential for numerous unintended consequences, both good and bad, depending on the institutions that each circle comprises. The reach of our intentions is distinctly local. Second is the way in which institutions, rules, and norms that emerge in the Great Society, and in communities, in turn structure the choices facing individuals and households. Beyond these structures, the values that drive the market order, and the wealth that they make possible, provide the motivation and means for resources to flow from the outer rings to individuals, households, and communities for both everyday concerns and situations of great need. What Deirdre McCloskey (2006) calls the “bourgeois virtues” are both causes and effects of the expansion of the market order. Those virtues are often instantiated in a desire to put the wealth that markets create to work in the form of gifts, grants, and other non-market forms of resource transfers or exchanges that are intended to improve the lives of those in the more inner circles. However, if this non-market resource allocation process involves exchange, it will have to have some way other than money prices that ensures that economic calculation is minimally possible. The rest of this chapter explores how this framework can be applied to the community described in Stack’s All Our Kin and what some of the implications are for both poor communities and communities in crisis.
Exchange and reciprocity in Carol Stack’s All Our Kin
Carol Stack’s All Our Kin is a classic piece of ethnography from the late 1960s. It is best read as a response to the Moynihan Report on the state of the African-American family produced by the US government in 1965. The report concluded that the African-American family was dysfunctional and in disarray. Stack and other social scientists began to investigate whether that claim was accurate, or whether the official data used to construct it had perhaps overlooked aspects of the lived lives of African-Americans, particularly poor ones, that might provide a more rich and complete picture of the way in which families functioned in that community. Stack’s strategy was one of the most radical: she engaged in participant-observer research by becoming a member of a poor, urban, African-American community in the American Midwest. She spent several years living with the people she was researching, integrating herself into the community to the extent possible. This enabled her to see the workings of family structure from the inside in a way not possible when one looks only at the statistical data and similar forms of evidence. Her conclusion was that even though the families of poor African-Americans were not functioning ideally, they were not nearly as dysfunctional as portrayed in the Moynihan Report.
What All Our Kin suggests is that the residents of the community she observed, which she names The Flats, found very creative ways to adjust the form that families took in order to enhance their functioning in the face of significant poverty. The critique of the Moynihan Report, as well as much other writing on the family before and since, was that by not looking closely enough at the way poor, black families actually functioned, the report assumed that because the family did not have a particular structure (namely that of middle-class, white America), it must therefore be dysfunctional. This confusion of form and function is endemic in much writing about the family, and one of the contributions of Stack’s work is to point out that one cannot make assumptions about functionality based only on form. Multiple forms of the family turn out to be reasonably functional, independent of whether those forms are the result of the resource pressures, such as in the case of The Flats, or of choices such as divorce, single-parenthood, or same-sex marriage.5
Of interest for my purposes here are some of the ways in which the families Stack described were able to make use of their limited resources to maximize their ability to function. To understand the strategies that they adopted, one must understand the circumstances they faced and the structure of their families and households. First, this was an extremely poor community, suffering under the legacy of segregation and lingering racism of the early- and mid-twentieth century. Employment was scarce, and jobs did not pay well. Many families were on various forms of government assistance. Family structure aside, individuals and families in The Flats faced significant resource constraints.
A common feature of families in The Flats was a large number of women who bore children of multiple fathers, without being legally married to any of them. Female-headed households were quite common, and this was one of the features of the African-American family that the Moynihan Report noted as evidence of its dysfunctionality. Many fathers did take on varying degrees of responsibility for their children, but this did not always, or even often, involve legal marriage. In contrast to a more nuclear model in which resources enter the family through the income-earning activities of a married couple who then use those resources to provide for themselves and their children all in the context of a single household, the families of The Flats (and this is true of families in other circumstances of poverty, both historically and around the world today) relied on persons outside the nuclear family and physical household to provide income and various forms of household production such as childcare. Where more comfortable, middle-class families could assume a near total overlap between “the family” as a biological and sociological unit, and the household as the organization through which income is earned and specific acts of production and consumption take place, the family structure of The Flats challenged that identification of family and household.
What is often termed “extended family” was central to this process. Mothers relied on their relatives to provide both physical resources and time. As is often the case with female-headed households, a network of female relatives was the core of these networks of kin. In addition, if the father stepped up and took responsibility for his child, even outside of a legal marriage, his extended family was brought into the kin network of the mother and child and could be drawn upon for various kinds of resources. Of additional importance is that the biological mother need not be the de facto mother for purposes of identifying whose extended family will be drawn upon. Motherhood, as well as a variety of other familial relationships, was defined within the community through a long-standing system of recognized norms. Stack argues: “The system of rights and duties should not be confused with the official, written statutory law of the state,” and that these rights and duties are “enforced only by sanctions within the community” (1974, 46). Stack provides extensive detail on the nature of these kin networks and how they were formed and dissolved. Once such kin networks, or “personal kindreds” as Stack refers to them, are established, they become the basis for an extended household based on reciprocal exchange.
Stack devotes an entire chapter to what she terms “swapping.” Faced with needs much greater than the available supply of resources, nothing can go to waste, whether a physical object or the time of residents. The solution is an “intricately interwoven” system of exchange through which resources, including time, are given to others in the community with the expectation that they will reciprocate at some point in the future. The swapping of The Flats is really a sophisticated form of credit rather than direct and immediate barter. It is tempting to see it as a form of gifting but, as Stack makes clear, providing resources for other members of the community comes with the expectation that the recipient will give back eventually. It is not a one-way pure gift, but more like a loan in which the repayment does not have to take the form of the same object or activity that was lent. Stack defines the swapping process as the exchange of “any object or service offered with the intent of obligating” (1974, 34). The nature of these exchanges could involve anything from household objects like a TV or coffeepot, to things like clothing or cash, but also to services such as childcare and housing. It was not unusual, Stack reports, for children to be moved from house to house over the course of their childhood as it became easier for one or another relative to care for them. The same was true to an extent of adults, who might require temporary housing in the home of a relative.
Stack argues that swapping had both an economic and sociological function. The economic function is clear enough, in that it became a way to reallocate resources to those who needed them most at any particular time. Economically, this sort of exchange behavior can be seen in three complementary ways. First, it is a form of credit, as Stack’s phrase “with the intent of obligating” suggests. Those who have objects or time or space that is greater than their current needs can “save” by providing those resources to others with the expectation of being able to draw on that saving down the road in the form of a reciprocal act of saving/lending from the recipient. Second, it can be seen as a way of minimizing the “idleness” of resources. A typical middle-class family might think nothing of having a closet full of clothes, most of which don’t get worn in a typical week but are there in case we want them. In a poor community, those can be seen as a sort of wasteful “idleness” that could be put to a more valuable use by being worn by other members of the community. Clothing not currently being used was fair game for swapping. One can extend this analysis to other household objects as well as household space and the time of community members. If some kin find themselves with the time to care for the child of other kin who are struggling, they will do so with the expectation of reciprocation down the road.6
Finally, all of this swapping is perhaps best understood economically as extending the effective size of a household to the entire network of kin with whom one might swap. What swapping does is to enable people to draw on a larger range of other people and resources to accomplish their various forms of household production. Whether taking the form of financial resources, objects like a couch or clothing, or time devoted to childcare, swapping enables residents of The Flats to not be limited to what is available within the four walls of their homes in engaging in household production. Living space, childcare, and other resources can come from anywhere within their personal kindred.
The extension of the effective household size in The Flats can be understood as a way to change the cost-effectiveness of household production. As discussed earlier, households are sites of non-market production. We can adapt the basic Coasean (1937) analysis of the firm here to observe that households face a trade-off between what we might call the non-monetary administrative or coordination costs of organizing resources within the household versus the explicit monetary costs of acquiring resources from outside the household. For the households of The Flats, this trade-off can be understood as between the costs of setting up and enforcing their sophisticated system of swapping, which amounts to an extension of the de facto household across a number of physical households, and the costs of acquiring new resources such as clothing or services such as childcare on the market, or perhaps at the opportunity cost of their own time. The goal of household production is to ensure that meals are cooked, houses are cleaned, errands are run, and children are raised. The organizational form that does so best will depend upon the relevant costs.
Economic calculation in the impoverished community
Within a single physical household, the need for some system of accounting and calculation is far less pressing as the heads of household can make allocation decisions directly. However, when the size of the household expands as we see in The Flats, some process for keeping track of how resources are being drawn upon or provided becomes necessary. What we see in The Flats is that the residents have in fact developed a fairly sophisticated system of credit and calculation.
The Flats is a more systematic version of behavior we see frequently in intimate orders even when not faced with ongoing resource scarcity. A lighter version of this sort of swapping characterizes middle-class America, though not in the systematic and deeply embedded way we see in The Flats. Family members trade favors with regularity. Members of the same school or house of worship might trade-off carpooling or caring for children after school when their parents are in a bind.7 Neighbors might trade objects or time with some regularity, e.g., the classic “may I borrow a cup of sugar?” This sort of behavior happens in good times and bad, though the struggles of friends and community members tend to produce more of it. We frequently bring meals to friends, neighbors, or co-religionists who are ill or who have had a death in the family. We might also volunteer to care for the children of the same people in a time of difficulty. We do all of this with the knowledge, or at least the belief, that those people would do the same for us were we in their situation.
Exchange is at the heart of both the more extensive swapping system of The Flats and the somewhat ad hoc processes we see in wealthier communities. Both involve what we might term as “barter credit” exchanges, as parties trade without money and do so asynchronously. The asynchronous nature of the exchanges is what makes them appear as forms of mutual gift giving rather than true exchanges. We know from The Flats, at least, that the actors themselves understood what they were doing as a form of exchange, not gift giving. They believed that “what goes around, comes around” and their willingness to give of their physical resources or time was a way of earning credit should they require help. The existence of a way of excluding free riders (see below) also indicates that this was not a mere gift exchange but a credit system. Spreading your willingness to give more widely also increased the number of people who you could draw on in the future. Of course, doing so increased the complexity of the process, and without money as a common denominator, this barter credit system requires some other way of keeping track of who has credit and debit balances.
As noted earlier, for reciprocal exchange to work with reasonable effectiveness in intimate orders, such systems will have to include some sort of substitute for the monetary calculation that characterizes anonymous orders. Stack reports that the residents of The Flats were aware of all of this and had developed some ways of engaging in substitutes for monetary calculation. As Stack describes it:
A person who gives and obligates a large number of individuals stands a better chance of receiving returns than a person who limits his circle of friends. In addition, repayments from a large number of individuals are returned intermittently; people can anticipate receiving a more-or-less continuous flow of goods. From this perspective, swapping involves both calculation and planning
(1974, 40; emphasis added)
Again, without the ease of comparison that monetary prices provide us, the calculations that go into swapping and other forms of reciprocal exchange will not be as precise, but they exist nonetheless. Non-human communities cannot calculate in the way that humans can, but sufficiently intimate and homogeneous human communities can engage in this process without the aid of money to a degree sufficient for their purposes. What is clear is that exchange is not limited to market contexts and that reciprocal exchange, as opposed to gift giving, in the absence of money must develop some substitute process of pricing or valuation, as well as an analogue of profits and loss.
Dealing with free riders is one of the most fundamental problems such a system must solve. Stack’s discussion suggests that residents of The Flats did have mechanisms for identifying and excluding cheaters. One’s reputation for being a fair trader was paramount to being able to draw on the community in the swapping process. People who only received and did not donate quickly developed a reputation for doing so and were excluded. The primary process by which reputational information was spread was through the female gossip network. The women of The Flats used gossip as a way to inform the community of those who were and were not reciprocating. Stack reports: “Individuals who fail to reciprocate in swapping relationships are judged harshly” (1974, 34). One resident said of a relative who never reciprocated, “Well, lots of people talks about someone who acts that way” (35). Non-reciprocators would find themselves refused a swap when they were in need, providing the exclusion necessary to prevent free riding.
One can view these reputational effects as non-monetary forms of profit and loss. Those with good reputations for giving back when they have been helped will more easily get help from others when needed, which is analogous to profits. Those who do not “pay it forward” develop bad reputations and begin to be excluded from the swapping process, and find it hard to acquire goods or services when they might need them. That result is the analogue of monetary losses.
The residents of The Flats were also cognizant of the question of value and price. Stack notes that the value within the community was not the same as the market value of the object or service in question.8 Instead, the value of an object for swapping purposes was “based upon its retaining power over the receiver; that is, how much and over how long a time period the giver can expect returns of the gift” (1974, 42). If we think in terms of both credit and subjective value, the value of a good was dependent on its value in the eyes of the recipient, which in turn established the indebtedness of that person to the giver and the community more broadly. For example, if it became known that you agreed to look after a friend’s children for an extended period, that was of significant value to the friend and would have two consequences. First, it would enhance your reputation within the community and make it easier for you to draw upon others in the future. It would also significantly encumber the recipient, both to you and The Flats as a whole. Within an intimate and quite homogeneous community, there would also be widespread agreement on the swap value of various objects or activities. Within such a community, money is not necessary to achieve a fairly high level of uniformity of value.
The absence of money does point to the limitations of a non-monetary swapping system such as this one: the credit one earns for creating value for others by providing goods and services has no traction outside the specific community. The ability to calculate without money is limited to the relatively intimate and homogeneous community of The Flats, and even there it applies only to household production and a range of consumption goods. The advantage of the monetary calculation of the anonymous order of the Great Society is exactly that it dramatically extends the range of people to whom we can provide value and trade for their products in return. We are not bound to what we can do for those in the more inner of our circles.
However, when the forces of community and household obligation are strong enough, even the acquisition of a significant amount of money may not serve as a pathway out of poverty and thereby have little value outside the community. Stack notes how residents of The Flats who came into unexpected money were under a strong obligation to disperse it to kin in the community, leaving little for themselves. This phenomenon is known as “leveling” because of the way in which it made it so difficult for any one family to work their way up and out of The Flats. The intensity of this obligation is evidence of the power of money as compared to the non-monetary exchange system of The Flats. Residents understood that money gave them a degree of flexibility and an access point to the extended order outside The Flats. It enabled them to move to the outer rings of the concentric circles. Leveling worked to both give a limited version of that access to a wider number of people while also serving as a way to ensure that those with resources continued to be a source of wealth inside the community.
Even as leveling made it difficult to escape, the swapping system served very effectively as a way to improve the lives of The Flats community. At one point, Stack (1974, 33) refers to the limited supply of goods in The Flats being “perpetually redistributed” within the community. Members of the community note that “you not really getting ahead of nobody, you just get better things as they go back and forth.” Others make similar observations about how this process does not really improve people’s well-being. Economists might beg to differ. If trade is itself value-creating due to the subjectivity of value, straight swapping makes both parties better off, at least ex ante. This sort of internal-to-the-community trading is, like all trading, a way of reallocating resources to higher-valued uses. Even if the stock of goods were constant, swapping improves people’s subjective well-being by enabling them to get goods they prefer to those they trade away. When we add the credit element in, we see additional benefits. Trading through time is mutually beneficial as well. If I swap away something now because I think I will need some other good or service later, I am better off as I have aligned my consumption through time more accurately. Presumably my swapping partner has the opposite set of preferences and is made better off by getting something from me now in exchange for the more open obligation to swap something back to the community later on. Note that swaps do not have to be between the same partners; the expectation of reciprocation is to the community as a whole, though specific trading partners can call on each other for reciprocation. All of this activity is wealth-enhancing, at least within the limits of the supply of resources in the community and the extent to which non-monetary calculation could function within it.
An important implication is that trying to analyze this community by looking at the behavior of individual households or families will provide a very incomplete picture as these categories, especially the “household,” are so fluid and permeable that they do not play the same role as a constituent component of economic analysis as they do in communities where the Coasean trade-off alluded to above is different. In more heterogeneous communities, where the costs of non-monetary calculation are high and where there is sufficient access to money and monetary exchange, we will tend to see households that are more independent. That ring of the concentric circles will be less permeable and the individual household will be a much more obvious building block of social analysis. Where circumstances are different, whether more pervasive like The Flats or in particular cases within more heterogeneous and better-off communities, the community can be the relevant unit of analysis. As we see with The Flats, taking a larger-scale view of the community as a network of exchangers defined by complex kin relationships enables us to better understand their creative adaptation to poverty.
But is it just kin selection?
Having described the world of The Flats, it is worth confirming that what we are observing is, in fact, reciprocal exchange and not kin selection by using the same criteria researchers have applied to the vampire bats. We need to show that donors and recipients must frequently reverse, that the benefits to the recipient exceed the costs to the donor, and that there is a way to identify cheaters and exclude them. The first two are clear from the previous section. Although the swapping process is not limited to pairs, no person plays only the role of donor or recipient. Members of The Flats community find themselves in both roles with frequency. The benefits clearly outweigh the costs and community members use that kind of language to explain why they swap. They understand that if they give up something they value less today, they will be able to draw on the community later on when their need is greater. That is, they understand that the immediate need of the recipient is greater than the immediate cost to the donor. And it is perhaps their inability to see an optimistic future beyond the relatively short run that enables them to calculate fairly effectively to meet their immediate needs yet not quite see the ways in which something like leveling prevents them planning effectively for the longer run.
One might object that what happened in The Flats really is just “kin selection” given that the exchange networks were based around kin. However, in the evolutionary literature, kin has to be understood in strictly biological terms. With the vampire bats, the question was whether or not they also reciprocated with genetic strangers, and they did, indicating this was reciprocal exchange not narrow kin selection. The implication is that reciprocal exchange is a strategy not just for ensuring the furthering of one’s genes but for promoting the survival of the whole community. The same is true of The Flats. The kin networks that Stack identified as central to the swapping process were not purely biological. As noted earlier, the woman recognized for social purposes as the mother was not always the biological mother, and in some cases not even a blood relative. Swapping also took place among biological strangers, as members of a mother’s network might swap with members of the network of her baby’s father. Stack points out that the language of kinship was also used as a way to indicate close, reciprocal relationships among non-kin in the biological sense: “Non-kin who live up to one another’s expectations express elaborate vows of friendship and conduct their social relations within the idiom of kinship” (1974, 40). It might be true that the residents of The Flats gave preference to people who they called kin and thereby chose to make part of their household/community, but that is not the same as preferring their biological kin, which is what is necessary for this to be kin selection. It would seem that the reciprocal exchange is here a strategy for community survival, analogous to that of the vampire bats. This suggests that reciprocal exchange has powerful evolutionary roots for populations faced with significant resource challenges.
Calculation, community, and concluding thoughts
One of the lessons to draw from Stack’s book is that in attempting to make sense of the behavior we see in any particular historical context, just working with the poles of the intimate–anonymous continuum is not enough, nor is treating exchange as exclusively a property of the anonymous extended order. Exchange does not necessarily require the use of money and the other formal structures of the marketplace to function, and often function very well, within the more inner rings of our alternative concentric circles model. Households and communities often rely on non-monetary exchange as an effective way to coordinate behavior. Mises, Hayek, and Buchanan were right in encouraging economists to think about markets as catallaxies, or networks of exchange, but as Buchanan’s (1964) extension of the catallactic approach to the political world suggests, exchange is a more encompassing phenomenon than what we observe in formal markets characterized by monetary exchange. However, even non-monetary exchange, especially if it is to guide any form of production, must have some way of mimicking the process of monetary calculation that guides choices in monetary exchange in a more formal market. There must be some way, if weaker and less reliable, to provide incentives and signals about the desirability of actions as well as mechanisms for dealing with problems such as free riders. Without the ability to provide a proxy for monetary calculation, non-monetary exchange systems are unlikely to be sustainable forms of wealth creation.
A further implication of this chapter’s discussion is that although the anonymity that comes with monetary exchange enables its reach to extend well beyond household and community (i.e., to the outer ring of the extended order), there may well be situations in which non-monetary exchange is preferred, perhaps due to poverty or a scarcity of actual money, or because monetary exchange is seen to be inappropriate given the role that the particular good or service plays within the community. One recurring situation in which non-monetary exchange might play a larger role is in post-disaster recovery. Actual money may be in short supply, or the formal institutions of the market may have been substantially weakened by the disaster, such that non-monetary exchange becomes a better option. More generally, monetary exchange might be possible and appropriate, but also come with greater costs than the sorts of non-monetary exchange we see in The Flats. Researchers exploring the ways in which households, communities, and markets operate should be mindful of the ubiquity of exchange among humans, even when money and more formal market institutions are weak or absent.
Finally, the experience of The Flats should also remind researchers of the flexibility and permeability of the rings of the concentric circles around the individual. What counts as a household or a community, and how much either mimics or complements “the market,” will shift as contexts and constraints change. Although the concentric circles models and the Hayekian distinction between the intimate and anonymous are helpful organizing frameworks, the concepts of exchange, community, intimate orders, and anonymous orders are all arguably messier and less precise than they sometimes seem. The lesson of All Our Kin is that we need to look closely at what we are studying to make sure we understand whether and in what ways those terms apply. Beginning with how the actors themselves understand what they are doing and then bringing to bear carefully the relevant frameworks from social theory can render intelligible what otherwise might seem strange. Doing so requires, however, that we not get overly bound by dichotomies when social institutions and practices refuse to fit neatly into those concepts.
I thank all three editors and participants at a seminar at King’s College London for very helpful feedback on the first draft.
Notes
1 The same distinction is also described as “catallaxy” vs. “economy” or “cosmos” vs. “taxis” to refer to spontaneous and made orders respectively.
2 The philosopher Georg Simmel ([1907] 1978) made this issue one of the central themes of his The Philosophy of Money.
3 Certainly, large-scale disasters, for example, can produce an outpouring of funds, but the number of small, local, community causes that find support in the US is almost endless. Of course, for others, shared national, intellectual, or political identities might explain more global level giving.
4 I thank Lenore Ealy for the concentric circles imagery.
5 As these are not the focal issues of this paper, let me note here that the claim is not that all family forms are equally functional. For example, the literature on the impact of divorce on children is clear that they are, on average, slightly worse off than children from intact marriages. The claim is more subtle: a variety of family forms are sufficiently good at the task of raising children to adulthood as functioning, responsible citizens while also serving the various needs of the parent(s). All other things being equal, we might wish every child was raised in a two-parent household with the attendant financial and human resources. Even if this is the best of all family structures, it does not mean it is the only functional one.
6 The analysis here is identical to the ways in which economists might talk about the role of a fire truck sitting in a fire station or the cash in one’s wallet. It is tempting to consider it “idle,” but in fact it is providing the service of being “available.” That service is, of course, evaluated subjectively and, as we see with the clothing example, the value of availability might be less than the return expected from the “credit” gained by swapping the object today for the promise of reciprocation later on.
7 One of the interesting aspects of All Our Kin is that schools and especially churches are nearly non-existent in Stack’s account of life in The Flats. It is hard to believe that the church in an African-American community was so peripheral to the everyday lives of the residents that it was not part of the regular rhythm of life and, particularly, to the attempt to share resources through swapping. Whether the omission of the church was really due to its peripheral role or some blind spot on the part of Stack is an interesting question. It might also be a difference between the lives of urban poor African-Americans and rural ones. I thank Sarah Skwire and Cathy Crosby-Currie for some discussion of this issue.
8 Stack is a bit confused in this section as she seems to adopt a cost of production understanding of an object’s price, which she sees as distinct from its monetary value. An economist who reads All Our Kin will frequently wish that Stack had a better understanding of basic microeconomics, as it would have given her a clearer framework for understanding much of what she saw. Such a framework would have made the argument even more powerful, as I hope I am demonstrating in this paper.
References
Buchanan, James M. 1964. “What Should Economists Do?” Southern Economic Journal 30: 213–222
Coase, Ronald H. 1937. “The Nature of the Firm.” Economica 4: 386–405.
Hayek, F. A. 1973. Law, Legislation, and Liberty, vol. I: Rules and Order. Chicago: University of Chicago Press.
Hayek, F. A. 1977. Law, Legislation, and Liberty, vol. II: The Mirage of Social Justice. Chicago: University of Chicago Press.
Horwitz, Steven. 2005. “The Functions of the Family in the Great Society.” Cambridge Journal of Economics 29: 669–84.
Lewis, Paul. 2009. “Commitment, Identity, and Collective Intentionality: The Basis for Philanthropy.” Conversations on Philanthropy IX: 46–64.
McCloskey, Deirdre. 2006. The Bourgeois Virtues. Chicago: University of Chicago Press.
Mises, Ludwig von. 1920. “Economic Calculation in the Socialist Commonwealth.” In Collectivist Economic Planning, edited by F. A. Hayek, 87–130. Clifton, NJ: Augustus M. Kelley, 1935.
Mises, Ludwig von. [1912] 1980. The Theory of Money and Credit, Indianapolis, IN: Liberty Press.
Moynihan, Daniel P. 1965. The Negro Family: The Case for National Action. Washington, DC: Office of Policy Planning and Research, US Department of Labor.
Ridley, Matt. 1998. The Origins of Virtue: Human Instincts and the Evolution of Cooperation. New York: Penguin.
Simmel, Georg. [1907] 1978. The Philosophy of Money. Boston, MA: Routledge & Kegan Paul.
Smith, Adam. [1776] 1976. An Inquiry into the Nature and Causes of the Wealth of Nations, edited by Edwin Cannan (1904 edn.). Chicago: University of Chicago Press.
Stack, Carol. 1974. All Our Kin. New York: Basic Books.
Wilkinson, Gerald S. 1990. “Food Sharing in Vampire Bats.” Scientific American 262, February: 76–82.